Monday, October 11, 2021

There was a bullish intraday reversal last Wednesday, October 6th, that flipped the former October 6th TD Buy Setup @7 to a TD Sell Setup for the S&P 500 (SPX). Though the trend is short term bullish, there was no wash out selling to convince traders a bottom is in. However, in lieu of the ‘wash out selling’, the SPX can trade in a wide base using the 4278.94 as a pivot low and 4436.12 as the high. Eventually the SPX is expected to resolve higher. The low print of 4278.94 should be considered as a major support area. 

The weekly SPX has an active TD Buy Setup @5. To serve a pattern analog, the current selloff is setting up the same as October 2020 or May 2021 as shown by the shaded areas of the chart above. 

Bitcoin (BTC) continued the ascent higher and currently reached a price exhaustion level with a TD Sell Setup @9. If BTC can remain constructive above 52k, a new bull trend via TD Sell Countdown should materialize. Above the TD Risk level at 58,478.35 should confirm it. Below 47,721.30 (TDST Support for 4 & 8 hour charts) is not where Bitcoin bulls want to see BTC trade. 

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Monday, October 4, 2021

The S&P 500 (SPX) cleanly breached below the reference point at 4441.67, the former TDST Support for the daily SPX. This paved the way lower with a 5.66% pullback so far. With the VIX above 20 and the overall daily trend lower, following the current TD Buy Setup currently on a 4 count is the best practice. If the current TD Buy Setup stays intact, a reversal target date looks more likely this Friday, October 8th, when a 9 count can be recorded. 

If the low has been made on Friday’s close, bullish first signs would see the TDST Resistance level at 4362.57 broken on the 60 minute chart, followed by a bullish price flip by closing above 4352.63 on Monday’s close. An initial target price would be TD Propulsion at 4436.12, which incidentally is a gap fill. 

All eyes are on inflation and the 10 year US Treasury yield. The CBOE 10 Year Treasury index (TNX) recorded a TD Sell Setup @9 and correctly stalled. A move higher next week above the previous high at 1.56% will begin the TD Sell Countdown phase, and likely break the TDST Resistance level for the weekly. This type of high velocity move for rates should be damaging to equities. 

Nothing much to glean from the weekly SPX. The main focal point is the 4164.40 TDST Support level.

The monthly SPX can fulfill a TD Sell Setup 9 + 9 by at least closing above 4302.43 at the close of October. This will keep the SPX on a bullish track through year end. 

Following the quarterly SPX chart, a TD Sell Setup is still active and on track to record a 9 count during the April/May/June 2022 period. Throw in the TD Sell Countdown count, and at some point during 2022 – 2024. markets can get wobbly with 9 & 13 counts recorded.

Bitcoin (BTC) caught a bid likely from some front-running a potential Bitcoin futures ETF approval. A cluster of potential Bitcoin ETFs are up for approval mid October. Following TD Sequential, this may set as buy-the-rumor and sell-the-news event. However, depending if key resistance levels are broken starting with 50k, a sell-the-news event should prove buyable.

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Monday, September 27, 2021

A volatile week for equities with the S&P 500 (SPX) finally recording a 5% plus pullback. A few takeaways that suggests the SPX is back to the bullish trend. The SPX started to rally ahead of the FOMC meeting, usually a bullish sign, and the volatility index VIX is back under 20. The SPX also rallied enough to overtake the previous TDST Support at 4441.67, and no future closes below 4441.67 keeps the most bullish option open. Lateral closes above/below 4441.67 suggests choppy price action. Choppy price action above the 30 minute TDST Support level above 4395.62 leans bullish, and below 4395.62 leans bearish. Based on the four hour SPX timeframe, price exhaustion should occur late Monday/early Tuesday. From there watch the VIX and the former TDST Support at 4441.67. All in all, the lows are expected to hold through the week at least.

The weekly SPX displaying similar behavior after every DeMark inflection point – A promising selloff which promptly reasserts itself higher. 

Thanks to China’s decision to make crypto illegal temporarily decoupled the crypto markets from equity markets. Similar to the Evergrande news, this is not really new news nor is it systemically devastating. While Bitcoin has an active TD Sell Setup, it is likely to hold the TDST Support level at 37300. 

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Monday, September 20, 2021

A weak reflexive rally is paving the way for more selling as the short term four hour S&P 500 (SPX) has transitioned to TD Buy Countdown with a 4 count. If it turns bullish next week, it would need to trade above the TDST Resistance level at 4473.77 on a 60 minute basis in order to be taken seriously. 

The most watched risk on/risk off level is the 50 day moving average, which the SPX closed just slightly below it. From a DeMark perspective, the daily recorded a fresh bearish price flip below the TDST Support. This supports positioning towards risk off.

The TD Sell Countdown @13 ending September 3rd marked the high, and bearish momentum is gathering. To measure a potential maximum drawdown, the 4164.40 TDST Support would represent a little more than 8%.

Despite Bitcoin (BTC) trying to claw back higher, it is vulnerable simply due to correlation to the equity markets. As the crypto market continues to mature with equity investors intersecting with crypto investors, correlation should get tighter. One positive outlook for BTC is there are still alt-coins making new highs, which Indicates BTC may just triangulate in a range rather than a full blown selloff.

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Monday, September 13, 2021

A snapback rally should commence next Monday as the S&P 500 (SPX) has dropped nearly 2%, which has been roughly the buy-the-dip point for many months. Support for a bottom call comes when many short term SPX timeframes have either recorded perfected DeMark counts or very close in recording TD Buy Setup @9’s. If this is more than a bear rally, 4520.47 is the primary TDST Resistance level (represents 60-90-120 minute) for the SPX to overcome. If there is not enough enthusiasm to breach 4520.47, the SPX stands to setup another leg down. 

The weekly SPX topped out at TD Sell Countdown @13, and closed under the TD Risk level at 4487.43. This keeps intact a deeper correction is in the works. However, it could be a one week wonder. From the chart above, note the two shaded areas. The left shaded area showed a deeper correction following a TD Sell Setup @9 as compared to TD Sell Countdown @13 which showed one week of weakness following the 13 count. Following the 13 count, the weekly SPX exhibited a bit more upside before retracing more meaningfully. It’s quite possible the right shaded box will follow the same movements as the left shaded box where the just completed down week is followed by more upside, followed by a larger bout of weakness. Reasoning is many are currently hedged which keeps prices from falling precipitously. But the hedges will be taken off if a higher high is made, and this makes the market more vulnerable. 

Ethereum (ETH) pulled back last Tuesday, September 7th, which was anticipated. What was not expected was the intensity of the pullback. This is a game changer that introduces a bear case to challenge the recent lows or even surpass it. 

Related to ETH’s chart, Bitcoin (BTC) could not overcome the TD Risk level at 51658.16, and the deep retracement has placed BTC in a corrective phase similar to ETH. A bull case can be made if BTC can hold the flash crash low at 42830.77, AND trade above 46717.53 on a 2 hour basis. Any deviation from this, the bear case remains the norm. 

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Tuesday, September 7, 2021

The daily S&P 500 (SPX) recorded a TD Sell Setup @9 last Thursday, September 2nd just under the TD Trend Factor at 4551.41. That marked the sweet spot for price exhaustion, and next week will provide clarification if equities can produce at least a mean reversion pullback. A lack of a meaningful selloff followed by the SPX trading above the TD Risk level at 4567.04 will signal upward momentum is still enforced. Keep a side eye on TD Sell Countdown and TD Combo Sell as they are in the late stages of their counts.

The weekly SPX recorded a TD Sell Setup @13 this week. Full bearish action would see a bearish price flip by closing below 4468 on Friday, September 10th. At the very least, a close below 4535.43, the previous weekly close. If TD Sell Setup stays active, mid October would set up a more pronounced pullback. 

The monthly SPX showing just how bullish it has been for over a year. It is on track for price exhaustion top for October or November which coincides with a TD Sell Setup @9 + 8 or TD Sell Setup @9 + 9. 

For the crypto space starting with Ethereum (ETH), the hot NFT market is powering ETH higher. From the low back in July 21st, the DeMark TD Sequential has expanded to a 9/13/9. Following the active TD Sell Setup currently on a 5 count, this sets up price exhaustion with a potential TD Sell Setup @9 next Tuesday, September 7th. This is also aligned with the weekly ETH, which currently has an active TD Sell Setup @8. 

Bitcoin (BTC) is still range bound and underperforming against ETH. This is partly due to BTC holders selling to fund ETH to buy NFTs. Time is running out for BTC to take out 50k or more specifically 51658.16, the TD Risk level. A breakout can see fast upside as the TTM_Squeeze is coiling.

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Monday, August 30, 2021

Breadth and volume internals are improving for the S&P 500 (SPX). This gives a lift for the longer range outlook. From a short term perspective, the next test comes next Thursday, September 2 where the four hour and daily charts meet up to possibly record a TD Sell Setup @9. By then, breadth as measured by the McClellan Oscillator needs to be in the overbought territory above 100. This keeps the confidence the next dip is still buyable. If the SPX struggles to keep the bullish continuity and price flips, the 30 minute TDST Support at 4469.71 needs to hold at the least. Note the 4551.41 TD Trend Factor. Given it’s about 1% away, there could be an overshoot. However, if the SPX is trading around with a TD Sell Setup @8 or @9 near the 4551.41 level, that would make a formidable reversal point. 

The weekly SPX closed above the 4487.43 TD Risk level. This slightly tilts bullish. A TD Sell Countdown @13 can record next week, and if we align this with the shorter time frames, price exhaustion should reach a peak next September 2nd. However, in keeping the longer term bullish theme, the active TD Sell Setup currently on count 13 (TD Sell Setup @9 + 4) needs to stay intact and early October may setup a larger degree drop.

Bitcoin (BTC) recorded a TD Sell Countdown @13 last Saturday, August 21st. To keep the bullish outlook, BTC needed to roll into a shallow tight range. So far it’s delivering, and trading above the 200 day MA as a plus. It’s becoming more probable BTC will find a way to eventually break the TD Risk level at 51,658.16. 

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Monday, August 23, 2021

The S&P 500 (SPX) managed a 2.5% pullback into a confluence of technical support. There was enough subsequent buying pressure ending the week to suggest the low was made or close to it. 

For anyone who follows Tom Lee, he has been vocal about an ‘everything’ rally where the recent sector rotation will cease and most asset classes will rise together. From a DeMark perspective, there are many charts setting up to support this. Looking at the Russell 2000 (RUT) which has struggled all year, is on track to hold the lower end of the trading range, and give this index an upward push. Currently the DeMark count is TD Buy Setup @7. Recording a TD Buy Setup @8 or @9 (Monday or Tuesday) with a lower low are price exhaustion signals which signals the RUT downward momentum will halt or reverse. 

The semiconductor ETF (SMH) already has recorded a qualified TD Buy Setup @9 signaling a bullish stance. Between the RUT and the SMH, the risk/reward levels are drawn. While the Delta Variant or a Jackson Hole miscalculation can derail the market, the bullish case outweighs the bearish case. If this ‘everything’ rally delivers, look for better breadth in the SPX to confirm the rally has staying power.

Even the battered Chinese based stocks are coming into price exhaustion signals. The weekly iShares China ETF (MCHI) should also give a tradeable bounce as the weekly count should record a TD Buy Setup @9 in the new trading week. 

On a longer timeframe, the weekly SPX is still under the guise of price exhaustion as there has been no closes above 4487.43, the TD Risk level derived from TD Sell Setup @9 recorded on July 30th. To help confirm a bullish stance, the weekly needs to cover the 4487.43 level and the next drop could potentially be seen in the fourth quarter. 

Bitcoin (BTC) is still bullish as it did not weaken substantially while stock indices were dropping last week. TD Sell Countdown and TD Combo Sell are currently nearing price exhaustion signals. To relieve these price exhaustion signals, BTC can stay bullish by continuing the trading range between 45-50k. A break above 51658.16, the TD Risk level, will signal even higher prices as buyers are playing catch-up. 

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Monday, August 16, 2021

The S&P 500 (SPX) is still hanging on to it’s uptrend. A reversal did not materialize during the previous week, but still locked in price exhaustion territory, only it’s more extended. The above short term four hour SPX is representative of all the short term timeframes. A giveback is imminent as low volume – anemic breadth can only go so far. 

The read for the daily SPX is now an unqualified 9/13/9 count – TD Sell Setup @9, followed by a TD Sell Countdown @13, followed by a TD Sell Setup @9. A reversal is expected early in the trading week in accordance to the current counts. 

The related index, Nasdaq Composite (COMP) has a slightly different look. It is one count away from a TD Sell Countdown @13. If a 13 would record during Monday’s close, two conditions would need to met. Close would need to be at least the high of August 12th’s high of 14824.31, and the high would need to be at least the close of TD Sell Countdown @8 on July 26th at 14840.71. 

The TD Sell Setup @9 recorded on July 30th for the weekly SPX is within the parameters of a drawdown. The TD Risk level at 4487.43 serves as the current marker as to whether or not the bullish trend will continue. 

Bitcoin (BTC) and the crypto space in general looks really productive. However, price exhaustion signals are showing up through the DeMark counts. Similar to equity markets, some give back should be near. A range bound pullback to 42k would be bullish. A selloff beyond 37300, the TDST Support level, would necessitate a reevaluation of the bull case.  

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Monday, August 9, 2021

Muted reaction from the marquee jobs release defers any potential reversal until early next week, possibly as soon as Monday’s trading session. Through the 4 hour S&P 500 (SPX) timeframe, an opening gap higher to start Monday should activate a perfected TD Sell Setup @9. The neighboring two hour SPX is also nearing a TD Sell Setup @9 that requires a higher high to ‘perfect’ the count. 

The daily SPX recorded a TD Sell Countdown @13 at the close of Friday, August 6th. A satisfactory correction from a 13 count would be a minimum drop of 5.5%. Currently, the market has been demonstrating corrections of 3% or more are non-existent due to cyclical and growth rotations. To achieve at least a 5.5% or greater pullback, the 90/120 minute TDST Support needs to be taken out at 4402.30. At that point, the odds can start shifting more towards sentiment that is bearish.

The weekly SPX has recorded a TD Sell Setup @9 to close the week. This also notches the weekly timeframe back in price exhaustion territory. Since this is the weekly timeframe, keep in mind there is room to move higher when observing it on a day to day basis. Also keep in mind, TD Sell Countdown has only recorded a 9 count which can push out a significant correction until September. 

Bitcoin (BTC) is beginning to move into TD Sell Countdown phase of TD Sequential. Trading above 43047.78 will help confirm the lows can be tested, but likely in.

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