The market had an Up Opening Spike on Wednesday which found sellers and came back.
Ditto yesterday.
Again this morning on the weekly options expiry, the S&P futures are up 10.
It will be interesting to see if the third time is a charm for the bulls or the bears.
In other words, will we see the market get traction on opening strength or reverse again and stay down?
Players are primed for a repeat performance of an up opening sell and a comeback, but if they stay down it could force a lot of hedging in the indices in front of the weekend.
Trump speaks in Davos today, the heart and soul of the New World Order clique, so it wouldn’t surprise me if there was an intention to give Trump a ‘black eye’ by stepping on the market which is his applause meter and poster-child for his administration.
Maybe something maybe nothing, but Soros purportedly lost a billion dollars on the Trump election so today’s speech would be an opportunity to ‘throw a pie’ in Trumps face by someone who knows how to make markets move.
Just a thought.
The dollar plunged and then rebounded somewhat from the 88 support level shown in the charts from the end of 2017 and shown yesterday.
The dollar bounced as Trump tried to walk back Mnuchin’s comments as to weak dollar policy.
They want a lower dollar but they don’t want a dollar crisis.
Be that as it may, the dollar is broken and below 88 is busted looking for 83 as shown on the Square of 9.
Remember that the dollar topped from the get-go in January 2017 as Trump came into office.
The Trump rally has mirrored the decline in the dollar.
IF the dollar should bottom, it may indicate a change in trend in stocks.
Either way, the thesis is a loss of reserve currency status over coming years and that is a big deal.
It means the Fed can’t print at the push of a button.
Gold backed off from the breakout area as the dollar bounced but remains a buy with a breakout signaling at least a 50% retrace of the bear market to 1450-1500.
I think that is this years business.
If gold is starting a new bull market, then new highs are on the table.
In my experience, when an item rallies up to a breakout area and backs off it is mustering strength for the eventual successful breakout.
Contrarily, when an item plows right through a breakout level without pulling the rubber band back, often it signals a failed breakout will play out.
The SPX clearly knows this 2843 level and it is interesting that 2843 is 90 degrees 666.
Of course the bull has made mince meat of every potential square-out this year but we are seeing some wild swing in some of the leaders, like BA and the semi’s and biotechs at this level and that is often a precoursor…distribution prior to a correction.
Tech is the leader and semiconductors lead tech. SMH, the semi-conductor ETF broke bad yesterday.
On Tuesday, SMH traced out an NR 7 Day (the narrowest range in 7 days) which was followed by a downside gap on Wednesday for a possible Island Top.
Bearishly, yesterday, SMH gapped open turning up the Daily Swing Chart which defined a high and leaving a large range outside down day.
In the process, SMH snapped a rising trendline from the end of December.
A false breakout over the prior swing high from November may be on the table.
A monthly SMH from 2016 (with data through Wednesday) shows its leadership so a reversal in the semis is a big tell.
SMH has been in a runaway move since the 2016 low as defined by the fact that every single turn down of the Monthly Swing Chart has defined a low.
There have not been two consecutive monthly lower lows since February 2016.
This is one of the factors I use in determining the trend. It is the behavior as the various wheels within wheels of time turn that determine the short term, the intermediate term and the long term trend.
January is the largest monthly range in 2 years so far.
With semi names like KLAC, SWKS and XLNX have been under pressure and look broken.
It will be interesting to see how SMH ends the month.
Evidence of a weakening smartphone sector which is the biggest consumer of semiconductors is growing.
Earlier this week we showed a daily AAPL suggesting a Bull Trap may be playing out.
An updated AAPL shows that it triggered a Triangle Pendulum sell signal yesterday.
Why?
AAPL had traced out a Pennant formation since late October.
Last week it broke out of the top of the pennant and quickly reverse knifing below the bottom of the pennant yesterday.
Three large distribution days including Thursday’s Expansion Pivot sell signal on the large range break of its 50 day line suggest 2 months of distribution.
AAPL probably doesn’t fall far from the market tree.
Conclusion.
It’s getting late in the game to be buying little dips intraday without the benefit of at least a 3 to 5 day pullback if not a 3 to 5% correction.
That said, if the SPX rips through 2850, the parabolic is alive.
Positions in SDS, SMH
APPL Follow Up
This morning's report follows up on the notion that an AAPL Bull Trap was on the table ala the chart from earlier this week.
A current AAPL daily through Thursday's action shows it triggered a Triangle Pendulum sell signal.
This occurs when a triangle or Pennant formation is traced out and an item breaks out of the triangle one way and then quickly reverses and pushes through the other side of the triangle.
This is a powerful pattern that represents distribution in the case of a Triangle Pendulum sell signal (or accumulation in the case of a Triangle Pendulum buy signal).
The pattern is powerful because markets/stocks turn on a dime most traders cannot.
So the pattern often indicates that a ‘buy 'em to bang 'em' play has been orchestrated.
In other words the breakout is often engineered for players to sell into.
The sell side of the pattern often finds those long of the name waiting for the prior strength to be revisited hoping to get even.
The name of the game is for the big money to accumulate and drive or to distribute and pull the plug.
A Square of 9 defines potential downside projections as long as AAPL stays below the bottom of the Pennant.
Price typically adheres to geometric 90 degree decrements according to W.D. Gann's methodology.
90 degrees down from the 180 high is 167. This ties to the low of the pennant.
180 degrees down from high is 155 which ties to the 200 day moving average.
270 degrees is 143.
A full 360 degree price cycle down gives 131. This ties to the Breakaway Gap in early February.
So it is interesting that 360 degrees/days from a major impulse high may resonate with one of the divisions of price above…such as 180 degrees off high 360 degrees from a major low.
This is one of the ways I use the Square of 9 to determine trend and marry time and price to come up with projections.
If you can't measure risk you can't manage risk.
The Square of 9 is the best tool on the planet for measuring the market.