254 replies to this topic

[Waver]

I understand your logic and makes sense.
All of the LQ coming into play, why is it flat?
The selling to offset it must be Huge.
Agreed, plausible thought process.

That being said

What I see is breadth momentum is relentlessly strong, even after being near record levels. Buying in the background continues.
The ST EMAs are now getting in order and moving up strongly.
Market about to overlap with the initial move down (wave 1 in EW Terms).
Looks like a bullish wedge building over the last few days.
Youd think if we we were in a bear market, the bear would have taken charge by now as opposed to having such a high level consolidation.

I understand your thought process and it is logical to think that way based on the price flatness. But the market is really below Major resistance as well. Almost an entire year of trading is Right above the market right here.

I think of it more of a bullish consolidation. The background of technicals matches that of a bullish consolidation.

I guess we will find out the outcome soon enough.

[EntropyModel]

Yep Waver I hear you - I was just kinda of thinking aloud about those scenario's.

 

As said, when LQ is very high, I tend to shy away from 'prediction' i.e. looking out too far from what is right now.

 

Market is hard to predict better than about 70:30 at best of times, right now, experience has shown me when LQ is high, and it

results in unique, historic moves, its even less predictable. Therefore, I shorten my trading timeframe to scalp mode, and really not

touch much here until things get clearer - as trader, there is no requirement to trade all the time, or predict everything, I prefer

to have an edge. So, right now i'm waiting patiently for a good setup.

 

As regards breadth - as said, LQ effects all those internals, its no coicincide were getting historic reading off that historic LQ injection - LQ is the cause, and

internals the effect.  Can history tell us anything?  if I match similar LQ, and similar deep low in NYMO say <-80 to +80 then I see about 4 examples since 2007,

and ALL four led to lower lows! ...simple to look and see, and that Swenlin chart I posted shows same idea. 

 

Now, but CONTEXT is everything in backtest. I see data where people back test to totally out of context periods, which is illogical.  For example, do we believe  the NYMO acts the same in a early stage bear to mid state bull? So the bull/bear position is important context, and is the LQ  ( which I dont' have pre 2007 on hourly, so, I wont' backtest before that).

 

There's no holy grail - no simple rule regard NYMO, summations, elliot wave or anything ... if there we''d all turn $1000 into millions very easily, but that's rare for a reason. So given that, and observing that Context of high LQ makes internals less reliable as predictors ..i'm on the sidelines awaiting more information as reagrd the longer term here.

 

Now, i've tried to build a system that uses information/indicators less effected by LQ - to try to avoid that issue, and that system is telling me were are high odds close in

time ( within 1-5 sessions ) of a swing high of some degree...likely below 2650...but, that assumes no new big LQ pulse ( because that's never happened, but it could).

I certainly would not front run a turn down here, and if I had to bet on it, I would be long ...but since I don't, i'm not :-) ..and prefer as said to trade the intraday or not at all

until the LQ calms down and my ST signals show higher predictability.

 

That said, putting trading aside, its fun to talk about what is likely to happen - I can speculate on that, as I did, and those are likely scenario's I see.

Edited by Entropy3.0, 12 January 2019 - 11:12 PM.

[kaiser soze]

Interesting discussion. I'll say this:  An Active Market does not care about the dumb traders whose knowledge of fundamentals is sketchy and who depend mostly on the glaringly obvious, almost cliched technicals.  This is because it can and will get their money any time.

 

In retrospect, September was a Passive Market - time of bullish consensus, long term investors were hardly even watching the market and complacency as measured by many measures, reigned supreme.  This was a great time for technically adept traders and investors with strong knowledge of the peak profits to go short the market.  After October 11, the crazy intraday volatility made things challenging again for everyone.

 

Mid-to-Late Decembers are usually boring, low volume affairs.  But with volatility high in October and November, December is when the algos chose to launch an epic bear raid while maximizing the element of surprise ( I still don't buy the tax loss selling and hedge fund liquidation arguments - these processes might have resulted after the fact but are unlikely to have initiated the bear raid). 

 

Now, ST traders as well as MT and LT investors have been jolted into consciousness.  At highly watched junctures such as this, the market always tries to hurt the traders/investors with strong knowledge of the economic fundamentals and who are technically very adept.  

 

I guess we should ask ourselves - what is the dumbest thing to do right now, technically and fundamentally ?  And that will probably be the right thing to do.

[EntropyModel]

Yep Kaiser - this is what I mean by 'think like the criminals' ...this is a zero sum game for retail against those who can move markets.

[EntropyModel]

Well I see an important new development on my system here re: LQ.

 

The historic injection looks to be over - its not plunging, but its slowly rolling over but the St indicators are not acting normally, which

indicates this is a 'forced draining' i.e. the PTB have it appears decided they have achieved their aims - whatever they were we can only guess

at ( hedge fund blow up, FED taking heat etc) ...

 

I have us now finally in a 'neutral' LQ market - we'll see if it goes to a down pulse, or stays here. 

 

So, now the market is trading again without the training wheels ..and we'll see what develops. 

 

St I see a clear 'abcde' - so either we're going to gap/run to 2640-2650 then reverse down ...or just drop from around today's level tomorrow.

It looks to me this pattern will play out into tue AM ..at most wed.

 

My system is also triggered for swing sell - just need a price confirmation ...which is a drop under 2550.

 

btm line - St can go either way as said, but i'm now looking for a swing high/reversal here, at most 2650'ish unless something changes. 

Edited by Entropy3.0, 14 January 2019 - 02:57 PM.

[EntropyModel]

Here's the ST 'abcde' - it favours upward resolution if we hold 2578 into the close,but, I wouldn't gamble on it...i'm

waiting to see which way it gaps tomorrow AM ..especially as OPEX fri which is x-games time!

( below 2570...odds favor down, and therefore break of swing KP 2550)

 

https://www.screencast.com/t/pXV1nQ9I

Edited by Entropy3.0, 14 January 2019 - 03:47 PM.

[kaiser soze]

Hi Entropy,

 

I see something very similar.  As of the close on Jan 14, the rally is either done or close to being done in TIME, but not necessarily in PRICE. 

 

Two Scenarios: 

(1) We start going down with a Big Down Day tomorrow

 

(2) We go up big tomorrow and create multiple negative divergences, and then top out Wednesday morning, followed by a big Down day on Thursday.  

 

My charts strongly favor (2); However, (1) is also possible due to the negativity associated with the government shutdown.  

[EntropyModel]

Kaiser ...thx for the update.

 

I've just got the EOD signals - and have to say, the model off the daily is putting high odds now the high (for now) is in. Particularly on the Comp.

I still want to see the open tomorrow using those pivots I gave - i'll be looking for quick day trade either direction - but , I am now leaning

quite heavily bearish bias here now - looks to me the window is closing for bulls to take this higher as internals are now following the LQ.

( assuming no new ST LQ injection which is unlikely as said).

 

It's kinda of surprising to me, I really thought we'd get a 'cherry on top' with a gap/spike to 2620 minimum, 2650 high odds ..but I trust

the signals or it's just a guessing game.  So, of the setups now,  if tomorrow doesn't gap up and run, i'm definitely looking for us

to break toward test of 2550  key pivot for hourly swing/maybe bounce, then lower.

 

However, as it stands now, it doesn't look right to go into a full retest, I favor another runup and this wd just be a 'corrective swing down',

unless I see a LQ down pulse.

 

btm line - tonight futures might give big clue - tomorrow cash open hopefully will ..but tomorrow looks like decision day to me, and bulls last chance

for cherry on top.( bkx & GS interestingly look like 5 minor up completing today/ish )

 

* I'm seeing alot of  rhyming with feb/march - marked in light blue.

https://www.screencast.com/t/3hKkHHMx

Edited by Entropy3.0, 14 January 2019 - 06:40 PM.

[AK2]

Thanks Kaiser & entropy.  We wavers call this a fourth wave conundrum.  Many alternatives, an inflection point.  The only way to know is when the waves prove themselves.

 

I also think the top might be in from 01/11/19, and I agree with your supports and resistances.  If it turns down, could be a big drop

 

Flip a coin...

Edited by AK2, 14 January 2019 - 07:26 PM.

[kaiser soze]

My favored scenario of a major rally has panned out.  However, its a truly big day only in the Nasdaq complex and even there, semiconductors appear to be lagging somewhat. 

 

Frankly, its not as bad as a coin flip.  Entropy correctly highlighted the importance of the Gap.  Once the Gap Up remained into market open, it was clear the market was headed significantly higher, especially considering they tried to take it down yesterday on a Gap Down and failed.