Looking at the numbers, looks like we will have an interesting week ahead.
I have included both the momentum probability and the technical probability in the predicted ranges in the chart. You will notice its pretty conflicting/confusing so let's get into it:
Recap:
Don't wanna take too long to recap. If you watched my last video, essentially we accelerated the timelines and did as predicted all on Friday, leaving us with a break over the DSL line and a test of that 396 target price.
Next week:
Looking at the data, I expect whipsawing.
Technical probability favours upside however momentum probability favours downside. What this means is that, technically the stock is bullish based on RSI, Stochastics, Z-Score and % Price changes.
However, based on momentum we are approaching exhaustion based on the overall % change in technicals and price.
This generally manifests in whipsaw type behaviour, with enthuastic, fomo buying continuing whilst those in on the initial bullish wave profit take in droves.
In order to give a strong recommendation, we need to see momentum agree with the technicals. This happens frequently, the last post I did on SPY both were in agreement of a bullish bias. However, it seems the rallying we have seen has taken the stock a bit too far and over-extended it from a momentum standpoint, leading to this disconnect. This type of disconnect is characteristic (in my experience) of short squeezing/ rallying on catalysts and should be treated with the upmost caution. Whenever I observe it, usually there is a swift and painful change in direction that seems to materialize out of nowhere. So I cannot stress enough, be cautious here.
I am somewhat expecting to see both ranges hit this week based on the data, but we will have to see.
Big Catalysts:
The catalysts never stop. We have more jobs data next week on the 26th followed by the big PCE on Friday. This tends to give me more suspicion of whipsaw / abrupt sentiment shifts and seems to echo the disconnect in the probability assessment.
IWM Probabilities:
IWM is completely inverse SPY in the probability arena. It has bearish technicals but bullish momentum. Go figure.
Monday outlook:
Both IWM and SPY favour pullback on Monday.
IWM immediate TPs on Monday are a bullish TP of 186.80 and a bearish TP of 183.14.
SPY immediate TPs on Monday are a bullish TP of 398.81 vs a bearish TP of 392.51.
So, how to make sense of this all?
For me, I would look to see the order of operations, because this can lead some idea as to what to expect.
If we see pull-back and some selling on Monday (which the intra-day probabilities support, more on that in a second) then we could very well be stabilizing the overboughtness for a move to the upside. We would look from there to see rejection on the catalysts.
If we see continued rallying into Monday, this would be extremely over-extending SPY and I would just expect swift and profound rejection to the downside sooner than later with very little recovery.
The later would obviously be the most simplistic and straight forward, so I wouldn't expect that to be the case. Because you know the market, always gotta be complex and annoying.
I tend to believe that we are at a point where we require a strong catalyst to bring the market into a more profound down-trend. We do have that overhead resistance that has been respected for the past year. Again, we are approaching it and as we approach it the selling pressure has been picking up because of that reflexive short bias that is associated with this trendline. The premise of continuation up assumes that we are going to successfully break that trendline but (if you retain a greater bearish bias) fail to hold it on a catalyst. But is very possible we don't break it at all. And I think its important to take a step back and remember that it exists. I see a lot of people just ignoring it and giving TPs of the 400s without remembering that this trendline has been respected for over 1 year with NUMEROUS rejections. While breaking it for 1 or 2 days does not necessarily constitute a "successful breakout", breaking it at all has remained problematic for the past year.
Summary and Conclusion:
I can't advance a preference in either direction at this point. The data is too mixed. But this is what to look for and watch for to clue you to the possible trajectory:
1) Pullback Monday to around 392 and hold - indicates a desire to make an attempt to continue up and re-attempt a break of that trendline.
2) Gapping up/rejecting the overhead trendline - indicates that the overall sentiment still very much is sell the trendline and a mass bearish bias.
3) Continuation of bullish momentum on Monday - indicates frenzied buying with no underlying rationale/reason. Not a sustainable move and will likely quickly get rejected.
4) Range bound behavior to commence the week into Tuesday - indicates the market is awaiting the results of Jobs/ PCE with caution. We will not know the preference until the catalyst is released. But suspect if this were the case, there would be an upward bias with selling towards the upper trendline followed by dip buyers stepping in.
Don't forget, we will also have the 99% weekly target on Monday which can clue us as to direction. Will update once we know.
Safe trades everyone!
I have included both the momentum probability and the technical probability in the predicted ranges in the chart. You will notice its pretty conflicting/confusing so let's get into it:
Recap:
Don't wanna take too long to recap. If you watched my last video, essentially we accelerated the timelines and did as predicted all on Friday, leaving us with a break over the DSL line and a test of that 396 target price.
Next week:
Looking at the data, I expect whipsawing.
Technical probability favours upside however momentum probability favours downside. What this means is that, technically the stock is bullish based on RSI, Stochastics, Z-Score and % Price changes.
However, based on momentum we are approaching exhaustion based on the overall % change in technicals and price.
This generally manifests in whipsaw type behaviour, with enthuastic, fomo buying continuing whilst those in on the initial bullish wave profit take in droves.
In order to give a strong recommendation, we need to see momentum agree with the technicals. This happens frequently, the last post I did on SPY both were in agreement of a bullish bias. However, it seems the rallying we have seen has taken the stock a bit too far and over-extended it from a momentum standpoint, leading to this disconnect. This type of disconnect is characteristic (in my experience) of short squeezing/ rallying on catalysts and should be treated with the upmost caution. Whenever I observe it, usually there is a swift and painful change in direction that seems to materialize out of nowhere. So I cannot stress enough, be cautious here.
I am somewhat expecting to see both ranges hit this week based on the data, but we will have to see.
Big Catalysts:
The catalysts never stop. We have more jobs data next week on the 26th followed by the big PCE on Friday. This tends to give me more suspicion of whipsaw / abrupt sentiment shifts and seems to echo the disconnect in the probability assessment.
IWM Probabilities:
IWM is completely inverse SPY in the probability arena. It has bearish technicals but bullish momentum. Go figure.
Monday outlook:
Both IWM and SPY favour pullback on Monday.
IWM immediate TPs on Monday are a bullish TP of 186.80 and a bearish TP of 183.14.
SPY immediate TPs on Monday are a bullish TP of 398.81 vs a bearish TP of 392.51.
So, how to make sense of this all?
For me, I would look to see the order of operations, because this can lead some idea as to what to expect.
If we see pull-back and some selling on Monday (which the intra-day probabilities support, more on that in a second) then we could very well be stabilizing the overboughtness for a move to the upside. We would look from there to see rejection on the catalysts.
If we see continued rallying into Monday, this would be extremely over-extending SPY and I would just expect swift and profound rejection to the downside sooner than later with very little recovery.
The later would obviously be the most simplistic and straight forward, so I wouldn't expect that to be the case. Because you know the market, always gotta be complex and annoying.
I tend to believe that we are at a point where we require a strong catalyst to bring the market into a more profound down-trend. We do have that overhead resistance that has been respected for the past year. Again, we are approaching it and as we approach it the selling pressure has been picking up because of that reflexive short bias that is associated with this trendline. The premise of continuation up assumes that we are going to successfully break that trendline but (if you retain a greater bearish bias) fail to hold it on a catalyst. But is very possible we don't break it at all. And I think its important to take a step back and remember that it exists. I see a lot of people just ignoring it and giving TPs of the 400s without remembering that this trendline has been respected for over 1 year with NUMEROUS rejections. While breaking it for 1 or 2 days does not necessarily constitute a "successful breakout", breaking it at all has remained problematic for the past year.
Summary and Conclusion:
I can't advance a preference in either direction at this point. The data is too mixed. But this is what to look for and watch for to clue you to the possible trajectory:
1) Pullback Monday to around 392 and hold - indicates a desire to make an attempt to continue up and re-attempt a break of that trendline.
2) Gapping up/rejecting the overhead trendline - indicates that the overall sentiment still very much is sell the trendline and a mass bearish bias.
3) Continuation of bullish momentum on Monday - indicates frenzied buying with no underlying rationale/reason. Not a sustainable move and will likely quickly get rejected.
4) Range bound behavior to commence the week into Tuesday - indicates the market is awaiting the results of Jobs/ PCE with caution. We will not know the preference until the catalyst is released. But suspect if this were the case, there would be an upward bias with selling towards the upper trendline followed by dip buyers stepping in.
Don't forget, we will also have the 99% weekly target on Monday which can clue us as to direction. Will update once we know.
Safe trades everyone!
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