Monday, May 16, 2022

There was a late intraday bullish reversal on Thursday, May 12th, and on Friday, May 13th, closed the session with a bullish price flip on the daily. This solidifies that an oversold bounce has commenced. This bounce back also looks fairly low quality as the leaders such as Apple and Microsoft showed mild buying enthusiasm, while the junkier long duration stocks soared. Furthermore, the intraday market action on Friday could not break above 4046.37 where there are multitudes of short term TDST Resistance levels. All this suggests a V bottom is not likely. 

Going forward, trading under 4046.37 would allow for various retracement options, but the lows should be safe in the near term. If there is a breakout above 4046.37, the next level of interest is the TDST Resistance for the 4 and 6 hour timeframe at 4299.77, which resides near a TD Trend Factor at 4287.97. A higher degree TD Trend Factor at 4502.52 is drawn in for reference only. 

The weekly SPX has an active TD Buy Setup @5. With the TDST Support level breach at 4164.40, the presumption is to allow a TD Buy Setup @9 unfold lower. For a bullish case to unfold, the weekly SPX will need to close next week above the close 4023.89 and subsequently close each week higher until the weekly SPX either price flips and or close back above 4023.89. If successful, this will provide a read that the SPX is carving out a multi week range. 

After breaking the TDST Support at 37560.40, Bitcoin (BTC/USD – Coinbase) recorded a TD Buy Countdown @13 on Wednesday, May 11th, and a TD Buy Setup @9 on Friday, May 13th. This signifies at least a temporary price halt or reset. Crypto markets are damaged and there won’t be any excitement unless BTC gets above the new TDST Resistance level at 39,864.55. The correlation with high beta equities is still strong and thus the intermediate outlook will mirror the SPX.

The crypto crisis story is Terra Luna (LUNA). The George Soros targeted attack on the LUNA stablecoin UST literally took the native LUNA into worthless territory. It remains to be seen how systemic this is, but confidence in the crypto space is certainly being tested. Personal disclaimer: I owned LUNA for the past two years and involved with the Terra ecosystem through Anchor Protocol, and Mirror Protocol which is tied to UST. While I invested prudently by selling on the way up, and increasingly became concerned about the risks since the assets into Anchor Protocol were exploding, I had a plan to start downsizing through the year. However, it was not enough. Having an investment literally blow up in 48 hours was humbling. Stories of other investors fared much worse. No regrets. I knew the risks of crypto and I take some comfort this event was out of my control. 

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1 Response to Monday, May 16, 2022

  1. Gary says:

    Art, I assume you mean a “George Soros-like targeted attack”? Sorry to hear this –

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