The SPX triangle broke to the downside following the Hawkish
Comments from Powell - a zig zag would target 4269 (C=A) and there
is an open gap just below around 4240 (the breakaway gap from
June). If the upside Channel is cleanly broken and Wave 4
exceeds 50% Fib that would favor the Bears (July intermediate Top).
The bulls will need to hold this important area and begin an
impulse back to the upside for Wave 5 to unfold.
The economic (weakening data points with sticky rates will have
to be improved) and liquidity (less debt issuances and QT remaining
in place unless altered) backdrop for the intermediate term
may pose a challenge for the bulls. The onus is now clearly
on the bulls.
Market Comments: Last spring we made a predication that the
market would likely hold up and rally throughout the summer into
late July, then experience a correction in Aug/Sep (per
seasonality) and that's exactly what has unfolded.
Currently on the markets as you know
we were focused on coil patterns on the indexes and those all broke
to the downside last week (did any of you act on those?). The
options we were discussing were: 1. either a shallower wave 4
consolidation (least favored), 2. a standard 4th wave zig zag
deeper pullback to the low 4300's to mid 4200's (which I have been
favoring), or 3. a major top was put into place in late July. Given
the fundamental backdrop, the unfathomable amount of debt, Interest
rates at 5.5% now, 8% mortgage rates, also the market is not cheap
evaluations are very high, and this has been the narrowest rally
we've seen in our lifetimes - it's passible that we could have put
in a major top in July and not push back to new highs.
For a 4th wave scenario 'Bulls' need
to keep the SPX above the point of recognition gap from early June
at 4220), below that price would seriously start the favor that the
highs are in and the next major rally will ultimately form a
lower high.
With all that said - make sure you
have an exit strategy that fits your risk tolerance and trading
style. If that's the daily KISS systems, the major indexes (SPY,
QQQ etc have been flat as their STS smart trailing stops were all
hit). Also the big cap tech names that dominate the market (AAPL,
GOOGL, AMZN, NVDA, MSFT, META, TSLA) - the KISS systems are also
flat. The weekly SPX KISS has a wide STS stop at 4250 if that's
what you are following. The point is, make sure you have some sort
of exit strategy and plan in place.
The market is quite oversold here in
the short-term and could bounce from here, but oversold is not a
buy signal, so anything can happen. The market ultimately is going
to need some sort of catalyst to put in a good bottom, such as the
US Dollar and the 10-Year Yield coming in.
Mean reversion systems: While the KISS Trend Following
systems are flat, Two of the sub systems out of 22 systems have 1st
and 2nd entries on SPY and ES (Trend/Pullback and QE BTS). That's
the natural of these mean reversion systems, they scale into
pullbacks and are early at times. Should the market go lower we may
see 3rd entries for these and possibly other sub systems start to
trigger.
Key Events for This Week:
1.Tuesday: Various housing data (FHFA housing price index,
Case-Shiller home price index, new home sales, consumer confidence
2. Wednesday: Durable Orders/Goods (
POWELL SPEAKS at 4 pm EST the market close!!!)
3. Thursday: GDP 3rd Estimate, Initial Jobless Claims,
Pending Home Sales, Natural Gas Inventories
4. Friday: Adv Goods, Inventories, Personal Spending, PCE
prices, Chicago PMI
SPX Daily
Posted by steve on 23rd of Sep 2023 at 03:08 pm
$SPX - Chart Link
$SPX - Chart Link
$SPX - Chart Link
$SPX - Chart Link
The SPX triangle broke to the downside following the Hawkish Comments from Powell - a zig zag would target 4269 (C=A) and there is an open gap just below around 4240 (the breakaway gap from June). If the upside Channel is cleanly broken and Wave 4 exceeds 50% Fib that would favor the Bears (July intermediate Top). The bulls will need to hold this important area and begin an impulse back to the upside for Wave 5 to unfold.
The economic (weakening data points with sticky rates will have to be improved) and liquidity (less debt issuances and QT remaining in place unless altered) backdrop for the intermediate term may pose a challenge for the bulls. The onus is now clearly on the bulls.
my writeup for the weekend Market
Posted by matt on 24th of Sep 2023 at 02:02 pm
my writeup for the weekend
Market Comments: Last spring we made a predication that the market would likely hold up and rally throughout the summer into late July, then experience a correction in Aug/Sep (per seasonality) and that's exactly what has unfolded.
Currently on the markets as you know we were focused on coil patterns on the indexes and those all broke to the downside last week (did any of you act on those?). The options we were discussing were: 1. either a shallower wave 4 consolidation (least favored), 2. a standard 4th wave zig zag deeper pullback to the low 4300's to mid 4200's (which I have been favoring), or 3. a major top was put into place in late July. Given the fundamental backdrop, the unfathomable amount of debt, Interest rates at 5.5% now, 8% mortgage rates, also the market is not cheap evaluations are very high, and this has been the narrowest rally we've seen in our lifetimes - it's passible that we could have put in a major top in July and not push back to new highs.
For a 4th wave scenario 'Bulls' need to keep the SPX above the point of recognition gap from early June at 4220), below that price would seriously start the favor that the highs are in and the next major rally will ultimately form a lower high.
With all that said - make sure you have an exit strategy that fits your risk tolerance and trading style. If that's the daily KISS systems, the major indexes (SPY, QQQ etc have been flat as their STS smart trailing stops were all hit). Also the big cap tech names that dominate the market (AAPL, GOOGL, AMZN, NVDA, MSFT, META, TSLA) - the KISS systems are also flat. The weekly SPX KISS has a wide STS stop at 4250 if that's what you are following. The point is, make sure you have some sort of exit strategy and plan in place.
The market is quite oversold here in the short-term and could bounce from here, but oversold is not a buy signal, so anything can happen. The market ultimately is going to need some sort of catalyst to put in a good bottom, such as the US Dollar and the 10-Year Yield coming in.
Mean reversion systems: While the KISS Trend Following systems are flat, Two of the sub systems out of 22 systems have 1st and 2nd entries on SPY and ES (Trend/Pullback and QE BTS). That's the natural of these mean reversion systems, they scale into pullbacks and are early at times. Should the market go lower we may see 3rd entries for these and possibly other sub systems start to trigger.
Key Events for This Week:
1.Tuesday: Various housing data (FHFA housing price index, Case-Shiller home price index, new home sales, consumer confidence
2. Wednesday: Durable Orders/Goods ( POWELL SPEAKS at 4 pm EST the market close!!! )
3. Thursday: GDP 3rd Estimate, Initial Jobless Claims, Pending Home Sales, Natural Gas Inventories
4. Friday: Adv Goods, Inventories, Personal Spending, PCE prices, Chicago PMI
See the weekend newsletter just
Posted by steve101 on 24th of Sep 2023 at 03:00 pm
See the weekend newsletter just posted but its really the Sept 20th, newsletter
The weekend newsletter is not
Posted by matt on 24th of Sep 2023 at 03:03 pm
The weekend newsletter is not yet out, I have not recorded yet
Steve thanks for the great
Posted by amcap on 24th of Sep 2023 at 09:41 am
Steve thanks for the great charts, you guys do an amazing analysts.
Thanks amcap...Matt and I conversed
Posted by steve on 24th of Sep 2023 at 05:31 pm
Thanks amcap...Matt and I conversed at length this weekend . Please read his poinient summary below.