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A week of heavy selling in the market.

Another look near the all time high on 12 October coinciding with a projection for a high from the T structure centered on the 23 September low initiates profit-taking and resulting in a series of lower highs whilst attempting to recover before finally losing support on 26 October with a Sell Signal at 3424.

Initial support at the important black support line sets up a bounce that is quickly forgotten with a gap lower and further selling finds the market looking at the 23 September low again.

A Sell Signal active and the beginning of a new bearish phase or a 'pullback' to previous support?

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The T volume oscillator* rose rapidly from the very small w pattern at the 23 September low moving up through the cash build-up lines** confirming the buying strength and supporting the emerging T structure centered at that low.

The peak in the oscillator occurred just prior to the October high and although it would be normal for some kind of re-test and/or marking out of the range into exhaustion, the price failure on 26 October confirmed the weakness that had been developing.

On 26 October the oscillator also turns negative, flashing a warning of weakness and distribution and suggesting that the market is again entering a weak phase with plenty of downside risk ahead.

* The T volume oscillator is an indication of Buying Power within the market as a whole
** The cash build-up line is a declining line drawn above a series of lower highs made in the oscillator.

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Zooming out to the weekly chart, we can see that price has dropped through the rising green support line in and is now just below the important red support line – an approximate area of support when approached from above for a bounce but also a dangerous area to penetrate with the potential for significantly lower prices once broken.

For now, a very ugly looking situation with a lower high or double top in play with possible support levels at previous highs and lows below. A strong recovery back above the green support line would be needed to change the picture.

The large weekly T structure centered on the March low did potentially project the October high (slightly early) and maybe projects into the week of November 20 – a post Election high? A recovery attempt? Perhaps a lower high? We shall see.

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The monthly chart shows the rapid reversal from above the long term trendlines at the projection for an important high in September 2020. The re-test and subsequent failure at that high reinforces its importance.

Interestingly, the September high is at the projection for a possible final high in the Mega T structure centered at the 2009 low, that I have drawn in red from the price peak in August 1997 – also the starting point for the earlier T structure. August 1997 is the earliest most prominent peak that is above the bear market lows.

If this projection is correct, it is suggesting that the Bull market has completed its course, with the possibility of a less convincing high in March of 2021.

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2020 has brought some fast and furious action in the market with a range that has become increasingly expansive since the move above 2500 in the Fall of 17. We can only assume that this will continue. This is a Brave New World.

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Regardless of whether the market can continue higher or whether significant lows are ahead of us, the simplicity of the proprietary price based S/T Signalling System will continue to keep us on the correct side of the market, with price currently on a Sell Signal since moving below 3424 on 26 October 2020.

If you would like to learn more about using the S/T Signalling System please get in touch.

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Be prepared for what is coming next and trade with confidence:

To receive detailed daily analysis, guidance and the updated daily Buy / Sell trigger levels being generated by the Trading the Line system before the market opens, and intraday alerts when appropriate, please become a Member and Sign up for Alerts & Observations – includes access to Members Area and the 'Explanatory Notes' for all of the concepts discussed as well as the new 'Notes on Daytrading' which provides insight into how to look for shorter term entries and exits within the context of the S/T Signalling System.

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A harsh sell-down from the late August high, back down to the late July lows at 3210 before the current S/T Buy Signal on 25 September at 3288.

Market gaps, chops and grinds higher on its way back up towards the all time high with a new T structure emerging from the late September low and the potential of more highs ahead.

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The T volume oscillator* has been rising since making the September low rising firstly above the steep cash build up line** on 25 September and subsequently also above the longer shallow cash build up line** on 05 and 07 September.

A movement upward through the cash build up line activates the T structure and draws buying power from each of the previous declines. Each previous high in the oscillator and in price projects a new potential high until the buying is exhausted.

Currently the market is moving into the primary projection from the all time high and likely will encounter some resistance in price, but with the oscillator still rising it is also likely that the market moves into a phase of marking out a new range with profit-taking, buying the dip and re-cycling until price reaches its target and becomes exhausted.

* The T volume oscillator is an indication of Buying Power within the market as a whole
** The cash build-up line is a declining line drawn above a series of lower highs made in the oscillator.

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Zooming out to the weekly chart, we can see that price is moving back towards the sharp reversal at the all time high and the rising trend line from the 2012-14 peaks.

That upper trendline has triggered major price reversals and should therefore be treated with extreme caution once reached.

The large T structure centered on the March low projects the next major high in the week of November 20 – a post Election high?

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The monthly chart shows the rapid reversal from above the long term trendlines at the projection for an important high in September 2020. Currently the market appears to be heading back for at least a re-test of that high with possible highs projected for January 2021 and for March 2021.

The long term oscillator although weakened by the collapse looks like it is strengthening again.

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2020 is bringing some fast and furious action in the market with a range that became increasingly expansive since the move above 2500 in the Fall of 17. We can only assume that this will continue. This is a Brave New World.

–

Regardless of whether the market can continue higher or whether significant lows are ahead of us, the simplicity of the proprietary price based S/T Signalling System will continue to keep us on the correct side of the market, with price currently on a Buy Signal since moving above 3288 on 25 September 2020.

If you would like to learn more about using the S/T Signalling System please get in touch.

–

To receive detailed daily analysis, guidance and the updated daily Buy / Sell trigger levels being generated by the Trading the Line system before the market opens, and intra-day alerts when appropriate, please become a Member and Sign up for Alerts & Observations – includes access to Members Area, Explanatory Notes (pdf) for all of the concepts discussed, and Notes on Day Trading (pdf)

Disclaimer: This is the diary of a personal trading system, its methodology and the signals that it is producing. You are welcome to follow along but please understand that the information presented here is for educational purposes only. No recommendations are being made to buy, or sell stocks, options or futures contracts. Please consult your own financial advisor before making any investment decisions.

 

A major consolidation and a double bottom above 3000 in June. An S/T Buy Signal on 30 June at 3067 and a push up into 3280. Another consolidation above 3200 leading to the current S/T Buy Signal on 29 July at 3238 and a dog days steady grind higher to new all time highs.

The DB (double bottom) structure formed at the June lows continues to stretch higher and ultimately is seeing 3400, and is at yet another projection for a high. But is it running out of energy?

There are certainly signs of bearish divergencies between the bullish price action and buying power as defined by the T volume oscillator *. The market has also continued for several weeks to exhibit extreme complacency and price is at levels that would normally trigger heavy profit-taking. And maybe it will – at some point. This is, of course, a market that is far from normal, even before the collapse earlier this year due to the unforeseen events and the extraordinary measures taken. This is, of course, a Brave New World not dissimilar to the visions of Aldous Huxley and George Orwell. We should therefore continue to expect and respect the extraordinary and trade accordingly.

A Buy Signal continues for now, but… Whatever next?

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The late June decline into the 2nd low formed a deep low in the T volume oscillator * and a 'double bottom' that confirmed at least a new small T structure or DB structure with the rise in the oscillator up through the cash build-up line** formed by the series of declining highs in the oscillator.

Previous highs in both price and the oscillator project potential highs via the important low, and as long as price performance continues to be bullish we can assume that the structure is intact. There was an important projection for a high on 13 August and subsequently another one here and now. We are therefore on lookout for a break in the structure.

We now see the T volume oscillator declining and falling away below zero, whilst price continues to be bullish and this 'bearish divergence' alerts us to the possibility that distribution is occurring in the background and that the structure may be nearing completion.

Strong, resilient structures can take many days to complete, and often move far beyond expectations,until price has exhausted itself. Keep one eye on the wheel and the other firmly on the road ahead as we look forward to the next phase developing.

* The T volume oscillator is an indication of Buying Power within the market as a whole
** The cash build-up line is a declining line drawn above a series of lower highs made in the oscillator.

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Zooming out to the weekly chart, we can see that the recovery off the March low reached the important rising trendline from the 2014-15 highs before becoming unstable and is now moving up towards the longer term target – at the rising trend line from the 2012-14 peaks.

That upper trendline has triggered major price reversals and should therefore be treated with extreme caution once reached.

Note also the expanding triangle structure as the market has become increasingly dynamic since the Fall of 17.

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The monthly chart shows the market back on the parabolic trajectory that it was on prior to the February and March collapse. Several of the larger structures project highs for next month but the price action continues to be strongly bullish.

The long term oscillator although weakened by the collapse looks like it is strengthening again.

Save the image to your desktop to view a larger version

2020 is bringing some fast and furious action in the market with a range that became increasingly expansive since the move above 2500 in the Fall of 17. We can only assume that this will continue. This is a Brave New World.

–

Regardless of whether the market can continue higher or whether significant lows are ahead of us, the simplicity of the proprietary price based S/T Signalling System will continue to keep us on the correct side of the market, with price currently on a Buy Signal since moving above 3238 on 29 July 2020.

If you would like to learn more about using the S/T Signalling System please get in touch.

–

To receive detailed daily analysis, guidance and the updated daily Buy / Sell trigger levels being generated by the Trading the Line system before the market opens, and intra-day alerts when appropriate, please become a Member and Sign up for Alerts & Observations – includes access to Members Area, Explanatory Notes (pdf) for all of the concepts discussed, and Notes on Day Trading (pdf)

Disclaimer: This is the diary of a personal trading system, its methodology and the signals that it is producing. You are welcome to follow along but please understand that the information presented here is for educational purposes only. No recommendations are being made to buy, or sell stocks, options or futures contracts. Please consult your own financial advisor before making any investment decisions.

 

 

An extension of the March recovery and continuation of the major T structure into the early June high, coinciding with the important pivot at 3239, the January low, and the February gap.

Followed by another nasty drop and bounce, a small T, serious gaps ups, and heavy selling at quarterly expiration.

Volatility continues to be extremely high with very busy overnight sessions and extensive ranges. Bi-polar or tri-polar modalities. Shock and awe on a daily basis.

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The harsh February and March decline(s) into the series of deep lows in the T volume oscillator * and the final low in price set up the waves of buying off the low into a series of momentum highs which in turn become new reference points for buying and for selling.

As we can see, the mid May decline became the center-point for another T structure projecting an extension higher from the April oscillator and momentum high into the subsequent June oscillator and momentum high.

We now see the T volume oscillator declining and falling away below zero. This is potentially a stabilization phase, building a cash-build up line **, prior to the next major advance. Whether that stabilization phase is in time or in price or both remains to be seen.

* The T volume oscillator is an indication of Buying Power within the market as a whole
** The cash build-up line is a declining line drawn above a series of lower highs made in the oscillator.

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Zooming out to the weekly chart, we can see that the recovery off the March low reached the important rising trendline from the 2014-15 highs before becoming unstable and unsustainable.

The pullback from the recent high to the 2995 area is corresponding with previous examples of pullbacks from highs within the context of the larger rising channel. A more severe decline would perhaps target the lower edge of the channel again around 2800.

For now, 2950 looks like strong support with rising averages below.

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The monthly chart shows the continuation above the green line – a bullish support line – but the high near the January low – resistance for now.

The green line above red line indicates strong ongoing support and bullish action. Penetration of the red line would be a Bear Market signal. A Bull market finds support at the green line. Price back below these lines would indicate an ongoing problem.

If the market is to enter a severe Bear Market we can see that there is significant downside below 2600, but for now the market is endeavouring to avoid that outcome.

The long term oscillator looks like it may be strengthening again.

Save the image to your desktop to view a larger version

2020 is bringing some fast and furious action in the market with a range that became increasingly expansive since the move above 2500 in 2017. We can only assume that this will continue. This is a Brave New World.

–

Regardless of whether the market can recover or whether further significant lows are ahead of us, the simplicity of the proprietary price based S/T Signalling System will continue to keep us on the correct side of the market, with price currently back on a Buy Signal since moving above 3111 on 22 June 2020.

If you would like to learn more about using the S/T Signalling System please get in touch.

–

To receive detailed daily analysis, guidance and the updated daily Buy / Sell trigger levels being generated by the Trading the Line system before the market opens, and intra-day alerts when appropriate, please become a Member and Sign up for Alerts & Observations – includes access to Members Area, Explanatory Notes (pdf) for all of the concepts discussed, and Notes on Day Trading (pdf)

Disclaimer: This is the diary of a personal trading system, its methodology and the signals that it is producing. You are welcome to follow along but please understand that the information presented here is for educational purposes only. No recommendations are being made to buy, or sell stocks, options or futures contracts. Please consult your own financial advisor before making any investment decisions.

 

A strong recovery off the 23 March low with a Buy Signal on 24 March at 2368 initiating a new T structure into a series of highs in the 2630s before dropping back towards 2450.

Another very strong continuation move higher in the shortened week opening well above the Buy Signal line on 06 April sees the market above 2800 before dropping back a little prior to the holiday weekend.

The market shrugs off the worst of the news and discounts the economic impact of a shocked global catastrophy, preferring to expect considerable support moving forward.

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The rapid drop in price bottomed on 23 March but as we can see in the chart below with the T volume oscillator*, the market was already showing some signs of recovery – bullish divergences between price and oscillator – after the 12 March decline.

In effect the market was waiting for just a little good news, a catalyst for some kind of recovery.

The rapid move higher in the oscillator – up through the cash build up line** in the oscillator – confirms the liquidity and buying power associated with a new T structure emerging, and it continues at a high level suggesting further strength ahead.

This T structure projected recent highs on 26 and 30 March, and 02, 06, 08 April, with the next high projected for 13 April and perhaps further strength into 23 April.

** The T volume oscillator is an indication of Buying Power within the market as a whole
** The cash build-up line is a declining line drawn above a series of lower highs made in the oscillator.

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Zooming out to the weekly chart, we can see that the recovery towards 2800 places the market back above the trendline from the 2016 low.

The collapse currently looks like a larger version of the February 2018 collapse with an ongoing 50% retracement.

The structure from high to low is currently small with a possible high projected for the end of April.

As we can see from the earlier collapses from all time highs we should expect a period of stabilization after the initial bounce, absorbing the volatility and impact of the decline prior to a meaningful recovery, or continuation of the decline.

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The monthly chart shows progress back above the support of the black line, showing how fundamentally important the 2500 level is.

Key levels above are the red line at 2867 and the green line at 2984

Penetration of the red line is a Bear Market signal. A Bull market finds support at the green line.

In the previous severe bear markets we can see that price bounced at the black line and recovered to the red and green lines but turned back down again. How the market responds to these levels in the weeks and months ahead will therefore be critical.

The long term oscillator is now weakening into a long term Sell Signal.

If the market is entering a severe Bear Market we can see that there is significant downside below 2500, but for now the market is endeavouring to avoid that outcome.

Save the image to your desktop to view a larger version

2020 is bringing some fast and furious action in the market with a range that became increasingly expansive since the move above 2500 in 2017. We can only assume that this will continue. This is a Brave New World.

–

Regardless of whether the market can recover or whether further significant lows are ahead of us, the simplicity of the proprietary price based S/T Signalling System will continue to keep us on the correct side of the market, with price currently back on a Buy Signal since moving above 2521 on 06 April 2020.

If you would like to learn more about using the S/T Signalling System please get in touch.

–

To receive detailed daily analysis, guidance and the updated daily Buy / Sell trigger levels being generated by the Trading the Line system before the market opens, and intra-day alerts when appropriate, please become a Member and Sign up for Alerts & Observations – includes access to Members Area, Explanatory Notes (pdf) for all of the concepts discussed, and Notes on Day Trading (pdf)

Disclaimer: This is the diary of a personal trading system, its methodology and the signals that it is producing. You are welcome to follow along but please understand that the information presented here is for educational purposes only. No recommendations are being made to buy, or sell stocks, options or futures contracts. Please consult your own financial advisor before making any investment decisions.

 

From bad to ugly. An extraordinary week with volatility off the charts.

Panic selling and panic buying.

A visit to 2400 in overnight action Thursday and a state of emergency announcement.

A closing short covering move into the last minutes of the week providing some relief to the mayhem and close enough to the Cover Signal level on the recent Sell Signal to suggest at least some kind of recovery may be ahead.

So, what's next?

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As we can see in the chart below with the T volume oscillator*, the rapid drop coincided with the completion of the very large T structure which originates at the high in the oscillator on 18 January 2019 – after the buying surge from the December 2018 panic low – and centered on the previous major oscillator low on 08 May 2019.

With the extreme selling we can see the 3 major moves down forming deep lows in the oscillator in the -200 area. The end of week surge places the T volume oscillator up above the level of the previous high on 10 March and potentially above the short cash build up line ** – suggesting buying power for a recovery move of some kind.

 

Of course a higher low in the oscillator would be preferable, especially if accompanied with a lower price.

** The T volume oscillator is an indication of Buying Power within the market as a whole
** The cash build-up line is a declining line drawn above a series of lower highs made in the oscillator.

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Zooming out to the weekly chart, we can see that the late recovery to 2700 places the market back above the trendline from the 2016 low and action above 2600 is consistent with a potential recovery, and some kind of bounce for a week or two would be consistent with the previous collapses from the all time highs.

However, a weekly close below the channel would suggest a more protracted decline and potentially target the December low at 2350 or even lower.

Is the market starting to map out a very large megaphone formation – with a series of expanding highs to lows? If so this maybe looks for support in the 2000 area and the potential for re-testing some of the highs and lows during the 2015-16 period.

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The monthly chart shows how the market has currently bounced at the strong support of the black line, lower bollinger band and at the rising trend lines from the 2009 low and from the 2000 high, showing how fundamentally important the 2500 level is.

Key levels above are the red line at 2886 and the green line at 3012.

Penetration of the red line is a Bear Market signal. A Bull market finds support at the green line.

In the previous severe bear markets we can see that price bounced at the black line and recovered to the red and green lines but turned back down again. Alternatively, in 2016 we can see that the black line held and the market eventually resolved higher.

The long term oscillator is now weakening towards a long term Sell Signal.

If the market is entering a severe Bear Market we can see that there is significant downside once 2500 gives way.

Save the image to your desktop to view a larger version

2020 is bringing some fast and furious action in the market with a range that became increasingly expansive since the move above 2500 in 2017. We can only assume that this will continue. This is a Brave New World.

–

Regardless of whether the market can recover or whether further significant lows are ahead of us, the simplicity of the proprietary price based S/T Signalling System will continue to keep us on the correct side of the market, with price currently back near a Cover Signal level above 2700 on 13 March 2020.

…

To receive detailed daily analysis, guidance and the updated daily Buy / Sell trigger levels being generated by the Trading the Line system before the market opens, and intra-day alerts when appropriate, please become a Member and Sign up for Alerts & Observations – includes access to Members Area, Explanatory Notes (pdf) for all of the concepts discussed, and Notes on Day Trading (pdf)

Disclaimer: This is the diary of a personal trading system, its methodology and the signals that it is producing. You are welcome to follow along but please understand that the information presented here is for educational purposes only. No recommendations are being made to buy, or sell stocks, options or futures contracts. Please consult your own financial advisor before making any investment decisions.

 

Fear and uncertainty grips the market with a huge drop overnight on 24 February – well below the Sell Signal level at 3316 – and takes the market down to a low on 28 February at 2856 before a short covering bounce to 3090.

A Fed announcement on 03 March and a look at 3136 before another slide to 2976.

A recovery above 3000 on 04 March sees another high at 3130 before more selling on 05 and 06 March sees 2901 before attempting to recover.

Breathtaking and intimidating price action with very strong moves in both directions the hallmark of volatility in this market triggered by declines below the key levels.

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As we can see in the chart below with the T volume oscillator*, the rapid drop coincided with the completion of the very large structure which originates at the high in the oscillator on 18 January 2019 – after the buying surge from the December 2018 panic low – and centered on the previous major oscillator low on 08 May 2019.

Until 22 January 2020 the oscillator was generally behaving very well with a series of higher lows indicating strong liquidity and buying power. It was noticeable that the rapid and rather surprising recovery off the 31 January low occurred with divergences in between price and oscillator. Although price action was very strong, the market was running on vapors and hitting the key level of the upper extreme of the channel ** – a level that has triggered significant corrections.

Price dropped through the important pivot – the black line when at 3260 – and this triggered a measured move plus more through the important 200 day moving average and a Bear Market warning.

Price and oscillator bounced strongly from 2850 with a dead cat bounce as panic selling meets panic buying and this was ultimately sold into, creating the first wave up and a high in the oscillator. This starts to define a new cash build-up line ***. A movement up through a cash build up line in due course will define a new T structure that is centered at a major low or series of lows in price or oscillator or a combination of both.

In simple terms, it is the bearish phases of declining prices that ultimately produce the advances in the bullish phases.

Once a low or series of lows has been established we can then project future highs from the previous price and oscillator highs.

Currently we can see that there is a short cash build up line from the all time high, but also a longer cash build-up line from the oscillator highs on 17 January and 23 December.

As the decline has been severe, we should continue to expect strong waves of selling and buying to occur until at least some of the energy from the decline has been dissipated, and we should continue to expect very rapid changes in direction. This makes holding positions for any length of time difficult and so hedging of positions and very tight stops are recommended.

** The T volume oscillator is an indication of Buying Power within the market as a whole
** The upper extreme of the channel is an approximation of the top of the energy channel discussed by Terry Laundry
*** The cash build-up line is a declining line drawn above a series of lower highs made in the oscillator.

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The weekly chart shows that price achieved the upper rising trend line from the 2012-14 peaks that also was also the target for the advance from Fall 2017 into the peak in January 2018.

The collapse in price took the market directly to the lower edge of the rising trend that contained all but one of the 2018-19 corrections.

As we can see, that was a good place for a bounce and arguably a sweet spot for the market, but if these levels cannot contain the selling we can certainly see the potential for much lower prices with the lower trend line in the 2700-25 area.

We should expect a similar period of instability like that which followed the January 2018 peak, like a wave breaking on a shore.

Note that significant weakness occurs below the red line (now at 3175), strength above suggesting potential recovery.

The oscillator is weakening rapidly from the high.

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The monthly chart shows the important trend line projected from the 2000 peak and the rapid move above it once it was effectively breached leading directly to the steeper trend-line from the 2016 highs.

The February close below the green line (when at 3016) is a bearish warning similar to that in October 2018 and also in May 2019.

The red line (2910) provides strong support but a movement below opens up Pandora's Box of significantly lower prices. A movement below and a subsequent failed recovery initiates a Bear Market.

In the eventuality of further significant collapse in price, strong rising support should be found at or near the black line currently at 2600 and lower edge of the monthly bollinger band at 2560

The long term oscillator is now weakening.

Save the image to your desktop to view a larger version

2020 is bringing some fast and furious action in the market with a range that became increasingly expansive since the move above 2500. We can only assume that this will continue. This is a Brave New World.

–

Regardless of whether the market can recover or whether significant lows are ahead of us, the simplicity of the proprietary price based S/T Signalling System will continue to keep us on the correct side of the market, with price currently back on a Sell Signal since moving below 3056 on 05 March.

If you would like to learn more about using the S/T Signalling System please get in touch.

–

To receive detailed daily analysis, guidance and the updated daily Buy / Sell trigger levels being generated by the Trading the Line system before the market opens, and intra-day alerts when appropriate, please become a Member and Sign up for Alerts & Observations – includes access to Members Area, Explanatory Notes (pdf) for all of the concepts discussed, and Notes on Day Trading (pdf)

Disclaimer: This is the diary of a personal trading system, its methodology and the signals that it is producing. You are welcome to follow along but please understand that the information presented here is for educational purposes only. No recommendations are being made to buy, or sell stocks, options or futures contracts. Please consult your own financial advisor before making any investment decisions.

 

Trading the Line Special Report.

There's a need to understand, but that doesn't require knowledge. The God hypothesis, for example, allows you to have an unparalleled understanding of absolutely everything while knowing absolutely nothing … Give a man a highly simplified model of the world and interpret every event on the basis of this simple model. This approach requires no knowledge. A few rote formulas, plus some so-called intuition, some so-called practical acumen, and some so-called common sense.

Arkady & Boris Strugatsky, Roadside Picnic, 1972

…

A significant new high in January, some severe overnight drops and a quick panic collapse in price at the end of January followed by a manic recovery in February to another all time high…

Selling developed on the 22 January when trading at the upper extreme* of the channel and coincidently at 3333, (which reminded me of another strange number marking an historic low but I don't want to get superstitous, yet).

As has been the case in recent years, selling below the support of the Mid-Channel (the blue and yellow band) was met with volatility and very rapid buying followed by more selling, presumably as players buy to recover positions that are out of the money, selling again at the previous point of entry.

The deep panic on 31 January saw the market back at the pre New Year lows with presumably enough fear in the marketplace to install an important low and a liquidity event that drove prices back up through previous resistance at 3295.

The 3 day thrust off the low took the market back within reach of the upper extreme , acheived early on 06 February in Futures, before backing away slightly, maybe threatening to drop back after its over-enthusiastic move, but no, back to new all time highs.

Another touch of the upper extreme on 11 February and a close at the upper extreme on 12 February at 3379.

Fast and furious and all over the place.

With the market displaying such dynamic and intimidating price action, the obvious questions are: is the market fully priced again or is there still more upside ahead?

Firstly, we have a very bullish response to price lows.

Secondly, we have a new T structure centered at the recent low on 31 January, either small or large.

Thirdly, price is attempting to breakout up through a potential double top at the 3333 level. A level that could be psychologically and numerically important – one third of 10,000.

* The upper extreme of the channel is an approximation of the top of the energy channel discussed by Terry Laundry.

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As we can see in the chart below with the T volume oscillator**, the recent Buy Signal on 04 February saw the T volume oscillator moving up from a deep low level and up through the declining lines from the previous high in the oscillator. This is the signature of a new T structure emerging.

The previous highs in price and oscillator – where the cash build up originates into the low-point – provide a length of time that we should expect that new buying power to last for, and this creates the projections forward in time.

Once the oscillator makes a high and starts to decline, this indicates profit-taking and re-cycling. A rapid drop and a movement below zero is a warning especially if the price continues to rise as it indicates a reduction in buying power.

For now, the oscillator continues to look strong suggesting that although at projections for highs from the recent structures, there is still the potential for further highs ahead.

The very large T structure – centered at the oscillator low on 05 August 2019 and drawing power from the oscillator high back in January 2019 – is looking complete, adding to the caution.

** The T volume oscillator is an indication of Buying Power within the market as a whole
*** The cash build-up line is a declining line drawn above a series of lower highs made in the oscillator.

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The weekly chart shows that price (since moving above 3100) is above the trendline that initiated the 2018 collapses and also now at the upper rising trendline from the January 2018 high, suggesting that the market may again be at or near its long term target.

Note that significant weakness doesn't usually develop until moving below the red line (3266), strength above suggesting potential for new highs ahead.

The weekly T structures continue to overlap and combine – this has presumably provided the additional fuel for the breakout. Some caution is warranted as the most recent structures projected highs in late January and early February and possibly early March. The longer structures project potential into late May, August and September.

The oscillator continues to look strong since the October low.

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The monthly chart shows the important trendline projected from the 2000 peak and the rapid move above it once it was effectively breached leading directly to the steeper trend-line from the 2016 highs.

Note that the recent move above 3250 in January took price to a parallel rising line from the January 2019 high before collapsing briefly and that price is again in that area with the move above 3350.

The Mega T structure projected another important high for October or November which instead developed into the breakout above 3030. The next major projection is for a high in September 2020 which is also in-line with projections from the more recent large long term structures.

The long term oscillator remains very strong supporting the breakaway move higher.

The suggestion is that price above here becomes increasingly over-stretched and at least some kind of consolidation and even a nasty pullback like we saw in 2016 and early 2018 may again be necessary to relieve some of the upward pressure and complacency and allow price to catch up with itself, but if price can continue to hold onto the trendlines we could see a continued move higher into perhaps an even more significant peak.

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2020 is bringing some fast and furious action in the market with a range that is increasingly expansive, especially since the move above 2500. With price above 3300 we can only assume that this will continue. This is a Brave New World.

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Regardless of whether the market can continue higher or whether significant lows are ahead of us, the simplicity of the proprietary price based S/T Signalling System will continue to keep us on the correct side of the market, with price currently back on a Buy Signal since opening above 3266 on 04 February at 3290.

If you would like to learn more about using the S/T Signalling System please get in touch.

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To receive detailed daily analysis, guidance and the updated daily Buy / Sell trigger levels being generated by the Trading the Line system before the market opens, and intra-day alerts when appropriate, please become a Member and Sign up for Alerts & Observations – includes access to Members Area, Explanatory Notes (pdf) for all of the concepts discussed, and Notes on Day Trading (pdf)

Disclaimer: This is the diary of a personal trading system, its methodology and the signals that it is producing. You are welcome to follow along but please understand that the information presented here is for educational purposes only. No recommendations are being made to buy, or sell stocks, options or futures contracts. Please consult your own financial advisor before making any investment decisions.

 

A new decade finds the S&P's trading at significantly higher prices since the 'breakout' up through the previous strong resistance at 3021 with a relatively calm straight up pop and grind higher into 3250 by end of year.

The majority of the Fall advance has been just 2 Buy Signals, firstly on 10 October triggered at 2929 and then on 06 December triggered above 3124 after the very brief drop on 03 December. Although challenged last week, this signal is currently still active with price continuing to make new highs and holding up above the Buy Signal line, for now.

With the market displaying such impressive strength throughout the last quarter the question arises:

Is there more upside and what is the potential for collapse?

Firstly, price has achieved some important levels including the 2019 R2 pivot at 3192 in mid December and reached the upper extreme of the channel * when it touched 3248 for the first time on 27 December. That in of itself is a rare occurrence and the last occasions were during late February 2019.

Secondly, the large T structure centered at the October low and the more recent T structure centered on the December low look to achieved their target projections, in which case it would be usual to expect some kind of consolidation or price decline prior to the next advance.

Thirdly, the market has made repeated warnings of complacency via the Put/Call ratios throughout the advance.

* The upper extreme of the channel is my approximation of the energy channel discussed by Terry Laundry.

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As we can see in the chart below with the T volume oscillator**, each of the 2 recent Buy Signals were accompanied by a strong rise in the oscillator up through the declining cash build-up line*** confirming the presence of new T structures,

Once the oscillator makes a high and starts to decline, this indicates profit-taking and re-cycling. A rapid drop and a movement below zero is a warning especially if the price continues to rise as it indicates a reduction in buying power.

For now, the oscillator continues to look strong suggesting that although at projections for highs from the recent structures, there is still the potential for further highs ahead.

** The T volume oscillator is an indication of Buying Power within the market as a whole
*** The cash build-up line is a declining line drawn above a series of lower highs made in the oscillator.

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The weekly chart shows that price (since moving above 3100) is back above the trendline that initiated the 2018 collapses suggesting some caution.

However, note that when price broke out strongly above 2500 it continued higher until rejected by the steeper long term trendline, currently somewhere near 3500 – perhaps a longer term target?

The weekly T structures continue to overlap and combine – this has presumably provided the additional fuel for the breakout. Some caution is warranted as the most recent structures projected highs in December and this move may be complete or close to completion. The earlier structures may still be projecting highs in late January and May respectively.

The oscillator continues to look strong since the October low.

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The monthly chart shows the important trendline projected from the 2000 peak and the rapid move above it once it was effectively breached leading directly to the steeper trend-line from the 2016 highs.

The Mega T structure projected another important high for October or November which instead developed into the breakout. The next major projection is for a high in September 2020 which is also in-line with projections from the more recent large long term structures.

The long term oscillator remains very strong supporting the breakaway move higher.

Some kind of consolidation and even a nasty pullback like we saw in 2016 and early 2018 may be necessary to relieve some of the upward pressure and complacency and allow price to catch up with itself, but if price can continue to hug the trendline we could see a continued move higher into a (more) significant peak.

A major reversal at this level could bring the breakout trendline back into focus and the building of new high level support, perhaps similar to what we saw in 2015-16 or 2018.

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2020 will most likely bring some fast and furious action in the market with a range that continues to be expansive, especially since the move above 2500. With price above 3000 we can only assume that this will continue. This is a Brave New World.

–

Regardless of whether the market can continue higher or whether significant lows are ahead of us, the simplicity of the proprietary price based S/T Signalling System will continue to keep us on the correct side of the market, with price currently on a Buy Signal since 3140 on 06 December 2019.

If you would like to learn more about using the S/T Signalling System please get in touch.

–

Be prepared for what is coming next and trade with confidence:

To receive detailed daily analysis, guidance and the updated daily Buy / Sell trigger levels being generated by the Trading the Line system before the market opens, and intraday alerts when appropriate, please become a Member and Sign up for Alerts & Observations – includes access to Members Area and the 'Explanatory Notes' for all of the concepts discussed as well as the new 'Notes on Daytrading' which provides insight into how to look for shorter term entries and exits within the context of the S/T Signalling System.

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A very choppy end to September and a quick look lower is met with strong buying below 2900 and an October push back up into 3000. Some initial hesitation at 3000 – the previous sell zone – is met with strong buying and a push up through the 3021 pivot to new all time highs.

It has been noticeable that on each of the recent negative and volatile phases that the market has been met with days of very strong supportative buying, ultimately leading to new attempts at the previous high.

Back at new all time highs and at a projection for a high from the current T structure and an active Buy Signal since 10 October.

More of the same, or something different?

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As we can see in the chart below with the T volume oscillator*, the recent Buy Signal was accompanied by a rise in the oscillator up through the declining cash-build up line confirming the prescence of a new T structure with projections into 22 and 28 October and possibly early November.

Of course this could be the end of the move, but if there is more, then we are starting to see the power of the previous structures combine and boost the market in what may be some kind of crescendo or breakaway move.

* The T volume oscillator is an indication of Buying Power within the market as a whole

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The weekly chart continues to show a bullish market within the context of the long term trajectory having found support at the long term rising angle (again) and with price now moving up into the trend line resistance from the previous highs.

The oscillator has now recovered with the quick look lower and resumed a strengthening position.

The weekly T structures show the potential for the overlapping and combining of the structures into November and/or even December highs, in-line with the possibility that the market is making a breakaway move above 3000.

If that is the case then we may be in for a move similar to that initiated in September 2017 when the market unexpectantly broke through important numerical resistance.

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The monthly chart shows the important trendline projected from the 2000 peak and the first monthly close above it.

The Mega T structure projects another important high for October or November, and the oscillator remains strong supporting the possibility of a breakaway move higher.

Some kind of spike high above here and/or a monthly close back below the trendline would be a danger sign but for now the long term oscillator looks very strong and more like it was back in 2017.

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2019 continues to bring some fast and furious action in the market with a range that continues to be expansive. We can only assume that this will continue. This is a Brave New World.

–

Regardless of whether the market can continue higher or whether significant lows are ahead of us, the simplicity of the proprietary price based S/T Signalling System continues to keep us on the correct side of the market, with price currently on a Buy Signal since 2929 on 10 October 2019

If you would like to learn more about using the S/T Signalling System please get in touch.

–

Be prepared for what is coming next and trade with confidence:

To receive detailed daily analysis, guidance and the updated daily Buy / Sell trigger levels being generated by the Trading the Line system before the market opens, and intraday alerts when appropriate, please become a Member and Sign up for Alerts & Observations – includes access to Members Area and the ‘Explanatory Notes’ for all of the concepts discussed as well as the new ‘Notes on Daytrading’ which provides insight into how to look for shorter term entries and exits within the context of the S/T Signalling System.