BART is a CMT and an expert a "advanced" pattern recognition used w/in the intermarket analysis discipline. He's also an accomplished Business Development Executive providing solutions to a myriad of business markets.
as you can see, Palladium is tracking down into our level ID’d above back in September. additionally, you can see that they track each other pretty nicely. it’s NOT exact but the general trend and flow is pretty much the same…
during this sell off in Palladium, the NASDAQ 100 has held up pretty nicely and we are approaching a level on the Palladium chart that represents the LARGEST corrective move in the past 15+ years. this measured move is key …
time to play IF and THEN …
IF we hit the level below on Palladium AND it holds THEN I would look to be a buyer of the NASDAQ 100. note, we have a LOT of thrust coming into this level so let it shuck and jive and look for a weekly signal reversal candle on palladium (in this case the HIGH of the candle that makes the low (the wick is included) on a weekly close above is a signal reversal candle or SRC)
note the thrust coming into this very important .786 retracement node. additionally, we have a 1.618 projection a little lower sitting right on top of .841 retracement. (1/1.1892 = .841 equal octave scale of music ratio) and we can throw in some polarity and bullish divergence so would expect some support or a pause.
that being said, I enjoy doing ratio analysis so here’s AMZN / BABA. the first graph below is back almost 4 years ago when I did the same relative strength look because, at the time (believe it or not) BABA was stronger that AMZN. don’t believe me? look at the ratio … it had been going down for a couple years as BABA climbed but then guess what, measured moves and retracements and a bunch of pattern stuff gave AMZN the support in the ratio and off it went and the rest is history. (note, did I mention – once – anything to do w/ sales, or revenue, or anything like that? nope …just numbers and patterns for me)
if seriously trying get long BABA I would watch for a daily or weekly SRC before entering. when I look at those relative strength ratio charts it looks like BABA is about to get smacked even harder so caution warranted … wait for an SRC.
below is our ratio .. if you remember my last post, we were talking about a monthly or weekly close BELOW the consolidation and the market would take off … it started but jumped back into the channel and has been climbing ever since.
what has happened in the market? some interesting selling … but is THE TOP IN?
honestly, have no idea nor do I care if it is or it isn’t. all we know is we now watch the top of the channel … if that gets attacked and we get a weekly/monthly close ABOVE then a health meltdown could occur.
for now -just in the middle of the channel folks. looks like it wants to go higher to hit the upper channel – that’s what its been doing – so why not? higher means some more volatility / selling but nothing to freak out about, yet.
so what do you do? here’s something easy … if your a bul or like buying then BUY the TOP of the channel and if your a bear and like to sell then SELL at the bottom of the channel.
it’s going to be very interesting. hit me w/ any questions …
we last blogged about the “1.618 level” and the fact that we are in the continuation phase of completing a LOT of 5’s or we completed it at the AB=CD.
that is one heck of a bearish “wick” on that candle folks … but it’s also a LOT of thrust into the AB=CD so WAIT but if your long Transports might want to start paying attention to them …
and then I think ..
“now that I see a MAJOR pattern completing (yes folks they do fail – please remember that) I think of what could be the “news cause” of actually really thumping the transports that, after a little sell off, have weathered the pandemic actually pretty swell ….”
when we have .618/.786 retracement levels on top of each other like below, it is good probability of support or a nice bounce … I’m not ready to call for a change in trend and this puppy goes from 10 to 30 or 40 but a quick options play in/around 10 for a bounce into 20 (?) seems reasonable …
the game plan/strategy is to BUY the first PATTERN in a “new” trend and if it works then probability is that the trend change is real …
Energy, Ags, etc. are exploding of late and GLOBAL shortages that are becoming apparent pretty much every day are REAL. so, if one thinks (trade what you see not what you think) that Nat Gas prices are due to continue to rise then we have UNG that will give you exposure.
if we break thru the low at 13 then I would consider this a failed pattern but we have some MAJOR support coming in/around 15 for the BUY to get long nat gas and, perhaps, hold this position for a LONG time …
it’s all probability folks …
below, you will see a MONTHLY on UNG since inception. wanted to post this chart so you could see why I wrote the above .. have we broken out in Nat Gas? have we begun a new bull trend? full disclosure, I’m long UNG down in the single digits and will be looking to ADD to my position at this pattern completing – if it ever does.
take note of the volume picking up and the fact that the RSI is at it’s highest level .. the key here, in the coming ongoing pullback, is where the RSI finds support … if we find support on the BULL ZONE (around 40ish) then we can start giving our change in trend some more probability … but, for now, we are speculating that a very investable low is in place .. don’t throw the farm at this one .. nibble at it … as we will see the breakout occur and there will be more time to get LONG if the “low in place” thesis is correct.
additionally, the “length of the base equals the price target potential is also nice here .. we’ve been basing for 6 years and, if you want to split hairs probably 10 years once that low was put in place 2012. bottom line, if this things goes higher, it’s going to go ….
another way to check trend is via long term LOG charts .. LOG’s help you understand rates of change and are very good at giving first hints of big changes in trends or inflections …in looking at this on the long term log scale, certainly appears to have broken the long term log trend line …
last, when you are building a position, it’s wise to see how “strong” or “weak” that security is compared to high fast flyers .. in this case, for no other reason than randomness, I chose UNG/NFLX.
yup, Natural Gas has out performed (on a relative strength basis) NFLX for all of 2020
as you can see, the NFLX AB=CD failed by, roughly, 4% and w/ this price point one would have some pretty big exposure if playing single shares ….. I considered that PATTERN failed.
that being said, it was a PRETTY HUGE pattern (hence I called it chart of the year) so I went back and looked at the “form and proportion” of this move up into the high and I saw on a daily that we had some more “count” to go and a projection smacked us right into the high (for now, it’s all probability)I realized my ego got in the way here, putting something out like “chart of the year” … I can’t stand when NFL or NBA players make a big deal out of play … why would I fall into that trap? my apologies.
that being said, this is a pretty big target zone so I do think we need to take this top seriously. however, a REAL change in trend would be a MONTHLY CLOSE BELOW 600 as shown below on this DAILY NFLX chart.
in order to fully understand the SRC or Signal Reversal Candle please pay attention to the chart below:
as you can see above, the SRC is a MONTHLY close below 595. a REALLY conservative play … however, you could do an intraday 60 minute SRC or daily, weekly, etc. it all depends on your risk tolerance.