Monday, August 8, 2022

The S&P 500 (SPX) averted breaking any kind of designated support levels and rallied higher. The coming week should be more challenging as both the daily and the 2 day SPX charts are very near TD Sequential price exhaustion levels. For simplification, if the SPX can record a print at 4167.66 or higher and record a TD Sell Setup @9, this will mark the beginning of potentially a major price exhaustion period. With or without a perfected TD Sell Setup @9, trading below the 15/30 minute TDST Support at 4091.33 will demonstrate cracks in the rally and trade below the cluster of short term TDST Support levels at 3920.32 should confirm the halt of the current bull trend.

If the SPX can continue to shake off any selloffs, it’s more probable the bull trend won’t end until August 19 – 22. First note a potential catalyst day will be on Wednesday, August 10th, when the monthly CPI print is released. Normally if the daily SPX is approaching a 9 count, it would make sense to fade the CPI print no matter the print. However, momentum has been strong as short term counts were doubled up by recording back to back ‘9’ counts for a total a 18 counts or TD Sell Setup @9 + 9. If there is a favorable below consensus CPI print, the daily SPX can also mirror the short term counts with a TD Sell Setup @9 + 9. If this is achieved, the daily SPX will be on track to record price exhaustion between August 19th – August 22nd. This will potentially coincide with the 3 and 4 day charts when they record their respective TD Sell Setup @9 counts. A potential target could be TD Trend Factor at 4342.31 as shown on the daily chart. 

Bitcoin (BTC/USD – Coinbase) has entered a volatility squeeze per the TTM_Squeeze indicator. It is also bounded by the 8 hour TDST Resistance level at 24600 and the 21045.73 TDST Support level. Against the Nasdaq or even the SPX, the BTC relative strength is weak. While it’s possible BTC may have hit a bottom at 17567.45 back on Saturday, June 18th, money is not  flowing to crypto as in the past. A break above the 24600 TDST Resistance may just be another sell opportunity when the next TD Sequential counts are recorded possibly around 30k. 

Monday, August 1, 2022

Big market rally good enough to push the S&P 500 (SPX) to close July right at 4130.29 which is the designated level to include a long term bullish narrative as shown in the monthly chart. This makes August a make or break month. If the SPX can close above 4131.93 on August 31st, the SPX will price flip the monthly DeMark TD Sequential counts. A price flip by definition will halt the long term selling momentum and reset again. This will pivot the bearish outlook to include a neutral stance. Should the SPX close below 4130.29 on August 31st, the primary bearish narrative stays intact with lower low print below 3636.87 during September or October. 

The best challenge to the 4130 bull/bear level as explained in the beginning of the post starts August 8th. From the weekly SPX, the active TD Sequential count is TD Sell Setup @3. Normally price exhaustion can come between TD Sell Setup counts from 8 or 9. However there is a cluster of timeframes from the daily to the 4 day SPX that will suggest an interim top would come before a weekly can record a ‘9’ count. In the middle of August starting August 8th begins the time range where a swing lower should occur. August 17th is of particular interest since more timeframes are concentrated there. A more specific date will be explored at a later time. 

On a shorter timeframe, the daily has an active count of TD Sell Setup @3. A TD Sell Setup @9 can record on Monday, August 8th. Before it gets there, the first test should come Monday or early Tuesday when the four and six hour SPX come together with their respective 9 counts. While 3950 – 4000 will serve as a bullish base, dropping below 3920.32 will validate a bearish reversal. 3920.32 is the TDST Support level for the 45/60/90/120 minute timeframes. Anything above 4100.10 (10/15 minute timeframes) is uber bullish. Note the 4135.40 TD Trend Factor. That level holds minor significance since the current daily count is at a ‘3’. More attention would be paid to it if the counts were closer to ‘9’ near that level.

Since the US Dollar Index (DXY) is still important to gauge risk appetite. TD Buy Setup @9 can be recorded on August 8th. Should the DXY record a TD Buy Setup @9 near the 103.77 TDST Support level, that effectively supports a halt to the SPX rally. 

BTC (USD – Coinbase) finally went on the offensive, but looks to remain capped below 30k. The 20,755.95 TDST Support level for the 8 hour timeframe effectively held from last week and printed a higher high. Since the 8 hour has recorded a TD Sell Setup @9, an updated TDST Support level is drawn at 21,045.73. Similar to the SPX, it also has an active TD Sell Setup @3. BTC needs more time to surpass the daily TDST Resistance level at 30,337.83. However it will be constructive if 21,045.73 holds.

Monday, July 25, 2022

The S&P 500 (SPX) has retested the 3636.87 June lows last Thursday, July 14th, and rallied to where both the four hour timeframe (shown above) and six hour timeframes recorded TD Sell Setup 9 counts on Thursday, July 21st. Some consolidation between the high at 4012.44 and where the 50 day moving average resides (currently at 3919.05) should be expected going into next week’s FOMC meeting along with a slew of high profile earning reports. While the SPX is positioning for further gains, next week will be volatile and somewhat binary. The big negative is if the SPX breaks down below 3829.89 where a cluster of short term TDST Support levels are situated. 

The daily SPX has an active TD Sell Setup @6. Should the SPX front run the FOMC event and continues to trade higher, and completes a 9 count, it is difficult to see more upside since a 9 count on the SPX may press against the 4135.40 TD Trend Factor. If a TD Sell Setup @9  is completed, it will coincidently fall on the same day as the FOMC meeting on Wednesday, July 27th, which sets up fading an initial reactive rally. A better bullish setup would be to see consolidation leading up to the FOMC announcement as outlined earlier. 

Concatenating the SPX, the US dollar has been the primary risk barometer. The US dollar Index (DXY) broke out from long term highs at 103.82 set back in January 2017 and long term DeMark indicators haven’t reached full price exhaustion. However the daily chart above has recorded a TD Sell Setup @9 on Monday, July 11th, and the DXY has consolidated allowing the SPX to rally. The DXY currently has an active TD Buy Setup @6, which also can record a 9 count on FOMC day, Wednesday, July 13th. If a 9 count is recorded, similar to the SPX, the bullish setup for the DXY would be a negative setup for the SPX. Note the TDST Support level at 103.77. This level is almost exactly the long term DXY breakout level at 103.82. To help confirm the bullish rally in the SPX, if the DXY DeMark TD Sequential resets by price flipping bullish – best chance on Monday by closing above 106.683 – this sets up a sustainable rally for the SPX if the DXY can break below the TDST Support level at 103.77 with a TD Buy Setup counts 1 through 3. 

Longer term, there are some market data pointing to a bottom is in for the S&P 500 (SPX), but nothing definite as breadth thrust levels have not been reached. The weekly SPX has an active TD Sell Setup @2. Netting everything together, the rally is considered a bear market rally unless the SPX begins to peek above 4130. 

On the daily Bitcoin (BTC/USD – Coinbase) chart, it is one count away from recording a TD Sell Setup @9. Whether it does record a 9 count is not that significant at this point. What would be significant is for BTC to hold above 20,755.95, the TDST Support for the eight hour timeframe. The daily TDST Resistance level is at 30,337.83. There is a lot of repairing to do for BTC to see that level soon. 

Monday, July 11, 2022

The S&P 500 (SPX) started July bullish and closed the week near the 30 and 60 minute TDST Resistance levels at 3910.31 on the above 60 minute chart. At the same time, both the 30 and 60 minute timeframes are recording price exhaustion levels with TD Sell Setup 9 counts. Expect weakness early next week as a result. The bullish framework stays in place as long as the cluster of the 60 minute TDST Support level at 3820.40 and the 2 hour TDST Support at 3809.37 holds. Breaking above the TDST Resistance levels especially at 3945.86 keeps the rally going. 

If the SPX continues to stay strong and rallies, the daily SPX has an active TD Sell Setup @4 which can terminate next Friday, July 15th with a 9 count. The TD Trend Factor at 4041.28 becomes significant if a TD Sell Setup @9 is in close proximity. 

For the long term, the weekly SPX barely price flipped bullish to close the week, but there is still a lot of work to do to change the bearish landscape. The recent rally has no depth in terms of volume or breadth. At best, it’s operating on a basing pattern which can turn bullish through time. Further lows are still strong options unless the SPX can get above 4130 in the weeks ahead. 

One bullish sign for risk assets is Bitcoin (BTC/USD – Coinbase) has peeked through the 12 hour TDST Resistance level at 21866. That’s a step in the right direction considering the fragility of crypto. The daily TDST Resistance at 30337.83 is the major target level. 

Tuesday, July 5, 2022

Some long term charts since we just concluded the first six months of 2022. The quarterly timeframe for the S&P 500 (SPX) could not manage a TD Sell Setup @9 count and price flipped bearish to end the June 2022 quarter. Since the Great Financial Crisis, every major red candle has been followed by a green upside candle. If history doesn’t repeat, markets could be signaling a secular change. 

Unless the monthly SPX can get back up above 4130, the current downturn will be on track to terminate in September at the earliest with a TD Buy Setup @8 or October when the SPX can record a TD Buy Setup @9. 

Weekly SPX has an active TD Buy Setup @5. This makes the weekly, monthly, and quarterly SPX timeframes in a bearish cycle. If the weekly can close above 3900.86 on Friday, July 8th, that will help start the discussion of a bull case.

For the near term, the SPX experienced another short lived rally. Since not much can be drawn from the daily chart, the two hour SPX above shows the best path forward. Hold the 3748.72 TDST Support level, and SPX will need to overcome the 90/120 minute TDST Resistance level at 3945.86. A more aggressive TDST Resistance level is at 3910.91 which represents the 60/90 minute timeframe. Currently the economic backdrop is following the Fed’s actions. Inflation is no longer accelerating, and 10 year rates are leveling off. Given the two hour TDST Support level at 3748.72 has held, the sense is equities will continue the volatility grind upwards to 4000 in the face of an intermediate and long term down trend. 

Bitcoin (BTC/USD – Coinbase) news keeps getting worse, but that has not translated into lower lows. If there will be any tailwinds, BTC will need to clear the 12 hour TDST Resistance level at 21866. 

If there a path for a lower low, the monthly TD Sequential for BTC has an active TD Buy Setup @8 that is unperfected. 

Monday, June 27, 2022

The oversold rally in the S&P 500(SPX) is aptly labeled with the relatively low volume. The rally can continue close to or at the end of next week as end of the quarter Window Dressing keeps the market afloat. Since the SPX will start the week short term oversold, if the SPX can hold above the 3769.08 TDST Support for the 60 minute timeframe early in the week, 4000 can be tested. Since the beginning of the 2022 year, there has been three significant oversold rallies that has averaged about 10.3%. If the assumption stays the same, a 10% rally from the 3636.87 bottom takes it to around 4000. Furthermore, if the daily TD Sell Setup is still active around a 7- 9 count, and trading near the TD Trend Factor at 4041.28, this will setup a stronger shorting opportunity.

Currently the weekly SPX has an active TD Buy Setup @4. If the market remains weak, lower lows until end of July can be expected. The one bullish path is for the SPX to continue to hold 3900 until it can potentially price flips on Friday, July 8th. From there, it can solidify the notion of at least a choppy summer. To solidify the bullish path, 4130 is the primary level to overcome to price flip the monthly SPX in the months ahead. 

Bitcoin (BTC/USD – Coinbase) marked a price exhaustion reversal point last Saturday, June 22nd with a TD Buy Setup @9. The bullish response has been tepid which is probably a nod to the current fear of investing in the crypto space. 30,337.83 is the TDST Resistance for reference where BTC can show a bullish stance. At a bare minimum, BTC needs to stay correlated with the SPX. If BTC breaks the 17567.45 low, while the SPX stays productively high, there is probably another crypto liquidity event in motion. 

Tuesday, June 21, 2022

Having the S&P 500 (SPX) record a lower low and close last Monday, June 13th, reversed all bullish views. Looking back at the McClellan Oscillator and Wayne Whaley’s Breadth Thrust, they both confirm a failed bullish read. The McClellan Oscillator needed to hold the zero line to help insure the previous low at 3810.32 would hold. That failed and Wayne Whaley’s Breadth Thrust dramatically went from an extreme high to an extreme low. Going as far back as the charts allow, this has never happened. Anomalies such as this and other ’never seen before’ events should be taken seriously as they portend to more ‘events’.

Now that a bearish overview has been established for the long term, to remotely see anything bullish, the SPX would need to trade above 4130. That is the price range for the a potential monthly price flip. More specifically, 4131.93 for August and 4132.15 for September. Trading above these levels will raise the possibility that momentum can be halted through a monthly DeMark price flip. If momentum continues lower, a TD Buy Setup @9 can record in October. Note: A monthly 9 count has never been seen since 2008. 

Coming into the daily SPX chart, a TD Buy Setup @8 has been recorded. The 8 count is also perfected since it recorded a low print that is lower than the 6 and 7 count. This opens the door for another snapback rally. However the recent 8 count close was not too inspiring. Therefore more lows terminating between between next Tuesday, June 21st when the daily can record a 9 count, and next Thursday, June 23rd when the short term 4/6 hour timeframes can converge with the daily could signal a bullish reversal. For price targets, a new TD Trend Factor at 3518.71 is drawn. This falls within consensus with other market watchers looking for a 3400 – 3500ish bottom. The 3505.24 is the 50% retracement from the Covid low to all time highs. 

The news for Bitcoin (BTC/USD – Coinbase) keeps getting worse. It is now having systemic issues with Three Arrows crypto hedge fund unable to meet margin calls, and the Celsius crypto lending platform halting withdrawals. These are Lehman type moments except there will be no bailout making a liquidity shock real. That said, BTC has also reached the point of price exhaustion. The weekly TD Buy Setup and daily TD Buy Setup are converging with 9’s and 13’s. If there is a liquidity event, that just may signal a bottom in regards to the TD Sequential indicators. Ironically, such an event wouldn’t signal a new bull market as the would change the crypto winter landscape into a crypto ice age longer term.

Monday, June 13, 2022

Solid bear run after the former 45 minute TDST Support at 4057.15 failed for the S&P 500 (SPX). The 8.6% CPI print gave another leg lower, but dip buyers did not show up as anticipated. The SPX also closed a nudge below the previous low close at 3901.36 for both the daily and weekly timeframes and gives the go ahead to trade lower. 

Staying optimistic that the 3810.32 low will hold, the short term DeMark TD Sequentials have recorded price exhaustion, but the SPX would need to press above the 4096.20 TDST Resistance, which is a tall order for the short term. A better opportunity would be to allow the 4 and 6 hour timeframes record their respective 9 counts which targets Tuesday, June 15th, the day before the FOMC meeting. 

Whichever the decision – 50 bps or 100 bps, this gives the SPX chance to rally, ideally without breaching the 3810.32 lows first. The negative outcome would see the SPX break 3810.32 and continue to mark lower lows until the daily SPX records a possible TD Buy Setup @9 on Monday, June 20th perhaps to the 3725.92 TD Trend Factor. However by then, technical damage would be severe and indicate many more weeks of an overall downward trend. 

To give some support for a FOMC induced bullish reversal, the High Yield iShares ETF (HYG) is reflecting an overall bearish outlook, but the current daily TD Buy Setup @7 sets up a 9 count on Tuesday, June 14th, the same day as the 4/6 hour SPX timeframes. Note the HYG has already marked a lower low. There needs to be heavy upward pushing to gain confidence the low for the SPX is in. 

Revisiting the CBOE 10 year Treasury Index (TNX), it has recorded a TD Sell Setup @9 for the daily chart as of last Friday’s close. The price exhaustion forces will stay intact as long as it is capped below 33.62 (3.36%). Also, the weekly and monthly TNX has already recorded price exhaustion indicating rates would struggle to gain more upward velocity. 

A bit more esoteric, but another case for rates to cool off. The Japanese yen has been crushed as it runs anti-correlated with rising rates. With an uncomfortably high public debt, Japan cannot afford increasing rates, and has to keep printing yen to compensate for rising rates. Currently the JPY/USD pair has recorded a TD Buy Setup @9 setting up a reprieve in rates and the yen. Similar to the TNX, the JPY/USD  weekly and monthly timeframes already recorded respective TD Buy Setup @9. 

For the longer term outlook, the eye test for the weekly SPX looks very bearish if it closes below 3901.36 on Friday, June 17th. This will set up a long Summer.

Bitcoin (USD – Coinbase) has recorded an unperfected TD Buy Setup @9 and TD Buy Countdown remains with a 10 count for the weekly chart. Unless 39864.55 gets taken out on the upside, the easier path is lower to fulfill the TD Sequential indicators by recording a TD Buy Countdown @13 or a perfected TD Buy Setup @9 by trading at 28000 or lower. 

Monday, June 6, 2022

The S&P 500 (SPX) is signaling two sides for the short term. On one side, the 45 minute TDST Support at 4057.15 continues to hold. This keeps the market technically bullish. On the other side, the daily SPX has price flipped bearish before recording a TD Sell Setup @9. A break below 4057.15 won’t necessarily signal another lower low, but a drawdown to the next level possibly between the 90/120 minute TDST Support at 3925.03 – 4000. 4000 is just an arbitrary round number. Should 4057.15 hold, the TDST Resistance for the 4 hour timeframe at 4299.77 is still viable and appears to be consensus among market technicians. 

Should the SPX break below 4057.15, the SPX may remain choppy and not provide a clean message from the DeMark TD Sequential indictors except for short term timeframes. Digging deeper, the CBOE 10 year Treasury Index (TNX) has been rising with a daily current count at TD Sell Setup @4. Generally higher rates translates into lower SPX, but currently as rates has been rising again, the SPX has been trading sideways. If TNX continues to rise and records price exhaustion by recording a TD Sell Setup @9 on Friday, June 10th, this could indicate a buy point for the SPX provided the SPX is above 3925.03. Coincidentally, June 10th is also the release of the May CPI print. This makes a good backdrop for rates to reverse allowing stocks to rise again. 

BTC (BTC/USD – Coinbase) continues to be locked in a volatility contraction as per the TTM_Squeeze indicator. On the daily timeframe, the TD Buy Setup was recorded on May 13th. Since then the best BTC could do was trade sideways despite the equity rally. 

Unless an upside catalyst comes for BTC, TD Sequential for the weekly allows for more downside before price exhaustion, which looks about a few more weeks ahead. 

Tuesday, May 31, 2022

There are indications that the bottom is in. From the S&P 500 (SPX) chart, the McClellan Oscillator is shown and below that, the Wayne Whaley Breadth Thrust. The McClellan Oscillator has not been this high since the March 2020 lows. If pullbacks can be contained near the zero line in the next few weeks, that bodes well going forward. The Wayne Whaley version of the Breadth Thrust has gone to extreme overbought readings where it suggests a longer term rally will persist. Note the March 14 – March 29 rally did not produce a breadth thrust which indicates a new all time high is a low end option. The current readings are providing a different picture and new all time highs can be challenged going forward.

For further confirmation, if the monthly SPX closes above 4373.94 on June 30th, that halts the downside momentum with a DeMark price flip. Furthermore, if the SPX closes above 4297.50, that will keep the quarterly timeframe with a TD Sell Setup @9 count. This is key since it will help construct markers for the next downturn. Financial markets are adjusting to a shift to global liquidity, just when long term DeMark indicators are in the peak stage. Expect more frequent volatility occurrences.

The weekly SPX priced flipped without recording a lower low. Since the rally showed broad strength, expect the low to hold for awhile.

For the short term,  there is enough momentum push in the daily SPX to make an attempt to the four hour 4299.77 TDST Resistance level. There is potential intersection with the 4 hour TD counts, which currently on a 5 count, and gives a potential 9 count on June 1st. It should be natural for a pullback and give buyers to add to positions. Also note the daily TD Sell Setup has a count 4 which a 9 can be recorded on June 6th. Therefore, what happens early in the week can dictate a more precise timeline for a relatively good buy the dip pullback. If there is overlap below 4057.15, the 45 minute TDST Support, early in the week, that is an indication the rally is not as strong as it is currently demonstrating.

Bitcoin (BTC/USD – Coinbase) is showing signs it is decoupling from equities and in a trading range as shown by the TTM_Squeeze indicator. This is all happening when price exhaustion levels have been recorded a couple weeks ago. The longer this range persists, it will favor more downside.

While the weekly SPX price flipped bullish, the weekly BTC has counts of TD Buy Setup @7 and TD Buy Countdown @10 which supports downside momentum and the trend trend is lower for a few more weeks.