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Risk Windows & Snatching Victory Out of the Jaws of Defeat


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#1 Douglas

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Posted 15 October 2022 - 09:46 AM

According to my risk summation system, the days this coming week with the highest risk of a turn in or acceleration of the current trend in the DJIA are Monday October 17th, Wednesday the 19th and Friday the 21st, an "M" or "W" shaped week.

 

Last week the Monday risk window tagged what appeared to be a low but turned out to be just a three-day floor until the fireworks started during the Thursday risk window which sported what I believe to be the biggest reversal point rally ever in the DJIA.  

 

WrhpHzh.png

 

The brief visit past the late September low in the DJIA last Thursday drew a firestorm of intervention for some reason or another when someone or some group with very deep pockets who snatched market victory back out of the bear's jaws of defeat.  My primary E-Wave count looks a lot more in doubt given this big reversal. This coming week's action should either resurrect it or put the final nail in its coffin.  

 

A crash risk window opens up this coming Friday October 21st. Thanks to prompting by beta, I went back and double checked my notes on the risk of one of these crashes occurring and found that it was actually something on the order of 1 in 240 rather than the much more frightening 1 in 30 that I first erroneously mis-stated.  Not very probable, but not zero.  It seems likely that the prestidigitation of a big black swan is required for this down draft to occur, so this coming week watch the sky for this fowl black harbinger of lower prices.  If this winged bear emissary fails to appear by next weekend, I'll probably need to heed Don's advice and watch the sky for soaring prices instead.

 

Is it my imagination, or is government disfunction now the new normal?  The kabuki theater going on in the government of my adopted home, the UK, this past couple of weeks has rivalled the insanity which has become commonplace in Washington.  I know major institutions will be wrecked during this Fourth Turning, but I thought the wreck would be an accidental crash, not the elected pilots flying the government planes straight into a mountain. 

  

Regards,

Douglas  


Edited by Douglas, 15 October 2022 - 09:47 AM.


#2 slupert

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Posted 15 October 2022 - 10:23 AM

According to my risk summation system, the days this coming week with the highest risk of a turn in or acceleration of the current trend in the DJIA are Monday October 17th, Wednesday the 19th and Friday the 21st, an "M" or "W" shaped week.

 

Last week the Monday risk window tagged what appeared to be a low but turned out to be just a three-day floor until the fireworks started during the Thursday risk window which sported what I believe to be the biggest reversal point rally ever in the DJIA.  

 

WrhpHzh.png

 

The brief visit past the late September low in the DJIA last Thursday drew a firestorm of intervention for some reason or another when someone or some group with very deep pockets who snatched market victory back out of the bear's jaws of defeat.  My primary E-Wave count looks a lot more in doubt given this big reversal. This coming week's action should either resurrect it or put the final nail in its coffin.  

 

A crash risk window opens up this coming Friday October 21st. Thanks to prompting by beta, I went back and double checked my notes on the risk of one of these crashes occurring and found that it was actually something on the order of 1 in 240 rather than the much more frightening 1 in 30 that I first erroneously mis-stated.  Not very probable, but not zero.  It seems likely that the prestidigitation of a big black swan is required for this down draft to occur, so this coming week watch the sky for this fowl black harbinger of lower prices.  If this winged bear emissary fails to appear by next weekend, I'll probably need to heed Don's advice and watch the sky for soaring prices instead.

 

Is it my imagination, or is government disfunction now the new normal?  The kabuki theater going on in the government of my adopted home, the UK, this past couple of weeks has rivalled the insanity which has become commonplace in Washington.  I know major institutions will be wrecked during this Fourth Turning, but I thought the wreck would be an accidental crash, not the elected pilots flying the government planes straight into a mountain. 

  

Regards,

Douglas  

"1 in 240 rather than the much more frightening 1 in 30" You're going to have to explain how you arrived at these numbers. Earlier this year there was 5 sigma Action in the bonds market (1 in 35 million). We learned 6 Sigma (2 in 1 billion) can happen, How can you get odds that precise???



#3 Douglas

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Posted 15 October 2022 - 11:06 AM

slupert, the odds I show are not precise, it's just a SWAG.  As I noted in my response to beta, two or three of these crash risk windows occurs each year, roughly one in four of the windows which work tag crashes of some form instead of an important low and flash crashes or crashes of some form seem to happen roughly once every thirty or so years.  Putting all that together gives 1/2 x 1/4 x 1/30 which yields a 1 in 240 risk of one of these crash risk windows tagging some sort of crash-like event.  A SWAG, just like I said. 

 

Right up until the BOE restarted QE a week or so ago, I was feeling pretty good about the odds for this coming crash risk window given all the craziness going on in the world today, but the BOE action shows that when things start to get rough, the central banks will probably be quick to throw in the towel on their inflation fight and restart the money pumps.  It's just hard to get all that beared-up if the Fed might would do the same thing too.

 

Regards,

Douglas    



#4 K Wave

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Posted 15 October 2022 - 12:12 PM

 

until the fireworks started during the Thursday risk window which sported what I believe to be the biggest reversal point rally ever in the DJIA.  

 

And what happens if that bar is reversed on Monday, as market leader TSLA already did on Friday?

 

As you noted, crashes ARE rare, but they happen upon violation of support no one believes can be broken..

Thursday fits the bill in that regard...

 

Food for thought....

 

TSLA.png


Edited by K Wave, 15 October 2022 - 12:13 PM.

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

 

 


#5 K Wave

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Posted 15 October 2022 - 12:17 PM

 

Right up until the BOE restarted QE a week or so ago, I was feeling pretty good about the odds for this coming crash risk window given all the craziness going on in the world today, but the BOE action shows that when things start to get rough, the central banks will probably be quick to throw in the towel on their inflation fight and restart the money pumps.  It's just hard to get all that beared-up if the Fed might would do the same thing too.

 

Regards,

Douglas    

 

Ask yourself...WHEN did BOE step in? BEFORE the GBP crashed...or..AFTER

 

If your your answer is AFTER, the apply same reasoning to FED...


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

 

 


#6 Douglas

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Posted 15 October 2022 - 01:10 PM

K Wave, the BOE stepped in before the crash.  Apparently, a number of retirement funds were on the verge of bankruptcy when the BOE acted due to accelerating losses on leveraged gilt transactions the retirement funds had used to juice their returns.  Had the BOE not acted as they did, the funds may have been forced into a gilt fire sale which might have crashed one or more of the (or maybe just flash crashed?) UK debt market, UK stock market and/or currency.  So, if the FED acts similarly, they will try to prevent any crash, hence my statement about a reduction of the risk of a US crash during the coming risk window due to the BOE action.

 

Regards,

Douglas 



#7 K Wave

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Posted 15 October 2022 - 01:33 PM

K Wave, the BOE stepped in before the crash.  Apparently, a number of retirement funds were on the verge of bankruptcy when the BOE acted due to accelerating losses on leveraged gilt transactions the retirement funds had used to juice their returns.  Had the BOE not acted as they did, the funds may have been forced into a gilt fire sale which might have crashed one or more of the (or maybe just flash crashed?) UK debt market, UK stock market and/or currency.  So, if the FED acts similarly, they will try to prevent any crash, hence my statement about a reduction of the risk of a US crash during the coming risk window due to the BOE action.

 

Regards,

Douglas 

I was not following that episode that closely and saw the huge crash and rebound on GBP, so was under apparently mistaken idea that they had acted to save GBP...and news stories timing seem to align with that on the chart.

 

FTSE has not even broken... yet.

Jeezus...IF they are already in this dire of straits now, what the heck is it going to look like if/when FTSE does break away from the broken 900 to the downside?

 

and FWIW,  Interventions almost never work in the long run...one hard down day in this area could destroy FTSE chart.

And GBP may not be done either yet longer term...although some possibility it could back test that very key 120 floor before resuming the fall.

 

FTSE.png


Edited by K Wave, 15 October 2022 - 01:34 PM.

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 bigbud

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Posted 15 October 2022 - 01:39 PM

nice reversal low on Monday, and reversal top on Thursday
So next week is a low on Wednesday, and a top on Friday... :D



#9 slupert

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Posted 15 October 2022 - 07:23 PM

 

 

until the fireworks started during the Thursday risk window which sported what I believe to be the biggest reversal point rally ever in the DJIA.  

 

And what happens if that bar is reversed on Monday, as market leader TSLA already did on Friday?

 

As you noted, crashes ARE rare, but they happen upon violation of support no one believes can be broken..

Thursday fits the bill in that regard...

 

Food for thought....

 

TSLA.png

 

Glad I had my hard BE stop in that one. Earnings on Wed. and it couldnt hold its trendline. (JMHO)



#10 Douglas

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Posted 16 October 2022 - 03:18 AM

K Wave & slupert, I don't directly own TSLA, so I don't regularly look at its chart, but I should cause it's a real doozy.  That's one heck of a head and shoulders pattern, and the gap fill just below is also beckoning.  According to bigcharts.com the PE is almost 75 times current earnings, and every mother's son of a carmaker is building EV vehicles to complete with it, so why the big PE premium?  With the neckline now broken, it sure looks like the first stop on the down escalator is somewhere in the 80 to 100 range.  

 

6EiAdn4.png

 

Regards,

Douglas