March 1, 2021

The market is doing what it is supposed to do so far. Let’s keep going. At first glance, the daily S&P 500 (SPX) is poised to break the 3773.30 TDST Support level as the current selloff appears to be gaining some momentum to the downside with an active TD Buy Setup @2.

However, the daily Nasdaq ETF (QQQ) is nearing price exhaustion with a TD Buy Setup @7. One more lower low will ‘perfect’ the first half of TD Sequential. A downward flush either Monday or Tuesday should clean out the sellers and provide at least a temporary bottom. Since the majority of companies are tech based, this should stabilize the SPX as well. If there is no upside momentum that can at least push the SPX above 3830.11 which was the former two hour SPX TDST Support. It is likely buyers are absent, and selling will continue.

Since the relationship between the SPX dividend yield and the 10 year Treasuries are in the spotlight, the representative index, the CBOE 10 year Treasury index has hit an extreme on the daily chart with a TD Sell Setup @9 at an index high of 16.14 (or 1.614%) last Thursday and the weekly chart has a ‘perfected’ TD Sell Setup @8. This indicates the 10 year Treasuries should stabilize around this area of 1.50% which should stabilize the equity markets. In order to support the rising rates going forward, economic indicators need to start showing growth. If the economy lags with rising rates, that portends to more selling in stocks.

With interest rates and commodity prices on the rise, investment firm asset allocation models will shift and provide different leaders and laggards. Expect the SPX on a weekly basis to continue to consolidate during this adjustment period.

The monthly SPX recorded a TD Sell Setup @9. It won’t be unusual for the monthly chart show a one wobbly red candle, but continue to head higher given the massive liquidity from central banks. Thus the base case is the bull market should continue. However, the TD Sell Sell Setup @9 should not be discarded. Although it is not the base case, the big surprise would see the high already put in at 3950.43. That’s how markets end — with a surprise. 

Bitcoin (BTC) is now trading under the 6 and 8 hour TDST Support levels at 47,832.49 and 47,051.22. A daily close below these levels should allow the short term 6 and 8 hour timeframes to record TD Buy Setups @9. If these short term timeframes do not show enough buying to push above their respective TDST Support levels, more price damage is likely.

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Monday, February 22, 2021

The first phase of the S&P 500 (SPX) selloff worked well as it was a clear fade from last Tuesday’s February 16th gap open higher. Last Wednesday and early Thursday, the SPX continued selling off, but the intraday rallies silenced the short term DeMark TD Sequential counts. Turning to the S&P 500 e-mini futures (ES) charts for assistance, the 4 hour chart (above) showed a clearer TD Sequential path by recording a TD Buy Setup @9 just above the 3899.25 TDST Support level. At one point, the 4 hour ES closed below 3899.25 which gave the first indication the market is bearish. However, it was able to recover with subsequent closes above 3899.25. For the second phase, the ES 3899.25 is the primary level as it represents time frames from 2 to 6 hours. Next Monday, February 22nd, will set the tone for the week. Below ES 3899.25 is bearish. 

Back to the SPX and the daily chart. If the ES manages to hold above 3899.25, trading above SPX 3915 introduces a bullish element. In the event the SPX makes a new high above 3950.43 with the corresponding VIX under 20 again, the rally is likely sustainable. Otherwise, a new recovery high with a VIX above 20 signals bearish forces are still in existence. 

Bitcoin (BTC) is diverging with the SPX. Bitcoin is making new highs with the SPX in a holding pattern. Based on the current counts for BTC, daily TD Sell Setup @8 and @9 can record next Tuesday/Wednesday. TD Sell Countdown @13 can record as soon as next Tuesday if each daily close is equal/greater than the previous two candle’s high print. Note the confluent Fibonacci level at 61,778.76 to 62,203.98 as potential targets. The TDST Support levels for the 6 hour (47,832.49) and the 8 hour (47,051.22) are levels to watch in case BTC breaks down prematurely. 

Gold ETF (GLD) has been left in the shadows of Bitcoin, but it is currently in the value range of 160.16 and 168.65 with a current daily count of TD Buy Setup @5 and weekly count of TD Buy Setup @6. The first price exhaustion indication will be the daily TD Buy Setup with a @9 potentially recording next Thursday, February 25th. It will be interesting to see if GLD will bottom while Bitcoin tops out. 

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Tuesday, February 16, 2021

It’s now the Irresistible Force Paradox where the unstoppable force (market liquidity) meets the immovable object (DeMark price exhaustion signals). The daily S&P 500 (SPX) has recorded a perfected TD Sell Setup @9 at Friday’s close under the TD Trend Factor at 3953.17. The conditions are there for a reversal. Glancing at the daily chart, there are 5 blue horizontal levels to help navigate if the market can reverse and rollover or continue its bull run. Starting from the bottom level, the 3773.86 TDST Support for the daily SPX is just a reference point for now. Ideally it is a 2-3 week target should the timing of the reversal is deemed correct. The next level shown is the 3905.78 TDST Support derived from the 60 minute chart where if the SPX closes below 3905.78 on a 60 minute basis, the probability of a selloff looms larger.   >> Note it is unofficial since the 60 minute TD Sell Setup is still active with TD Sell Setup @8. The assumption it will record a 9 count starting Tuesday, February 16th (Monday is a market holiday).  <<   The next level up is the four hour TD Risk level at 3927.25. That will be covered in the next chart below. Above the four hour TD Risk level is the TD Trend Factor at 3953.17. This level is a DeMark Fibonacci based level. By recording a TD Sell Setup @9 on the daily chart near the TD Trend Factor holds significance as a potential reversal marker. The final level is the 3968.68 TD Risk level derived from the daily SPX. If the SPX closes above 3968.68, this could lead to even more bullishness. But before it gets there, the four hour chart has some qualifiers as outlined below in the next chart that will help with risk management.

This is the four hour SPX chart which records two bars/day represented by a first half of the day session and the closing bar in the second half session. It currently shows a 3935.04 close above the TD Risk level at 3927.25. Generally the TD Risk level is the maximum level where leftover bullish momentum can trade up to before getting stopped out. However, it is not unusual to overshoot this level and reverse. The point where the overshoot is actually bullish is when there are three consecutive higher high closes above 3935.04. The bearish version is if the SPX should trade below 3927.25 and stay under it. That’s the simplest version. A slightly more complicated bearish version is if the first half of Tuesday’s session should close higher than 3935.04, but the second half session closes below the first half’s session close, and continues with lower successive closes until 3927.25 is broken. This is considered bearish. To sum it up in the simplest level is it is bullish if the SPX continues to linger above 3927.25. 

Bitcoin (BTC) continues with the SPX correlation. The near term Fibonacci levels begins at the 53,667.39 level. How BTC trades during the weekend will help design what the SPX will do when the cash session opens next Tuesday. Furthermore, the volatility index (VIX) closed under 20. For the bearish structure to begin, the VIX needs to close above it fairly quickly.

All in all, by having the VIX to test the 20 level, suggests a longer term bull run is in the works. If the market can get a proper selloff for at least a few weeks, there is a good chance an even bullish rally will succeed. That’s when the talk of market bubbles and froth turns into this-time-is-different talk. Given that, market bubbles are the most profitable since all assets no matter their worth moves more dramatically. 

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Monday, February 8, 2021

The market ‘correction’ from last week lacked price depth and duration, and this keeps the intermediate/long term momentum for the S&P 500 (SPX) intact as the 3854.15 short term TD Risk level (from the previous post) officially disqualified.

The rally should pause early next week. If the SPX successfully holds a confluence of short term TDST Support levels at 3830.11, the daily SPX will be on track to record a TD Sell Setup @9 on Friday, February 12th, possibly at the original TD Trend Factor at 3953.17. Another evaluation on market conditions can be taken as the TD Sell Setup stays active. The VIX holds importance at this juncture as well. Dropping below 20 will indicate the rally has lasting power. 

The daily Bitcoin (BTC) chart has recorded a TD Sell Setup @9 just under the eight hour TDST Resistance level at 37857. Strength from the SPX has passed on to BTC. As of Saturday, February 6th, it is pressing against the monthly 41060.80 TDST Resistance level. Taking the cue from equity markets, BTC should be carving out another bull rally as well. 

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Wednesday, February 3, 2021

Update on the markets on the S&P 500 (SPX). The base case is still a complex correction, but the counter rally was high enough to introduce a bullish scenario. Currently the SPX has reached short term price exhaustion levels. Referring to the 60 minute SPX, in simplest terms, a move above the TD Risk area at 3854.15 suggests the bullish trend that started from November 2, 2020 is intact as the current drawdown is only 4.57%. That qualifies as a pullback within the intermediate trend as opposed to a correction. If the SPX is still in a complex correction, it should be more erratic between the TD Risk level and the 3725.62 TDST Support level. Time or duration should resolve the SPX boundaries. 

Bitcoin (BTC) continues to feed off of equities. Currently the daily count is a TD Sell Setup @7. Since it is near price exhaustion inside the roughly 30 – 40k range, it should likely stay inside the range. That supports the SPX should stay inside its own range as well. 

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Monday, February 1, 2021

The whole Robinhood/GameStop/Reddit Wall Street Bets saga is truly a spectacle. Social culture is changing in real time. The four hour S&P 500 (SPX) chart above is nearing completion of a 9 count where an interim bottom can be found late Monday (TD Buy Setup @8) or early Tuesday (TD Buy Setup @9). As long as the active TD Buy Setup does not price flip into a TD Sell Setup before recording a 9 count, the target will be around the 3624.23 TDST Support area. From there, the counter trend can be measured. This is the narrative for the week – a low early in the week followed by a counter trend consolidation.

Utilizing the short term narrative from the previous four hour SPX chart, unless the S&P 500 (SPX) suffers dislocations from all the Reddit raids, the current count for the daily SPX should price flip bullish before reaching a 9 count. Reasoning is this correction should be a complex correction where sector rotation is more of a factor than last year’s pandemic correction when all stocks went straight down. On the subject of dislocations, the Robinhood/GameStop/Reddit Wall Street Bets phenomenon presents new unknowns. These are how Black Swans are born. Not to fear monger, but something to be aware of. Also note the TDST Support for the daily chart is at 3577.59, only a 46.64 point difference from the four hour TDST Support at 3624.23. This further supports an area of support should the SPX drop to those levels.

The weekly SPX displaying a classic TD Sequential with a TD Sell Setup @9 in September, followed by a sideways drift, and finally terminating last week with a TD Sell Countdown @13. If this ‘classic’ pattern holds, the weekly 3269.96 TDST Support awaits. 

For the weekly Nasdaq (COMP), note the alternating closes above and below the 13141.93 TD Risk level. This type of activity allows for the option of a consolidation period than a pure downtrend. 

On the weekly Russell 2000 (RUT), the RUT closed with two higher closes above the 2101.66 TD Risk level, and since the third close was not another higher high, but a close below 2106.66, the TD Risk level has not been invalidated. This keeps the bearish option open. Should the RUT close above 2106.66 on Friday, February 5th, this will signal a sideways consolidation period. Putting all three indices together: The weekly SPX has a bear option unfolding. The Nasdaq has a sideways option unfolding. The weekly RUT will cast the final split decision. A weekly close above 2106.66, expect a consolidation period for all three indices. 

The long term monthly chart for the SPX is making a case we’re entering a period of indecision that should resolve in 2-3 months. Note these are long term charts making them less actionable than daily or weekly charts. 

Still utilizing Bitcoin (BTC) as a future barometer for the equity markets or vice versa. BTC is respecting the drawn TDST Support and Resistance levels. The levels are clean. Closing below the 12 hour TDST Support at 31160.12 translates to more selling, and closing above the 8 hour TDST Resistance at 37857 serves as a head’s up the monthly TD Risk level at 41060.80 is going to be challenged and possibly broken.

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Monday, January 25, 2021

Last Wednesday’s high print in the S&P 500 (SPX) forced a rewrite on a possible peak and reversal. Tom DeMark has a 3907.58 number based on TD Propulsion and that looks viable. The TD timeframe commonality for a price peak can come soon as Monday, January 25th, where TD Sell Countdown can record a 13 if the close is above 3861.45 or as far out as the following Monday, February 1st where the daily SPX can record a TD Sell Setup @9. However, point to next Wednesday, January 27th when the FOMC meets along with a Jerome Powell press conference. Fed meetings are perfect turning points and any signs of a blowoff top or next day price exhaustion gap can signal a reversal. 

Also, after the close of Wednesday, a trio of high profile tech stocks, Apple, Tesla, Facebook, will report earnings. The price reaction to last Tuesday’s Netflix earnings lit a fire for large cap tech stocks and it looks likely they will run up ahead of next Wednesday’s earnings. Adding more context, the Nasdaq Composite (COMP) can record a TD Sell Setup @8 on Thursday setting up price reversal. Note that it is two counts away from a 13 count for TD Combo Sell. 

The TD Sell Setup @9 recorded last week on the Russell 2000 ETF (IWM) is placing a lid on continued highs. A close above the TD Risk Level at 218.87 will begin to place doubt on the timing of the reversal. 

There is a philosophical belief the US Dollar runs inversely to Bitcoin (BTC), but at this point, it is more likely a risk asset that is tied to equities. BTC recorded a lower low and bounced off the 50 day Moving Average. It was able to recover enough to close above the 12 hour TDST Support level at 31160.12. Expectations are for BTC to either continue trading in a range or definitively break 31160.12 following the lead of equity indices or vice versa. Similar to IWM’s TD Risk level, a break above BTC’s TD Risk level at 41136.51 will sow doubt in the timing of a reversal. 

The weekly SPX has reached full price exhaustion with both TD Sell Countdown and TD Combo Sell recording a 13 count. This is the primer for a multi week consolidation.

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Tuesday, January 19, 2021

While the S&P 500 (SPX) was grinding higher last week, the Russell 2000 ETF (IWM) was on a clear path to record a TD Sell Setup @9 with a 9/13/9 DeMark TD Sequential count going back to early November. Last Thursday’s trading was interesting such that IWM closed near the highs, but the SPX exhibited some selling intensity. The selling in the SPX had the look and feel it was the beginning of another correction. Even the  short term TDST Support levels at 3791.50 were broken. That was the first time the short duration TDST Support levels were broken since the rally began in early November. This makes for high confidence we’ll see additional selling going forward. For the IWM, further confirmation will see a break under the 206.90 TDST Support level derived from the 60 minute chart. This will support the notion all indices are on board for a wholesale correction. If 206.90 breaks, an initial target will be the daily TDST Support at 193.07. For the SPX, 3577.59. Both are daily TDST Support levels.

The weekly Tesla (TSLA) recorded a TD Sell Setup @9 as of last week. As a new emerging leader, this helps support the broader market corrective phase that goes beyond a few days. 

Bitcoin is still in correlation with equity markets, and currently in price discovery mode as to either consolidate or cascade lower. The short term TDST Support levels have been drawn and so far they have been contained. Observe weekend trading for clues for direction in equity markets when US markets open next Tuesday. 

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Monday, January 11, 2021

It appears the market reversal will be deferred yet again from the original January 11th target date. The idea is to check off all the boxes and not all boxes are checked. We all know the market are showing extremes and the intermediate and long term charts are are still in price exhaustion territory. The shorter term charts have not been resolved as the market pauses and rotates higher, which resets all the TD Sequential counts. The idea is to see the market run up in a speculative fashion ideally when the two hour, four hour, and the daily charts come together. This is a reasonable expectation now the above chart of the TTM_squeeze indicator located at the bottom of the daily S&P 500 (SPX) is projecting higher. Note the revised TD Trend Factor at 3953.17 as a new target price. If the pace of the rally stays intact, a reversal can occur on Friday, January 15th or Tuesday, January 19th. (January 18th is a US market holiday). The SPX should also see short term weakness starting late Monday. Current support levels have not been defined yet, but as long as 3700 stays intact, the rally should go on. 

The weekly SPX notched another count higher. Another higher close above 3824.68 on Friday, January 15th will record a TD Sell Combo @13. That will mark the second price exhaustion count. 

Quick look at Tesla (TSLA) now that the stock has a big influence on the SPX. TSLA recorded a TD Sell Setup @9. Aligning it with the SPX, we’ll expect TSLA to reach the TD Risk level at 952.94. For risk management, TD Risk level invalidation is confirmed if TSLA records two consecutive higher closes above 952.94 and records a close above that second higher close before it closes below 952.94. 

Bitcoin (BTC/USD) is pressing against the monthly TD Risk level at 41,060.80. Since it is on a monthly time frame, this has more significance in early 2021. For now, BTC support is derived from the eight hour TDST Support at 30,829.56.

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Monday, January 4, 2021

Continuing with the methodology to seek an optimal day for a reversal, the S&P 500 (SPX) can record a TD Sell Setup@9 on January 8th from the daily chart. If both TD Sell Countdown and TD Combo Sell can align with TD Sell Setup at or above the TD Trend Factor at 3773.36, the case to against the trend grows. Be aware there is there is a catalyst starting on January 5th, the political vote for the state of Georgia. The outcome has significance for the future of fiscal policies. Expect the voting to be close and may not not be determined on January 5th itself.

The Nasdaq ETF (QQQ), like the SPX is trending higher, and in price exhaustion territory. The sweet spot for optimal price exhaustion is also January 8th, where a TD Sell Setup @9 can be recorded. If the 9 count can be aligned with 13 counts for TD Sell Countdown and TD Combo Sell near the 326.34 TD Trend Factor, the more conviction for a reversal. Very similar to the SPX. Should QQQ trade below 308.98, the confluence of short term TDST Support levels, the selloff is likely commencing before TD Sell Setup @9 can be achieved.

The Russell 2000 ETF (IWM) is trading as it should since recording the TD Sell Setup @9 on December 28th, 2020, it has stalled while the SPX and QQQ are playing catch up. This type of rotation should continue until the SPX and QQQ realize their daily price exhaustion signals before falling in concert. 

Moving to the intermediate term, the weekly SPX has recorded the first price exhaustion signal with a TD Sell Setup @9 on December 31st. This begins the reversal process and may take a few weeks to be fully realized when TD Sell Countdown and TD Combo Sell complete their respective 13 counts. 

The monthly SPX will enter price exhaustion territory for January through February of 2021 as it can record a TD Sell Setup @8 and @9 respectively. Note it has overshot the rising trendline translating the bullishness has become excessive.

The quarterly SPX recorded two closes above the 3253.05 TD Risk level. If the March 31, 2021 close is above the December 2020 close of 3756.07, that will enhance the likelihood of the continuation of the long term bull rally. 

The yearly S&P 500 (SPX) provides a picture of what a secular bull market looks like. The 1987 crash, dot com bust, financial crisis, and the recent pandemic selloff were risk off events. Ask those who have been in the financial services business for more than 50 years and the majority will point to the 70’s as the most painful – A long grind full of uncertainty. Another element at the time was inflation, and not the good kind. 2020 ended with a TD Sell Setup @9, and this suggests a pause beginning in 2021 or early in the decade. With commodities in a primary trend and bonds wobbling, there is finally an inflation element going forward after years in a low inflation environment. Question will be will be the good kind of inflation that correlates with growth or the unkind inflation during the 70’s. 

As of this writing, new levels are drawn now that Bitcoin (BTC) has traded above 33k, which is currently above the 32,283.99 TD Risk level. For the near term, BTC remains bullish if it can maintain that level. It would be a warning if BTC should pare below 30,677.76, the daily TD Risk Level (not drawn). Note the current TD Sequential and TD Combo counts are nearing price exhaustion. Chances are high it will recycle higher since speculation is just beginning. This is similar to the 2017 playbook. Currently, BTC is up about 12% for the day. Trading up 10% is not excessive by bitcoin standards. In 2017, the top were preceded by 20% moves higher. If BTC stays bullish through the weekend, equity markets should be bullish as well.

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