THE WEEK AHEAD PART 1
Leading Indicators are largely in line very short term and longer term, this would be the Week Ahead" forecast as we have largely completed the reversal process, we have moved from an uptrend to a lateral reversal process trend and today's events have broken the charts, but I suspect Wall St. will not accept the losses represented by the gap and there's still some question as to whether or not we see a head fake/false or failed breakout as the SPX daily chart has the MOST obvious resistance line in the most watched index, with a concept that occurs any way about 880% of the time before a trend reversal (the reversal of the price trend since the April 2nd forecast and upside since).
While I believe a gap fill is the most probable outcome based on the concept and more so on the losses intermediaries like market makers, specialist and the numerous HFT algos that fill the liquidity demand of market makers and specialists as the bid/ask spread is their profit on thousands of trades run per hour, in some cases I'm sure they could do that per minute if the demand was there.
While the short term Flameout occurred today as posted in the last update, Intraday Flameout-
from here the difference between a gap fill and a head fake shakeout/false breakout is significant and I suspect will only be answered as we see the intraday trade next week and whether or not it is capable of forming a base strong enough. Either way, I would encourage you to start worrying less about the very near term intraday or day to day trade, and start focussing on the longer term trend positioning as represented in today's earlier post, Important Trend Market Update
Granted, a new high on a head fake move would be an emotionally moving event near term and cause doubt about the trend, however, everything that we need to know is already in place regardless of whether we get a gap fill, a new lower low or a head fake / false/failed breakout based on the VERY obvious SPX resistance area / trendline that is exceptionally obvious in the form of the March trendline...the more obvious and closer watched the asset, the more probable a head fake move, but just like we used the +25% 1-day gain in HLF to short in to knowing it was a head fake move in advance, I'd urge you to not focus on any such possibilities beyond the opportunity to use them to your advantage and rather focus on the longer term trend PROBABILITIES.
The intraday capitulation event on a spike in volume and bullish candlestick lifting prices since, but if there's to be a gap fill where there are likely significant institutional losses from market makers , specialists and HFT algos, there needs to be a stronger base formation and/or a closing bullish candle on what is already increased volume.
As you can see above, the price/volume trend since the intraday flameout is losing impact, suggesting a pullback to form a stronger /lateral base near the flameout lows.
The Daily SPX chart with a deep, large bearish candlestick thus far. If this candlestick and trend today are to be overcome for a bounce to the gap (yellow) or even more impressive and helpful, a breakout (HEAD_FAKE) above the MArch SPX downtrend line where the last 2-days have put in bearish downside reversal candles EXACTLY at resistance, then the market will need to gather more strength in the form of a larger base than just the lows of the intraday flameout above. #1 is the gap fill, #2 would be the head fake/false breakout ABOVE the march resistance trendline which is now VERY obvious and the obvious target for the normally high probability head fake/bull trap set-up before a stronger downside reversal.
It is the longer term downside reversal trend I would start paying attention to and not have your attention dragged to other corners of the market based on short term intraday or day to day price action
No comments:
Post a Comment