Market Risk Windows Next Week

According to my risk summation system, the days next week with the highest risk of a turn in or acceleration of the current trend in the DJIA are Tuesday the 19th and Thursday the 21st of January.  

 

Last week's Monday the 11th risk window really didn't amount to a hill of beans, but the Thursday the 14th risk window tagged the high for the week and a nice turn down.  That 51 day cycle that I noted caught that Thursday turn too.  This coming week the 51 day cycle points at both Thursday the 21st and Friday the 22nd and Monday the 25th the following week as well, a pretty wide target.

 

The DOW close on Friday tested the top trend line of that infernal rising wedge.  Given that there's a risk window this coming Tuesday, either the trend line should hold and a turn up ensue or the DOW should plunge down trapping bulls who bought the break out.  I suppose events Sunday and Monday will tip the balance in favor of one or the other.

 

 

 

Speaking of events tipping the balance, are any of you guys watching the grains?  You got beans in the teens, five dollar corn and your morning wheat toast is getting a lot more pricey. From what I read we're just one weather event away from some serious food inflation that will smoke past that goofy 2% FED target. 

 

Regards,

Douglas

Edited by Douglas, 16 January 2021 - 02:15 PM.

Max pain on the Friday expiration was down around QQQ 300, so not surprising at all. This market will continue to run on the Monopoly money chasing it. A wild expanding triangle on the TQQQ 60 minute chart.....should get back in gear.

LMF, your TQQQ is sitting right on a trend line in a nice channel and much like the DJIA will need to make its mind up whether to break that line or respect it over the next couple of days.  

 

Regards,

Douglas

The trend up is compelling, but the sentiment is smelling to bust a rhyme on the current market state of affairs.  The chart below shows an average of TSP, AAII and CNN end of week bullish sentiment figures versus the DJIA weekly close for the last roughly two and a half years.  Over that period important DJIA tops seem to have been accompanied by an "M" shaped top in bullish sentiment as seen at the four hand drawn arrows.  Current sentiment appears to be forming the second "M" hump just before the fall.  A correction of some degree appears to be at hand, maybe not tomorrow, but uncomfortably soon if history repeats.

 

Regards,

Douglas

Tyvm for sharing Douglas.

 

Sentiment at turns are particularly important, and I will observe with interest how the Right side of the M develops.

 

Fridays expiration sell off looks like following thru Monday.

 

Kind Regards , Salam.

 

ps I have sent you a PM