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 …