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Who's in charge?


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#1 steadyquest

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Posted 03 May 2020 - 06:33 PM

The oft-spoken warning "don't fight the fed" implying the fed controls equity market pricing has become so much irony as of late.  Who's really leading whom?  Who made the first move in Dec. '18 and again in March - the fed or the markets?  A casual observer might reasonably conclude that the markets are in charge.  Their smallest display of dissatisfaction results in the fed fulfilling their every desire.  Destroy the competition of treasury yield?  No problem.  Bail the zombies?  Of course.  Backstop the entire freakin crooked system?  Why not.
It is easy to make the bear case.  Everyone seems to be doing it - and therein lies the problem.  Elevated fear and bearishness builds a solid wall of worry for the courageous (or foolish?) to climb.  And with the election looming, neither party wants to catch blame for destroying the economy - deficit be da#%ed.  "Relief" funding will continue to be printed - or at least promised.  Wrong as it may be, stock market strength is perceived by many as equating to economic strength.  And there are still a few 409K holders (mostly tail-end boomers?) whose hopes are tied to the markets.  Who knows, a true wealth effect in nominal terms might result from markets rallying and never looking back.
If the Monday plunge that some are expecting ends as a failed breakdown, the snapback rally could be fierce, with higher prices bringing more bearishness bringing still higher prices - continuing until bears relent or go broke - whichever comes first.  Of course strong defensive selling, a phase two of C19, a black swan or lousy fed follow-through could always skewer the bulls.
Below is a rough linear hourly chart of tqqq including a minor count guess.  Price so far has fallen short of the 3rd target level.  A breach of the 2nd target (but not the 1st) prior to resuming the trend would kick off a major count having a potential final target of ~182 [((60.89 - 40.67) x 7) + 40.67].  The following chart suggests the same approximate level as a possibility.  Should one sell in May July and walk away?  The third chart is an hourly log plot of tqqq showing the low volume of Friday afternoon's selling.
Of course none of this post is intended as trading advice nor prediction of future market direction.  My only ff at present is that price might move strongly one way or the other in the near term.  The current level looks to be somewhat significant.

JMHO.

 

TQQQ-1.png

 

TQQQ-2.png

 

TQQQ-3.png



#2 LMF

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Posted 03 May 2020 - 07:12 PM

Its the blue line on the daily QQQ chart I posted earlier today. Every trader with a pulse knows that line like the back of his hand. Go from there on the 1 minute TQQQ chart.

#3 steadyquest

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Posted 03 May 2020 - 08:26 PM

I misspoke above - which is OK since no one cares or is paying attention. It should read "A breach of the 1st target prior to reaching the 3rd would kick off a major count having a potential final target of ~182 [((60.89 - 40.67) x 7) + 40.67]." Sorry 'bout that.

#4 LMF

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Posted 03 May 2020 - 11:49 PM

The sooner the Fed ramps it up to a cool $1 trillion a day the better. Theyre gonna learn it the hard way like they always do. Get ridden hard and put away wet.

Edited by LMF, 03 May 2020 - 11:50 PM.


#5 flyers&divers

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Posted 04 May 2020 - 07:44 AM

The way I look at it is that on larger time frames economics are in charge, changes in expectations and repricing of goods move prices to some level where there is agreement until an other catalyst

triggers an other move to yet an other level.

I would agree with someone if they said  that reading that properly is not that easy, but some cases it is quite clear.

 

In day to day trading and trading on shorter time frames emotions are in charge.

All of us hotheaded short term traders should have a partner or advisor reminding us of the larger picture:).

A disciplined trader able to discern larger shifts and time the shorter time frames can be forever successful.

 

Best,

F&D

 

 

steadyquest, thanks for your wonderful postings


Edited by flyers&divers, 04 May 2020 - 07:47 AM.

"Successful trading is more about Sun Tzu then Elliott." F&D

#6 redfoliage2

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Posted 04 May 2020 - 09:06 AM

The Fed owns the market, but in short term it allows fluctuations within certain limit.  So longer term bears always lose.  Another thing is the market leads the economy in a recovery, believe or not. 


Edited by redfoliage2, 04 May 2020 - 09:14 AM.


#7 K Wave

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Posted 04 May 2020 - 09:24 AM

Unless they can get the BIG 5 to roll over, bull still firmly in charge.

 

Thus far, only the minorest of pullbacks there...

 

Worth watching to see if that starts to change soon...because if it did, then bears might actually have something to say...


Edited by K Wave, 04 May 2020 - 09:25 AM.

The strength of Government lies in the people's ignorance, and the Government knows this, and will therefore always oppose true enlightenment. - Leo Tolstoy

 

 


#8 redfoliage2

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Posted 04 May 2020 - 09:36 AM

In short term the bears can win as the market needs to pullback and consolidate from time to time .................


Edited by redfoliage2, 04 May 2020 - 09:39 AM.


#9 LMF

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Posted 04 May 2020 - 09:51 AM

This was a monster low whether anyone believes it or not. UVXY hit 5.57x the 200 day MA. And TVIX even higher at 7.76x. Unheard of levels that may not be exceeded till who knows when......

#10 CLK

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Posted 04 May 2020 - 09:53 AM

This was most likely just due to the FOMC meeting, I think the market has sold off around those for the last year or more, and Powell saying they weren't concerned with levels, only that the market works, didn't help either.


Edited by CLK, 04 May 2020 - 09:55 AM.