Monday, May 17, 2021

From the 60 minute S&P 500 (SPX) chart above, there were quick selloffs testing support levels on April 19th, 22nd, and May 4th. Just when it looked liked a clear bullish path from May 6th, an intraday bearish reversal occurred on May 10th.  The selloff continued and capitulated on a hot CPI inflation print last Wednesday, May 10th. On the same day, the SPX was testing the next level support at 4071.19, which is the 4 hour TDST Support level. That alone would make it suspect it can hold. However, there was support from the related Nasdaq and Russell 2000 indices recording daily TD Buy Setups @9’s. This help align a bounce was coming which did come, and it was good enough to keep the bear structure away for at least a little while. 

While a bullish trend can still materialize, it’s more likely the continued sector bifurcation will keep markets range bound. This will be consistent with the intermediate/long term charts. Back to the 60 minute chart, there is still room early next Monday to move a bit higher as the 60/120 minute timeframes reach TD Sell Setup 9 counts. From there, we’ll get a better look if the strong selling pressure still exists. As long as the SPX holds the bright blue zone which was the former cluster of TDST Resistance levels between 4151.80 – 4145.52, markets have a chance for new highs. Below that, then the call for range bound trading remains intact. Trade below the notated 4111.53 (15 minute and potentially the 60 minute TDST Support), things will get dicey once more. 

To support a reversal on Monday, the daily SPX chart is approaching a TD Sell Countdown 13 count. For this to be established on Monday, the SPX will need to print 4187.62 or higher. This is one of the DeMark rules in validating a true TD Sell Countdown @13. Once recorded, look for signs of market distress as the SPX starts to test levels as outlined in the 60 minute chart. Another tell tale sign of market distress is if the VIX begins to rise as the SPX goes higher. The current market conditions are a true ‘Wall of Worry’.

To illustrate more of last Thursday’s bounce, both the Nasdaq 100 ETF (QQQ) and the Russell 2000 ETF (IWM) recorded TD Buy Setup @9 last Wednesday. Going forward, if there is one concern, it’s the QQQ. Bearish viewpoint for all equities will come if QQQ trades below its TDST Support level at 311.54. By trading below 311.54, this will indicate the Nasdaq may have peaked and eventually drag down the SPX as well. 

All the intermediate/long term timeframes continue to stay in price exhaustion levels. Note the above SPX weekly TDST Support was moved higher accordingly to 3819.25. 

Bitcoin (BTC) is neatly packed between the 47,077 TDST Support and 62,572.48 TDST Resistance. The coiling action is productive for another move higher. A break below 47,077 for BTC can spill over to the stock markets as well. 

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Monday, May 10, 2021

Despite the jobs number wildly missing consensus, the markets were already predisposed to go higher. Per the S&P 500 (SPX) short term 60 minute chart, the all important 4185.56 TDST Support was breached to the downside last Tuesday, May 4th, and subsequently Thursday, May 6th, breached decisively to the upside. To break out before a traditionally market moving event, there was high chance markets was already looking past the jobs number no matter the print. Now that the short term counts are recycling higher, further bullish price action is expected. Note that the new TDST Support for the 60 minute chart is notated at 4167.75 which is not that practical for short term trading. A better level based on Fibonacci would be 4194.60. If SPX has momentum behind it, 4194.60 should hold to keep the trend bullish.

The daily SPX is now poised to fulfill at least one of the DeMark counts, and suddenly the TD Trend Factor at 4344.39 is back in play again. TD Sell Countdown is the closest in proximity in recording a 13 on Tuesday, May 11th, if both Monday and Tuesday’s close is equal or higher than the high of the previous two candles. At the bottom of the chart shows what is behind the potential for further gains – The TTM_Squeeze indicator, which integrates both Bollinger Bands and Keltner Channels to signify breakouts from bases. When Bollinger Bands and Keltner Channels overlap, the indicator shows red indicating the SPX is coiling for a move. It appears the ‘red’ to ‘green’ shift is to the upside. 

To check for alignment in other sectors that has been the primary driver of the SPX, the SPDR financial ETF (XLF) has recorded a TD Sell Setup @9 and TD Sell Countdown @13 on Wednesday, May 5th. It is now above the TD Risk level at 37.61. Two more consecutive closes higher would strongly suggest the rallies in the financials would continue as well as the energy and oil complex. 

Although the SPX is bullish short term, the intermediate long term charts (2 – 3 – 3 day )are still within their parameters for a reversal. Now we can add the weekly SPX as it recorded a TD Sell Setup @9 and subsequently the TD Risk level is drawn at 4347.49. Note that the TD Trend Factor mentioned before is at 4344.39. There is some coincidental confluence there. 

Bitcoin (BTC) is also coming into it’s own basing pattern.  The boundaries are clear with 62,572.48 and 47,077. If we align it with equities, it mirrors the Nasdaq, which should keep it in a range for the near future. 

Ethereum (ETH) has been outperforming BTC thanks to Decentralized Finance (DeFi) support. ETH recorded a TD Sell Setup @9 last Tuesday, May 4th. While it is at price exhaustion levels for the daily, the weekly chart (not shown) is at TD Sell Setup @7. This indicates the daily TD Risk level at 3902.88 should be challenged. 

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Monday, May 3, 2021

Equities are beginning to look tired. Long term TD Sequential charts are at price exhaustion levels while short term charts are in neutral territory. But there is opportunity for one more upside move. For a deeper dive, shown above is the S&P 500 (SPX) hourly chart. The SPX is scraping by the 4185.56 TDST Support level for the 45 minute chart. This at least keeps the short term outlook bullish. However, a gap or trades below 4185.56 for the new trading week opens the door to the 60 and 90 minute TDST Support level at 4119.07 and 4125.85, respectively. Below that, bearish scenarios can be addressed. 

To emphasize the importance of the SPX 4185.56 level, the 60 minute chart of the E-Mini S&P 500 futures (ES) TDST Support equivalent is 4172.72. This adds confluence to the SPX 4185.56 level as the ES levels represents the 60, 120, and the 240 minute timeframe. 

If the SPX can remain bullish for just a bit longer, one timing objective that can be used for a reversal would be next Tuesday/Wednesday through the SPDR Financials (XLF). Since this sector has demonstrated leadership, this sector has the ability to drag down all sectors. Currently, the active counts are TD Sell Setup @6 and TD Sell Countdown @11. For next Tuesday, May 4th, if XLF can successfully record a TD Sell Countdown @13 and a ‘perfected’ count by recording a TD Sell Setup @8 with a high print at/above counts @6 and @7, that would be sufficient for a reversal setup.  

The daily SPX price flipped bearish with a TD Buy Setup @1. However the TD Sell Countdown is still active with a TD Sell Countdown @9 to keep a short term optimistic. If the SPX does gap below 4172.72 without a subsequent recovery on a 60 minute basis, the TD Trend Factor at 4344.39 will be less significant for the near term. 

The weekly SPX has met all the parameters for a ‘perfected’ count since the high of TD Sell Setup @8 is above counts @6 and @7. As the weekly SPX enters next week with a potential TD Sell Setup @9, it will officially join the 2, 3, and 4 day timeframes currently at price exhaustion levels.

From the monthly SPX, a TD Sell Setup @9 was recorded for February 2021. As a result, the TD Risk level can be drawn at 4175.24. April 2021 closed out the month at 4181.17, marginally higher than the TD Risk level. Despite this, the SPX is still within the scope of a reversal from a long term perspective despite the price extension above the TD Risk level. If there are at least three successive higher closes above 4175.24, then it’s highly likely the monthly SPX is moving towards a TD Sell Countdown, along with the ability to pull the bull market into 2022. 

Interest rates has been much of the driver between growth and value sectors. For the monthly CBOE 10 Year Treasury Index (TNX), a TD Sell Setup @9 has been recorded for April 2021. From here, we should expect 10 year rates to normalize between 1.50% – 1.80%. If correct, rotation between growth and value stocks may not be clear cut. 

Last Sunday, April 25th, Bitcoin (BTC) demonstrated a textbook example of DeMark indicators by recording a TD Buy Setup @9 with a low print right at 47,077 TDST Support level, and the result is a nice counter trend move higher. Currently BTC is at TD Sell Setup @6 which can record price exhaustion next Monday with a 9 count. To stay overall bullish, BTC needs to stay above the 50 day moving average just to keep it simple. Below 47,077, bearish options needs to be considered. 

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Monday, April 26, 2021

Despite some consternation during the week for the S&P 500 (SPX), all the short term TDST Support levels held at 4125.85. Holding support continues to pave the way for more higher highs. If the SPX decides to round trip lower again early in the week, a cluster of TDST Support levels near the 4125.85 level are apparent. The “very must hold” level is the lower 60 minute TDST Support at 4119.07. Should that break, expectations are for the 2 and 4 hour TDST Support shared at 4071.19 to hold. New problems arise if that fails. 

From the daily SPX chart, this shows the potential to move higher as the current DeMark counts have not reached maximum price exhaustion. If the SPX stays bullish, the sweet spot for maximum price exhaustion/reversal starts in the following week which is the first week of May. The TD Trend Factor at 4344.39 can be entertained as a potential target though it is approximately 4% away. There are plenty of catalysts for the week with high profile earnings and a FOMC meeting next Wednesday to get us there.

The longer term weekly SPX is nearing price exhaustion territory starting the week as the 9/13/9 count is nearly complete. The 9/13/9 counts are tethered counts which begin from TD Sell Setup @9 to TD Sell Countdown @13 and finishes at another TD Sell Setup @9. It should start the week with a TD Sell Setup @8 in the third stage of the 9/13/9. Once a high of 4194.17 is tagged, it has met the minimum for price exhaustion. Not shown are the 2 day/3 day/4 day charts, but they are already at price exhaustion levels. This signals overall caution. 

Bitcoin (BTC/USD) finally broke down. The daily TDST Support level at 47,077 is still intact. However, since the daily TD counts are on a TD Buy Setup @8, the 47,077 significance is diminished as the counts are at price exhaustion levels. Any additional swoosh lower this weekend provides even a better a risk/reward setup for a counter trend to begin. Note that Bitcoin – equity markets are diverging as BTC is correcting and equity markets are making highs. With equity markets about ready to start correcting, it is suspect that BTC will make a new all time high in the near future. Given that, do not discard the 47,077 level just yet. It may come back later as a significant level to watch.

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Monday, April 19, 2021

Last Wednesday’s intraday selloff in the S&P 500 (SPX) held promise it would carry over for the remainder of the week. Rather, the SPX gaped higher and went unabatedly to all time highs the following day. The TD Risk level at 4116.43 and the TD Trend Factor at 4137.38 are now fully out of the picture. The next point of inflection is for the daily SPX to complete two consecutive TD Sell Setup 9 counts (TD Sell Setup @9 + 9) which will be due next Wednesday, April 21st. If the SPX should selloff prior to next Wednesday, the 30/60/120 minute TDST Support level at 4125.85 should exhibit temporary support long enough to assess the next move higher or lower. 

With the daily SPX on an extended momentum run, the longer duration timeframes become more prominent. The 2 day SPX has an active TD Sell Setup @7. It is about to record a clean 9 – 13 – 9 which is due next Thursday, April 22nd. Between the daily and the 2 day timeframes, this is another high potential price exhaustion signal coming mid-week.

The 3 day SPX has already recorded a TD Sell Setup @9, and the TD Risk level is drawn at 4200.49. The TD Risk level will be disqualified if there are three are consecutive higher closes above 4200.49. 

The weekly SPX has recorded 3 consecutive closes above the TD Risk level at 3942.53. With that, a fair assumption can be made a 9 count TD Sell Setup will record on Friday, May 7th. With a 3 week spread between the daily and the weekly, another assumption can be made the pending selloff will likely be narrow pullback in the 2-3% range and rally again to keep the weekly SPX TD Sell Setup active. Just a scenario to watch for.

A look at the Nasdaq Composite (COMP) rally which has been the beneficiary of the 10 year Treasury rate retracement. The Nasdaq is currently pressing against it’s own TD Risk level 14062.47. To stay in line with a potential SPX reversal, The Nasdaq should not exceed two consecutive higher closes above 14062.47 or that will indicate even higher prices.

Bitcoin (BTC) is still in correlation with equities, but more in line with the Nasdaq than the SPX. Although there is an active TD Sell Setup currently on the 7 count, it appears shaky whether or not it can stay active. The more prominent count is the TD Sell Countdown which is on count 11. By definition, two more closes above the high bar of the prior two day’s closing high would record a TD Sell Countdown @13. Since BTC is aligned with the major equity markets, there is an outlook for a little shake out in the crypto space with equities. Watch for a potential 13 inline with the SPX or Nasdaq.

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Monday, April 12, 2021

Expanding on yesterday’s post, the S&P 500 (SPX) closed between the 4116.43 (TD Risk) and 4137.38 (TD Trend Factor) zone. A gap higher on next Monday’s open will help the price exhaustion signs easier to see. The Fed chief, Jerome Powell, will make a taped appearance on 60 minutes to help accentuate the gap higher. It will occur during Sunday’s overnight futures session.

If a selloff commences, a bounce can be made from 4071.19, the TDST Support for many short duration timeframes (30-45-60-120 minutes). Expect the SPX to challenge the highs again. If that fails and 4071.19 is breached, then the daily TDST Support at 3909.52 becomes major support.

There is evidence of a broader selloff from the above chart illustrating the McClellan Oscillator. There is a divergence as the SPX makes a higher high, the oscillator makes a lower high.

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Friday, April 9, 2021

There was a segment on Jim Cramer’s Mad Money program which highlighted Tom DeMark’s public remarks on a possible top. You can see it here on You Tube: https://www.youtube.com/watch?v=dsl9–rOf1g.  

From the S&P 500 (SPX) daily chart, we have recorded a TD Sell Setup @9 at the close of Thursday. From the segment, the emphasis was on TD Sell Countdown. On my end, TD Sell Countdown is not apparent, but there is TD Combo Sell which can record a 13 on Friday if SPX trades at 4098.19 or higher during the session and the close is above 4097.17. This will record a TD Combo Sell @13 (strict version). Also mentioned during the program was a target of 4139. Utilizing the TD Trend Factor tool, the target measured from 3723.34 is 4137.38. It’s not quite exact, but close.

No matter how it is measured, the principle is the same. There is enough for the market to begin to backtrack. The ideal spot would see a marked high on Friday somewhere between 4116.43 and 4137.38 and signs of failure at the close. Absent of that scenario, closing under 4071.19 (30m and possibly 60m TDST Support) is a clue the selloff has begun. Know that another high attempt can be made next Monday as other short duration timeframes will reach price exhaustion levels at that time. Also, Cramer paraphrased DeMark that although risk levels are high, major carnage will not happen unless 3909 SPX is breached. That was likely a reference to the 3909.52 TDST Support level.

One support the overall rally will stay intact is from the weekly SPX. It will likely record three consecutive closes above the TDST Support level at 3942.53 as of tomorrow’s close. This suggests the market should stay afloat.

Bitcoin (BTC) was also mentioned with a target of 66,347. Given BTC is trading sideways and TD Sequential is silent, current action is wait and see. Breaking the 12 hour TDST Support at 52,534.11 is a warning. 

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Monday, April 5, 2021

New all time highs plus a closing high for the S&P 500 (SPX). With the SPX on an active TD Sell Setup @5, an interim top should be expected if TD Sell Setup @9 records next Thursday, April 8th. Since the SPX is short term extended, next Monday’s trading can trade below the psychological 4000 level to 3963.61 before tracking higher again. The 3963.61 level represents a projected TDST Support level for the 30 and 60 minute timeframe. Below 3963.61 is a reversal warning. If the SPX records a TD Sell Setup @9 on the daily chart, internal market measures and interrelated indices will help gauge any potential corrective pullback. 

Returning to the iShares 20 year Treasury ETF (TLT), after two weekly consecutive lower closes below the 137.36 TDST Support, the next two closes were higher closes and currently closed above 137.36. This stays within the reversal parameters, which indicates rates should be neutralized. This should bring stability to all markets. A weekly close back under 137.36 will contribute to the choppy disarray between the Dow Industrials and tech stocks. Below 133.3 at this juncture will problematic for equities. 

If there be a case made for caution, it is the daily Bitcoin (BTC) chart. Currently it has not closed above the 60k level. If it does close above 60k over the weekend, it may be short lived as a TD Sell Setup @9 can be recorded. To draw out a bullish narrative, BTC would best be served if does not break out above 60k, but stays rangebound just below 60k. This would provide more firepower for a 60k breakout in the near future. A close below the 52,534.11 TDST Support level would be bearish. 

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Monday, March 29, 2021

The S&P 500 (SPX) closed the week by recording a bullish price flip with a TD Sell Setup @1. This ends the path to a deeper retracement, and the message is currently bullish. There is a lingering TD Sell Countdown count at 12, and nearing a TD Sell Countdown @13. However, it is difficult to follow that path given the SPX has already tested the TDST Support at 3773.86. The main assumption is to follow the current TD Sell Setup. 

On the flip side, the Nasdaq Composite (COMP), still has an active bearish count with TD Buy Setup @7. Realizing a potential TD Buy Setup @9 due next Tuesday, March 30th, there is a scenario for the Nasdaq early next week to close below 12,786.87, but price is expected to stay above the previous low at 12,397.05. Both scenarios are bullish. This scenario will also set another chance to buy the SPX as it digests the gains the past two trading days. 

Looking at a larger timeframe, the weekly TD Risk at 3942.53 has recorded the first close above that level. There are the possible outcomes – higher, sideways, or lower. If higher, the weekly SPX should see three consecutive higher closes above 3942.53. Plausible given all the stimulus in circulation. If lower, the weekly SPX needs to start recording a lower close each week starting next week or the week after that, and eventually closing below 3942.53. This would be bearish, and currently not the base case. Any interruption to the ‘recording a lower close each week or the week after that’ is bullish provided the close is above 3942.53. At anytime the SPX closes crosses back and forth 3942.53, that will indicate sideways price action for the foreseeable future.

The manner Bitcoin (BTC) is correlated with stocks, any significant correction will probably occur when equity markets are ready for a significant correction. BTC has an active TD Buy Setup @6, and close to price flipping bullish. Even if BTC records a TD Buy Setup @9, the combination of that TD Buy Setup @9 near the 47,077 TDST Support supports a reversal to the current downtrend.

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Monday, March 22, 2021

The expected TD Sell Setup @9 for the daily S&P 500 (SPX) for Friday, March 19th, did not materialize as the rally ended at the close on Wednesday, March 17th. Additional selling can dominate for the early part of next week. A bottom and reversal to resume the uptrend can be expected from late Tuesday to early Thursday. This is based on the 4 hour timeframe recording a TD Buy Setup @9 due on Wednesday, March 24th. If during the course of the week, the SPX closes below 3820.31 (2 hour TDST Support) on the 2 hour timeframe without recovering, that will signal emerging bearish forces. A daily close below 3773.86 will practically confirm bearish momentum. 

The weekly CBOE 10-year Treasury Index (TNX) is still locked in momentum with a TD Sell Setup @9 + 2. Given the Federal Reserve’s willingness to allow for rates to run higher, but not disorderly, trading towards the weekly TDST Resistance level at 1.86% and the daily TD Risk level at 1.84% looks preordained. Note that despite interest rates running hot, equities held up fairly well.

Bitcoin (BTC) recorded a TD Sell Setup @9 on Sunday, March 14th, and reacted accordingly with a mild selloff. As long as BTC trades above 47,077, which is solid support derived from both the 12 hour and daily TDST Support, BTC should see TD Sequential lateraling from TD Sell Setup to TD Sell Countdown, and new highs.

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