6 weeks later, still up against the PATTERN levels. I do think this will be resolving, soon. Which way – not even going to try and guess!
Last post on the Markets: https://bartscharts.com/2024/12/17/markets-december-17-2024/
6 weeks later …
The big one to watch is the PATTERN FAILURE on the European Banks.
Banks/Financials are still key.
Patterns appearing all over the place …the only ones that count are the BANKS/FINANCIALS. They will lead us up and lead us down … bank on it … (get that?)
Let’s make this simple.
I’m watching a few things:
Last – might want to go load up on some coffee. Coffee futures are rolling thru a long term projection.
Bring on the Charts!
forgot to label, the chart below is Copper Futures
Here or, perhaps, a little higher we are hitting major resistance on the NASDAQ.
I’ve put a ‘rudimentary’ count together on the NASDAQ and from a price perspective, it does not violate any rules of Elliott BUT notice how LONG (time) wave 1 and wave 3 were …?
Might be a hard argument to win that this is THE 5th wave …maybe 1 of 5 but I do think we have some resistance here or a little higher.
Interestingly enough, the all time high, so far, on the NASDAQ was exactly equal to 1.618 * wave 1.
Big confluence zone of support for the NASDAQ.
My friend/mentor Larry shot an email over describing the current state of the NASDAQ composite.
Friday’s move represented only the 3rd time the Nazzie was down more than a two standard deviation – in one day. The last time happened – October 1987.
I DO NOT SEE ANY SIGNS OF A CRASH COMING BUT … an interesting factoid, one would think.
We have VERY important support coming in lower in/around 13750-14000.
Not enough of a pullback to do a good projection so … just watch the measured move level (read arrow) and then the confluence levels shown below.
Again, I think we go down into mid-May.
The NYSE Index HIT the square out at 18, 059 and reacted very very minimally (which surprised me to be honest) and is walking up the wall of worry. Today that level is at 18,070.
As you can see above, we have not CLOSED ABOVE the 1:1 trend line from the all time low and I suspect that it will continue to provide MAJOR resistance BUT as it happened last week, it can keep squaring itself out until it reaches the ‘final’ square out. As long as we do not get a close above (monthly) the 1:1 trend line this market remains vulnerable (very ?) to a pullback that could last, at a minimum, a couple months.
Here’s the DJIA approaching or hit an area of MAJOR resistance.
Same story w/ the S&P 500 and the NASDAQ:
The Russell 2000 is VERY weak compared to the other indices:
On prior posts we have focused on the Banks/Financials … the XLF has outperformed and made new highs … the overall market has followed. We are VERY close to a BIG ABCD completing on the XLF. If you remember the post on the Banks/Financials a few months ago, the XLF pattern failed and the market kept going higher.
If we take a look at the Banking index (NASDAQ) you will see it has been lagging badly compared to the overall general market. REAL leadership in the Banks/Financials would have this MUCH higher.
Sure looks like a zig-zag correction and 1.68AB=CD was hit Friday.
Where are you Mr. KRE?
The VIX is/has been flirting w/ going single digits but, it’s been LOW for a very very long time. There is NO FEAR in the market right now.
The sentiment/ fear-greed/bullishness is at MAX levels … NOBODY is bearish.
I was on my good friend Larry’s show and we were discussing he unrelenting advance present. He mentioned, in some weekend mail traffic that the last week on WED-THS there was the HUGE rallly of over 1o0 handles in the S&P500 while awaiting the FED’s decision/action. On both of those days the cumlative net open interest dropped.
We need to also pay attention to the companies that are, basically, controlling the market as custodians. Vanguard, State Street and Blackrock control roughly 70% of all trading going on … One would think that these would be at new highs …like everyone else?
Larry showed this over the weekend:
when we look at the shorter term cycles … we can see this one going on w/ the S&P500. Notice the harmony w/ the lunar eclipse and the moons synodic cycle:
A non-correlated, but a goody, at looking for both bullish and bearish inflections in the market – ratio analysis of XLP/NYA is VERY close to MAJOR support which, in the past, has been “bearish” for stocks. Again, it’s a “institutional gauge” of risk/risk off.
When it’s risky – the smart guys like Tim but toilet paper …the XLP does WORSE (from a relative strength standpoint) than the overall market and vice versa.
The target appearing on the XLP/NYA is the LARGEST MEASURED MOVE correction in the ratio since the inception of the XLP. PAY ATTENTION TO THIS LEVEL and the .618 retracement (from the all time low) a little lower.
There are MANY stocks that are manically parabolic … stocks like LLY will crumble and fall like a stone. As demonstrated before, the parabolic moves, from a pure subconscious level, have to balance and that massive move up will be followed by a big correction. It happens, every time …
NVDA will do the same … yes, I believe NVDA is going higher BUT I think we need a good ole’ corrective move to cool everything down.
Here’s LLY parabolic:
Here is LLY in MONTHLY LOG scale .. bumping right into the upper channel:
The market is overextended. Large, monthly targets are being hit.
If a perennial bull – think of taking profit or have some sort of “loss” stop in mind. Some are calling for a MASSIVE TOP and others are saying this bull market continues for years.
I try, the best I can, to just look for patterns.
ACROSS THE BOARD SELL PATTERNS HAVE AND ARE APPEARING …
IF they work, THEN – at a minimum – expect a good 6-8 week “pullback” that must be bought. LET’S JUST WAIT FOR THE FIRST BUY PATTERN TO APPEAR AND LET IT RIP.
IF the fail, THEN – this market could explode higher … into a parabolic run up that will put the 2000’s to shame.
MANAGE THE RISK … that’s all we can do.
In the chart above, one can see the “blue measured moves” have been important price moves and, from a percentage perspective, EVERY move UP in the ratio has met resistance after the “blue measured move” has completed.
Remember, this is LOG scale so 1/ the measured moves are percentage moves and 2/ the corrections might not appear that large on a log scale (percentage) basis, but they are significant.
For example, the “blue measured move” from the all time low caused a 21% correction in the ratio once it completed … so, these blue measured moves completing are something we should put on our radar.
One of the main reasons we are paying attention to the “blue measured move” is because that was the move UP into the all time high and it works very nicely w/ the flow/harmony of this ratio analysis chart.
You will not see this equality unless you 1/ go to long term charts and 2/ take a peak at LOG scale on the larger time frame charts.
This ratio (XLK/XLP) can be used as a barometer for “risk on” and “risk off.” The thesis being IF risk is on THEN the high flying NASDAQ 100 zooms higher (as in now) and IF risk is off THEN institutions/large retail roll into “staples” for the conservative tub of toothpaste, toilet paper, etc. AKA – the staples.
Right now we have STRONG VOLUMINOUS candles so risk is on … I’ve captured some very important levels a little higher that could stop this puppy in it’s tracks.
Additionally, the EWT count I have doesn’t break any rules so 1,23,4,5 and then we roll over? No pride in authorship of my “EWT count” as that is what stuck out to me. I can see “other” bullish alternative counts BUT on all of them this is a 5th wave so a correction in the ratio, which in turn has put pressure on the NDX 100 in the past, should work again as resistance for the NDX..
One last, take note of the above chart. These “sentiment” ratio analysis tools are excellent timing tools for the overall healthiness of the market. The PATTERNS work on them because the instruments being compared (ETF’s XLK and XLP) are, themselves, liquid.
In the environment we are in right now, I am going to WAIT for a signal reversal candle on a weekly basis to short this market. Parabolic arcs are appearing everywhere … over the past weekend I’ve come up w/ some pretty powerful levels based on a host of geometry, music, etc. and some of, after 10K’s of hours on the charts, the more “esoteric” (yet most profound implications for life on this planet) methods to simply manage risk.
DO NOT BE SURPRISED IF THESE LEVELS GET SMOKED AND THE TRAIN KEEPS ROLLING …IT’S JUST PROBABILITY FOLKS.
For those of you who have been following me for a while, when I start posting like crazy, it’s usually meant something is coming. Could be monstrous bullish …! WHO KNOWS.
The point being … when PATTERNS appear on the weekly/monthly across the board it’s a signal that “cycles are converging” because, ultimately, that is what the patterns are …they are a confluence of PRICE and TIME that will cause an inflection in the market. The LARGER TIME FRAME the PATTERN the LONGER THE TIME CYCLE HENCE THEIR IMPORTANCE …
