E-Wave for the S&P 500 Index

[RCKS]

Today is Friday and this is Pretzel's Monday offering....

".....we're into an inflection zone down toward the SPX 4300 (+/-) zone, so we'll see how the market reacts here."

http://www.pretzelcharts.com/

"There are a million ways to count the decline from this year's high, but in my opinion, it's now three large waves down (recall that three large waves down means two smaller impulsive waves connected by a corrective wave) -- the question is whether those three waves are complete yet (and it's terribly unclear; they could be, or not. Neither would surprise me here.). If they are, then a larger bounce would be in the cards now (see chart below).

The next question will be whether those three waves can go on to form a still-larger impulse down, which would in turn more strongly suggest an intermediate decline. But let's not get too far ahead of things yet, as "the evil of the day" is sufficient to wrestle with for now. Accordingly, I've tried to create something of an "all in one" chart with a focus on clarity for SPX:"



"An interesting companion to that chart would be NYA. In the event NYA wanted to back test its broken red trend line, we can see how that would align nicely with a test of the confluence on the SPX chart above. Of course, that's not a "guarantee" that the market will go that route, just something that would display some consistency across markets if it did:"



"Finally, COMPQ dipped below support, but bulls can still salvage things if they act quickly:"



"In conclusion, we're into an inflection zone down toward the SPX 4300 (+/-) zone, so we'll see how the market reacts here. Again, in the event bulls can't pull things together soon, then things can get slippery to the downside. Trade safe."

[JLS]

He who doesn't care why ...

The average participants in the stock market as a whole are not very well educated about the stock market but it's a game they want to play as they dream of winning.

So they spin the roulette wheel when it feels right to them, which is typically when the market takes a little dip and they believe that playing the game is cheaper.

It is cheaper, but since they don't know how to play well they have a 50:50 chance of winning. But losing the gamble takes money away from them, so their next gamble has less money to play with so it's harder for them to break even.

Wash, rinse, repeat, they eventually go home broke, but they tell their kids they had a great time.

[jxyzobrien]

the market is in a downtrend
who knows why or cares why

the info you are posting is already baked in the cake
the market looks forward

[JLS]

The problem with statistics,

such as when the (stock) market does this then it usually does that ....

is that the current situation is that SPX has an inverted yield curve (the largest one I've ever seen) and that is not very common but when it does exist the market statistically has a much larger correction as money flows into short term bonds instead of into stocks.

[jxyzobrien]

tim ord

[jxyzobrien]

tim ord stat
when a market is down 4 days in a row
there is 73 pct chance it will make a new low in a week or so.
markets are extremely devious
get everyone to be a bull and trap em
https://schrts.co/uxgjIEcB

[RCKS]

Are You Ready for a Huge Rally?
AUGUST 18, 2023 AT 10:25 AM

https://stockcharts.com/articles/tradingplaces/2023/08/are-you-ready-for-a-huge-rally-708.html

"It was one month ago that I discussed the serious (short-term) warning signs that the stock market faced. I summed it up pretty well on a Your Daily Five recording that aired on July 19th. Calling weakness after it hits is easy, but discussing objectively the warning signs BEFORE the market drops is where our value at EarningsBeats.com begins. If you didn't get a chance to see this Your Daily Five video, here it is:"

"In it, I discussed two sentiment indicators:

Volatility Index ($VIX), highlighting the positive correlation with the S&P 500, suggesting a market downturn approaching.
Equity-only put call ratio ($CPCE), pointing out that the 5-day moving average had dropped to a 15-month low. Extremely low readings on this moving average have historically coincided with market tops.
I also discussed the bearish historical time of the calendar month (the 19th to the 25th has proven to be EASILY the worst time of ALL calendar months), with negative divergences everywhere on daily charts. I even suggested that Tesla (TSLA), which was trading at 293 at the time, could fall to 230. It's actually at 216 this morning (last time I checked). These are "before the market drops" calls.

So where do we stand now? Well, Volatility ($VIX) has pretty significant resistance at 20, and that's where I thought the VIX could run -- in a worst-case scenario. Here's the VIX chart:"

http://d.stockcharts.com/img/articles/2023/08/18/99e2009b-6c75-49f9-a43a-ba17ca6f6dcd.jpg

"We're getting close to where the VIX has failed over the past 4-5 months. Could it rally past this level? Sure, anything is possible. But if I'm right about this secular bull market, then I doubt we see a close above 20. We'll see.

How about that 5-day moving average of the put call ratio ($CPCE)? Well, we've gone from extreme complacency in mid-July to extreme pessimism currently. This moving average has reached .85 as of yesterday's close. I believe this is THE most telling indication of how stretched we are right now to the downside. Check out this turnabout:"

http://d.stockcharts.com/img/articles/2023/08/18/bcbc440c-e20d-4077-beba-a30385430a64.jpg

"A little over a month ago, this 5-day moving average was below .50, its lowest reading since April 2022 during the height of the cyclical bear market. And in just a few weeks, bearishness has sent our 5-day moving average of the CPCE to .85, its HIGHEST level since March. If you recall, that level of extreme pessimism helped to launch the massive rally we experienced over the summer. Don't fear what others fear. Take advantage of it.

One final note on the CPCE. Here's the table of cumulative half-hour readings of the CPCE over at CBOE.com. To move the cumulative reading like it moved in the final 3 readings is EXTRAORDINARY. Retail traders were buying puts hand over fist in the final hour or so of trading on Thursday. The masses rarely get it right. Check out this table:"

http://d.stockcharts.com/img/articles/2023/08/18/8f630668-8870-4fa7-9440-543f43563f83.jpg

"This is CENTRAL TIME, one hour behind those of us on the east coast. So the 2pm reading CT is 3pm ET. So in that half hour from 3:00pm-3:30pm ET yesterday, the individual half-hour readings came in at 3.45!!!! That smells like capitulation to me! I'll be watching these half-hour readings throughout the day today.

Next, it's always important to watch negative divergences. These warnings should never be taken lightly, as they typically precede more significant selloffs during secular bull market advances. Here is how the S&P 500 ($SPX) and NASDAQ 100 ($NDX) looked on July 19th, the day I recorded my last Your Daily Five:"

S&P 500:

http://d.stockcharts.com/img/articles/2023/08/18/330a897b-aa87-4d6a-877b-7ebd657e98f3.jpg

"The RSI was at 75, indicative of very overbought conditions, and the negative divergence suggested slowing momentum. This combination, along with the sentiment issues, didn't guarantee us that prices would drop, but they certainly SCREAMED at us that the risk of a drop had increased significantly. Now we know the result."

NASDAQ 100:

http://d.stockcharts.com/img/articles/2023/08/18/95540202-6584-432f-b7d4-8dfc95dc48d6.jpg

"This negative divergence was even more pronounced. Again, we now know the result of these warning signs.

It's important to note that we're also in the worst calendar period of the year. Unlike those spewing "Go Away in May", I've actually done the research to correctly point out that the worst period of the year is from July 17th (close) to September 26th (close). All of this current weakness has been during this weak summer period -- once again.

So do the technical indications support a potential reversal back to the upside? I say yes. When I pointed out the potential for selling a month ago, I indicated that my "worst-case scenario" for a continuing secular bull market advance would be retesting the August breakout on the S&P 500 at 4305, while simultaneously testing the rising 20-week EMA. Here's a current view of the longer-term weekly chart, highlighting the last 3 years:"

http://d.stockcharts.com/img/articles/2023/08/18/a4322b70-7bbf-47e1-8353-917056a2f7c5.jpg

"If I didn't listen to any news stories and this chart was the only thing I had to look at, I'd say the following:

Volume trends are strong (rises have been on heavy volume, currently selloff on lighter volume)
Weekly PPO has been accelerating to the upside throughout 2023, right up until the July high
Weekly RSI became overbought at the July high, suggesting a possible pullback to relieve overbought conditions
We've pulled back to test the rising 20-week EMA, which has a history of support market advances

But here's the problem: nothing is rational when big selloffs approach bottoms. Volatility sends stocks gaining and losing much higher percentages on a daily basis, and the whipsaw action can be very alarming. Plus, if you're off by 1-3 days on a bottom, it can mean another 5% or more to the downside, which makes you question your signals.

If I'm being totally objective, again ignoring the short-term volatility and emotional toll, mid-July's story was one of caution and suggested minimizing risk. The current environment, however, is the mostly opposite of what we saw one month ago. This is the time to hold your nose and buy.

Just my opinion."

Happy trading!

Tom

[jxyzobrien]

ew works much better in a corrective down move
the fed has paused raising interest rates
but has been withdrawing funds
this is causing the pullback

i assume we are doing a double zigzag down
the fed can change policy at any time though
World financial markets are sold so the fed is not concerned about a market correction

[RCKS]

"......I have no issue with admitting my lean is early (it was actually way early, but I didn't feel it was prudent to discuss yet), so the market could surprise and change its appearance to something more bullish, but so far, everything continues to align for bears."

http://www.pretzelcharts.com/

"It's time for me to bite the bullet here. At least since August 4, I've been wanting to throw caution to the wind and proclaim the rally over, but are you kidding me? Have you seen this market for the past 6 months? No one in their right mind would ever declare the rally over, ever. So I'm not going to do that just yet, but I will say I've been leaning that way for two weeks, and so far, the market is giving more and more reason to continue leaning that way.

Let's look at some charts.

First up, INDU captured both its downside targets:"



"Turns out this VLT SPX trend line was a good one:"



"Next, NYA is close to overlap:"



"Here's one for the bulls: COMPQ support just below."



"And one for the bears:"



"In conclusion, I have no issue with admitting my lean is early (it was actually way early, but I didn't feel it was prudent to discuss yet), so the market could surprise and change its appearance to something more bullish, but so far, everything continues to align for bears. Trade safe."

[GLENO34]

RCKS. Thanks for the charts etc,,,My guru thinks we will have a strong rebound possibly lasting "multi weeks",,,But he said we will need to recapture some strong REZ and he actually like 4404 Futs as a possible breakout point..?? FWIW


Watch out for lightening...

[RCKS]

"...bears have their place at the table all set, now they're just waiting to see if the waiter brings the steak (which in this case, would be a sustained breakdown at SPX support)."

http://www.pretzelcharts.com/

"INDU broke below its key zone from last update, which implies either a snap-back rally fairly directly (which would likely revisit current levels afterwards) or an immediate follow-through decline. Immediate and meaningful bull options seem less likely, so this break seems to favor the bears for the near-term... and possibly much longer, as we'll see.

Let's take a look at SPX first to understand why:"



"As we've known for a while, SPX hit a major long-term resistance line, and has so far been rejected. While rejections at resistance (or bounces at support) aren't necessarily the end of the world, this is, again, about the best bears can hope for at this stage. And combined with the potential for three complete rally waves (as shown above), it's definitely worth sitting up and taking notice."



COMPQ next:



Next, NYA:



And finally, BKX:



In conclusion, bears have their place at the table all set, now they're just waiting to see if the waiter brings the steak (which in this case, would be a sustained breakdown at SPX support). Trade safe.

[jxyzobrien]

tim ord
markets need fear and too many puts
to bottom

trin needs to zoom indicating fear
and put call needs to be high too
trin
https://schrts.co/xKukqpAi
put call
https://schrts.co/gzUsGYsW

wonder if fed notes zoom down does the trick

[jxyzobrien]

stan harley
cycle bottom soon
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172602883

[RCKS]

".....we have a fairly clear zone to watch in INDU, and bull hopes are better served by staying above that zone, while bear hopes are best severed below it."

http://www.pretzelcharts.com/

"First, I'd intended a couple more charts, but Stockcharts did that thing where it lets me write a bunch of stuff on the chart and then just deletes it, after which it displays a .gif of Kamala Harris laughing hysterically. So I ran out of time and we'll have to settle for three charts.

We'll start with oil. I'd called the bottom at 64.36, but that turned out to be a few pennies early, though the larger count shown then appears to have been correct, and I haven't moved anything (included the "2?" which I should have moved but forgot on my second attempt to get Stockcharts to accept my edits):"



"For our near-term proxy, we'll use INDU again (SPX would be expected to track):"



"Finally, SPX has remained stalled at the very long-term trend line, which may prove to be quite significant as time goes by:"



"In conclusion, we have a fairly clear zone to watch in INDU, and bull hopes are better served by staying above that zone, while bear hopes are best severed below it. Trade safe."

[RCKS]

Stock Market Commentary 08/11/23
By Lawrence G. McMillan

"The $SPX Index has started a downtrend, from the recent highs just above 4600. This decline began with overbought conditions providing headwinds and then accelerated when Fitch downgraded the U.S. debt rating. That 4600 area represents resistance, and the next support area is at 4440 which would close several gaps on the $SPX chart. A pullback to that level is taking place now. Below there, support at 4330 is crucial. If that is violated, in my opinion, it would be quite bearish for stocks, even though there is another support level at 4200.

Equity-only put-call ratios remain solidly on sell signals. They have begun to rise even more rapidly now, and it looks like they won't be falling back to a new 2023 low anytime soon. This means that they will remain on sell signals as long as they are rising.

Breadth has been relatively poor, and the breadth oscillators remain on the sell signals that were generated on August 2nd. This is about the least whipsaw we've seen from the breadth oscillators in quite some time, so that seems to be a good thing. The oscillators are modestly in negative territory, but are not oversold yet.

$VIX has risen slightly while $SPX has sold off over the last week or so. $VIX is in "spiking" mode, as of August 4th. Stocks can fall while $VIX is in "spiking" mode, but eventually a "spike peak" buy signal will occur. That buy signal has not occurred yet.

So, we are maintaining a "core" bullish position (albeit with a small delta now that the market has pulled back), as long as $SPX remains above 4330. We are, however, trading other signals around that core position when those signals are confirmed."

S&P 500 (SPX), CBOE Market Volatility Index (VIX), 21-Day Equity Only Put Call Ratio (PC21), and Weighted 21-Day Equity Only Put Call Ratio (PC21 w) charts updated each Friday.

http://www.optionstrategist.com/sites/default/files/SPX.JPG?v=1691788166946

http://www.optionstrategist.com/sites/default/files/PC21.JPG?v=1691788166946

http://www.optionstrategist.com/sites/default/files/PC21_W.JPG?v=1691788166946

http://www.optionstrategist.com/sites/default/files/VIX.JPG?v=1691788166946

[RCKS]

"....the market has remained disheartened by resistance -- but the big question on everyone's mind is whether we have an impulsive decline yet."

http://www.pretzelcharts.com/

"Last update predicted:

While it's always possible bulls will surge again, the fact that multiple markets are still below resistance heading into an important data point (one which could well show inflation rising again) leads me to suspect bears will manage to pull out the win over the near-term and create at least "another" 3/C down ("or 3/C" on the first INDU chart).
Headline CPI inflation is not showing as rising again (yet), but producer prices showed their largest increase since January -- and, either way, bears did pull out the win due to overhead resistance, and INDU indeed seems to have gotten "another" 3/C down exactly as shown in the last update. The real question for INDU at this point is whether it feels like it needs ANOTHER up/down sequence or not:"



"SPX has continued reacting to very long-term resistance:"



"BKX has continued reacting to the resistance zone I highlighted a month ago:"



"NYA has continued reacting to its resistance zone:"



"And finally, COMPQ is in the process of trying to whipsaw its last breakout:"



"In conclusion, the market has remained disheartened by resistance -- but the big question on everyone's mind is whether we have an impulsive decline yet. By all rights, the decline does appear to be impulsive in both NYA and SPX. There's some lingering possibility that the high was a B-wave, but I'm not leaning that way and if bears can keep pushing a bit lower, that option should be erased. Presuming the decline is not a b-wave, then the implication is that if there's another bounce from here, there should also be another leg down. The more bearish option would be to continue lower directly, without another large bounce. Trade safe."

[RCKS]

"While it's always possible bulls will surge again, the fact that multiple markets are still below resistance heading into an important data point (one which could well show inflation rising again) leads me to suspect bears will manage to pull out the win over the near-term......."

http://www.pretzelcharts.com/

"Tomorrow is CPI, which the market is watching with interest (no pun intended) for obvious reasons, so let's keep things simple today.

First off, the near-term options, illustrated via INDU (other markets should roughly track this, but INDU was the clearest for purposes of conveying information to readers):"



"Bigger picture, NYA remains below key resistance:"



"And even bigger picture, SPX remains below key resistance:"



"While it's always possible bulls will surge again, the fact that multiple markets are still below resistance heading into an important data point (one which could well show inflation rising again) leads me to suspect bears will manage to pull out the win over the near-term and create at least "another" 3/C down ("or 3/C" on the first INDU chart). Trade safe."

[gdl]

TEXT BOOK month move. Great July, slip/slide August. Absolutely NOTHING to indicate any danger zone. Thurs/Fri the all important INFLATION data. I expect it to stay tame simply because CHINA is in a deflation spiral.

Every single indicator is still in a tight range bound scenario. Bonds, Dollar, Oil.

Let me put it to you this way. Earnings were slightly better than expectations and we went for a 7 percent expected DROP to only 5! WOW! Lets talk NEXT quarter.
It is expected to be FLAT. Yup no earnings gain and if they beat by 1 to 2 percentages the street will cheer!

ONLY with projections made in October will we see any significant moves. I see a weak August, strong Sept/Oct. Weak November and attempt to catch the highs in December.

Now looks like January is the best case scenario for a dramatic drop.

So there is only 2 things to watch for: Inflation data and earnings. Both have the odds stacked in the BULLS favor for now.
-----------------------------------------------------------------------------------------

All this is happening while it looks like the clock will run out for jail time for trump before election day. The ability to shrug off the most damaging historically significant event since the Civil War by totally ignore the obvious. A trump win will completely dissolve this republic and change forever our democracy. How anyone can't see this is like dismissing 4 indictments based on the premise that your own eye, ears, common sense and ability to reason above the age of 5 has been taken from you. The political arena is as two sided as if trump never got indicted and events on TV never took place.

My point! if we can cheer on trump today we have lost all sense of right and wrong but more importantly lost out ability to stop running when a cliff is in front of you. We will fall over on all levels.

2024 we might survive intact. 2025 will usher in Trump/GOP takeover of the nation, war and martial law to prevent Georgia from jailing trump. This is so freaking obvious but hey i pointed out what already transpired and at the time was called a kook. Still am by those that can't see reality for what it is.

[JLS]

Wheels go 'round and 'round ...

and where she stops nobody knows.

Took note of that a few weeks back as the market is trying to figure out where to go. Decided I didn't want to play the game so I went to all-cash.

That's not the only reason though. I'm at that special time (that I hate) when I have to renew my drivers license and therefore have to take a written driving test. So I need to focus all my attention on that upcoming test I have to take ... meaning I have to boot stock trading thoughts out of my head until that new drivers license test receives a passing grade.

[RCKS]

Watching the Wheels Go 'Round and 'Round

http://www.pretzelcharts.com/

"In the last update, I wrote:

Here's what we have so far:
The market has indeed encountered resistance at the resistance lines we've been watching.
This is about the best bears could have hoped for at this point, but
So far, the decline is not yet impulsive.
In other words, it's everything bears could want at this stage, but thus far is not enough to definitively signal they have the ball, so "just a near-term correction" is still possible. I can't sum it up much better than that.

And this is still where we are today. I do want to add, however, that the significance here probably can't be overstated: Multiple markets tagged resistance, ranging from intermediate to very-long-term, in concert, and were rejected. Bears still have their work cut out for them, but so do bulls. If bulls cannot claim those resistance zones, then lots of people could get caught standing around gawking at "the most obvious top in the world." So we should stay on our toes here."



"NYA's action was interesting on Friday:"



"And COMPQ is still testing its old trend line. "



"In conclusion, no change so far: Bears have hope on this reaction to resistance, but no confirmation of anything else just yet. Trade safe."

[GLENO34]

RCKS, Thanks for the update...Could just be a relief bounce here ???

[JLS]

Covid ... that's a short list.

I think you should add Putin (and everything he has caused) to that list then apply a little thermodynamics with a little understanding of what entropy is and how that mix has put the world at a higher, relatively uncomfortable, energy state which one can measure by watching the state of the stock market along with its higher volatility and change of phase as measured by its rather huge inverted yield curve -- the biggest one I've ever seen!

Well ... I'm pretty sure.

So, with all that in mind, I took all my money out of the stock market about three weeks ago., and that has proven to be a very good choice so far.

[RCKS]

Stock Market Commentary 08/04/23
By Lawrence G. McMillan

"It took the catalyst of Fitch downgrading the debt rating of the US from AAA to AA+ in order to generate some heavy selling in stocks. So far, most of the damage has been limited to just one day, but that was enough to confirm sell signals from several overbought areas.

$SPX itself now has resistance near 4600, which is the high of the most recent rally. The first support area af 4528 was broken, but there are others that should come into play: 4440 is the area at which all of the recent gaps on the $SPX chart would be filled (red circled area in Figure 1). Then 4330 and 4200 are major support areas below that. Their importance derives from the fact that it took some time to build both of those support levels. A move below 4330 would be a negative for the $SPX chart and would cause us to relinquish our "core" bullish position. Otherwise, we are going to retain it for now.

Equity-only put-call ratios are rolling over to sell signals. The standard ratio (Figure 2) has visibly turned upward, and that sell signal is solidly in place. The weighted ratio (Figure 3) is less clear. The ratio jumped higher for one day day of the US debt downgrade but that's about it, which is why there is a "?" on the sell signal marked on the chart.

Breadth had started to slip before the Fitch downgrade and then worsened after that. Both breadth oscillators have now rolled over to sell signals, and those have been confirmed for two consecutive days.

$VIX has moved slightly higher in the wake of the Fitch downgrade and the resulting selling of stocks, but not even enough to enter "spiking" mode. It did probe up above 17 briefly on Thursday, but then closed back down below 16. In other words, the reaction of $VIX has been muted. The trend of $VIX buy signal thus remains in place.

So, we are retaining our "core" bullish position. We have rolled in-the-money calls up to higher strikes all along with this rally, so our exposure is somewhat limited. We are taking positions in line with some of the new sell signals, and each system has its own stop out."

"S&P 500 (SPX), CBOE Market Volatility Index (VIX), 21-Day Equity Only Put Call Ratio (PC21), and Weighted 21-Day Equity Only Put Call Ratio (PC21 w) charts updated each Friday."

http://www.optionstrategist.com/sites/default/files/SPX.JPG?v=1691265695711

http://www.optionstrategist.com/sites/default/files/PC21.JPG?v=1691265695711

http://www.optionstrategist.com/sites/default/files/PC21_W.JPG?v=1691265695711

http://www.optionstrategist.com/sites/default/files/VIX.JPG?v=1691265695711

[RCKS]

JLS

All I will say is things don't add up as they have in the past.

My suspicion is that the Covid unraveling has had a distinct influence on how the Market has and is performing given the Inverted Yield Curve

[JLS]

Should have checked how that posted...

The link got some junk stuck to it because in my rush I posted it wrong.

Oh well ... edit it if you're interested.

[JLS]

That said ...

Tomorrow's futures are all in the red at this time of day.

And, as I already pointed out, the yield curve is inverted, more so than I've seen in years AND short term bonds are paying some pretty high rates AND those rates are guaranteed.

That said, the current price is at a significant support level, so what happens now depends on the next throw (or two or three) of the dice. I'm not a gambler so I'm going to be staying out of stocks. For what it's worth, the inversion started in August of last year, so it's had almost a full year to fatten up.

With short term bonds (even the 3-month) paying as much as they currently are, those bonds are going to suck up a lot of money that may have been destined for stocks.

"https://stockcharts.com/freecharts/yieldcurve.php";