S&P500 Charts and Strategy 3


I hope you enjoy the videos and that it’s clear/easy to use for you all. If not, then please let me know!


S&P500 Weekly Candle Stick Strategy JAN 14, 2017 



Bitcoin JAN 17, 2017 



S&P500 (Bearish Divergence) vs VIX (Bullish Divergence) JAN 14, 2017 



S&P500 Time and Pattern Report JAN 12, 2017


S&P500 Time and Pattern Report JAN 11, 2017

My apologies, the file was too big to upload (I bought the real version of Camtasia and all of a sudden the file is too big), so I had to use YouTube as I did not want to make a new one. I will fix it asap. Check it out here. 

Video Update 4h Chart JAN 10, 2017

Video Update Daily and 4h Chart JAN 8, 2017

Video Update Weekly Chart JAN 7, 2017



Video Update Monthly Chart JAN 7, 2017


 

 

JAN 4

The chart says it all. Stay long > 2232, Target 2278, 2292, 2300, 2320, 2350.

I will increase the stop loss on my long positions on the way up and I will start thinking about overweighting short positions @ 2300. A break below 2232, and the bears are back in the driver’s seat.

Keep an eye on the next major cycle time window JAN 15-25. For now, it looks like a High will be formed.

JAN 2

4h – I’m buying the dip, a retest of 2215-2245. Target: retest of 2278 and hopefully even 2292, 2300, 2320 and 2350 into the next Cycle Time Window JAN 15-25.

 

Monthly Chart

Elliott Wave – Based on my labeling, wave 3, usually the largest wave, started in 2009 after the MBS/CDO crisis and led to an incredible surge to new Highs.

For the next couple of months I have two scenarios that make the most sense to me: blue and orange.

The blue scenario assumes wave III of (I-II-III-IV-V) is close to finishing with a wedge up that consists of an abcde pattern and we should expect a corrective pattern (IV down) as soon as wave e of V up is finished.

The orange scenario is a lot more bullish as it assumes wave III-i up is close to finishing and wave III-ii is next. After wave III-ii, wave III-iii will bring a massive surge up for equity markets.

And I do realize, that it’s veru difficult, if not impossible, to predict the future. So therefor, it’s best to take one step at a time and adjust when necessary.

Conclusion: JAN 2017 should set the High for the next couple of months & both scenarios assume a corrective wave to take place after the next major Cycle Time Window JAN 15-25.

Weekly

The S&P500 tested support @ 2240 (blue line) and I would like to see a close above the blue line for this week.

Weekly

Daily

Daily

Daily

Daily

DEC 30

I added 2 contracts long S&P500, based on support area 2235-45, minor cycle date DEC 30-JAN 2, signs of the CM William VIX of a Low in progress and my bigger view that a Low is about to form for the final wave up to retest 2277.

S&P500 4h Chart

DEC 30

Yesterday the S&P500 formed a doji candle stick, which shows an (for now) undecided fight between bulls and bears and in my view, it should lead to a break out to the upside –> it was formed after a large downside candle stick, and based on historical patterns, it would make sense to me to see bulls take control to finish this cycle up.

Target prices for the next 2 weeks are: 2270, 2277, 2285, 2292 and 2320.

DEC 27

The S&P500 is not able to break outside the 2248-2276, so today will likely mark the 8th inside day since DEC 14. And although this bigger picture is something I have been expecting (a sideways zigzag pattern for DEC into mid JAN, little volatility, upwards bias, just like the period JUL-AUG 2016) it is quite boring to watch and difficult for me to trade. The ‘only’ thing you could do now is sell premium (options), stay long or start building a short portfolio.

For the next 2-4 weeks, I expect a High in the 2280-2320 area for wave E, accompanied by Bearish Divergence in the Daily RSI, so that’s where and when I will add short positions. Secondly, for the longer term, I will keep buying products that will profit from an increase in interest rates.

I’m back with an update when there’s something new to report, does not look like this week will be an exciting one….hopefully the start of 2017 will bring more volatility.

Enjoy the holidays, stay healthy and hopefully 2017 will be even more profitable.

Some charts…


Time & Pattern Daily Chart


Time – Cycle is up towards mid JAN

Pattern – Wave E up

Elliott Wave – Base scenario = Wave III or III-i, in both cases, it will lead to a corrective wave

Daily Trend – Stay Long if close > 2235

timeandpattern


Trading near resistance line 2270-2320.

The red box within the green box is the target area for wave E up.


 cycles


My medium Term Strategy – overweight shorts in the 2280-2320 area.


cadnle-stick

DEC 20

Obviously I was wrong in my assessment of a small but quick sell off during the first two/three days of this week. Now, I wonder, is DEC 20-22 referring to a short term High instead of a short term Higher Low? Could be the case, so I will stick with my short positions for now.

With an hour to go before the US markets close, it looks like the S&P500 is forming another inside day (the 4th in a row, stuck between 2277 and 2248). Inside days show indecision/doubt (for more background info, click on the link). If an inside day is found at the end of a prolonged downtrend and is located near a level of support, it can be used to signal a bullish shift in trend. Conversely, an inside day found near the end of a prolonged uptrend may suggest that the rally is getting exhausted and is likely to reverse.

Based on theory, it shows that the uptrend is getting exhausted and is likely to reverse to the downside. Not time yet to go all in, as the underlying 70 day cycle is still up but a small corrective wave of 1-2% is what I’m hoping for (mainly to get out of some short positions and overweight longs again).

Secondly, the pattern is beginning to look a lot like mid July – mid August, where prices traded in a narrow range with a bullish bias till the next TTCM date. As I mentioned before, this is also something I expect for the remainder of DEC and the first two/three weeks of JAN, sideways with a bullish bias.

My Short Term Strategy has not changed: I will try to buy the next dip (if there’s any at all) and  close shorts on the next dip.

For the medium term, I will try to build a large short position to profit from a large corrective ABC pattern during the first 3-6 months of 2017.

daily

DEC 17

For this week, I expect a retest of 2210-35, DEC 20-22, to end the week slightly up, so my strategy is as follows:

Close 50% of shorts (stop loss 2277+1) if there’s a dip between Monday-Wednesday, 2210-2235, and look for signs to overweight longs.


Daily Charts


Cycles


The next minor cycle is scheduled for DEC 20-22 and could be a short term Higher Low.

The next major cycle time window is scheduled for JAN 20-25.

cycles


Candle Stick


So far, the High was formed @ 2277, so I will use that level (+1) as a stop loss for 50% of my short positions. The other short positions are for the medium term.

I expect a retest of 2230-2210, and if correct, I will use this as an opportunity to close 50% of my shorts and overweight longs again for a short term trade up.

daily


SuperTrend


I do not think 2277 is an All Time High that will  last a long time: 2292 and 2320 seem possible between now and JAN 20-25.

The SuperTrend indicator is referring to the medium term trend:  stay biased Long if close > 2222.

supertrend


Monthly Chart – most likely scenario in my view

Wave III, III-i or V. In all three scenarios, it should lead to a large corrective pattern once it tops.


monthly-sp500


 Weekly Chart – Candle Stick Pattern


Weekly candle stick: a combination between a shooting star and a doji.

Based on historical patterns, a shooting star/doji pattern often leads to more downside for the next weekly candle stick.

There’s weekly support @ 2235, green trend line, and this is the level that I expect to be retested DEC 20-22.

weekly-candle


 Weekly Chart – Elliott Wave


Based on the Monthly Chart, I changed my long term view a bit. In my view, the current uptrend is either Wave III up (IV down next) or wave III-i up (III-ii next).

weekly-wedge


DEC 15


The market corrected after the FED raised rates and stated that they want to increase rates 3x during 2017.

I expect a Higher Low somewhere next week, DEC 20-22, possibly in the 2215-2225 area.

So my plan is to close 50% of my short positions next week or when the 2230 is reached. Stop loss @ 2277 +1 point.

At 2215-2225 I will look for a long opportunity into end of year and mid JAN, the next major cycle date.

After mid Jan, I expect a larger corrective bearish pattern, ABC down, that will take several months to develop.

daily-candle


DEC 12 


If it dips into 2215-20, I will buy Long Positions for a short term trade up > 2260.

DEC 9, 20-22, 30-JAN 2 could be relevant for the short term.

DEC 21 retest @ 2220?

daily-candle

DEC 11


My Long Term Strategy for 2017 and beyond…

Add Shorts S&P500 2260-2320 for an ABC down, Lower Low < 1810. Buy the Lower Low for Higher Highs (flight to private assets)

Add Shorts EU and USA Bonds, 10-30 years, (short bonds = expecting rates up), the bond market is the real bubble in my view

Add Gold/Silver coins as insurance against financial meltdown

Exchange EUR for USD and/or Gold/Silver

Fixed the rates for my mortgage for the next 10 years, and by then, the mortgage should be paid off


MONTHLY CHART 10y German Rates (Bund) and 10 y US Treasury Notes.

At the end of October, I posted a chart of the US 10y Treasury Note and informed readers that it might be useful to hedge yourself against rising rates. In the meantime, since OCT 30, US 10y rates have risen from 1.85% to 2.46%, +30%. It might test former lows, and if it does, I will add positions that profit from a rise in rates.

If you have time, and patience, betting on rising rates makes a lot of sense. In my view, this is the biggest bubble I have ever seen: rates at historical lows and in some countries even negative rates!

So I entered the first position last week, a position that will profit from rising German interest rates. In the next couple of weeks/months, I will add positions that will profit from rising rates. This is a play for the long term, and requires a lot of patience, but I truly believe it will be worth it, especially if rates do explode higher for the next couple of years.


10 year German Rates

monthly-german-10y-rates

10 year US Treasury Note

monthly-us-10y-rates


S&P500 Strategy


MONTHLY CHART

The yellow scenario is my base scenario: once wave E of V up of III-i up is finished, an ABC corrective wave will form a Lower Low and seems perfect to buy once the real flight to private assets  begins (rotation out of bonds into equities).

monthly-sp500


WEEKLY CHART

Wave E still in progress, will likely take till mid JAN to finish after which I expect a larger corrective wave, ABC down –> a similar pattern that we saw before during JUL 2015 – FEB 2016.

weekly


DAILY CHARTS

These charts “tell” me to overweight shorts S&P500 in the area 2260-2320, between now and mid JAN 2017.

So that’s what I will do.


The S&P500 will likely face resistance in the 2260-2320 area, into mid JAN where it should finish this 70 day Cycle Up.

After mid JAN, it’s very likely that a new 70 day Cycle Down will start.

daily-candle


CYCLES

Important next Cycle Date mid JAN.

The purple arrows point to 2280-2320 to form a High.

The red box shows my strategy: short the S&P500 2240-2320.

cycles


2292?

Basically every blue line points to 2292 as a level that has to be worked off, +1.5% from Friday’s close.

No surprise, but the market is overbought –> RSI > 70. It does not mean it has to go down now –> a sideways pattern, or a correction in time, will also reset the RSI and could be fuel to reach the 2292 and maybe even the 2320. Whenever the RSI is as overbought as it is right now, it often leads to Bearish Divergence.

supertrend


DEC 9


Seems I was a bit too early with closing the longs and overweighting shorts. One of the reasons for this is that I installed a take profit on the longs of 2230, assuming it would not go up that quick as it did and that I had time to adjust. I was wrong on that part. But then again, I still made a decent profit of 70 points.

Now I have 6 shorts contracts S&P500 and I will add more today/next week if it keeps on going higher.

Based on the weekly chart below, 2250 shows resistance and if that breaks to the upside, 2268-80 could be possible as that’s the area where resistance lines meet each other (red arrow). This is roughly the area where I will add more shorts:

 2 contracts @ 2265 and 2 @ 2275.

The RSI is not able to keep up with price, so it’s showing a Bearish Divergence in progress, similar to what we saw before during the weekly wedge pattern at the end of 2014, early 2015.

My medium term view is unchanged: after this wave E up is finished, we should see a larger correction (ABC down) and form a Lower Low < 1810.

I do not expect the apocalypse for equities yet,  after that ABC correction that will take into early 2018, I expect another ATH for equities based on the assumption that the real bubble is in Bonds (historical low rates) and that capital will flow out of bonds and into equities. The bond market is 3x the size of equities so any outflow of bonds could/should have an enormous impact on equities –> flight to private assets.

So I have also taken a long term position that will profit from rising rates of the 10 year Bund (German Government Bond). I will expand this with more positions that profit from rising rates (EU and US 10-30 years).

This weekend I will show you my story about the Bond market and my plan to profit from rising rates.

weekly


DEC 7


Looks like the S&P500 is ready to break the ATH @ 2214.

Maybe not today or tomorrow, but in my view, it will happen, this month.

For the next couple of weeks, I expect a similar pattern as in AUG 2016: a break to new Highs, followed by a narrow trading range.

If it first dips into 2150-80, I will add longs.

So my Strategy stays unchanged: I will buy the dips 2150-80, close longs 2220+ and/or short the 2220-40 (+?)

strategy


DEC 4


My Expectation for this week:


either a retest of 2185 and a Lower Low in the 2150-80 area, after which the markets should bounce up pretty quick (red scenario),

or

my alternative scenario (blue), a continuation of the uptrend on Monday and new All Time Highs


My Strategy for this week:


buy the dips 2150-85

sell the longs > 2214

overweight shorts 2214-40-70


Doji, Hammers and Shooting Stars


First, I’ll show you some pictures of what these candle sticks look like.

shooting-stardoji hammer


And then I started to circle every shooting star, doji and hammer in the daily chart that was formed after an up- or downtrend of at least 3 days.

And then I zoomed out and noticed that these signals provide a nice guide to take position for a short term trade (days). As you can see, it’s not always correct, but it does provide an early warning that the trend might change for the next few days to come. In some cases, it even led to a larger new trend.

candle


Last Friday, it showed a possible, bullish candle stick, and an early sign the trend might change and we’re close to a short term Higher Low.

candle-zoom


Italy vote


This is what happened overnight (futures) during the Brexit and Trump outcome. This weekend, we have the Italy vote, same result?

Personally, I’m not expecting the same result when markets open, but if it would happen, I will try to buy it.


trump

brexit


S&P500 4h chart


Three scenarios for this week:

Blue, Red and Green, all assuming we should buy the dips this week.

4h


S&P500 Daily Charts


Wave E

blue-and-red-daily

Daily Pattern

daily

Cycles

cycles


S&P500 Weekly Chart


Buy the dips of wave E into end of DEC/mid JAN.

weekly


DEC 2

Today and/or early next week, I will add long positions in the 2150-85 area. Target is a Higher High > 2213.


S&P500 4h chart

Approaching support area 2180 and 2140-60

4h

S&P500 Daily Charts

Target Price Blue scenario @ 2180

Target Price Red scenario @ 2140-60

Both scenarios assume at least one more Higher High during DEC 2016.

blue-and-red-pattern-2

blue-and-red-pattern

cycles


NOV 29

Tonight, I will update three different daily charts of the S&P500. The first one below, the other two will follow the next hour.


Nr. 3

Next major change in trend expected for mid JAN.

For now, I assume it will be a High.

So based on cycles –> overweight longs till end of DEC, start overweighting shorts early to mid JAN.

d3


Nr. 2

A close up of wave E, same two patterns as in chart Nr. 1.

d2


Nr. 1

This chart represents my view on two different scenarios for wave E up, into the next TripsTrading Cycle Model Date mid JAN 2017.

The blue scenario is a copy of the pattern we saw before, during JUL-AUG 2016 and assumes a slightly bullish scenario. A pattern that will frustrate the bears (including me, always impatient).

The red pattern assumes a copy of wave E, period MAY 2015, and leads to an ABC pattern, A @ 2113 for now. A bit more volatility, so better to trade on.

In both scenarios, I expect a retest of 2150-80, an opportunity to close short term short positions and/or add long positions.

I will stay overweight long (small though) as long as close > 2083.8 and < JAN. I know it is tempting to overweight shorts, but it does not feel right. Not yet.

Give me 20m for the next chart.

d1


NOV 25


Hi all, I’m out of office for the weekend so there will be no weekend update. I’m back on Monday.

Enjoy your weekend!


My expectation for next week:

A retest of the 2150-80 area.


My Strategy for next week in case I’m right about the future:

Close the short position, if possible, in the 2150-80 area

&

Buy the Dips 2150-80 area.


My Strategy for next week in case I’m wrong about the future:

Market up: I will close the long position, if possible, in the 2120-40 area,

&

maybe add short positions


My Trading Portfolio



CHARTS NOV 25


Weekly Wedge up, wave E

RSI Lower High, Price Higher High, first sign of Bearish Divergence in progress

w1


Daily Cycles: NOV 26-28 Bradley and JAN 18 TripsTrading Cycle Model

cycles


Daily Wave E, what will it be? an ABC pattern (red) or the upwards sloping scenario (blue)?

d1


Daily Pattern, blue scenario.

d2



NOV 24


For DEC, I expect a zigzag up and down into JAN after which a larger ABC correction will take place.

My plan is to overweight/add short positions in the 2210-2240 area and buy the dips in the 2150-80 area. So I will let the long position run with a trailing stop of 1% and I will add short positions in the 2210-2240 area.


Weekly Chart – so far it’s going as planned, wave E up, now at resistance from trend lines.


w1


Daily Chart – Cycles – Bradley Time Window NOV 26-28 – short term High?


cycles2


Daily Chart Pattern – Zig Zag (blue line) for DEC?

I will sell the 2210-2240 and I will buy the 2150-80. The more time passes by and we reach the end of DEC-mid JAN, the more I will overweight short positions.


spx


NOV 19


Based on the Daily and Weekly Charts, I expect the S&P500 to continue the uptrend this week and form a new ATH,

possibly in the NOV 26-28 Bradley Time Window and at resistance area 2200-2230.

That’s why I have a long position.

But I do realize that I could be wrong and that the market corrects for a couple of days as we have had an impressive move up from 2084 to 2180 (+5%). So this is something I have to take into account and that’s why I made some changes to my portfolio. 

Now, let’s take a look at the Daily and Weekly Charts.


Daily Chart Pattern


A lot of resistance to the upside, 2180 area, 2194 (ATH), 2210-2230, 2275.

Support @ 2180 area, 2150, 2120-30 area, 2080.

For now, I expect a High NOV 26-28, so an opportunity to close longs and enter shorts.

If I’m wrong, and NOV 26-28 turns out to form a Low, I will likely enter new long positions @ 2123-2152.

spx


Daily Chart – Cycles


As long as the S&P500 is able to trade > 2085, I will stay Bullish for the next 70 day cycle into mid JAN 2017.

Summarized: 

Buy the Dips > 2084

Close Longs in the 2194-2230-2275 area

Overweight Shorts < 2085

Overweight Shorts 2230-75 area….mid JAN.

cycles2


Weekly Chart


Wave E is still in progress > 2084.

Intra Weekly Dips should be bought as long as support @ 2084 holds –> see wave E during the 2015 episode, sell offs during the week were normal, but at the end of the week, it managed to close higher –> Hammer Candlestick, normally a Bullish Signal (at the end of a down trend), but at the end of an uptrend, it is signalling fatigue and a possible Top.

Target Wave E @ 2200-2275.

w1


NOV 16


Will the S&P500 be able to break the 2182 and then the 2194 to the upside?

I do think so, based on a repeating of the pattern in the blue box.

My target is 2230 for NOV 26-28, a Bradley Time Window. 

Click here for the latest update of my positions (take profit 2210-30 and I increased the stop loss to 2145).

spx

 cycles2


NOV 13


Similar pattern after a corrective wave, similar outcome? See the blue boxes.

My Strategy for this week is the following:

Close the shorts if there’s a pullback on Monday/Tuesday, add longs in the 2130-50 area (if possible) and I will add longs if 2182 breaks to the upside.

spx


NOV 12


As long as the S&P500 is able to trade > 2085, I will stay Bullish for the next 70 day cycle into mid JAN 2017.

Summarized: 

Buy the Dips > 2085

Add Longs if Break > 2182/94…Target 2210+

Overweight Shorts < 2085

Overweight Shorts 2230-75 area….mid JAN.

cycles2


NOV 11



So now that the Dow made new All Time Highs, will the S&P500 and Nasdaq follow soon? 


the-good-bad-and-ugly


NOV 11


In a year, maybe two, Trump will be blamed for the next financial crisis. He’s perfect for that role, and easy to use as an example for the elite. Or maybe he’s part of it. Who knows?

I do ‘know’ that ten years from now it will be explained in textbooks and wiki’s as  “the Bond Market collapse” or “Trillion Dollar Debt Problem“. We had the 2000 episode (Tech), the 2008 episode (MBS, CDO, Real Estate) so it would make sense to prepare for the grand finale, the 2016/17 episode. But, but, but…if the bond market collapses (rates up), where does all the money go to?

In my view, it will lead to an inflow of money into private assets such as equities, precious metals and farmland. But that’s all medium to long term.

Let’s take a look at the short term, 15m chart.

Some things to note for the short term:

  • Price broke blue support line to the downside
  • Resistance @ 2160-80
  • Support @ 2130/40/50, 2115, 2100
  • RSI shows Bearish Divergence

So be careful with short term long positions and manage your risk to the downside.

15m


NOV 10


I thought it was a smart idea to bet on a retest of at least 2130, but so far, 2153 was the low of the cash index, so no success trade yet. The reason I entered shorts, is also explained by my cyclical model, that says we should expect a change in Trend next week, NOV 14 (Higher Low?) and I wanted to play a short term trade for a profit of 1-2%. It could still happen, but I’m closer to my stop loss than my target price.

For the medium term, I will add longs (I have 2 remaining long contracts, notional value USD 4.000) when there’s a corrective wave (abc) that looks finished, preferably a Higher Low.

Based on cycles, it would make sense to see another 70 day cycle into wave E and that points to JAN 18, 2017. Based on the weekly wedge pattern (ABCDE), I assume it will be the last cycle UP before a larger correction (ABC) takes place.

The blue chart shows the risk of trading futures and CFD’s, a crash of 5% overnight after the elections.  Be careful people, and stay humble. Manage your risk, and never overbet your hand. I learned that the hard way, as most of us have.

Conclusion: for the short term, as in day(s), I’m overweight short. For the medium term, as in weeks, I will overweight longs.

A break of 2085, the Low of wave D so far, and I will have to reconsider my medium term strategy as it invalidates the weekly wedge ABCDE pattern.

spx cycles


NOV 9 – Trump Victory


I was stopped out of my remaining long positions, and re-entered a new long position this morning, click here. It’s still a small position as I expect a bearish market till at least NOV 11-14.

I will buy the Lows till mid NOV, as my cycle model shows a change in Trend should take place NOV 14 –> 35, 70, 140 and 280 day cycle.

Stop Loss if wave D breaks the Low of wave B @ 1990, see weekly chart.


NOV 6 – Inverted Hammer


For the next two weeks, I will aim for the start of wave E, but I will wait till after the elections, Tuesday, to add long positions.

I changed my strategy and stop loss on my current small long position to a price level that equals the cash index @ 2059, click here, and this is based on the Weekly Chart Support Trend Line.

As I mentioned before, I mainly hold cash and precious metals, but at 2060-2100 I’m willing to add long positions in the CFD S&P500 for a medium term trade into end of year, wave E. I’m out if there’s a weekly close below 2060 support.

The last time we experienced such a huge market impact event, it was Brexit and the days before the Brexit vote, we went up. We all know what happened next. Now, with the elections due Tuesday, we experienced a market selling off 4%, so an opposite move (in this case, up) is what I expect. Based on media experts, that would lead to the conclusion that Hillary will be elected.


Last Friday, the S&P500 formed an inverted hammer, which looks like the following text book example.

invertedhammer

“The Inverted Hammer candlestick formation occurs mainly at the bottom of downtrends and can act as a warning of a potential reversal upward. It is important to note that the Inverted pattern is a warning of potential price change, not a signal, in and of itself, to buy.

After a long downtrend, the formation of an Inverted Hammer is bullish because prices hesitated their move downward by increasing significantly during the day. Nevertheless, sellers came back into the stock, future, or currency and pushed prices back near the open, but the fact that prices were able to increase significantly shows that bulls are testing the power of the bears. What happens on the next day after the Inverted Hammer pattern is what gives traders an idea as to whether or not prices will go higher or lower.”

And here’s the S&P500 of last Friday..almost too perfect, a text book example. Now, we need to see conformation of buying the Lows.

So I am prepared to add long positions if we see a Bullish Confirmation next week. And let’s be fair, after 9 days of Lower Closings, it’s about time we see a counter trend of at least 2110-2130. And then a (Higher) Low into NOV 14 & the start of wave E, would make my year. Basically, the same pattern as the example above –> A relief rally, then a retest of current Lows and then a surge up for new Highs.

inverted-hammer


The following chart represents the S&P500 cycles (left) and shows we should pay attention to the following two weeks (into NOV 14) to expect a change in Trend. Based on price behavior since SEP 5, it is pointing to a Low to finish the 35, 70, 140 and 280 day cycle, mid NOV. As you can see, the cycles do not always line up perfectly. For example the Highest High of wave C was formed two weeks before SEP 5. That’s why I will focus on a Low from now till NOV 14.

The right side shows possible support for Price @ 2080 (red trend line), SuperTrend stays on a SELL as long as Price is not able to break above 2125, RSI in a downtrend, MACD on a SELL, but the CW indicator (which is very suited for finding medium term Lows) shows signs a Low is in progress (red bars).

cycles


I’m still favoring an ABCDE pattern, but it’s taking a lot longer than I expected for wave D to form. I’m not ready to let this idea go yet…a weekly close below 1990 and this pattern/expectation becomes invalid as wave D has to form a Higher Low compared to wave B.

w1


NOV 3


No real signs of a Low yet, besides the CW indicator showing three red bars, a sign for a Low in progress, possibly into the cycle date which should be significant @ NOV 14 = 70 and 140 day cycle. The red lines point to 2070 for NOV 14.

Confirming the downtrend: Price forms Lower Highs and Lower Lows, Price broke the green and blue trend lines to the downside, RSI is in a downtrend, MACD on a SELL, as well as SuperTrend if the close remains < 2146.

Seems I was a bit early with the small long position and I am close to being stopped out (-0.5%-1% stop loss). If stopped out, I will simply wait for the election outcome and aim for a change in trend (Low) near NOV 14.

cycles

spx


NOV 1 


I added 4 contracts long CFD S&P500 @ 2098.8, stop loss 1%. It’s an early bet on price finding support in the 2090-2110 area, time window OCT 31-NOV 3. As I said, an early bet, because MACD and SuperTrend are on a SELL, Price sets a Lower Low and RSI broke to the downside.

I will decrease my long positions before the elections, as I do not want to wake up and see the markets flash crash because Trump takes the White House.

spx


OCT 30 – retest 2100? 


The S&P500 keeps on sliding lower, was not able to break the 2150 area and closed the week near support/resistance 2130. I’m not interested to enter positions at these levels.

These are the price levels that I pay attention to:

  • at 2090-2110 long opportunities become more interesting
  • a break/close above 2150 signals a retest of 2194
  • a close below 2070 (50% fibonacci retracement) and I will consider entering short positions and
  • a close above 2194 seems like an opportunity to sell long positions and start overweighting short positions.

Regarding Time, I’m paying attention to: OCT 31- NOV 3 and NOV 11-16 for a change in Trend, see below.

For now, I will simply wait how it unfolds. If it goes up, fine with me, as it is an opportunity to close the remaining long positions and start building short positions. If it goes down, 2090-2110 could provide support and I will likely add long positions for a quick trade. I just do not want to see the crash right now…I’m not yet positioned for that one…


What day of the week is a change in Trend most likely? 

Out of the last 35 Highs and Lows, 12 times it was formed on a Monday, so more than 1/3! To increase our odds even more, we should only trade on Monday and Tuesday, in case we expect a High or Low. It simply increases our chances of picking it right.

You could also say that if on a Tuesday the High of Monday breaks to the upside, Wednesday till Friday have increased odds of trending up. And vice versa, if Tuesday sets a Lower Low, it increases the odds for a bearish week. No guarantees, just statistics…

Conclusion, a High/Low is more often formed on a Monday, and the performance of Tuesday could be used as input for your trading decisions and expectations for the rest of the week.


day-of-the-week


Weekly Chart – I’m in doubt about wave D, is it finished @ 2114 or should we expect another Lower Low into the 70 and 140 day cycle NOV 14?  NOV 14 scores a 5 on the TTCM monitor (see update of OCT 29) –> 5 important cycles lining up –> could be a major trend changer.

Adding longs in the 2090-2110 area seems attractive for a short term bounce though –> 2100 = previous Highs and break out area, so could provide support. I might add long positions if that support area is tested, with a tight stop loss (just below 50% fibonacci retracement 2068) and a short term horizon (days to weeks).

For the medium term (as in weeks to months), I would like to see one more Higher High for wave E, which I would like to short into anticipation of a larger corrective wave.

w1


Daily Chart – Lower Highs and Lower Lows, SuperTrend remains on a SELL < 2160, RSI closed below green uptrend, MACD on a new SELL signal, support @ 2100-2110, resistance from trend lines @ 2130-40 and 60.

daily-indicators


Cycles – an overview of the cycle time windows is presented in the update of OCT 29, pay attention to the following time windows for a change in trend: OCT 31-NOV 3 and NOV 11-16. 

cycles-2 cycles


OCT 29 – Update TTCM –> OCT 31-NOV 3 and NOV 11-16

Out of the last 35 Highs and Lows, 12 times it was formed on a Monday, so more than 1/3! To increase our odds even more, we should only trade on Monday and Tuesday, in case we expect a High or Low. It simply increases our chances of picking it right.

You could also say that if on a Tuesday the High of Monday breaks to the upside, Wednesday till Friday have increased odds of trending up. And vice versa, if Tuesday sets a Lower Low, it increases the odds for a bearish week.

Conclusion, a High/Low is more often formed on a Monday, and the performance of Tuesday could be used as input for your trading decisions and expectations for the rest of the week.


day-of-the-week

cycles-sep-nov


OCT 28


The S&P500 and Nasdaq retested support @ 2128 and 4800 and so far, it seems the green trend lines do their work.

It would make sense to me to add long positions, with a stop loss 1 point below the low of today, but I am reluctant to increase long positions. For the simple reason that the downside potential for the medium term is outweighing the upside in my view.

My total portfolio consists of 15% gold and silver coins and 85% cash (sold all investments in mutual funds this week). The remaining  trading portfolio consists of a small long position, EUR 25 margin, 1% change is EUR 75, so peanuts. I would like to overweight short positions @ 2194 – 2215 – 2230- 2250 – 2300…and then be patient.

And I’m also risk averse to take on large positions, because of this: a nice, oldskool flashcrash, this time in the Dutch stock market. Open @ 451, Low @ 429, within the 1st minute of trading, -4.9%.

aex-flashcrash

S&P500 – round the clock: 4h, 4h, daily, weekly, Nasdaq daily, Nasdaq weekly. 

spx-all

OCT 26

Three Elliott Wave scenarios: blue, purple and red.

I have a small long position left, click here, and will likely wait for mid NOV (70 and 140 day cycle, see yesterday’s update) to increase my bets regarding my trading portfolio.

If you’re a long term investor, decreasing your long positions might be a smart thing to do. I just sold my long positions in my long term portfolio (invested in mutual funds 90% equities) as I’m pretty confident I can buy it back cheaper within the next couple of months/years.

But short term, I prefer the blue scenario as I have a small long position. Purple scenario would also be fine with me.

I do not expect the red scenario (a significantly Lower Low, maybe even a crash) right now. Hope I’m right. Or else, I will simply blame Mr. Elliott and adjust the count. That’s the drawdown of EW, with hindsight it all makes sense.

ew-scenarios


OCT 25

S&P500 2h chart – shows difficulty trading above the blue trendline but it is making Higher Highs and Higher Lows.

Needs to make a jump > 2150 soon to stay bullish. Otherwise, a retest of 2128 and 2114 becomes more likely.

blue-line-2h


S&P500 4h chart – SuperTrend turned Bullish yesterday, and stays Bullish as long as the close is > 2138.

Price broke out the red downwards trend channel, currently retests break out area. Needs to hold to regain power to the upside.

2160-65 area is first resistance if 2155 breaks to the upside.

supertrend-4h


S&P500 – Daily Charts

MACD positive crossing. RSI broke the downtrend, will it lead to a Bullish Divergence?

SuperTrend is on a SELL < 2180.

rsi-and-macd


Heavy resistance area 2140-60.

daily-wedge


Pay attention to mid November for a change in Trend, so a High or a Low.

cycles


Weekly Chart from this Weekend Update, to get my bigger picture.

w1


OCT 23


As you can see in the 2h chart below, the S&P500 moves sideways for 10 days already, in the narrow range of 2125-2145, 1%. Boring markets, and not my cup of tea, I prefer a bit more volatility.

Usually, when price consolidates in such a narrow range, a large move/breakout is about to happen. As I have said before, it’s like holding a ball under water, at some point even the strongest arm can not hold it anymore. And it will pop.

Now, assuming it will pop in the next couple of days/weeks, the next question becomes, what direction will it pop to? Up or down?

I try to answer this question with the help of the 2h, 4h, daily and weekly chart but based on the weekly wedge pattern, I expect one more push up, wave E.

My strategy has not changed yet: I will close longs on the way up (>2150) and add longs in the 2090-2114 area (for now, I still assume a High for NOV 11/14 period, the 70 and 140 cycle date). After the elections and preferably in the 2200+ area, I will likely change my bias to overweight short.


S&P500 2h chart


The S&P500 needs to trade above 2140 to stay above the blue upsloping trend line. So far, it managed to close above, but it’s not very convincing. I’m still waiting for a break of either 2150 or 2114.

Important levels to keep an eye on:

2150 –> 2165, 2180, 2200

and

< 2128 –> 2114, 2100 and 2085.

2h


S&P500 4h Chart


The optimist would say it closed above the thick red resistance and it’s a matter of time before the S&P500 breaks the 2150.

The pessimist sees a S&P500 that is trending slightly down, broke the green uptrend, retested but failed to break above green resistance. Expects a break to the downside.

No need to be bullish < 2150 according to the SuperTrend Indicator. Currently, it’s at a Sell Signal < 2150.

A new buy emerges if it closes > 2150.

4h


S&P500 Daily Chart


Last Friday, the S&P500 formed a Hammer candlestick and when it is formed after a period of decreasing prices, it often signals a Low has been formed and we should expect further upside.

d1


S&P500 Weekly Chart


 This chart shows the relevance and importance to close above 2140 this week.

The way I see it is that we have a completed ABC corrective wave and this will be confirmed if we break the High of wave B.

w2

And this is the weekly chart that I use for my base scenario: wave D of the weekly wedge seems finished and we should/could expect a Higher High for wave E after which a large corrective wave (ABC) will take place.

w1


OCT 21


The S&P500 is not yet able to break the 2145-50, so it remains stuck between 2145 and 2116 (38% fibonacci retracement).

A break of 2150 activates 2180 and a break below 2116 activates 2085.

The Weekly Chart still fits my base scenario of one more Higher High for wave E, weekly wedge. After wave E, a larger ABC corrective wave should take place.

I have made no changes to my portfolio, click here for the latest overview of positions.

Daily and Weekly Chart below…

d1 w1

OCT 18


Yesterday, OCT 17, a minor cycle day, the S&P500 formed a Higher Low which can be labeled as the right shoulder of the inverted SHS pattern that I showed you during the weekend update. Furthermore, it can be labeled as a wave 2, which leads to the assumption that we should expect the High of wave 1 @ 2150 (neckline @ 2140-50, strong resistance) to be broken to the upside during the next couple of days.

I have made some changes to 50% of my portfolio (take profit and stop loss), click here for the latest overview of positions.

4h-future


OCT 16


I’m still overweight long S&P500, 8 contracts CFD, click here for the latest overview of positions, in anticipation of wave c of D forming.

It’s a small position relative to my portfolio and compared to positions I used to trade. I simply do not want to enter large trades right now. It feels like something big is about to happen, I even think there has to happen something big between now and early 2017. Adding it all up (macro economic figures, record low interest rates, US elections, Deutsche Bank, unemployment artificially low, micro economy –> friends and family that lose their jobs, …) it simply does not make sense. It’s a matter of time…see monthly charts below. One more Higher High > 2194, between now and early 2017 and then a large ABC corrective wave –> that’s my base scenario for the longer term charts.

Here in Holland, we have a saying that sounds like: act normal, and you’re crazy enough (directly translated, awful, but I hope you get my point, act normal). Now and then I watch a show/debate about the US elections and I think to myself: look at them, all actors for their own good, can’t tell who’s the worse choice, a lying, corrupt politician (or is a politician by definition lying and corrupt ;)) or a lying, out of control ‘entrepreneur’? One of them will become President of the United States of America 🙂 Madness people, pure madness. Or maybe I’m the one who sees it all wrong and this is the “normal” situation.

Pure out of curiosity, I would love to see Trump take control and destroy the ones in control. Don’t think it will ever happen though. One way or the other, Hillary will win, she has to for the status quo.

A Trump victory and the markets will crash, or at least that’s what the media wants us to believe.

Let’s take a look at the markets.


S&P500 2h chart


There’s an inverted Shoulder Head Shoulder in progress –> Right shoulder Monday/Tuesday > 2114.7? A Lower Low < 2114.7 and this pattern becomes invalid.

Keep an eye on the 2128 and 2114 for more clarity.

Neckline is at 2140-2150, if that breaks to the upside, the target can be calculated as 2180.

2h


S&P500 4h chart


Wave c of D formed a Lower Low so it could be possible that wave D is finished. This is confirmed if we get a

Higher Low this week >  cash index 2114.7.

I have made three different scenarios for wave c of D:

black – assumes wave c of D is finished @ 2114.7. For confirmation, we need a Higher Low for wave 2 down.

purple and orange – both assume a Lower Low to come, 2090-2100, after which wave E will start.

As you can see, the RSI is trending upwards since early SEP, but the last couple of days it’s struggling with red resistance. A close above red resistance and it’s an early sign we should expect Higher Highs.

4h


S&P500 Daily Chart and Cycles


NOV 14 is the next major cycle date, 70 and 140 day cycle. The minor cycles are: OCT 17 (Higher Low?) and OCT 24/25.

For this week, there should be strong support in the 2110-2120 area (blue trend line).

d1


S&P500 Weekly Chart  


The pattern of an ABCDE wedge up is still valid as wave D formed an ABC pattern, just like the previous wedge and wave D, so that would imply the start of wave E anytime now.

w1

 The S&P500 tested support of the green and red trendline. So far, it managed to close above, but keep an eye on the 2114-2120 area.

w2


S&P500 Monthly Chart


 We have 2 weeks left for OCT, and based on the current monthly pattern below, it is now or never for the S&P500 to get back into the blue wedge for wave e up. That would imply a positive bias for the remaining two weeks of OCT into mid NOV.

A monthly close < 2114 (red support of the trend channel) would be very negative for my base scenario of one more Higher High.

m2

And here’s my favorite chart, bubbles, bubbles, bubbles. As I have explained several times, the real bubble isn’t in equities now, it’s in bonds (record low rates). Sooner or later, rates will go through the roof and money will flow out of bonds into private assets such as equities (yellow wave V up). The white scenario is based on the previous crashes, 2000 and 2007/8.

One way or the other, this is not going to end well.

m1


OCT 13


Just got home from work and wanted to inform you that I bought 4 more long contracts S&P500 CFD @ 2112 one hour ago. I was travelling so could not report it at the moment of the trade. CFD 2112 equals cash index roughly @ 2117 (as time passes by, the spread decreases –> time value of money).

This trade is in anticipation of wave c of D forming. A retest of 2095 is not off the table yet, so I use a stop loss of 2%.

Click here for the latest overview of positions.


OCT 11


Seems my base scenario (blue) is invalid as the triangle @ 2140 broke to the downside and the orange scenario becomes more likely to unfold, a 2095-2119 retest.

My strategy has not changed: I still have a long position, small though, as I expect a final Higher High, one more before a larger correction starts. I will close in the 2200 area and I will add longs in the 2095-2119 area.

4h


OCT 9 


Elliott Wave – Based on the 4h chart I have made two scenarios that seem most likely to me: blue and orange. Both assume that there’s more upside to be expected (wave E of the weekly wedge), but the timing is different.

The blue scenario assumes wave D has finished SEP 13 and wave E started. This wave E could consist of smaller overlapping waves, an abcde pattern up of which a and b are finished. Next, we should expect wave c of E and that would lead to a target price of a Higher high > 2194 and if the blue arrows match the size, then the 2200-2215 area is the target for this wave c of E up.

The orange scenario assumes the Low of SEP 13 is wave a of D down. The High at SEP 21 is wave b of D and if correct, we should expect a Lower Low (<2119 cash index) for wave c of D.

Triangle – The S&P500 is stuck between 2140-2175 and is forming a Triangle pattern. Often, I see a false break of the triangle before the next real wave evolves. In this case, the break of green support of last Friday, could be the false break.

RSI – The RSI is struggling with the green and red trend line, and not able to close back in the uptrend, so that’s an early warning. This week it has to show strength to match the blue scenario.

My Positions and Strategy – Click here for an overview of my positions. I have a small long position left, and I will close this when the 2200 is tested. If my base scenario (blue) does not happen, I will wait for a retest of the 2119 and add long positions in the 2095-2119 area –> assuming wave D will likely find a Low in the 2095-2119 area.

Conclusion – I will reduce my overweight long and maybe start building short positions when a Higher High is formed. I will add longs if the 2095-2119 is retested.

 4h Chart4h

Weekly Chart

spx-w1

Monthly Chart

monthly


OCT 4


 I’m waiting for a break out, either 2140 to the downside or 2175 to the upside.

The reason I’m a bit confused about the next move is presented in the following chart. To me, it shows too many conflicting signals:

Triangle, at green support line 2140 for the 3rd!! time, blue arrow pattern 2200 target, overlapping waves, false break out?, not able to close above blue trend line, Negative Reversal RSI, wave D finished? Cycles point to Friday/Monday for a short term change in Trend. Simply too much question marks at the moment…

 And that’s why I find it difficult to take on big bets right now so I prefer to stay slightly overweight long and wait for more clarity.

I have a small long position, click here for an overview of the S&P500 Trades.

Friday Jobs Report! Always entertaining. Enjoy your evening.

4h


OCT 2


Seems like I made an error by decreasing my overweight longs. Although it did not lead to a loss, I still left money on the table and experience an opportunity loss. Should have kept my stop loss in place, with hindsight.

So be it, can’t win ’em all, but I do realize that these errors are popping up the more I shorten the time frame of my charts and the more I read the “news”. So for me, it’s better to focus on the daily and weekly charts instead of the 2h and 15m charts and stop reading the news.

I still have a long position left that I entered SEP 12 @ 2123. Stop loss 2118. Take Profit @ 2200.

Let’s start with the weekly chart.


S&P500 Weekly Chart


 The Weekly Candle Stick formed a Hammer, indicative of a short term bias to the upside and further upside expected for next week. It also shows early signs of weakness and selling pressure, but for now, bulls are still stronger than the bears.

Based on the weekly pattern and cycles, I expect more upside into NOV 11/14, the next 70 & 140 day cycle, wave E up. Upside seems limited though to 2220-50.

spx-w1


S&P500 Daily Chart


2175- 2185 is main resistance, if that breaks to the upside, 2194, 2200 and 2205 are next. Support @ 2160, 2145.

Base scenario is still a Higher High for wave E, consisting of overlapping waves abcde –> a @ 2180 (check), b @ 2145 (check), c @ 2200, d @ 2150/70 and e @ 2220-50. If this labeling is correct, then we should expect to see the ATH tested this week (wave c up of E up).

spx-daily-1

spx-daily-1


SEP 30


I’m in doubt about the current pattern of the daily chart and the next move. I was expecting more upside into end of month/quarter (window dressing) but yesterday proved the opposite. So I decided to close the long positions that I entered @ 2143 (CFD) at a small loss. Now I have a small long position left that I entered SEP 12, stop loss 2118 cash index.

The reason I’m in doubt is the following: 1) The Daily Chart is showing Lower Highs since the end of AUG, 2) it is not able (yet) to break above the red/blue resistance line @ 2175-2186 area and trade back into the uptrend and 3) the S&P500 closed below the green support line. That means that it’s possible to see a retest of 2119 and maybe 2110 (support red trend line) in the next couple of days.

Furthermore, I read more and more examples of an OCT crash, as the pattern is quite similar to the one that happened in 1987. I know, the more people scream it will crash, the higher it will go. But still, one day they could be right and that’s something we have to keep in the back of our minds.  I learned the hard way that when I’m in doubt I have to stay out.

So for now, I decreased my long exposure and I will wait for more clarity to change my positions.

spx-daily-1


SEP 27


Since SEP 12, the S&P500 is forming Higher Lows and Higher Highs, a short term uptrend. Yesterday, it reached my target area for a corrective wave and now my next target is at least 2176 (black horizontal line). I expect a break above 2176 and a test of 2194-2200 (ATH and green trend line) early OCT but since we never know for sure, I will take profit on 50% of my long positions when the 2176 resistance is reached. Profit is profit.

I believe wave E (see weekly chart) will show a zig zag pattern (up, down, up, down 2140-2200-2160-2250) of overlapping waves so I my plan is to decrease my overweight long positions if the 2176-2200 area is reached and I will add longs if the 2140-60 area is tested. Hopefully we will be able to continue this strategy into NOV 11-14, the next major cycle, after which I will likely turn bearish again. Not there yet in my view.

Stop Loss Longs @ Low of SEP 12 – 1 point (cash index 2119).

Regarding Europe, maybe after NOV Deutsche Bank will completely collapse and we have our new Lehman moment…I’m no expert on banking, but to me it seems that Deutsche has a real problem: default risk surges, price follows the same pattern as Lehman and Merkel states it will not bail out (like if they have a choice, they have to, eventually). And if Deutsche cracks, we better watch out as it’s a systemic bank. Scary shit is coming, we all know that by now, they only need to postpone it till after the elections 😉

Summarizd: I have a bullish view into NOV, then a bearish view for a large ABC correction and then the final push up (flight into private assets) –> that’s still my main scenario for the longer term (see Monthly chart, yellow scenario). First things first, a new ATH.

spx-2h


SEP 26


I bought back the longs @ CFD 2143 (=cash index 2150) that I closed @ 2177 cash index (2170 CFD).


SEP 24


The S&P500 touched resistance @ 2180 and a small corrective wave followed to the 2165 area (-0.7%).

My Strategy for this week is the following:

  1. Close the remaining long positions (stop loss SEP 12 – 1 point = 2118 cash index) when the cash index reaches 2200 –> I set my Take Profit @ 2193 (CFD price) = cash index 2200
  2. Add long positions if the S&P500 reaches 2130-57 area (Target 2200+)

So basically I will buy the 2130-57 area and close long positions in the 2200 area. I do not think it’s smart to overweight shorts already, I think we need more time to finish this wave E up into NOV. And of course, there will be dips when wave E is formed, but since I expect Higher Highs next couple of weeks, it’s in my view better to stay overweight longs and wait for new long opportunities instead of trying to catch every wave up and down. Then, after wave E is finished, I will overweight shorts again, for either a minor wave IV (10%-15% correction) or a major crash (-40%, personally, I think this major crash will happen after 2020). Not there yet.


Monthly Chart


 Blame the new president for a market ‘crash’ to form a Lower Low < 1810?

For now, my base scenario is a Lower Low < 1810 into early 2017 (black pattern), then back up again for Higher Highs above wave (V) e (flight out of public assets & into private assets) and then the major crash that will last several years.

spx-m1


Weekly Chart


Based on the Weekly Chart, I expect a retest of 2145 area, then 2200, then 2160 area and then the final High for wave E into NOV (blue pattern). Similar to the pattern we saw before, APR-MAY 2015.

spx-w1


Daily Chart – Bradley Model SEP 29 –> +- 4 days –> Time Window SEP 25-OCT 2


spx-daily-3


S&P500 Daily Charts


spx-daily-2

spx-daily-1


S&P500 4h chart


 Higher Highs and Higher Lows since SEP 12. A retest of 2145-57 area would make sense to me after which new Highs in the 2200 should be expected for the first week of OCT.

spx-2h


SEP 22


I closed half of my remaining long positions @ 2177 (CFD 2170) for a decent profit since I entered these long positions SEP 12. And of course, I closed the other part too early SEP 20, but as long as I’m making money, I will not complain.

The reason I closed half of the remaining long positions is the following: the S&P500 is facing resistance in the 2176-80 area, see 2h chart below. A pullback would make sense to me. If not, I will enjoy the ride up with the remaining long positions (stop loss Low of SEP 12 -1 point).

Based on the Weekly Chart, 2nd chart below, I expect Higher Highs into NOV, wave E, so I will buy any pullback towards the 2145 area.

spx-2h

spx-w1


SEP 20


I just have a ‘feeling’ the following will happen:

Equity markets sell off after the FED meeting, break the Low of SEP 12, form wave D in the 2085-92-2116 area and just as quick as it went down, it surges up for wave E. Longs will be stopped out on the way down and shorts will be squeezed out on the way up.

In the end, it’s a zero sum game. So that’s what I would do if I was in charge of “the markets”….to cause as much pain as possible.


S&P500 4h chart


The S&P500 is forming a triangle, Lower Highs and Higher Lows, a continuation pattern. This could lead to a break to the downside, target 2085 (same length blue line).

I tried to close 50% of long positions @ 2165-75, but it did not reach that far yet. To avoid some risk going into the FOMC meeting and the possibility we could get a Lower Low, I decided to close 50% of my long positions, just now @ 2133 (CFD price, entered @ 2119-22, so a small profit). The other 50% is still in portfolio, BE @ 2123. My medium term expectation into NOV is up, so for now I prefer a small overweight long position and I will add long positions in the 2085-2116 area.

So therefor I decreased my long exposure. I can always add at lower prices and if I’m wrong, my current long position will pay off and I’m also satisfied. Only thing that will ruin my mood is a crash….I’m not positioned for that right now…

I would like an opportunity to buy the 2090 area –> assuming I expect new Highs, 2090 brings a return of at least 100 points = 5%. That’s my strategy for the next few days. Buy the dip if possible.

2092, 2116 and 2145 are key level Fibonacci retracements.

spx-daily-1


SEP 17 – FED meeting SEP 20-21


This week, SEP 20/21, we have another FOMC meeting and based on my expectations, they will not raise rates. They simply can’t. That should be a positive for equity markets and in my view it could be the catalyst for the start of wave E up. I’m not sure if wave D is already finished so I will take into account that we might test the Low of SEP 12 @ 2108. But in my view, we should buy the dips (wave D, 2090-2130) for wave E up > 2194. And that’s what I will do.

My Strategy for this week:

1. I will add longs in the 2090-2130 area (no stop loss for now, first want to see if the Low @ 2108 is formed –> retest 2108 and maybe 2090 = 50% Fibonacci could be possible but I see that as an opportunity to add longs)

3. I will take profit on 50% of long positions @ 2165-2176

3. Other 50% of long positions is for the medium term, wave E up > 2194


Weekly Chart – Wedge up – Wave D and E – Buy the 2090-2130 area


spx-w1


Weekly Chart – ABC pattern finished? 


spx-w2


Daily Chart – Buy Wave D


spx-daily-2


Daily Chart – Buy wave D


spx-daily-1


2h Chart – Higher Lows – inverted SHS target if the 2150 breaks to the upside –> 2167-76


spx-2h


SEP 15 – 2h Chart


I will close 50% of long positions. tomorrow, if possible @ 2165-75.

spx-2h



SEP 13


I re-entered longs S&P500 @ CFD price 2119-22.

Stop Loss 1 point below the Low of yesterday, roughly 1%.


SEP 12


I closed 60% of my long positions @ CFD price 2150 (–> cash 2160) that I entered this morning, a nice profit for one day (45 points) as it could be possible to see a retest of the 2115-2145 area. I will keep the other 40% of long positions in portfolio in case the S&P500 keeps going up.

Basically, I’m expecting a copy of the wave D pattern that we saw before, see weekly chart below, blue forecast. During FEB 2015, we saw that wave D was down-up-down into the green box. If we get the same pattern again –> that would imply a test of 2170-80 (where I will close half of the remaining long positions), then a retest of the 2115 area (which I would like to buy again) and then Higher Highs 2200+.

So my plan is to close half of the remaining long positions at 2170-80, keep some longs in portfolio in case the S&P500 keeps on going up and I will add long positions when there’s a retest of the 2115-2145 area.

spx-w1


SEP 12


I entered the first long positions S&P500 @ CFD 2105, small position –> 1% change is EUR 375 profit or loss.

If possible, I will add if the cash index tests 2090-2100.


SEP 11


Finally, after 7 !! weeks of sideways behavior, the S&P500 cracked and hit the target zone that I was expecting for wave D.

Now the question becomes: was this it and is the 2090-2145 area the one we should buy? Or should we expect more downside potential < 2090?


My Portfolio – Due to the Take Profit I installed, most of my short positions were closed at a decent profit (1.2k since I started this trade, mid July). Although it was a profitable trade, it took too much time and did not feel comfortable.

Now, I have a small short position left, stop loss 2148 (1%) and trailing stop 1%.


My Strategy for this week – search for and overweight long positions in the 2090-2145 area.


Risk:Return = 2090:2200 –> I assume wave E will have at least a 2200 target, so 70 points reward. To the downside, 2090 – 2100 could be retested but it should behave as strong support. So a risk of 40 points if you use the 2090 as stop loss for long positions.

–> R:R = 40:70, so the bias turns to long positions.


Monthly Chart – Bubbles


Sooner or later, the CRASH will come. Only question I have is….will it crash after the white V up or will we follow the yellow pattern and expect another wave V up?

My educated guess says we should expect a flight to private assets as in my view, the real bubble is in sovereign bonds –> record low rates. In the 80’s, interest rates were between 10-12%. I do reckon that inflation during that period was also a much higher, nearing 10%. And here we are now, at record low and in some cases even negative rates. Pure madness….and we all act and behave as if it is normal.

I can tell you for sure, this is not normal. This is lunacy…

Just like the tulip mania…

tulipomania

So whenever the bond market bubble pops, capital will flow out of public assets (sovereign bonds) into private assets (precious metals, physical goods and equities –> capital preservation). The bond market is 3x the size of equities, so you can imagine the impact on for example equities –> should provide an even more massive buying spree and unthinkable Highs for the S&P500.

For now, the yellow scenario makes most sense to me but I will keep the white scenario in the back of my mind.

monthly


Monthly Chart


monthly-2


Weekly Chart – ABCDE wedge up – Fibonacci Support @ 2116, 2092.


spx-w1


Weekly Chart – ABC down for wave D


spx-w2


Daily Chart


 spx-daily-2


Daily Chart – I’m buying the 2090 – 2130 area Monday/Tuesday.


spx-daily-1


VIX @ Resistance 17-18


vix


SEP 8

Strategy


Strategy – I will add shorts tomorrow in the 2184-2194, if possible, stop loss 2195. Targets –> Lower Low < 2157 –> 2145, 2130, 2115, 2100. Shorts positions in portfolio have a stop loss of 2205 for now. I will change the stop loss during the weekend.

First I want to see what happens tomorrow:

a sell off or a retest 2188-94?


SEP 8

Charts


Weekly Wedge…Trading range –> High 2194, Low 2157.

Target remains 2145 – 2100 for wave D.


spx-w1


Weekly Chart, ABC pattern, currently wave C of D down.

Forming another doji.


spx-w2


Daily Chart – Fibonacci support @ 2145 and 2116

Key Levels @ 2194, 2188, 2184, 2175, 2160


spx-daily-3


Medium Term Cycle Dates: SEP 5-7 and NOV 14-16

Targets @ 2145, 2130, 2115


spx-daily-4


SEP 7


Based on the cycles, SEP 5-7 -> the 70 and 140 day cycle, the US markets should form a High and the next 7 to 14 days should have a bearish bias.

So I have decided to relax the 2195 stop loss –> 2205 as I don’t want to get stopped out on a spike up.

Let’s see if the cycles do their work.

Enjoy the day all!


SEP 2



My Strategy:


I will manage my short positions as follows (cash index):

25%
Stop Loss @ Weekly Highs 2194 + 1 point = 2195
Take Profit @ 2157

25%
Stop Loss @ Weekly High 2184 + 1% = 2206
Take Profit @ 2147

25%
Stop Loss @ Weekly Highs 2194 + 1 point = 2195
Take Profit @ 2135
Trailing Stop 1%

25%
Stop Loss @ Weekly Highs 2194 + 1% = 2216
Trailing Stop 1%

&

I will Overweight Long Positions in the 2090-2145 area for Target 2180-2200-2250 of wave E.



S&P500 Daily Chart Pattern – So you want to gap up? 


 Based on a pattern we saw two times before I expect another week of downside pressure,

to form a Lower Low < 2157 and finally the Low for wave D in the 2145-2090 area –> see weekly chart below.

The pattern I’m referring to is the following:

The cash index gaps up at the open, forms a new short term Higher High (compared to previous days) and closes somewhere near or below the half of the length of the day’s range. The 2-4 days after this pattern, selling pressure enters the market and a Lower Low is formed.

If the pattern repeats this week, we should expect more downside for this week to form a Lower Low < 2157. Targets are 2147 (38% fibo) and 2130. If the 2130 breaks to the downside, a retest of 50% fibonacci retracement is to be expected @ 2116.

Conclusion: keep an eye on the 2184, 2188, 2194 to the upside and 2157, 2147 and 2130 to the downside.

SPX DAILY 4


S&P500 Weekly Wedge


Still waiting for wave D down –> at least 2145 and I’m satisfied and willing to scan for long opportunities. I have an upside target of 2250 for the next couple of months, wave E up.

The Weekly Close is exactly at resistance from trendline…@ 2180. The weekly High was @ 2184. So for Monday, keep an eye on the 2180 level to see if there’s more strength to push and close it above 2180/84. If that breaks to the upside, a retest of 2194 is next. Below 2175, expect a retest of 2068, 2060, 2157 and 2145 (38% fibonacci retracement).

SPX Weekly Wedge


S&P500 Weekly Chart & Strategy


Weekly Corrections often come in an ABC pattern

Wave A: High 2194 & Low 2157

Wave B: Low 2157 & High 2184 (so far)

Wave C expected: High < 2194 & Low 2145-2090

Weekly Candle


S&P500 Daily Chart – Outlook for 2016 – Two scenarios


SEP 5 = 70 day cycle since Low of JUN 28 @ 1990.

SEP 7 = 140 day cycle since APR 20.

SEP 6 = 14 and 91 day cycle.

So SEP 5-7 should/could be a Time Window worth trading.

I was under the impression that SEP 5-7 would form a Low, but it looks like it will be a High –> wave D will follow later.

 Two scenarios: base case (black) and alternative (orange).

Black scenario – Copy of 2015 pattern –> Base case is retest @ 2145 area (-2%), max of 2090 (-5%), form a Low and then set a Higher High @ 2250 area (+5% from 2145, +8% @ 2090).

Orange scenario – wave D is a copy of wave B, in pattern and in time.

Cycles


SEP 2 – Jobs Report


After all those years of watching the markets I still find it remarkable to see how they can manipulate the market to stay at elevated prices for so long. On the other hand, it should not be a surprise anymore as the Bank of Japan is buying everything –> Every intra day dip is bought –> a lot of hammers are formed and VIX is crushed on a daily basis.

If possible, I will close 50% of my short positions today if Price trades in the 2150 area, assuming that a Low will be formed for wave D in the Time Period SEP 3-9 and in the 2145-2115 area. The other 50% will be closed next week, SEP 3-9 time period –> assuming wave D will be formed.


S&P500 – Weekly Wedge


SPX Weekly Wedge


VIX – pressed down intraday..Key levels to keep an eye on: 10.7-11, 13.5, 15.5, 17-18


VIX


S&P500 Cycles –> SEP 3-9


 Will the Jobs Report of today be the trigger to set the Lower Low for Wave D into the 2145 area?

I do wonder, that based on the pattern (Cycle Up -> Cycle Down–> Cycle Up etc), that after a Cycle Up, a Cycle Down will follow. That means SEP – NOV should be a Down period based on this pattern, but based on the ABCDE pattern (wedge) I still assume SEP 3-9 to form a Low and the Cycle will be UP into the elections.

Next week will provide more clarity…

SPX DAILY 3


S&P500 Daily Wedge


 Here I assume wave C is finished and wave D should form a Low in the 2145 area.

The 20 day MA is @ 2180 (resistance), the 50 day Moving Average is @ 2151 (support) and the 100 day MA is @ 2115 (support).

SPX DAILY 2


S&P500 EW and Arc


 Left chart: Support at 2160, 2150-40, 2130, 2115, 2100 and 2090.

Right Chart: The red arc acts as resistance for the S&P500, for today @ 2170-75. Resistance from black trendline @ 2200-2205.

SPX DAILY


AUG 31


Not much to report as nothing really happened over the last two days, a bit up and a bit down. Currently, the S&P500 trades at resistance 2175 (trend line and arc).

Friday, the Jobs Report of AUG will be published and good news will be bad news (and vice versa) as it increases the case for an interest increase (personally, I don’t think a FED rate increase will ever happen). A good jobs report could be the trigger to set the Low for wave D into early next week, Cycle Date SEP 5. Until then, I don’t think much will happen and they will keep the market stuck between 2160-94.

I still think the cycle window SEP 3-9 will form a Low and as mentioned before, I will use any downside pressure into the 2150 area as an opportunity to close shorts and overweight longs.

I could be wrong, and in that case SEP 3-9 will turn out to form a High. If so, I will sell the 2205-2220 for wave D down into OCT.

SPX DAILY

SPX DAILY 2


AUG 28


Last week finally saw some selling pressure for the US markets and a 2nd Lower Weekly close. The High was @ 2194 and the Low @ 2160. So still not a lot of volatility, as it represents a narrow range of only 34 points = 1.5%.

For this week, I expect to start with a small uptrend to test 2170-2184 (based on a Positive Reversal in progress Daily Chart, see below) but for the end of this week I expect a Lower Low to be formed, 1st target @ 2145, 2nd Target @ 2125 and 3rd target @ 2116, to finish wave D of the Weekly Wedge (ABCDE). These targets are based on Fibonacci and Weekly/Daily Support lines. There’s resistance @ 2175, 2180, 2188, 2194, 2200-2215.

 The longer term cycles, 10 and 20 week –> 70 and 140 day cycle –> point to SEP 5-7 as a significant change in Trend. You know I’m biased to shorts for the short term, so I expect a Low to be formed. If it turns out as a High (which I find unlikely to happen, but since it’s only my opinion it does not have any value) it would seem smart to sell that High.

In the past, the 70 day cycle was quite accurate –> DEC 2, FEB 10, APR 20, JUN 28 –> SEP 5, see chart below

SEP 5 is next week Monday. As the cycles are not always spot on to the date itself, I will use a +-2 days correction. This leads to a Time Window of SEP 3-9 –> so it could be possible to see a Low for the end of this week @ 2116-2145. Based on a close @ 2169, the downside potential is 25-53 points, 1-3%. Once again, not a wild ride to be expected but enough to close the short positions for a nice profit and overweight long positions for wave e up into NOV 14.

The Swing Alert changed to a SELL signal AUG 24 @ a cash close of 2177, stop loss 2194 as it changes to a LONG signal if the cash market closes > 2194.


S&P500 Weekly Chart


Wave D seems like it finally started –> Target Zone to close shorts and overweight longs –> 2116 – 2145.

SPX Weekly Wedge


S&P500 Cycles – SEP 5 and NOV 14


The period of SEP 5 – 7 is an important Time Cycle Window as it represents the 21, 70, 91 and 140 day cycles.

As you can see in the chart below, the most significant changes in trend are formed whenever Time approaches the 70 and 140 day cycle. The 35 day cycle (5 weeks) also shows an important impact, but not as much as the 70 and 140 day cycle.

My conclusion based on cycles –> I’m expecting a significant change in trend for SEP 5-7 and based on my Elliott Wave count, The Weekly Wedge Pattern and the upcoming elections, it would make sense to see a Low formed in the 2100-2150 area and this should be an opportunity to close short positions and/or overweight long positions.

If it turns out to be a High, I will sell it.

S&P500 Cycles


S&P500 Daily Charts – Positive Reversal in progress?


The left chart shows a Positive Reversal in progress as RSI forms a Lower Low while Price still trends above the Low of AUG 3.

If Price is able to trade > 2160 for early this week, then the PR is confirmed and a Target Price of 2205 can be calculated.

The blue EW scenario (left chart, iv down and v up) is an alternative for the wave C up, but this is not my base scenario which is the orange one –> Low for wave D this or next week.

The right sided chart shows we should expect wave D to form in the 2110-2145 area, 1st week of SEP.

SPX DAILY 2


S&P500 Daily Wedge


SPX DAILY


AUG 25


Today at 10 am ET, Fed Chair Janet Yellen delivers opening remarks on “The Federal Reserve’s Monetary Policy Toolkit” and this should/could be a market mover. Based on my expectations of a retest of at least 2140-50, I expect continued selling pressure, but a sell off on a Friday seems very unlikely to me as markets pop up every time the Central Banks make a statement. As if they have to support their own words…


VIX Daily Chart


Let’s start with VIX today. Last weekend I stated that VIX was trading near support and a test of 14 seems likely.

As you can see in the chart below, VIX bounced off support 11 and tested resistance @ 14. RSI broke above resistance and trends back into the uptrend.

If VIX is able to close above 14, then a test of resistance @ 17 seems valid.

VIX


S&P500 Daily Chart


1st Target where I will close shorts is in the 2140-50 area, the 23.6% Fibonacci retracement level.

The 2nd target is @ 2133 and the 3rd downside target is @ the 38.2% Fibonacci retracement level @ 2116.

Conclusion: I will close my shorts on the way down, starting at the 2150 area.

In the 2090-2116-2145 area I will look for long opportunities.

The first week of SEP, to be more specific –> SEP 5/6, should be an important trend changer as it represents the 70 day cycle since JUN 28. So if Price is trending up into SEP 5, it should be sold. If Price trends down into SEP 5, it should be bought.

SPX Daily EW


S&P500 EW & ARC


Green box 2160-2090: close shorts and overweight long

Red box 2160-2194: overweight shorts

SPX DAILY


AUG 24


I will close my short positions if the 2150 is reached and will overweight longs in the 2080-2140 area.



S&P500 Daily Chart E.W. and Pattern


I may sound like a broken record, but I still expect a retest of the 2140 area before setting new Highs.

Yesterday, the S&P500 came close to breaking the High of AUG 15, but failed, formed a Lower High and a Bearish Candle Stick –> a Shooting Star.

Shooting Star

I have labeled that Lower High as wave b of wave A down (2140 area). If correct, now we should expect wave c down of A down, then wave B up into 2160-70 and then wave C down for a Lower Low compared to wave A (see left chart).

The right side shows the difficulty the S&P500 is facing to break to the upside of 2180-2200 as there’s a lot of resistance from trendlines and arcs.

SPX Daily EW


AUG 23 


The S&P500 broke out to the upside of the diamond pattern and came close to breaking the ATH of AUG 15.

Not there yet, and therefor it can be labeled as black wave B that’s close to finishing –> Blue Wave C = Blue Wave A in length.

Black Wave C should set a Lower Low. If the High @ 2194 breaks to the upside, this count can not be correct and short term short positions should be closed and a visit of the 2200-2210 area is next.

Risk:Reward seems in favor of bears, at least for the short term.

Short Term: Sell 2182-2193, Stop Loss @ 2194, Targets 2182 & 2168 & 2150

Medium Term (weeks/months to come): Buy the Dips (2150-2080) for Targets 2210-2330

Diamond

Diamond


And longer term cycles…Pay special attention to

SEP 5 @ 2210, 2150, 2120,  2090

and

NOV 11 @ 2330, 2250, 2220. 2170-85, 2050


Cycles


AUG 21


This last week, European markets showed weakness  (-2.5%) while US markets basically traded flat over the week (-0.5%)

So another week, another doji candle stick for the US markets. Based on the Weekly Candle Stick Strategy, see chart below, it’s the 4th SELL signal in a row. Maybe OPEX had something to do with it to keep markets near the 2180 price level, but that effect should not be in place for next week anymore. Now it’s only the FED remaining 😉

For September, I noticed a high open interest in the >2200 calls so it would not surprise me to see US markets to stay below 2200 for September, form a Low in the 2080-2140 area and after SEP OPEX (SEP 16), new Highs are formed into the NOV elections.

image


My Strategy for this week: 


1) I will add the 3rd batch of shorts in the 2195-2210 area (SHS target 1h chart, see below) if possible, and

2) close shorts in the 2080-2150 area if US markets do correct as I expect and

3) enter long positions in the 2080-2150 area for the final wave (e) up into NOV


Click here for the latest update of the Swing Alert.


AUG 21

Current Signal: neutral LONG.

Indicator 1 and 2 are short term, indicator 3 is medium term.

Currently, 1 and 2 provide conflicting outcomes, indicator 3 is still at LONG, 7 day EMA is uptrending

–> so LONG, but be careful (orange) –> tighten your stop loss

As you can see in the image below, indicator 1 is often the frontrunner to indicate a new LONG signal

And indicator 2 is often a bit early to indicate a new SHORT signal


CYCLES @ AUG 22, 29 and SEP 5


Cycles point to AUG 19/22, AUG 26/29 and SEP 5.

AUG 22 is the 7th day since the HIGH of AUG 15.

AUG 29 = 14 and 63 day cycle.

SEP 5 is the 70 day cycle and should be important! –> FEB 10 (Low), APR 20 (High), JUN 28 (Low)

Based on that pattern, SEP 5 should form a High.

It would make a lot more sense to me though, to see a Low for SEP 5 and a High for NOV 14 (70 days since SEP 5)

Cycles


Example Strategies based on Swing Alert


Close > 2194: indicator 2 will change to LONG –> new LONG, SL @ 2066 (Low of AUG 17) or 2173 (Low of AUG 19)

Close < 2170-75: indicator 1 will change to SHORT & 7day EMA turns down –> new SHORT, SL @ 2194


Some charts next…



S&P500 Monthly Chart 1


Two scenarios:

  1. White – Same Pattern as during the 2000 and 2008 period.
  2. Yellow: Elliott Wave Scenario: after wave III up, wave IV will show a minor retest of 2000 area and wave V up (capital shift out of bonds, into equities, capital preservation) will take the US markets to Higher Highs for the years 2022-2024. Hard to believe if you take into account the current economic fundamentals.

Bubbles


S&P500 Monthly Chart 2


During August, so far the S&P500 was able to produce a Higher High and Low compared to July

Heavy Resistance in the 2200 area

My Strategy:

SELL wave c, 2180-2250

BUY wave d, 2080-2140

SELL wave e, 2250-2350

S&P500 Monthly


S&P500 Weekly Chart Wedge Up


The arrows match the pattern that we saw before

Currently at the orange arrow

SPX Weekly Wedge


S&P500 Weekly Candle Stick


The cash index made another Doji Candle Stick

The cash index produced a Higher High, Lower Low and Lower Close for the week

Key Levels for this week @ 2200, 2194, 2184, 2168 and 2160

A break of 2160 opens the door to 2120-40 area and a break above 2194 activates 2200-2215

Weekly Candle


S&P500 Daily EW


I labeled the drop from AUG 15 as wave a, the retest of 2188 is wave b and if I’m correct, it would lead to wave c down next. If this week a Higher High is set, then this EW count can not be correct.

I basically expect AUG 22 – September to be a period of bias to the downside (wave d of the weekly wedge) after which OCT and NOV should bring new Highs.

SPX Daily EW


S&P500 Daily Chart Cycles


Daily Cycles



S&P500 1h Chart


Two SHS patterns, keep an eye on the 2194 or 2170 to see which Target is activated.

As you can see, there’s heavy resistance @  2184, 2188, 2194 and 2203. Support @ 2175, 2168, 2160

RSI is in a downtrend since Bradley Model Date AUG 5/8

SPX 1h


VIX Daily Chart


VIX was slightly down for the week, after reaching the resistance @ 14. Seems like OPEX players do not want a rising VIX during Option Expiration.

Currently, VIX trades near support and seems like it’s preparing for another retest of 14 and maybe even 17. After that, I expect another Lower Low for VIX during OCT-NOV.

Hammers in the blue box increase the odds for a pop in VIX

I expect a pop into the 17 level when the S&P500 retests 2140 area

VIX


EU vs USA


EU vs USA


AUG 17


If possible, I will add short positions S&P500 today, in the 2184 – 2193 area, with a tight stop loss @ 2194 (High AUG 15).

I will wait for the US open to take position. If I miss out on this opportunity, so be it, I have more than enough to profit from a down move.

Target is still 2140 retest. Max Risk = 10 points, return could be 40 points.

Click here for the latest update of the Swing Alert.


S&P500 15m chart 


SPX 15m


S&P500 Daily Chart


Daily


VIX 


VIX


S&P500 Weekly Chart


SPX Weekly Wedge


AUG 16


S&P500 1h chart

If 2186 fails to hold as support, expect a retest of

Today @ 2175, 2172

This week @ 2160…if that breaks, 2140 is next

Resistance @ 2196 from wedge trend line


Price is still in an uptrend, Higher Highs and Higher Lows, 2186 and 2175 key levels

RSI shows a Triangle Pattern, rule of thumb: break at 75% progress –> AUG 15, first a false break and then the counter move? That would lead to a test of 2192 for Monday/Tuesday and a Lower Low for AUG 18

RSI shows Bearish Divergence

There’s an inverse Shoulder-Head-Shoulder Pattern in play, if 2188 (neckline) breaks to the upside, target becomes 2188 + 16 = 2204, if you assume the neckline is @ 2192, a break > 2192 and the target becomes 2192 + 20 = 2212

Gaps @ 2175 and 2165

Key Levels to keep an eye on: 2196, 2193, 2188, 2186, 2175, 2160

SPX 1h



EU vs USA


EU vs USA


AUG 14 – UVXY +90% or +20%? 


The question I ask myself after Yue made a comment, is the following:

Will the UVXY surge by 90% or 20%?

I’m leaning towards two scenarios:

  1. either the current pattern is wave a of the wedge up, and that matches the 5% DEC 14-JAN 15 decline, UVXY increased 90% over that period.
  2. the other scenario is that the S&P500 is currently working on wave c up, next d down, and matches the period end of FEB 15-mid MAR 15, S&P500 -4% and UVXY went up only 21%.

As you know, I have been expecting a decline of 3-5% for almost three weeks now, so to say that this week it must happen is a little bit useless. But I do still expect a decline and retest of at least 2140 before we reach Higher Highs end of year.

We have got Option Expiration this Friday, and that could impact markets into the end of this week. The S&P500 has a solid support @ 2140 and 2100-2120. Furthermore, it’s election period and that would lead tot he conclusion that ‘they’ will not let markets drop that much.

So if I had to choose, I would say a decline of the S&P500 to at least 2140, maybe 2100-2110 and a surge of 20% for UVXY, c to d. A surge of 90% for UVXY seems a little bit too much in my view, especially since we had the 90% move already during JUN 2016.


UVXY 2016


UVXY 2016

 


UVXY 2015


 

UVXY 14


S&P500 abcde vs UVXY


UVXY DEC14


AUG 13


You could say I’m ignorant (which I sometimes am), but I still think that it’s correct to emphasize to you all that the short term risk is to the downside, 2140-2110, which should/could be an opportunity to overweight longs for Higher Highs into Q3/4

I do think that it’s possible that the S&P500 will test 2188, 2192, 2200 and 2205 this week, but I see this as an opportunity to add the 3rd (and final) batch of shorts S&P500 and the 2nd opportunity to add longs VIX

I’ll close the shorts S&P500, if possible, when the 2140 is reached this week. That’s roughly 2% from current levels. At 2160 I’m break even

Some charts to think about during the weekend…feel free to provide feedback if you (don’t) agree with my view…always welcome as I could become blind for my own (short term bearish, medium term bullish) bias

This week I will update the Swing Alert (Long > 2175) page, did not have time yet to plug in all the numbers of the last couple of weeks

Enjoy the weekend all!


S&P500 1h Chart  – Short Term


Price is still in an uptrend, Higher Highs and Higher Lows

RSI shows a Triangle Pattern, rule of thumb: break at 75% progress –> AUG 15, first a false break and then the counter move? That would lead to a test of 2192 for Monday/Tuesday and a Lower Low for end of week, Friday OPEX

RSI shows Bearish Divergence

Blue Arrows: Energy overflow, 13 points to the downside, expect the same to the upside, 2175 + 13=2188 –> High so far @ 2188

There’s an inverse Shoulder-Head-Shoulder Pattern in play, if 2188 (neckline) breaks to the upside, target becomes 2188 + 16 = 2204, if you assume the neckline is @ 2192, the target becomes 2192 + 16 = 2208

Gaps @ 2175 and 2165

Key Levels to keep an eye on: 2192, 2188, 2182, 2175, 2160

SPX 1h


S&P500 Daily Bow


Ellliot Wave looks like wave v of 5 up is finished or close to finishing

Price closed below blue support, 1st retest to close above failed (AUG 11 @ 2188), for AUG 15 a retest of blue line @ 2205 could take place

Volume – who is buying this market (besides Central Banks)?

SPX EW

 


S&P500 Daily Elliott Wave


SPX Cycles


Round the clock: VIX Daily, S&P500 Daily, VIX Weekly, Nasdaq Daily, R2000 Weekly, UVXY Daily


For the short term, I see limited upside for equities, 0.5% to 1% from current levels

VIX is currently at support (daily and weekly) and RSI shows signs of Bullish Divergence (daily), Weekly Resistance @ 25, 1st Weekly Target @ 15

UVXY – Proshares Ultra VIX short term – volume increases, is someone buying protection? 1st target 24, 2nd target 28

Russell2000 – Closed Lower for the Week, formed a Hanging Man and a Doji

Nasdaq resistance @ 4825 (+0.5%) and support @ 4785 (-0.5%). If 4785 breaks to the downside, 4740, 4730 and 4700 are targets for end of week

VIX


S&P500 Weekly Chart Wedge


Pattern looks quite similar to me

I will close shorts and will start to overweight longs in the 2140-2110 area

SPX Weekly Wedge


S&P500 Weekly Chart Elliott Wave


Weekly EW


S&P500 Weekly Chart – Candle Stick Pattern


Another week, another Bearish Candle Stick

Key Levels for this week @ 2195, 2140, 2115

Weekly Candle


AUG 12


During the holidays I asked myself why it always takes so long to form a High and why a Low is often formed in the blink of an eye.

And of course, I realize that such questions always pop up when you’re on the wrong side of the trade like me. But the answer is in my view the same as always, Central Banks. Last week I read that over the last couple of months the Swiss National Bank doubled their interest in Apple shares.

Since I started shorting this market, mid July, I am down for a total of 2.5k. I made some short term, intraday trades, but they can not make up for the loss that I currently face on the medium term short positions. Am I worried? No, not yet. Frustrated? Absolutely. Do I feel stupid? Hell yeah. But based on the charts, I still think I should be overweight short for a small corrective wave of 3-5%, 2110-2140. I do realize that my impatience and being afraid to miss out on an opportunity is the main driver for this current loss. Something I obviously find difficult to learn.

Some other charts, beside the ones that I showed yesterday evening, to build my case.


% of stocks above 50day Moving Average


While the S&P500 is setting Higher Highs, the % of stocks that is supporting this uptrend is decreasing/forms a Lower High, currently @ 72%.

50d MA


Weekly Chart – Wedge 


The current weekly pattern resembles the period of OCT 14 – MAY 15, a wedge up. If the pattern follows the same course as back then, it would suggest we’re currently at the red arrow.

Targets for the orange arrow are Fibonacci support levels 23.6% @ 2140 and 38.2% @ 2110.

Weekly Pattern


Daily Chart – Wedge


I’m now targeting the 2140-2110 area for a short term Low, wave b or d –> depends on how you label it.

Daily


AUG 11


A short update as I just got home from Paris (wonderful city, go if you have the opportunity).

I stay bearish, overweight short S&P500 and long VIX (today I entered the first VXX futures long position and yesterday and today I added S&P500 shorts in the 2180 area).

Some charts…


Weekly Candle Stick is forming another Bearish Candle Stick – a Doji or Hanging Man, depends on tomorrow.

Weekly Candle


VIX shows Bullish Divergence

S&P500 Bearish Divergence

Ultra short term VIX shows two green candles in a row, buying interest on increasing volume

Weekly: Higher High and Higher Low so far. Weekly Key Levels 2188 & 2172.

SPX & VIX


Elliot Wave can be labeled as a 5 wave pattern up

I changed the bows a bit, to better match pattern of price, heavy resistance @ 2190/2200

Elliot Wave and Pattern


AUG 7


Are you desperate for a simple Strategy to Beat the markets?

For the following case study, I took the Weekly Chart of the S&P500 and searched for Candle Stick Patterns such as a:

Of course, we could debate if the signals that I depicted in the chart below exactly fit the criteria as mentioned in the links, but let’s skip that discussion for another day. The point I’m trying to make clear here is that Weekly Candle Sticks are a great tool to use for “forecasting” next’s weeks performance and the start of a new Trend (short term as well as longer term).

What would be your Hit Ratio if you only trade the Weekly Candle Sticks that signal a change in Trend is becoming more likely? 

Out of the 26 signals during 2015 and 2016, that match one of the 4 patterns mentioned above, 20 signals led to a profitable trading opportunity in the week following the signal. In some cases, the new trend lasted longer than 1 week and it was even possible to make more than a 1% trade.

Where are we now?

The last two weeks, the S&P500 formed two signals that indicate weakness ahead: a Doji and a Hanging Man. As you can see, not every Hanging Man or Doji is a guarantee for the Jackpot, and in some rare cases it did not lead instantly to a drop in the markets, but with a Hit Ratio of nearly 77% since 2015, the odds favor a bearish week ahead.

For this week, the week of August 8, key levels to watch are: 2215, 2200, 2160, 2120.

Bradley Model Dates are scheduled for AUG 5/8 and the 35 day cycle finished AUG 2/3, the 7 and 42 day cycle is scheduled for AUG 8, August 9 represents the 63 day cycle. The next TTCM date is scheduled for AUG 14-17, a cluster of the 68, 70, 91 and 119 day cycle. VIX is showing Bullish Divergence and Price/RSI is showing Bearish Divergence. Furthermore, the Nasdaq underperformed the S&P500 during the last hour of Friday’s trading and the DOW is not able to set a Higher High while the SPX and Nasdaq are.

If the “market” (or should I say, Central Banks) respect(s) the pattern, then a Price < 2160 opens the door to retest support at 2120, 2100 and maybe even 2080. And in my view, that’s a buying opportunity for Higher Highs.

(ps. I’m back on Thursday, a surprise trip to Paris was planned, looking forward to that).


S&P500 Weekly Candle Stick Pattern that signal a Change in Trend is becoming more likely


Weekly Candle Stick

AUG 6


A short update as I just got back from holiday, but I do think it’s necessary to inform you that I expect a rapid decline of the markets at the start of this week. A week in which the S&P500 could retest the 2090-2110 area, -4% from current levels.

Although my expectation of a corrective wave into end of July, early August did not come true (clearly -1.5% was not the corrective wave I was expecting) I’m still sticking with my strategy to sell the 2150-2180-2200 area, which I did, for the 2150, 2140, 2130 and 2100 targets.

 I will close short positions on the way down, 2150-2100.

I’m back on Monday evening with a full update.


S&P500 Weekly Chart & Elliott Wave


Weekly Chart


S&P500 Weekly Chart – Hanging Man


Weekly Chart Hanging Man


S&P500 Daily Chart – DEC 2014 vs AUG 2016 and Elliott Wave


Same algo’s, same pattern, same outcome?

The correction from 2183 to 2150 could be labeled as a minor wave 4.

If correct, then wave 5 could be labeled as the move up from AUG 2 – ?, currently pressing against purple arc resistance @ 2180/90.

Bradley Model Dates are scheduled for  AUG 5/8. 


SPX DAILY Bow


VIX – Bullish Divergence in progress and Bollinger Bands


VIX


JUL 21

 ECB day! 


For the last two weeks, whenever  I check the EU and US open, I notice that the actual buying does not take place at the open of or during the cash market, but instead, the buying is done in the pre-market, mostly the hour before the cash opens. And although price might signal otherwise, it does not show strength that markets have to be pushed up before they open and then mainly trade sideways (USA) for the rest of the day during this week. Result: a lot of gaps and doji’s on the way up. Sooner or later, these gaps will be filled.

Last night, Japan opened Higher due to that futures were up 1% lifting along with the USA session, but the cash market trended lower for the rest of the day. This does not show buyers are willing to step in.

Today, it’s ECB day again, so that could have an impact on markets. Algo’s search for stop losses that are easy to target, so in my view it’s best not to place the stop loss on longs or shorts too tight when the ECB announcement is made.  

Let’s take a look at the information that I gathered.

The Swing Alert is still on a LONG signal, key level 2150, and although yesterday the E-mini (future) was up and surpassed the High of JUL 14 by 1 point, the internal indicators 2 and 3 show weakness. Indicator 1 improved from a score of 6 to 7, but they all have one thing in common, they’re closing in on turning negative and produce a new SHORT signal. The SuperTrend indicator is at a Buy the Dips > 2141.

Fear and Greed is at Extreme Greed and the % of S&P500 stocks that trade above their 50d Moving Average is at 85%. Based on the past, we should sell equities in an uptrend if this ratio is > 85% for a small corrective wave of 3-5%.

Elliot Wave:

  • short term – the move up from JUN 27 can be labeled as a 5 wave up pattern, with the push up yesterday as the 5th wave of a larger wave c up. Sell wave c for targets wave d of 2130, 2100, 2080, 2060. See Daily Chart below.
  • medium term – based on the Weekly, I believe wave c up of a larger wedge (abcde) pattern is in progress and should be followed by wave d, a Higher Low, and wave e, a Higher High > 2200. Buy the Dips.

Pattern of Price – Higher Lows and Higher Highs so still in an uptrend. A close below 2158, the Open  and Low of this week, and the pattern changes to a bearish one as a close below 2158 signals a Lower Low. So keep an eye on the 2175-80 resistance area and the 2158-50 to the downside.

The Weekly Pattern looks a lot like the pattern we saw during Oct 14-May 15, (wave c up, see weekly chart below) and at that time wave c up lasted 16 trading days. The current wave c up takes exactly 16 trading days.

My plan for the next two weeks is to stay overweight short in anticipation of wave c up finishing (confirmed with a close < 2158) and I will start overweighting longs when wave d down is close to finishing, end of July, early August, 2060-2100 is my target area.

Key Levels to keep an eye on for the short term: 2175/80, 2158, 2150.


S&P500 Weekly Chart


During Oct 14-May 15, wave c lasted 16 trading days, 3 calendar weeks, see update of JUL 20. The 4th candle stick showed weakness and the 5th was confirmation that wave c finished.

If the weekly pattern for wave c up is repeated, then “it’s now or never” –> the current pattern shows 3 weeks up and the 4th week up is in progress, but facing resistance @ 2170-80.

A close below 2158 –> Open and Low of the Week –> confirmation that wave c has started.

Weekly Chart


S&P500 Daily Chart


SPX DAILY


JUL 20


Spot the differences…

OCT 14-MAY 15 Wave 5 of III up

 SPX DAILY OCT 14

vs

FEB 16 – SEP 16 (?) Wave V up

SPX DAILY


JUL 19


JUL 19 S&P500 15m chart – Update after Close


A break above resistance 2166 leads to 2166 becoming support and activates 2173, 2175, 2179 for tomorrow.

Key levels to the downside @ 2160, 2155, 2150.

S&P500 15m


By now, I don’t have to tell you how overbought this market is and a cooling off would seem logic. We also know that logic and fundamentals have nothing to do with current markets.

Yesterday, July 18, was the 14 and 21 day cycle, and represents the Highest Close, but not a Higher High (JUL 14). The uptrend started JUN 28 and lasts exactly 3 weeks. So time wise, it could trigger a corrective wave down. Regarding Price, it faces resistance @ 2170 from 4h, daily and weekly trendlines. RSI shows Bearish Divergence and the Trend Indicators (Swing Alert, SuperTrend, MACD) show early signs of weakness ahead.

The 15m chart of the CFD (sort of future), shows an impressive move up, but short term, also a pattern emerges that starts to look like bears will take over –> Lower Highs and Lower Lows.

I still expect a corrective wave into end of July, beginning of August, cycle date AUG 3, for S&P500 targets of 2130, 2100, 2080, 2060.

Based on the chart below –> Support @ 2157, 2155, 2149 and Resistance @ 2163-64, 2166, 2172.

So keep an eye on the 2150 to the downside and 2170 to the upside.


S&P500 15m chart – Key Level 2150 -0.5%


S&P500 15m


JUL 17


Conclusion: I’m aiming for a Low end of July, early August, 2100-2060, wave d down and a Higher High for wave e up into September. But first we need to get confirmation on Monday/Tuesday, in the form of Lower Highs and Lower Lows intra-day (and at close), before we can state that wave d has started. Also, keep an eye on the 2150 (trendline 4h) and 2135-40 area (previous Highs) for possible support. Resistance from 4h, daily and weekly trendlines in the 2160-70 area.

I will close 75% of my short positions on the way down, if possible, starting below 2130 and stopping at 2100. I’m satisfied if we see at least a retest of the 2100 area this week, 2080 and 2060 would be a bonus in my view –> that’s why I want to keep 25% remaining.

The 2100 area is the area where I will start to look for signs that indicate we should overweight long positions and wave d has formed.

Personally, a corrective wave into 2060 is a bridge too far in my view, 5% from current levels. But last week was once again proof that opinions don’t matter when trading the markets.


Swing Alert Mectrics


The Swing Alert is on a Long since June 30,  and will change to a short/sell the Rips < 2135.

Fear and Greed and % stocks trading above 50d MA are at extreme levels!

Let’s continue with some charts to build my case for Lower Lows next week/two weeks, but Higher Highs into September.


VIX Daily Chart


Several things I notice about VIX:

  • VIX broke red resistance line to the upside, currently retesting support, see blue squares
  • RSI broke the short term uptrend, happened 3x before in this time frame. All 3 times it led to a small pop up in VIX, so 15-17 could be retested this week.
  • Support @ 12.5-13
  • Resistance @ 16, 17

VIX


S&P500 DAILY CHART Wave V up OCT 14 – MAY 15


Back then, wave d retraced 62% of wave c up, exactly at support of the wedge.

SPX DAILY OCT 14


S&P500 DAILY CHART Wave V up FEB 10-today


  • Price broke down purple support.
  • RSI is unable to follow Price up and set new Highs, Bearish Divergence.
  • Fibonacci 38% @ 2100.
  • Fibonacci Support 62% @ 2060, exactly at support of the wedge.
  • Resistance 2170 area.
  • Support @ 2126, 2100, 2080, 2030-60.
  • Cycle Dates JUL 18, 26 and AUG 3.

SPX DAILY


JUL 15


Needless to say, but I was completely wrong about the current pattern and started overweighting shorts way too early. Although I was wrong, I still think it’s wise to overweight short positions for a retest of at least 2100 next week. This is based on a change in view regarding the structure of this 5th wave up. As I mentioned yesterday in the update of the Weekly Chart, wave 5 up usually is not a clean, non-overlapping waves. Looks more like triangles and wedges. So I used that insight to make a projection of the Daily Chart.

Based on the pattern below, wave c up is close to finishing or finished yesterday at 2170 resistance line. If correct, wave d should follow and take the S&P500 to the 2100, roughly a 3% down move.

Short term: Sell the 2170 area for a retest of at least 2100

Medium Term: Buy the dips, 2100-2050, for Higher Highs into end of year.

As you know, I’m overweight short and I will hopefully be able to close those short positions next week, 2100 area, wave d down.


S&P500 Daily Chart


SPX DAILY


JUL 14


Should we sell (c), the 2170-2200 area for targets (d) @ 2100/2080/2050?

So I was puzzling the weekly chart and suddenly it hit me that waves 5 up often show a triangle, diamond or wedge pattern…overlapping waves and anything but a nice and clean, non overlapping 5 wave up structure.

As an example, I will refer to the following time period: during OCT 15 – MAY 15, wave 5 up consisted of overlapping waves and an abcde structure.

And then I thought, what if the Price Pattern of OCT 15 – MAY 15 equals the current Price Pattern –> FEB 16 – OCT 16?

If history repeats once again, wave c up is close to finishing and wave d will take the S&P500 to 2100-2080-2050.

Last time, wave c up lasted 3 weeks and wave d in total 5 weeks  (2 down, 1 up, 2 down).

Currenrly, wave c up lasts 3 weeks….Be prepared….


S&P500 WEEKLY CHART


Weekly Chart

I have decided to keep the short positions at least till next week (after OPEX) as I’m pretty confident we will see lower prices next week and an opportunity to take profit on the short positions (based on my own analysis of course, but also based on Armstrong who warns for increased volatility for the week of July 18).

Currently, my unrealized losses on the shorts (1k) equal the profit that I made on the long positions that I entered and closed during June/July. So one month of work down the drain.

Needless to say that I’m not satisfied about the last trades I made, but I do not worry too much for now as I still believe we should see a corrective wave before we reach to the 2200+.

Below an update of the Swing Alert and the charts.


JUL 14


The Swing Alert is still on a Long Signal, but yesterday indicators 1 and 2 showed weakness. Furthermore, Fear and Greed is at Extreme Greed, the % above 50d MA is at 84% and out of the last 4 days, the Nasdaq underperformed 3 days vs the S&P500…all early signs this short term uptrend is coming to an end.

To be clear, I do not expect a significantly Lower Low < 2040…I expect a Higher Low for next week in the range 2080-2100 as there’s a cluster of cycle days for JUL 18-22, 7 in total! (Will update those cycles this weekend).

Below the updated charts of the 15m, 2h, 4h and Daily chart.


S&P500 15m chart


The 15m RSI formed a Positive Reversal and leads to a Target of 62 for RSI –> currently at 52, so that would indicate more upside for today/tomorrow into OPEX.

Price trades below purple trendline, resistance 2155 and increasing with time up to 2180 for JUL 18.

S&P500 15m


S&P500 2h chart


S&P500 2h


S&P500 4h chart


S&P500 4h


S&P500 Daily chart


SPX DAILY


JUL 13


My strategy is to close the shorts as soon as possible, as I do not believe in a large corrective wave, 2080 might be the best the bears can get, but I will close my shorts at 2130, 2100 and hopefully 2080.

Keep in mind, Friday is OPEX for July. If I remember correctly (can’t find the chart anymore, no time now to make a new one), a massive surge up the week(s) before OPEX led to a sharp decline two to three days into OPEX.

Let’s start with VIX today. As you can see in the chart below, VIX found support at long term support line 13 and if the past is an indicator for the future, then we should expect at least a test of 16. I also notice that VIX has a positive bias the last two days, while stocks were up. Normally, this should lead to the expectation of stocks going down and retest 2130 and 2100.

VIX


S&P500 15m chart


Whatever time frame (15m, 1h, 4h, daily chart) I use, I see Bearish Divergence all over it.

Furthermore, the 15m trend was not able to stay above the purple support. A retest of at least 2130 would make sense to me.

Key levels 2155 (High JUL 12), 2130, 2100.

S&P500 15m


S&P500 4h chart


I’m still sticking with my blue scenario, a sharp and rapid decline into Friday JUL 15 (OPEX) – Tuesday July 19 (7 calendar days from the High of JUL 12 so far).

As you can see, the 4h RSI also shows Bearish Divergence, the 3rd time since April 2016.

S&P500 4h


S&P500 Daily Chart


Facing long term resistance @ 2155 and RSI shows Bearish Divergence.

SPX DAILY


JUL 12


Eight different US stock markets all have one thing in common: parked at Long Term Resistance.

It would be too easy to expect an immediate drop down now, right?

The more patient/risk averse/medium term trader should increase the stop loss on long positions and wait for a Higher Low to add long positions. The greedy ones closed their long positions and want to play the short term downside potential.

8 markets

I closed the remaining long positions and I added shorts S&P500 for a total short exposure of EUR 150 margin.

I know it’s a bad idea to throw good money after bad money, that’s why I set the stop loss @ the High of today + 1%. If tomorrow does not bring the expected change in short term trend, then I’m out. And quite frankly, I’m really pissed at myself for trading against the trend, wasting all profits of June for trying to catch a small wave ii down.

Tonight after the close I will update the charts.


JUL 11


Hi all,

Below an update of the S&P500 15m chart. Some things I notice:

  • Clearly an uptrend since JUN 27, the 70 day, 10 week cycle
  • It’s a good news show, bad news is neglected
  • It’s calm out there, maybe too calm…
  • Bearish Divergence RSI vs Price
  • Weekly Resistance trendline @ 2137-42
  • Fibonacci 38% Support @ 2080
  • JUL 11/12 is a Cycle Date, as mentioned in the Weekend Update. Seems like a short term High to form.
  • Earnings season will start after the close today…although expectations have come down (and upside surprises become more likely), I can’t imagine earnings season to be worth the current value of equities…and then to think that it will even get worse…before it gets better
  • EW pattern looks like a wave 5 up structure, the first wave up of a larger wave V up, see Weekly Chart
  • Apple is not leading, Lower Highs
  • Keep an eye on the 2140 and 30 to the downside, 2155 to the upside
  • Support @ 2140, 2130, 2100, 2090, 2075, 2040
  • Resistance purple trend line @ 2155
  • Inverted Shoulder Head Shoulder, we still need a right shoulder to finish the pattern. If so, it points to a target of at least 2200 for the medium term, end of year

So short term there’s a lot of “evidence” we should expect a corrective wave, and in my view, it’s another opportunity to buy the dip for Higher Highs into end of year. Madness…we live in interesting times…in ten years we’ll look back and blame ourselves for not seeing the obvious….Until the music stops…and no chairs are left.

It would make sense to me to tighten the stop loss on long positions –> I changed the stop loss on the remaining long positions to 2129, just below green support. With hindsight, I left a lot of money on the table…but if I knew everything beforehand, I would not sit behind my computer right now but instead would be enjoying sipping cocktails at some distant beach.

I will adjust the stop loss on my short positions after the close today.

I will get back on the long side/overweight long positions after I believe wave ii bottomed, there’s Bullish Divergence, a next Cycle Date, or the S&P500 formed a Higher Low.

Enjoy your evening!


S&P500 15m chart


S&P500 1h


JUL 9


Hi all,

For this weekend update I have a lot of interesting information to share with you all. Feel free to ask questions or share your own view.

Let’s start this update with our in-house developed Trend indicators.

The Daily Swing Alert is on a LONG signal since JUN 30 @ 2098, but it will change to a SHORT if the S&P500 closes below 2100. The Daily SuperTrend is at a BUY the DIPS > 2064.  The % of S&P500 stocks trading above 50 day Moving Average is currently @ 73%, a level where we should overweight shorts. Furthermore, Fear and Greed is back to levels that scream SELL, SELL, SELL, currently at Extreme Gread 73. Last time it reached these levels, the S&P500 followed with a correction of 5%.

Current CyclesShort Term – JUL 11 is 7 days since the High of JUL 4 and 14 days since the Low of JUN 27. JUL 12 is 35 days since the High of JUN 7. Medium Term – JUN 27 marked the Low for the 70 day/10 week cycle, next cycle date is AUG 2 (35 day cycle since JUN 27).

Let’s continue with some charts that build my case for a Low this week, 1st Target 2075-80. To be fair, I already expected a Low for JUL 12, but it seems that I was too early. Short term I’m still biased to short positions, but for the remainder of the year, I’m buying the dips (see monthly, weekly and daily charts below).


Pattern of Wave 1 up


In this section I would like to discuss the current Pattern of Price and how much it resembles the pattern we saw in FEB 2016.

Let’s start with the period FEB 10-22. FEB 10 marked the Low for Wave IV down and the start of wave V-I-1 up. As you can see in the 4h chart below, the S&P500 surged from the FEB 10 Lows, showed a sideways correction, gapped up (blue circle) and formed a Higher Low for wave 2 down.

wave 1 up 4h feb 10

Now, let’s take a look at the current Pattern of Price, also labeled as a wave 1 up (V-III-I).

This pattern looks a lot like the pattern we have seen in FEB 2016. If the algo’s play the same game, then we should expect a corrective wave this week to form a Higher Low for wave 2 down.

In FEB, wave 2 down corrected 40% of wave 1. If this pattern is repeated, it leads to a Price Target of 2075-80 for wave 2 down, JUL 15 (OPEX) or JUL 18 (next cycle date).

The orange scenario is my alternative scenario. This scenario assumes wave I up is close to finishing and if so, wave II will form a Higher Low < 1990 and > 1810. Not my base scenario, but if correct, it does imply more potential for short positions during July and August.

wave 1 up 4h jul 8

Let’s continue with the Long Term Charts and work our way back to the shorter time frames.


S&P500 Monthly Chart


Bubbles, bubbles, bubbles…but this time the real bubble isn’t in equities in my view. It’s the bond market that is even more out of whack and whenever that bubble (record low rates) pops, it will lead to an outflow of public assets (sovereign bonds sold, rates up) and an inflow into private assets such as equities and precious metals.

This is my current view, new All Time Highs for end of year, target 2300. After that target is worked off, I either expect the start of the big crash (white scenario, same pattern as 2000 and 2007) or in the alternative scenario (yellow), I expect wave IV down and another surge up for wave V.

We all know that from a fundamental point of view, equities are extremely overvalued at P/E ratios of 25. But my expectation is not based on fundamentals, it’s based on the assumption that people do not want to invest in sovereign bonds anymore, lose confidence in governments and search for alternatives that will lead to capital preservation instead of capital appreciation.

Frequent readers know that I have invested a large part of my portfolio in silver and golden coins, fixed my mortgage rates for the long term and have a long term portfolio in which I invest in global equities. So I’m prepared for the longer term. Now I only need guns and non-perishables to be classified as a prepper 😉

Monthly Chart Bubbles


S&P500 Weekly Chart


Key message from the Weekly Chart is Buy the Dips for Higher Highs into end of year.

For the week of JUL 11-15, pay attention to the 2137-42 resistance area. If this breaks to the upside (and closes above), it activates the 2170. Support @ 2120, 2100 and 2080.

Based on the rule of thumb that wedges and triangles break out at 75% progress (in time), it will lead to the conclusion that the S&P500 is close to breaking out, this week or the week of JUL 18. Based on my expectation for the remainder of 2016, I expect a break to the upside.

The orange scenario is my alternative scenario. This scenario assumes wave V-i up is close to finishing and if so, wave V-ii has to form a Higher Low < 1990 and > 1810. Not my base scenario, but if correct, it does imply more potential for short positions during July and August.

Weekly Chart


S&P500 Daily Chart


The S&P500 closed above resistance 2125.

The RSI forms Lower Highs so far, while Price was able to set a Higher High –> Bearish Divergence in progress, confirmed if the S&P500 starts a corrective wave next week.

Support @ 2120, 2100 and 2080.

Buy the Dips seems to be the ongoing message from Central Banks.

SPX DAILY 


S&P500 4h Chart


Some things that I find interesting about the 4h chart.

  • Price worked its way back to the magnet/aorta, purple line @ 2130. This happened 3 times before and in all 3 cases it led to a corrective wave (red circles)
  • The current uptrend, wave I, takes 14 days so far.
  • Cycle Date JUL 11 points to a High for the short term. Next cycle date JUL 18.
  • There’s an inverted SHoulder Head Shoulder pattern in play. If the 2130 breaks to the upside, it will lead to a Target of 2100 + 110 = at least 2200. In my view, the right shoulder is not finished yet. Target @ 38% Fibonacci = 2080.
  • 4h RSI shows early signs of Bearish Divergence and is facing resistance.

S&P500 4h


ALL MARKETS


  • VIX is at support 13
  • Nasdaq at resistance 4520
  • Dow at resistance 18150
  • R2000 approaching the High of JUN
  • 10y UST yields are down –> safety is bought, rates down. If bonds see an inflow of money, bond price goes up, rates down, then how can it be that equities go up? The bond market is 3x the size of equities…so where does the money flow come from? Ctrl-P, I just remember…it’s the Central Banks printing money.
  • USDJPY is still in risk off mode, setting lower Highs and Lower Lows.
  • Crude Oil corrected almost 10% from 52 to 48, currently at support.
  • Gold and Silver in an uptrend.

Why does it look like safe havens (Bonds and Gold) are bid and equities haven’t received the same memo?

All markets

I found the following charts at zerohedge.com, great website for information, although I have to say that those guys are extremely bearish…but they do provide interesting analysis/information. I just wouldn’t advice to read it everyday to make sure we don’t end up as a doomsday prepper.

Summary: stock have gone too fast, too furious again compared to Bonds and Crude Oil.

Divergence 5

Divergence 4

Divergence 3

Divergence 2

Divergence


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Enjoy your weekend!

 


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3 thoughts on “S&P500 Charts and Strategy

  • Kwinten

    Edwin, are you also consider adding long puts to your portfolio in the near future? If yes, which maturity date, underlying (SPDR 500 ETF?) do you advice? Thanks in advance! Siemen

    • Edwin van den Berg Post author

      Hi Siemen, good question. I have considered it, but I will not add put options. Ten years ago, I traded options, but I found (and still find) it difficult to select the right maturity and strike price as I do not understand the impact of theta, vega and volatility in such a way that I can use it properly. So I will stick to gold and silver coins as a hedge for a revolution/crash/Trump, fixed mortgage rates, cash and CFD S&P500 short positions and/or CFD VIX long positions. That should be sufficient to preserve my capital…