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The Risk of a St. Valentine's Day Massacre


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#1 Douglas

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Posted 13 February 2020 - 02:44 AM

Today the stock market entered my system's latest two day risk window for a turn.  The SPOOS are forming a very distinct steeply rising triangle in the hourly chart whose bottom trend line is being tested as I type.  A break of that line projects back down to 3220.  As I've said innumerable times, my system attempts to identify windows of risk.  Today and tomorrow the market is moving through quite a big and nasty one IF the days are sans tweets and FED pumping.

 

Regards,

Douglas


Edited by Douglas, 13 February 2020 - 02:46 AM.


#2 LMF

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Posted 13 February 2020 - 04:22 PM

TQQQ is now getting something of an expanding wedge on the 5min chart after the down open this morning. It took all of 122 minutes today to set new ATHs after the open. The wedge should be a continuation move higher and then I think some profit taking will ensue on Friday into the close. They didnt cover all of the gap below on the 60 min from yesterday. Still 6 cents left on it. Overall its still a mile from the 5 min MA cross sell signal I would use for a trading top......the previous one was on Jan 27 10am. Currently, the daily chart MACD is not even diverging yet with price...... usually what happens at a good price high.

I think the bears are trying to be like pests, starting 15 min down waves when ever it feels good. Not when it looks right on the charts. We will see how that strategy turns out.....

Edited by LMF, 13 February 2020 - 04:27 PM.


#3 Douglas

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Posted 13 February 2020 - 06:06 PM

LMF, your TQQQ also appears to be in a upward sloping contracting triangle on an hourly chart from Tuesday of this week.  It is currently heading down to test the lower trend line. 

 

The hourly rising wedge that I noted in the S&P futures using the Jan 31 low didn't work out very well today.  The future broke through the bottom of the triangle just after I posted my note, went down as expected but then rose back to break back above the bottom completely disrespecting the pattern making a new high. I've abandoned the Jan 31 low and moved to the 9th and 10th lows and today's low for the new bottom of the rising triangle.  The risk window is still open tomorrow, so the bearish pattern may yet redeem itself but I have to admit it's not looking good.  Bears have largely been made into stylish rugs next to the fireplace in the buy-the-dip bulls' mountain hunting lodges.  

 

Regards,

Douglas



#4 LMF

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Posted 13 February 2020 - 07:32 PM

I think its difficult to see a huge amount of downside risk when the Fed balance sheet keeps rising on schedule, and their treasury ownership level is close to hitting new record highs. The balance sheet now is about 91.7 percent of the max level before they did the QT. 



#5 Douglas

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Posted 14 February 2020 - 01:33 AM

The FED and other CB's have effectively kited this market for quite some time.  Interest rates are a joke.  Look at what happened in the repo market a few months ago when the FED pump wasn't turned on quickly enough and banks were forced to actually go out into the market for overnight money.  The rates exploded upward.  Europe and Japan have insane negative rates.  At some point, who knows when, maybe months, maybe years, people will realize how badly broken the system is and it will freeze up, but you can't trade on this basis because markets can remain irrational much longer than any short can remain solvent.  One potential sign that the seventh seal has been broken may be a parabolic up move signalling complete capitulation by the shorts.

 

I fully expect that the down turns that my system is currently identifying will be very brief and buying opportunities, not places to short.  I can't remember the last short position that I took.  Until I see signs that the system rot has been correctly diagnosed, I'm just swinging from cash to long crashing the buy-the-dippers' party.  

 

Regards,

Douglas


Edited by Douglas, 14 February 2020 - 01:35 AM.


#6 LMF

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Posted 14 February 2020 - 08:35 AM

Every morning I sit down at my computer......its like this is the biggest baddest casino there ever will be. Vegas is like a kindergarten place compared to it.

#7 LMF

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Posted 14 February 2020 - 12:37 PM

Ok I can finally see a good triangle on the TQQQ 5 min. Should be an ending move up.....

#8 LMF

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Posted 14 February 2020 - 02:32 PM

What a joke......forget the triangle, back to a big ABC on the 60min.