RKLB - Rocket Lab USA space, Inc. - Chart LinkRKLB typical of many space related stocks lately, huge Christmas Tree pattern. 

also from an educational standpoint on demand:  notice the bounce off demand zone back in late June. Ultimately price formed a lower high and sold off and lost that demand zone BUT you still got a nice bounce off demand, as I told you, first test of demand is almost always bought - that could be a strategy itself. Now price is testing bottom demand

BAC - Bank Of America Corp. - Chart Linkbeat earnings, big move.  Banks are loving funding all the AI BS LOL

anyway  back in May to illustrate how low risk of a buy that pullback was:

1. You had an ABC 3-wave pullback

2. that pullback was into the 61.8% Fib

you had two important technical events lining up at the same spot - again very low risk when you have multiple things, NOT just one thing like a stock pattern or trendline - a very good textbook pattern many times is good enough for an objective low risk trade, but when you have other technical factors confirming or lining up, makes it higher probability 

A VERY high probability trading system would be buying abc pullbacks into the 61.8% Fib or 50 day or 200 day MA - however your only problem might be finding enough setups to trade - if one could write a scan for those conditions maybe more of those show up than we know of, if that's the only setups you took, you would kick butt with very tight stops risk as well

see if Friday's lows hold. Otherwise chart was broken with that offering.   Friday bounced off a demand zone, if one still had shares could place a stop there

that said, guys always have your exit plan before you even buy a stock, I'm sure vast majority were stopped out, which is just part of trading.  But if one still has shares you now need to place your stop and exit plan and realize that also depends on what your plan is. A pure trader would have been out, or may still hold onto some but decide to exit if a bounce occurs soon.  I say this because the chart is broken for a while, it will need time to recover, so another trader who might be willing to give it the time it needs to base out and recover and is willing to stay in it for a while might use a wide stop. 

again the hope here is this ABC into demand if price can form a higher low, however the March/April lows are also pretty close and while price has bounced off demand (remember first test of demand is generally bought) it might ultimately fail and retest those April lows or undercut them - at this time you just don't know, we have to let if flesh out.  

for me I took my lumps on Friday, it bounced off demand and I managed to sell the bounce off Friday's lows, took my lumps and moved on.  For others still in, my comments above apply 

remember the baseball analogy, it's about your batting average and having a plan with defined risk.  Just like a baseball player you have a lot of strike outs, some walks etc, it's not about each at bat, it's about your long term average - these things happen, it's part of trading.  Just like striking out is a part of baseball, you don't freak out about a strike out if overall you are a good hitter, strikeouts are a part of the game, just like stopping out or getting a bad trade is part of the trading game

regarding Elliot Wave, what I've highlighted is a very simplistic by powerful an useful way to use it. With Elliot Wave it's easy to go down the rabbit hole and try to label all these crazy counts and micro counts etc and that gets overly complex and actually hinders trading. 

my method is to keep it very simple:  

1. In up trending environments look for 3-wave abc pullbacks as buying opportunities-  same for shorts on downtrends, short abc bounces.  coils can form instead and if they do they are 5 waves but overlapping) but most of the time you see abcs

2. most folks know what the traditional 5 wave impulse looks like.  Wave 4's can't overlap top of wave 1 in an uptrend or bottom of wave 1 in a downtrend, It's pretty obvious just looking at a chart when you are in an impulse.

coils have 5 waves.   and 5 waves up or down that are overlapping are corrective not impulsive 

also - true 5 waves always have MACD divergence, if no divergence most likely it's a wave 3 instead 

so when looking at a stock that has had a correction,  if all you see is a bunch of up and down waves overlapping each other, even if price has been stair stepping lower, that's clearly NOT an impulsive trending move down, it's ultimately corrective and bullish, not starting a major downtrend - so you know that it will eventually resolve up

simply viewing EW like this in a very simplistic way is good enough for most people to use it very effectively vs having to study all the dozens of wave counts and rules that can take months and years to really get good at - with this simplistic approach you can use it right away with your trading 

regarding some of these slow moving ETF's like DBA an PDBC - I have received messages like, Matt why would I waste money on things that move such small percentages, ties up too much money, I need stuff that moves.

I tell these people, not everything needs to be or should be high flying beta stocks/ETFs, Quantum stocks etc, that move 10% and 20% a day - yes nice to catch trends on those for sure. However a big part of trading is mental, and stuff like that that is highly volatile, has huge average true ranges, I cannot personally stomach buying big positions, because I can't handle the noise, like a pullback that is just noise can be a  lot of money - easy to stop out on loss. Whereas PDBC, DBA yes they move slowly like 1% to 0.5% in a day, but it also means I can hold a much larger percentage and not worry about it, let it work, not get emotional on noise fluctuations.  

Also good example, guys told me about that on PDBC. Well...buying it in late Dec or early Jan when I said the was the objective buy signal on that channel break - by mid April it was up 40%!!!  Those small incremental moves added up a lot over 4 months  - so yeah small daily moves, but up 40% in 4.5 months - that doesn't seem small at all, that's 2 good years of SPX growth. Like compound interest those incremental small daily moves add up over time

Commodities PDBC Weekly - Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF - Chart Linkbought in December, sold in late April looking to get back in sometime

Commodity - Agriculture DBA ST - Chart Link had bought back in a few days ago, added more yesterday

QQQ 15 View - Chart Linkamazing how well those well defined RSI trendline breaks work.

what I like about them is, that it is not a common technique used by most technicians. most are using RSI for overbought or oversold or divergences, and only draw trendlines on the price candles

however these RSI trendline breaks can give VERY objective signals

Bitcoin Coin Zoom out - Chart Link

_t INDU Dow b Weekly a - Chart Link

updated views - prices got pretty close to the 61.8% Fib on both, this morning price bounced perversely off demand, and then at the highs earlier pulled right back off supply - see how easy those supply/demand zones work. 

also I can draw uptrend lines on the RSI 14 to use as a possible sell signal in the future as well

SPY 15 min SPX g - SPDR S&P 500 ETF - Chart Link, 

QQQ 15 View - Chart Link

HUM - Humana, Inc. - Chart Linkcrazy how one could have ridden that like a surfer riding a super long wave

HUM - Humana, Inc. - Chart Link

DXYZ 60 min SpaceX - Destiny Tech100 Inc. - Chart Linkagain from an educational standpoint, the 3-wave ABC pullback was your buying opportunity.

in strong uptrends, you BUY 3-wave pullbacks.  Also notice after that first big ABC on the 60 min and subsequent bounce, you had a small abc pullback again!

DXYZ daily SpaceX - Destiny Tech100 Inc. - Chart Linkdaily

TDUP - ThredUp Inc. - Chart Linkremember I commented that I bought TDUP yesterday with stop at yestrday's low, nice pop today.  

again I bought it because it was very close to big support, which enabled me to place a very tight stop. 

that's what trading is about; identifying 'breakpoints' important support/resistance areas where you can take a trade with a tight stop and higher reward potential. It's not about having a crystal ball and knowing what's going to happen and being right all the time; it's about identifying those low risk entries

HUM - Humana, Inc. - Chart Link

HUM - Humana, Inc. - Chart LinkHUM keeps humming along.  I suggest moving stop up to where I show the new dotted line. Note target is that open gap

also from an educational standpoint note the swing stops.  So when one first bought this, your initial stop would have been placed at the low of that pattern. Then your swing stop would have been moved to the next higher low, and finally today I'd move it up a 3rd time 

XHB 2hr - SPDR S&P Homebuilders ETF - Chart Linkhere's an update on XHB, homebuilders ETF that I've been long, remember I pointed out that bullish symmetry break in late February

I'm showing this as an educational because this is a behavior I see sometimes on bullish symmetry breaks. One thing I've noticed is that if you get a slight symmetry break like you have here i.e. 5.7 point bounce vs the previous largest 5.2 bounce, that's only a slightly break, many times instead of a good higher low, you get almost a double bottom retest like you see here. Technically forms a very slight higher low.   

When you get a much stronger bullish symmetry break; for example let's set the bounce off the lows was 8 points instead of simply 5.7, then more than likely you would NOT get a double bottom, but a much higher higher low.

anyway I'm adding this to the educational channel for future reference.

otherwise XHB continues to look good, nice bottom there, looks higher over time still

Compare - SPX vs HYG 60 min - Chart Linkthe HYG gave a bullish divergence at the lows as it leads and it kept leading to the upside, which caused the SPX to play catch up

now short term there's a slight negative divergence with the slight lower high on HYG vs higher high on SPX

no changes....RSI oversold, RSI 40 longs holding, and hi mid lo show holding on MES

QE 3.2 and RSI oversold longs holding on SPY

longs doing fantastic!  clearly hi mid lo short on ES taking a hit, but MORE than offset from the open longs - systems are far more long than they are short. SPY has not shorts either.  

you also see why I still issue trades for all the 22 systems because once in a while you get one that takes some draw down or early entry or whatever, but other systems offset that and counteract it.  

While I like the idea of placing all the systems on one chart so that only one system can ever trigger (it's first come first serve) while that's far simpler to follow because you only ever have 1 system that can be active and only 3 entries total (makes the math easy) by odds once in a while you'll get the 'bugger' system that enters too early or exits too early or whatever, and you then miss the risk management and diversification the other systems will offer. 

The point of having 22 different mean reversion systems is that they are all doing different things, and it's part of the risk management because of the diversification.  We've seen that occur in real time with the systems lately when the RSI 40 went long way too early on MES futures (but the other systems went long later and at better prices to offset that). Now of course the RSI 40 is very profitable, even the first EARLY entry LOL.  And currently we have this 3rd entry short on MES futures taking heat, however we have two open long systems on MES futures that more than offset that. And of course two open longs on SPY

LOL yes and no - sometimes systems make people more emotional. 

and in particular mean reversion systems because of their nature of buying into market selloffs that feel completely unnatural and  scary to folks who's brain is telling them to do the opposite.

the KISS systems, while they can take similar draw downs or even higher ones at times, people seem to get less  emotional because of their nature, they are not buying into a downtrend and they have initial stops, so people tend not to get that emotional with them, even if they take a 5% or 10% drawdown, whereas when mean reversion systems take a similar drawdown people get very emotional and worried as shit

Some of you may have also noticed some changes on the trading community with new buttons for Educational,  Favorites, KISS, Matt's Macro V, I'll be designating posts to those areas over time.

I'm also going to add this to the educational section

anyway as I stated on Friday, in my observations over the years, OPEX Options Expiration on Friday's tends to be quite choppy most of the time. That said, on days when the market has a trend move (one direction) on Friday OPEX like it did on Friday with the market selling off all day in one trend.  Almost always when that happens you will get a decent bounce the last 5 or 10 min of the day that also lasts into the after hrs as all those options expire and contracts settle. We saw this on Friday obviously 

remember the cycle indicator is quite unique for a variety of reasons. 

1. Most indicators you guys use (included me) are all price based and derivatives of the same thing.  MA's, MACD, RSI, Stochastic, all basically derivatives of the same thing

2. The cycle indicator works on a totally different method.  It was also first designed for the audio industry back in the 1970's to measures signal to noise ratio.

3. It sort of works like an Elliot Wave indicator.  It identifies chop abc abc abc's very well, and trending conditions

here's some examples

BOIL 2hr nat gas - ProShares Ultra Bloomberg Natural Gas - Chart Link

this wedge was perfect here's why:  

1. had 5 clear waves, true wedge patterns have 5 waves

2. had MACD divergence, true 5 wave wedge patterns have MACD divergence, if no MACD divergence then most likely you are still in a wave 3 NOT a 5

3. breakaway gap out of the wedge - breakaway gaps are very bullish

that said a wedge like this I would always buy in the wedge vs waiting for a break because many times you will get a breakaway gap out of the pattern vs a clean break of the trendline where you might want to buy but can't