supratimbarman

Double Top, Who Know's.

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TVC:SPX   S&P 500 Index
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To me, this current situation (25th of July 2019); on the SPX looks like a Double-Top. Maybe it isnt. Maybe it will blast through and form a Higher High. But if I was going by what we have seen so far, there was a similar sort of situation on the 12th of September and the 2nd of October 2018, when the SPX nosedived.

I say similar, because the previous ATH attempt was messy whereas this is just a clean ramping up.
Comment: On the 31st of July, 2019, (also, the last day of the month and the day of the all important FOMC announcement, before the summer holidays), the FedResrv cut the Fed Rates by 25bps and the SPX retracted from the latest ATH. The next support seems to be 2942, which is the lower limit of the 28th of June gap and also the limit of the previous Double-Top ATH. The move was ferocious; which reset the NDX, DJI, the HYG curve as well as uncoiled VIX to a strike point of 16. Will it replicate the moves post previous DbleTop ATH. Who knows, but the momentum has powerfully shifted away from any more near-term ATH attempts.
Comment: In 2 days of August, all the gains of July were wiped out. Looking ahead (on the 4th of August), the SPX seems to be aiming to fill the gap between 2904 to 2896 in the near term. 2878 seems like the next line of further support. However, looking at the Big Picture, there is nothing holding back the SPX till the June19 lows, which are at 2876.
Comment: I am sorry, I meant to say that after 2876, the Big Picture Target is 2729; which is the 3rd of June 2019 low.
Comment: On the 5th of August 2019, the SPX fell 2.98% or 87points, after opening with a massive 34point gap-down from the previous close of the 4th of August. It filled the gaps between 2904 and 2896. It opened at 2898, fell to 2822 and finally closed at 2844. It remained below 2878 which was Support but now is Firm Resistance. The 5th of August has, so far, been the largest losing day in 2019.

These were exactly the target points as I saw them on the 4th of August.

These are now just Classic Machine Pattern Recognition Trading with little Human Intervention. The 6th of August, will again be an attempt to target the Zone of Resistance between 2823 and 2803.

2800 is an important target focus, as that was the clear line of resistance all throughout 2018, especially the 3 attempts that were made to breach it on the 16th of October, 7th of November and 3rd of December 2018; after which the SPX crashed to the 24th of December 2018 low of 2351.

The SPX will attempt to break 2803 and if and when it does, it will clearly bring the 3rd of June 2019 low of 2729 right into the next line-of-sight.

Looking at the Big Picture, it is important to realise that the UpWard sloping TrendLine from the lows of 2009 has been breached. This is a very significant development, as it indicates that the massive 10 year BullRun has been broken. The HYG has retracted and seems to be indicating a top in US Equities. US Bond Yield Curve Pairs are nearly all at zero, Germany and Switzerland have Inverted Yield Curves and the US Dollar or DXY is starting to weaken. All signs that the 2009 BullRun is coming to a close.
Comment: 7th of August 1am London Time. The SPX made numerous attempts to breach 2878 and failed. It ended the 6th of August Cash Session just above this strong Line of Resistance, having fallen away from the Daily High right at the close.

It made 2 serious but unsuccessful attempts to break this Resistance in a sort of mini Double Top. SPX opened at 2861 with a gapup of 17pts.

This was expected as the previous huge drop on Monday, (5th August), was the largest loss so far this year and the RSI Indicators were heavily oversold. It required this slight bounce on the 6th in order to re-adjust the technical numbers so as to be able to proceed further with the sell-off in an orderly fashion, without creating a panic, which the CTAs could then intensify into a WaterFall.

Looking ahead to the Wednesday 7th August New York Cash Open, I see the SPX making concerted efforts to target and break 2803 with High Volume and Momentum.

It must be remembered that the SPX500 or SPX Futures reached 2773 on the overnight session of the 6th before the Cash Open for Tuesday. This means nothing until it is done during the actual trading session, but it does indicate that the SPX will target 2803 and, if the momentum is strong, the SPX will hit 2773 and perhaps bounce off and be held there till the Wednesday (7th August) Cash Close.

This is a Bear Market that is in the initial stages of its inception and being a Bull here would be fighting a strong Bear Trend that is currently taking shape.
Comment: An addendum to the above. 7th August at 1.33am London time.

The Sell Volumes are picking up to Dec18 levels.

VIX has been uncoiled and finds 20 as a Base to build on, whereas prior to this time, 9 was the average daily VIX reading.

The SPX hs dropped from ATH at 3025 to currently 2880 in 5 days of trading. A loss of 145 or 4.8%.
Comment: 9.51am London Time, 8th of August 2019.

The SPX on the 7th did everything in its power to reach 2900, but just could not do it; and in fact, eventually settled at 2884, which is just above the current critical support line of 2878. One thing to note is that the Lows of the past 3 days are getting lower, (this is more clearly evident on the DJI).

Prediction for the Cash Trading on the 8th New York Open Time? More ranging and more failed attempts to breach 2878 and stay convincingly above it.

The Put/Call Ratio is nearing Dec18 levels. The flow of money from the SPX to the US Bond Market is also approaching Dec18 levels. (One of the reasons for the dramatic rise in US Bond Prices and the consequent fierce drop in US Yields). The HYG curve indicates a top.

2803 still remains in focus, followed by 2778.
Comment: The Cash Open Trading on the SPX on the 9th of August was marked by a range between 2900 and 2935. What was significant about the day was that the SPX touched the Dec18 TrendLine at 2900 and was then bounced off it by intervention, via AAPL being bought thru the Swiss National Bank and spiking the USDCHF pair. (The SNB remains the largest institutional owner of AAPL and FAANG stocks in the world). The FedResrv ofcourse cannot officially buy stocks nor can they be seen to be interfering in the US Equity Market, but they can however direct the SNB to act on their behalf.

The SPX waited for help from London after their close and after 20 minutes, realising that none was forthcoming, resorted to holding up the SPX above 2900 by manipulating the buy orders for AAPL. The suppression of VIX also seemed to indicate that sell orders were either held back in a queue or were completely dismissed. VIX is a determinant of the frequency of buys and sells and when it goes down, it indicates that the SPX is calm but that was not the case on Friday as there was heavy buying of AAPL and AMZN. The problem here is that the SPX wants to sell off but is being held back. Once selling pressure fires in from other Stocks then VIX will correspondingly explode as has been evident in the recent past couple of weeks.

This was a very weak intervention to avoid the SPX from breaking through below 2900 and the subsequent TrendLine.

The intervention was very obvious, as USDCHF and USDJPY both spiked at the same exact time as AAPL began to trade just above the gap fill open at around 201. (200 for AAPL is an important price line, as anything below that will open the door to 185 and below for the Company).

The US10Y yield began to lower drastically, indicating that real money is leaving the US Equity Market and heading towards the very safe US Bond Market. However as soon as 2900 was hit that flow stopped. I still remain inclined to believe that once the SPX does sell-off that US yields will fall as Bond Prices increase.

The upward max value that the SPX could achieve all day was 2935, (which I feel is the current ATH as we look ahead to next week, starting on the 12th of August).

One of the indications that this was an intervention, and a weak one at that, is that the breadth of the market on the 9th was shallow. It was just AAPL and AMZN which were being traded in order to prop the SPX above 2900. (AAPL and AMZN are both major components of the SPX and manipulating their price in times of stress can hold up the SPX above critical support lines).

Will this last? I feel that the answer to that has to be unfortunately, no. The SPX will test 2803 and will also test 2778. There is also an interesting situation developing in the SPX and that is, the signs of an emerging Head and Shoulders Pattern, with the Right Shoulder now seemingly being built. If that is the case, then it is a classic case of the NeckLine eventually breaking.

All this and more will take time to play out and the next 4 weeks till the September FOMC meeting is still the timeframe within which a break down to the June19 and Dec18 lows remains firmly within view.

The final point to note is the rapid selloff just in the last hour of trading which saw the SPX end at 2918, which is the top of the 30 gap between 2918 and 2898.

We are still nearly a 100 points below ATH and this week saw a unique DragonFly Doji on the Weekly Chart, (a huge one), one that is rarely seen and has been seen only twice going back to 2009. (Doji Patterns indicate that the Index is trying hard to rise but is unable to, usually an early indication of a Trend Reversal).
Comment: 5am London Time, the 11th of August.

Looking at the SPX, it seems to be following the near same pattern as after the previous Double-Top on the 3rd of October 2018.

On the 8th and the 9th, it found resistance at 2940, which is the 3rd October 18 Top.

10 days after the 3rd of October 2018 ATH attempt, it completed the initial drop and subsequent retraction. That was at 2814. We are now at the 9th day of trading after the latest ATH attempt at 3020 on the of 29th of July 2019.

The SPX has filled the gap of the 5th of August and should have gone higher but the rally failed. I think that it will go down to the strong support at 2815 in the week head.
Comment: A Short Note on How The Money Moves In Global Finance

https://skbarman.home.blog/2019/04/13/a-...

An Impending VIX Explosion

https://skbarman.home.blog/2019/04/12/im...
Comment: 10am, the 13th of August 2019, London Time

It is about 4 and half hours before the Cash Open on Tuesday. Looking back to yesterday, it panned out as I thought it would. The SPX made no effort to break upward resistance and just engaged in a slow and steady drop. One of the reasons for that was the dramatic fall in the US10Y yield, which fell nearly 7% in just one day and at one time reached a 52 year low. The 10Y yield is half of what it was when Trump took office and is at 2016 levels. The fall in the yield, and most notably, the rapidity of the fall, indicates fear in the Stock Markets and a rush of cash into the safe havens of the vast US Bond Market.

Looking at the early futures market, it seems that the SPX will again try and test down towards 2815/35 and that the prospect of attempting another ATH is slight. The upward momentum is gone and ranging, followed by meaningful downward moves maybe the norm now. 2778 remains strong support.

(I point you towards the huge and glaring Dragonfly Doji Candle on the SPX Weekly Chart from last week). Gold is spiking in value, almost in a parabolic fashion.

There are gaps that need to be re-filled down to 2822 and new gaps till about 2803. Important number to watch is 2873, which is the Jan18 high and also the point at which the SPX bounced off yesterday. Once it breaks below this then the 2835, 2822, 2815, 2803 come into focus.

Many Thanks For Reading and I Wish You All the Best, As Always.
Comment: 1.16am London time, 28th of August 2019.

The SPX is boxed into a range between 2940 and 2820. It is forming a downward sloping wedge pattern and unless it rallies hard, it will keep stalling and eventually drop out of the box.

In August, so far, we have had the largest 3 drop days for 2019; which are, a drop of 2.98% on the 5th, a drop of 2.93% on the 14th and 2.59% on the 23rd. The intervals are 9 days apart. The drop on the 23rd was for, a few seconds, the largest loss for the year at over a loss of 3+%.

All in all, it is not looking good. If the bulls cannot rally the SPX hard and true then it will just keep stalling and the longer it stalls the greater is the chance of a drop.

The US Yield Curves have dramatically inverted and the 2s10s keeps flipping in and out with it not being very long before it remains consistently inverted. The U30y yield is at its lowest ever point since its inception. The 10y yield is at 52 year lows. Time will tell but the direction is biased southwards but with the proviso that a tweet could pump up the jam on the SPX anytime.

Comments

Still holding what I called 3-4 weeks ago: ~3050-3100 by end of Tuesday (July 30). Seems to be closer to fruition as we move closer to present.

Key date will be July 31st for the Fed. How the market reacts after the Fed into August will determine the fate of the near-term markets.

IMO we only squeeze higher if we see a 50bps cut which I can't see happening. I think a 25bps will keep it near-term steady as long as he remains extremely dovish for future cuts and outlines a likely next cut in September.

I don't see any major (>15%) correction until September or October. However I am still eyeing a Gold and BTC gearing up slowly tomorrow after the ECB talk and commencing after the Fed talk on August 1. I would not be surprised to top 1500 in Gold.
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@zSplit, Many Thanks. I too don't see the Fed cutting by 50bps. I see them cutting 25bps and then "hinting" at more in the future based on "incoming data" by the time they come back in September.

I also agree with you that Gold may have started a long-term bull run, due to dollar devaluation and also as a hedge against imminent recession. Thank You again, for your comments. Much Appreciated.
Reply
zSplit supratimbarman
@supratimbarman, Very welcome. Likewise!
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@zSplit, Thank You.
Reply
zSplit supratimbarman
@supratimbarman, One thing to note is: watch for how the European markets react to the ECB tomorrow. If they increase, I highly suspect that the US indices will increase as well when the cut comes next week. If they drop, then the US indices overall will follow suit.
Reply
@zSplit, I agree, which is why I find it odd that the US30 and the SPX500 has not really moved nor has the EURUSD pair moved, (it should weaken in anticipation of an ECB cut).
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