Carlos discussed on the posted video earlier this morning, the $SPX levels and where we could be heading today.
So far it has played exactly how we predicted, we are in processes of completing wave 3 and then a pullback is required to complete the 1-5 wave move (for those who follow EW method) before making any bullish counts, so far its just a corrective bounce, and currently we closed back in the wedge, as we couldn’t close above 50MA. On the same token in the chat room Warren in our Futures room has placed a short trade on the $ES_F and possible target 2639, trades were posted via shorting $ES_F or playing the $SPY put trades.
Now we looking at the $QQQs on the other hand have been holding pretty solid up move, and making some good new highs on the intraday basis. They are better set for any bullish play, and we can thank our leaders for that up move in the Nasdaq, Leaders like $AMZN, $FB, $AAPL, $NVDA etc.
Assumption on $QQQ if wave C hold, we can project to 166.93 as a target with having 163.99 as the support, due to the seasonality for a strong up move to even 171.
$FB long trade almost getting ready for another long play once we clear that 174 support holds and go higher to 186 target.
$AMZN, has been holding very good after reporting its ER, and we can potentially look for 1721 target, or perhaps 1678 to be on the conservative side 6% return on the investment.
$ANET reported earnings and its one of the market leaders, and we think it has a nice move up, holding the current level and as it complete the 5 wave up, we could see 1108% win rate if we take the Delta 40 long calls after its reporting its earning. We will place this trade in the room.
$CPA also reporting this week, one of our favorite companies. Its currently working the 5 up and it will likely completed over here, and ready for an up move, so we will place based on the lows and target of 123-126 possible upside targets – always better to wait after earning..
One of the Major movers for the $QQQ’s, $NVDA is going to report this week, and we predict that it can get sold after it reports, as the patter of the Elliot Wave already set for a drop, as a standard move. After the initial down reaction, we could project it makes a new high after with potential targets roughly around 260 to 280+, in Summary don’t short it, wait for the entry around 227, if we don’t get it that’s basically our long targets.
Last week we did $BABA and we projected 190 as a price target, and we bought the 190 calls and currently it’s trading 197.
$TNA is currently getting closer to our target and we have been lightening up since Friday, as at the moment ROI on capital invested is not warranting holding more, although we can extend to 73-75 as potential target – we would like to see a pull back to 70 before joining the long again. With return of 3-4%.
$AAPL, has been a leader and its getting closer to the 1Trillion dollar company, right now its pretty much extended
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Powerful move for the last two days to say the least, it was pretty wild, on Thursday, market tried breaking down below the 200 SMA to only rip back up capturing it and closing shy from green.. on Friday (May 4th, 2018) today in chat room we saw $SPY tried breaking the 200SMA, only to bounce back up and close the day over 1.20% with all major Indecies well in the green.
#Bitcoin is over 10K is it correlated to the stock market? maybe not but it did move pretty much up on heavy volume..
Dow closes up more than 300 points after Apple sparks tech rally
What did we do today?
We pulled our powder and triggered some long plays in the market, taking positions in $SPY, $QQQ, $TSLA and $BABA on the long side.. Those Tickers were traded on different strikes.. also some traders took $NFLX and $AMZN on the long side..
and here is how the $SPY Ended the day – we are not out of the woods yet we are still in a wedge that is about to release some energy, check with us next week on how to play the next move, hitting 50MA, and hence a pullback is likely to happen.
At the moment, it not guaranteed if markets can go higher next week. This time we don’t have a secure pattern. Cyclical analysis is calling for higher into April 30th and Open Interest is projecting higher into the end of this week, May 4th. I like the way daily stochastics are positioned, they will provide strength in case markets decide to follow the open interest projections to the upside.
EW Analysis:
On Tuesday April 24th, based on the .618 extension that was being hit on SPX as shown in the following chart
We, across the board, warned that the excessive confidence of the bears would have to be examined and on Wednesday again, we, in the general Chat Room, warned that markets were to face the 3rd of the 3rd off the 2611.2 lows. So while we maintain that the $SPX should see the 2468 level and potentially lower we have taken an unbiased attitude looking for any evidence that shows our case for lower is wrong, evidence that allows us to capitalize on any potential truncation.
We continue monitoring $AMZN which ideally should hold 1551/1542 in order to continue advancing toward 1721/1770 area. We continue advising you that $AMZN is a must hold company, I have said this to you many times and I expect to be right again while 1540 area holds and retakes highs of this week.
Current $SPX:
The case for higher on $SPX only can be constructed this way shown in the following chart:
another ABC that should take the market higher to 2775 and 2757, the resistance at 2714 is relatively important so reversal from this area should be watched in order to confirm any impulse to the downside.
Immediate pattern has support at 2742 and 2666.1; I will add more if we see one of these levels, at the moment we need more price action with base calling for 2468 but needing a move to 2757 in a C wave up.
QQQ, three up off the lows, needing to hold 160.63 and print one more high in order to confirm five up off the lows that allow us to buy a potential retrace in wave 2.
Enjoy rest of the week and do not forget to not overreact, stay patient and focused.
Initially we will degrade the targets of all our leaders and ETFs from 2.618 to 1.618 in their sub-divisions that we do regularly in our live trading rooms.
Second, we will slowly work on underweight our leaders and we will move capital tactically to $SPX and its leveraged ETFs, limiting purchases from now on only if 2400 area is seen or if some parameters are met on the upside, like taking 2719 resistance in something more than 3 waves up. Most importantly, we should cut exposure on Indexes to only 20-30% of our portfolios once we arrive to the 2950 area and we must have cut most of our non essential longs.
Options: Much more importantly, we will limit option trading on companies; we should only trade options on $SPX/$IWM and $QQQ, trading options on companies from now on should be limited to when we are looking for 1% and 1.618 retraces, you have to adapt and limit the way you make money.
If you want to trade options, make sure you are pointing your target at secure 1% and 1.618 retraces, prepare for some companies to get to exuberant levels, but be aware something that goes up 10% today might/will be down 20% tomorrow, you will lose more money than what you intend to make by following something that goes up only by going up.
We will cut our target for the market to 3100 from 3200 and we should only go after the 3,000 level with limited capital, by the time market hits 2950 our only positions should be on indexes $SPX/$IWM/$QQQ.
Now, assuming 2950 will be seen before 2191, some parameters should be met, starting with the fact that the market should not break under 2373 area.
First approach, under 2587 we continue considering that 2420/2375 are targets, 2327 represents .764 below the standard 1%, this is our primary approach, while we think pullback can go below 2420, but we don’t think it will exceed 2327; if standard pullback is playing out. Traders should consider shorts for as long as market breaks and stay under 2587, and continue shorting when $SPX breaks 2506. Round number for this first approach is 2373.9.
Second approach is a confirmation of first approach, below 2587 market might or might not find support at 2447, acceleration under 2506.3 only confirms 2447 is solid target. Acceleration down under 2447 only confirms our number at 2373 is secure.
Third approach, as shown in chart below, only points to 2422, implying extensions to 2373 might be short lived.
“A VIX future effectively serves as a means reversion indicator in that it tells us what the market expects as a mean”- Adam Warner
Conclusion:
Some new rules have been set, bears are right shorting the market, below 2587 we confirm 2506, below 2506 we confirm 2447, below 2447 we confirm 2373. Everything should be slowly under weighted, except for the indexes, where we can accumulate tactical positions. For example, if $SPX 2719 is taken and $SPX holds above 2687.5 on pullbacks, we can tactically go for 2823. By concentrating our energies on $SPX/$IWM/$QQQ we will avoid the risk of being too spread out.
Rules
Impulsive Waves always divide into 5 waves: Waves 1,2,3,4,& 5; followed by a corrective wave, typically A, B & C.
The waves that are numbered (1,2,3,4,5) are in the direction of the Trend.
The waves that are Lettered (A, B, C ) are against the Trend.
Structure = 5-3-5-3-5 (21) followed by 5-3-5 (13)
Wave 1 could divide into an impulsive 5 wave or a Leading Diagonal.
Wave 3 is always an Impulsive 5 wave and is never the shortest wave.
Waves 5 & C are always 5 waves but it could be an Ending Diagonal.
Wave 2, 4 and B always subdivide in 3 wave corrections.
Wave 2 Never moves beyond origin of Wave 1.
Wave 3 must go beyond Wave 1.
Wave 4 never moves into wave 1 range.
Wave A can be a three wave structure or Leading Diagonal.
Wave 5 often goes beyond Wave 3, if not it is called “Truncation”.
The Chart shows a bull Market. For a Bear Market the chart can be flipped and all the rules remain the same.
The same pattern can be viewed in all time frames: Thick Charts, 1 min, 2 min, 3 min, 5 min, 10 min, 15 min, 30 min, 1 h, 4h, Daily, Weekly, Monthly Charts etc…
Guidelines:
Waves 2 & 4 will almost always Alternate into ZigZags, Flats, or Combos.
Wave 4 can be Flats, Triangles or Combinations
Wave 2 which is usually ZigZag or a ZigZag combination.
Wave 4 Usually Terminates in the same area as the Previous Wave 4 of Wave 3.
Typical Fib counts for Wave 2 is 50%, 61.8% of Wave 1.
Typical Fib Count of Wave 4 is 38.2% or 61.8% of wave 3.
See the charts for other Fibonacci relations.
Often Waves ad-hear to the laws of Channeling:
5 ends around the Chanel line extension of endpoints of 1-3, and
Wave 4 may end at the parallel line point 1-3. (please look at the charts)
Rules
ZigZag is always a 3 wave structure.
Structure = 5-3-5
Wave B never move beyond the start of Wave A.
Wave B is subdivided into a three wave pattern: zigzag, flat, triangle or any combination thereof.
Wave A can be either an Impulsive wave or a Leading Diagonal.
Wave C can subdivide into 5 wave structures: a Diagonal or an Impulse wave.
Guidelines:
Waves A and C connected is usually parallel to the Line connecting the origin of the ZigZag to point B.
Waves A and C usually are Equal in length.
Wave A and C are more often subdivided into an Impulse Wave.
Wave C is always ended beyond Wave A.
Besides Waves A & C usually being equal, the ratios in a correction are less accurate than in an Impulse Waves 1,3 & 5.
See the chart for Typical Fibonacci Retracements.
Glossary
R within links stands for Running
F within links stands for Forced.
(()) double parenthesis stand for macro count from 2009 lows.
As shown on the Chart below that the most probable count for VT, the Vanguard Total World Stock Index ETF. We can see wave (2) was a running flat, beautiful in it’s nature, you don’t need to do anything; the flat plays and develops itself naturally, this is the reason I cordially invite you take it as natural.
We prefer this count over other more tortured lucubration, if we say for example, that this is a 1-2-(1)-(2); we will have an overlap in any subdivision that we force versus the February 2016 decline, it is clear here on chart below
52.31 high of wave (1) versus 50.35 low of the 2016 decline, overlap is clear; now if we gracefully divide the counts as macro ((I))-((II))-((III)), definitely wave ((III)) off the 2009 lows has ran its course at the 2.618 for wave V of macro ((III)), we have an overlap within macro ((III)), so please pay close attention because what I am posting here is important, and if you don’t read carefully we will make a tremendous mistake.
So, here is the important question, based on this chart alone, what is the standard pullback? Well, standard 1% for this chart is 61.01 or a 17% correction from current levels. If this ETF tracks SPX perfectly, this would imply SPX should see the 2190 level. While the chart is beautiful, it’s implications are not. So first let me tell you what I think, I think primarily that bears are being honest and are playing it’s game fair, we, the bulls, are committing a mistake because our time is running out fast, our time to be aggressive on the long side is over gentlemen.
If some upside is left, it should be in the 5th of the V of macro ((III)), so we are playing the last squiggles of something that is ending, like miners that decide to work on a planet too close to a Supernova whose time is over, might explode anytime, we are playing a risky game… risk won’t bode well if we don’t play it with strict rules.
Lately We have been experiencing very aggressive and elevated rise in market volatility, by “volatility”, we’re not referring to VIX. We’re referring to the S&P 500’s daily % movements.
The stock market’s high volatility right now is not rare. There were a lot of historical periods with high volatility. What’s rare is that the stock market’s high volatility right now was preceded by a period of extremely low volatility (i.e. 2017 – January 2018).
Here’s today’s study: what happens next when:
This is the first time in 1 year (252 trading days) in which….
The S&P closed up or down at least 1% vs yesterday’s CLOSE….
For 21 or more trading days out of the past 42 trading days (2 months).
Here are the historical cases
March 26, 2018 (current case)
January 25, 2016
August 29, 2011
September 4, 2007
March 7, 2000
December 15, 1997
September 27, 1990
October 27, 1987
November 15, 1982
April 7, 1980
July 11, 1973
June 4, 1970
June 15, 1962
Let’s look at these historical cases in detail.
*We are eliminating all the cases that occurred near a recession because the economy is nowhere near a recession today. U.S. economic growth is solid. The next recession is at least 1 year (12 months) away. The economy and stock market move in the same direction over the medium-long term.
January 25, 2016
The S&P went down over the next 3 weeks. The next 6%+ “small correction” began 5 months later in June.
August 29, 2011
The S&P went down over the next month. The next 6%+ “small correction” began 7 months later in April 2012.
March 7, 2000
The S&P swung sideways over the next week. Then it rallied for 2 more weeks before the bull market topped on March 24.
December 15, 1997
The S&P went down over the next 3 weeks. There was no “small correction” before the next “significant correction”. The next “significant correction” began 7 months later in July 1998.
September 27, 1990
The S&P went down over the next 2 weeks. The next 6%+ “small correction” began 6 months later in April 1991.
October 27, 1987
The S&P swung sideways over the next 1.5 months. Then it continued to rally fiercely until October 1989.
Conclusion
it doesnt mean past can repeat here but all we can say volatility will stay longer and over the longer time frame market can trend back higher as money flow, that will be sometime probably in June/August.
The stock market’s volatility isn’t over. It’ll either swing sideways or swing downwards in a very choppy manner for the next few weeks
The stock market’s next 6%+ “small correction” is months away. This supports another study, which suggests that the S&P 500 will make another 6%+ “small correction” in the second half of 2018.
at the 2.618 for wave V of macro ((III)), we have an overlap within macro ((III)), so please pay close attention because what I am posting here is important, and if you don’t read carefully we will make a tremendous mistake.
is 61.01 or a 17% correction from current levels. If this ETF tracks SPX perfectly, this would imply SPX should see the 2190 level. While the chart is beautiful, it’s implications are not. So first let me tell you what I think, I think primarily that bears are being honest and are playing it’s game fair, we, the bulls, are committing a mistake because our time is running out fast, our time to be aggressive on the long side is over gentlemen.
