I've noted previously how much this B wave mirrors the wave (iv) of A fractal from 1/24 - 2/2... so if we're onto wave C, then it makes sense to use the subsequent wave (v) of A as a model for how C will play out. If we lay it out all the inflection points match up well given the similarities in consolidation zones for wave B. The length of each move also makes sense though I have a feeling it may extend a bit further and take out stops at 3900...
The other shoe has clearly yet to drop. The balance sheet runoff hasn't even started yet... the Fed were STILL buying bonds even up to this past March meeting. Real rates are rising, the Fed is non-accommodative, the yield curve has inverted, and I believe investors are underestimating the complexity of supply chain issues... a lot of it is geopolitical, not logistical and resolving them requires new infrastructure and relationships to be built.
Look, I get being a contrarian and buying the fear... but we've almost retraced back to ATHs. RSI didn't bottom anywhere close to where previous corrections dipped to.... not to mention we haven't seen the back to back days of red where the term "irrational fear" gets thrown around daily. There are enough real problems that have historically been unfriendly to equities that I believe at best we're rangebound for the next year, and more realistically... we retrace back to pre-pandemic levels before it's all said and done.
As usual none of this is advice...
The other shoe has clearly yet to drop. The balance sheet runoff hasn't even started yet... the Fed were STILL buying bonds even up to this past March meeting. Real rates are rising, the Fed is non-accommodative, the yield curve has inverted, and I believe investors are underestimating the complexity of supply chain issues... a lot of it is geopolitical, not logistical and resolving them requires new infrastructure and relationships to be built.
Look, I get being a contrarian and buying the fear... but we've almost retraced back to ATHs. RSI didn't bottom anywhere close to where previous corrections dipped to.... not to mention we haven't seen the back to back days of red where the term "irrational fear" gets thrown around daily. There are enough real problems that have historically been unfriendly to equities that I believe at best we're rangebound for the next year, and more realistically... we retrace back to pre-pandemic levels before it's all said and done.
As usual none of this is advice...
Comment:
Here's a picture of QQQ and shows just how much more downside there is for wave (i) (wave(i) of A overlay shown). Bearish shark is confirmed and price target at the .500 retrace tho from the looks of it we will likely hit the .618 retrace and draw a right shoulder to mirror the left.
Gapped down past the 200 day moving average on SPX and backtested multiple times. Failing to capture it will put us on target for the bottom of that channel and the .500 retrace around 4400 which has been my target for wave (i).
The market freaking out about what has basically been known to anyone that's bothered to read anything about the Fed in the past several weeks just shows you the constitution of your average retail investor who have been blindly piling money into megacap tech. They should get their hopium fix next monday when I expect short term trends to reverse, though ultimately it'll be for naught as I think we'll get a couple of more FB/NFLX/PYPL type haircuts during earnings season.
Here's a picture of QQQ and shows just how much more downside there is for wave (i) (wave(i) of A overlay shown). Bearish shark is confirmed and price target at the .500 retrace tho from the looks of it we will likely hit the .618 retrace and draw a right shoulder to mirror the left.
Gapped down past the 200 day moving average on SPX and backtested multiple times. Failing to capture it will put us on target for the bottom of that channel and the .500 retrace around 4400 which has been my target for wave (i).
The market freaking out about what has basically been known to anyone that's bothered to read anything about the Fed in the past several weeks just shows you the constitution of your average retail investor who have been blindly piling money into megacap tech. They should get their hopium fix next monday when I expect short term trends to reverse, though ultimately it'll be for naught as I think we'll get a couple of more FB/NFLX/PYPL type haircuts during earnings season.
Comment:
And uneventful day with the exception of a late day "breakout" past the 200 day MA... Feels fake to me however as it simply looks like we're drawing a flat 4th in contrast w/ a sharp wave 2. Typically breakout of important resistance levels don't backtest this quickly and bullish price action felt less than enthusiastic.
Regardless of direction tomorrow, ultimate target remains 4400 area to conclude wave (i) of C.
Regardless of direction tomorrow, ultimate target remains 4400 area to conclude wave (i) of C.
Comment:
Showing NDX futures here and you can see wave (i) of C is trending along with the overlay of wave (i) of A very nicely. The .500 retrace which was the price target looks like it'll be hit Monday, though we could get a flush down to the .618 where I expect a bounce. That blue line is where I anticipate the bottom of the daily Bollinger Band to be.
Showing NDX futures here and you can see wave (i) of C is trending along with the overlay of wave (i) of A very nicely. The .500 retrace which was the price target looks like it'll be hit Monday, though we could get a flush down to the .618 where I expect a bounce. That blue line is where I anticipate the bottom of the daily Bollinger Band to be.
Comment:
Probably a gap down in the morning on expectedly bad CPI numbers (market has clearly tanked to price this in already) where it will hit the .500 retrace and the bottom of the daily BB. Counting the waves I think we have a few small lower lows but I'm expecting wave (i) to conclude tomorrow w/ a powerful short covering surge followed by some profit taking and consolidation. Wave (ii) may take longer than expected... the longer the consolidation, the higher wave (c) of (ii) will go. I've got it pegged for a .500 retrace here but let's see.
I'm now out of all my short positions save for a few SPXS shares left.
I'm now out of all my short positions save for a few SPXS shares left.
Comment:
Finally tapped the bottom of the BB on both NDX and SPX. Retested at end of day and the response was rather bullish. Still a chance for one last spill to the .618 retrace where a buy outside the BB would be prudent for any scalps.
Regardless it seems like a bounce is imminent. 4500 where the 200 day MA and midpoint of BB appears to be a good target for minimum retrace.
Regardless it seems like a bounce is imminent. 4500 where the 200 day MA and midpoint of BB appears to be a good target for minimum retrace.
Comment:
Very little follow through on any selling which is expected since we haven't even hit the 200 day moving average or 50% retrace yet. My guess is this bear rally will die around 4540-4565 in typical trappy fashion after a bullish close above the 200 day moving average.
Comment:
Hit target at 200 day MA as expected and bounced HARD. Pretty powerful move downwards today but not sure I buy it yet... how many times have we seen the S&P consolidate beneath an important resistance only to pop above it before the real selloff starts? Didn't even hit the .618 retrace yet either...
Comment:
Welp, guess I was wrong about that support holding... won't be the first time I left $ on the table and certainly won't be the last. I still think bears will get another bite at the apple however in the next couple of weeks. Looking at my NDX model we're clearly drawing a right shoulder here and coming up on major support which I doubt will break prior to the megacaps reporting earnings next week.
Can certainly see poor earnings already being priced in and a few of these guys surprising to the upside (GOOG is already way below it's 3/1 lows) with "dovish" hints from the Fed leading to a rally going into early May.
Can certainly see poor earnings already being priced in and a few of these guys surprising to the upside (GOOG is already way below it's 3/1 lows) with "dovish" hints from the Fed leading to a rally going into early May.
If details regarding balance sheet runoff outlined in the minutes freak the market out and we'll purge all the way to 4400 and possibly even further. Either way the direction is eventually down whether it's via an aggressive Fed or the market taking risk off the table prior to earnings.