Friday’s session was just a straight continuation of Thursday’s daily breakdown bar. It was the same accelerated 1HR 8EMA bear train for swing and 15m 8EMA+20EMA short re-entries train for scalpers. Overall, Thursday and Friday were perfect textbook trend days.
A quick recap of
what occurred this past week and take the previous weekend update into context:
- Monday closed below daily 8EMA for the first time in 28~ sessions.
- Tuesday inside bar closed below 50% of Monday’s range and still below 8EMA
- Wednesday lower high rejection bar along with a bear sandwich setup
- Thursday morning at 9AM broke below Monday’s low and confirmed the daily extreme overbought signal that targets initial 25-30 points immediate down that could turn into more. Closed below daily 20EMA and 200SMA
- Friday was a breakdown follow through day. In the morning, the major support of 2034 was tested and bulls couldn’t even manage a bounce. This indicated that bears are serious and price momentum was very bearish still and closed at the lows. Daily 50SMA = 2000.4
From last
weekend’s update:
Remember, this is a
bull train until price proves otherwise. We’ve been mentioning
this for weeks now, but price is king and everything else is just noise.
What’s next?
Daily closed
at 2013, this is the 5th consecutive session closing below the daily
8EMA. This is the first session closing below the 2026 daily 100SMA and major
support of 2034. The next major moving average support resides at 2000.4 which
is the daily 50SMA.
Remember,
this is a bear train until price proves
otherwise as daily is now below 8EMA and 20EMA. For swing bears, this means
that any bounce back to 8EMA and 20EMA are going to be re-entries to short.
The
immediate targets of 2035, 2027 are fulfilled along with intermediate target of
2010.
Now, the intermediate target of 2000
becomes an immediate target. However, we are expecting a possible deadcat
bounce on Monday/Tuesday since price is near major support level of 2000-2007
and hourly extreme oversold signal in the works of confirmation.
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The Daily Extreme Overbought Signal
The initial
target of 25-30 has been fulfilled from that 2062 breakdown trigger. 2062 to
2011.5 is 50.50 points already.
Now, the important question is that
are we going to get a Leg 2 down on the daily chart?
We are going to assume that there’s a deadcat
bounce on Monday/Tuesday due to the price nearing major support levels of 2000
and 2007 along with hourly extreme oversold signal waiting for a confirmation. Then,
we would see if the market forms a lower high/other bear setup for the Leg 2
down. Currently, we are treating the 2110.25 to 2011.50 low as leg 1 of the
daily bear train.
Taking into context of the past 14
months
Market has
been in a trading range of 1813 vs 2134 for the past 14 months and that is 321
points. Inside those 14 months, 6 months were spent inside 100 points range of
2134 vs 2034 from March to August. Recall, we warned about the fast and furious
breakout/breakdown at the end of July before we went on vacation. Then, when
August 20 closed below the 2034 range low of the past 6 months, it triggered
the MASSIVE feedback loop of bulls being stopped out and bears chasing the
train as it were a 6 months’ worth of accumulation and consolidation range.
How is this relevant? Well, since the market has been in a
range bound market for the past 14 months and it just hit a range bound high of
2110.25 that was rejected by almost 100 points down. The market now has
potential on the weekly and monthly charts to revisit that range low in the
longer term perspective if we get that Leg 2 bear extension from the daily
chart setup. This means that from now to the end of November, bears have to
really prove themselves.
Weekly chart perspective:
- Large Weekly perfect bear bar closing at the lows and below 8EMA and 20EMA
- One week erased the prior 3 weeks gains. There's a lot of trapped bulls from the prior 3 weeks’ worth of accumulation, which means it creates a large feedback loop of them getting stopped out if breaks below 2007 and 2000.
- Question is straight continuation down or inside bar/consolidation bar first then bears try for the follow through during the first week of December?
Monthly chart
perspective:
- There’s 11 sessions left (really 9 sessions since Thanksgiving is going to be early close and light volume) for monthly bears to try for a bearish engulfing which means closing ideally below 1883 or around 2000.
- Currently, monthly 20EMA = 1972.72. Friday closed below 8EMA 2021.86.
General
thoughts and potential roadmap planning:
Since
we are expecting a deadcat bounce to occur on Monday/Tuesday by sticksaving in
the 2000-2007 area, the bears have to reject the bounces at daily 8EMA and
20EMA in order to keep this bear train running into a potential Leg 2 down.
Obviously, all bets are off if daily closes below 2000 as the next major
support is at 1982, then 1951.
If bear
train is so strong that bulls can’t even manage to retest daily 8EMA/20EMA,
then hourly 50SMA and 100SMA are going to be key rejection levels for the
deadcat bounce.
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FWIW, we are still holding 25% swing shorts from 2064.25 entry as a trailing winner in the swing futures account. Waiting to see how we open on Sunday in about 5.5 hours.
FWIW, we are still holding 25% swing shorts from 2064.25 entry as a trailing winner in the swing futures account. Waiting to see how we open on Sunday in about 5.5 hours.
