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Loose economics conditions going in. This punt should be fuel to the inflationary fire and give a nice boost to equities.  That said, TNX already did the standard trap move for Fed day and the market usually has at least 1 trap up its sleeve, but often 3 traps between now and tomorrows close. 

SPX - new all time

Posted by DigiNomad on 20th of Mar 2024 at 02:03 pm

SPX - new all time highs 

Thanks. Short term top call though...to be clear.  Seems likely to go higher although crude bulls have to worry about the Biden Admin turning on the SPR bazooka again just like they did right before the midterms. I think it's too early though and they're keeping powder dry until the election is closer (vote buying strategy = don't fire until you see the whites of their eyes).  This chart also suggests higher for the energy patch, but keep in mind that Trump years were not great for XLE (increased supply) and it ran with Biden (large constraints on supply...although it increased on a nominal basis). 

Haha. I don't know. Why? You thinking about a reciprocal gift?   

Which path will the Fed

Posted by DigiNomad on 20th of Mar 2024 at 01:01 pm

Which path will the Fed choose?  With Sanders and Warren loudly demanding lower rates now and a looming election, I think the single party dominated Fed likely surprises with a dovish gift to the ultra wealthy. 

KRE - H&S look on

Posted by DigiNomad on 20th of Mar 2024 at 12:56 pm

KRE - H&S look on the weekly....right shoulder could use some work. Today and tomorrow are likely to tell us whether or not we're completing wave C of a bear flag or going higher.  Twitter is mostly bullish. I don't understand why except for the fact that  being a bull has been the only thing that has paid in many months now or maybe that the Fed and Treasury are likely to protect very powerful investors in this sector at all costs.  CRE "expert" dude on CNBC yesterday said that we're maybe in the top of the 1st when it comes to the CRE crisis and he sees no viable ways to escape...especially if rate don't come down a lot, and come down very soon. 

Market rallying near all time

Posted by DigiNomad on 19th of Mar 2024 at 04:01 pm

Market rallying near all time  bubbly highs while Fed is meeting is ballsy. Market usually plays sick the day before a potential stimulus event. Too much liquidity sloshing around - impossible to keep a lid on it. 

Nice high tight flag look

Cycles GLD

Posted by DigiNomad on 19th of Mar 2024 at 03:46 pm

Nice high tight flag look on 130 with the cycle above just waiting to confirm a wave 3 if broken through.  It has already proven that it can go higher with a strong dollar and rising rates (dollar could get stronger and rates higher tomorrow if Fed doesn't punt to the doves for political reasons, as seems to be the whisper consensus). Whatever -  it looks like it wants to go higher despite the dollar and rates.  Light volume, shallow pullback, etc. What's not to like? 

CHIPS Act - big chunk

Posted by DigiNomad on 19th of Mar 2024 at 03:22 pm

CHIPS Act - big chunk of funding released tomorrow...much of it to INTC. I'm glad they are using our grandchildren's money to prop up the semiconductor industry - they are clearly struggling and need the money more than we do.  Big push now from Lobbyists and Biden Admin officials for "CHIPS ACT Round 2" ....not joking. 

Financial conditions continue to loosen

Posted by DigiNomad on 19th of Mar 2024 at 03:12 pm

Financial conditions continue to loosen (lower is looser). I think middle class savings drain via Gov deficit induced inflation is part of the high level plan - it's navigating the narrative that is tricky for the Fed Gov.  They can't be completely honest about it while we still have some semblance of a democracy remaining. For people willing and able to look at the actual numbers, the narrative of fighting inflation doesn't fit the statistical reality.

I had a short debate with ChatGPT on the topic of deficit spending and theft over the weekend.  It's a biased AI but I was able to get it to see my POV.

https://chat.openai.com/share/08aa907a-65d9-4862-957b-c667942660d6

Crude (CL) - 1 hour

Posted by DigiNomad on 19th of Mar 2024 at 01:42 pm

Crude (CL) - 1 hour looks like wave 5 but this daily looks great in an apparent wave 3 after break of the cycle indicator to the upside.  The inflation party is on.

On second thought - maybe not. The MA ribbon suggests this is a wave 5 and is likely to fail on the push above the cycle indicator (I'm just counting color changes). The longer I look at this chart, the more complex the wave count becomes. Haha. This one seems kind of complex to me. 

SPX - busted out of

Posted by DigiNomad on 19th of Mar 2024 at 01:06 pm

SPX - busted out of the coil discussed last night...but looking like a trap at the moment. It could hold but not looking great. 

Fed Decision - consensus seems

Posted by DigiNomad on 19th of Mar 2024 at 12:53 pm

Fed Decision - consensus seems to be that the Fed is likely to throw the market a bone now to avoid looking political later on in the year. I think that ship sailed in December, but whatever. Party on with inflating assets and commodities if they do that. 

Cycles - just spotted a

MSTR

Posted by DigiNomad on 19th of Mar 2024 at 12:41 pm

Cycles - just spotted a decent example of what I was trying to explain about wave 5 breakouts above the cycles typically failing. There are two of them in the middle of this chart (1 very clear, the other maybe a wave 5, maybe not).  If you want to avoid the look above and fail, make your best guess about the current wave count and avoid 5 (I avoid looking at price these days to count waves and focus on the color changes in the MA ribbon indicator)

MDY 2h -  Looks like

Posted by DigiNomad on 19th of Mar 2024 at 12:18 pm

MDY 2h -  Looks like a completed ABC and a trigger after the last bar closed above the 9.  Tight stop possible. 

Crude (CL1) - speaking of

Posted by DigiNomad on 19th of Mar 2024 at 12:01 pm

Crude (CL1) - speaking of wave 5's, it looks like we've in one on the 1 hour.  MACD divergences confirming. Probably not a great time to initiate longs in the energy patch. 

I look at cycles and

MSTR

Posted by DigiNomad on 19th of Mar 2024 at 11:54 am

I look at cycles and the MA ribbon almost exclusively these days.  You've taught me most of what I know about them over the years. The only thing I would say about this analysis is that it helps to look for a wave count to determine the probability of breakout when closing above the cycles like this. In this case, it was an obvious wave 3 move and was safe to go long (IMO).  However, price often breaks above the cycle indicator in wave 5 moves also and those usually fail (the break above isn't as common in wave 5 as 3, but it does happen often). 

SMCI - I wonder if

Posted by DigiNomad on 19th of Mar 2024 at 11:43 am

SMCI - I wonder if this getting smashed now was part of a larger plan or just blind squirrels kind of luck?  A lot of people have been basing their bullish outlook on a broadening market and IWM breaking out. If SMCI was still in this week, the IWM chart would be broken and that thesis would have to be thrown out. Moving it to the S&P before it corrected could be a good strategy for both indexes.  Especially since I don't think many people cheering on IWM realize that most of this years performance is linked to SMCI alone.

The move probably also gamed a lot of algorithms that look for confirmation across indexes. 

I guess the bond auction

Posted by DigiNomad on 19th of Mar 2024 at 11:37 am

I guess the bond auction went well. Looks like a stinker to me (4.81 vs 4.695 previously) but not sure what the the  print was going into the auction. As long as the Gov can borrow without a hitch, they can continue to inflate asset prices and we're all good in equities. 20 year auction in 90 minutes. 

Good question. I didn't create the indicator, it's from the TV community. I wouldn't take a trade only on divergence. Looking for confluence of multiple indicators and also use as a warning a warning not to trade against it. Also, the first Demark after breaking through a cycle to the upside with authority is usually the end of wave 3.  

That divergence indicator also does work well on 1 min and below time frames for scalps... kind of surprisingly. 

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