Factor

Another busy week as the market spikes higher and re-visits the pivot at 3021.

Mixed signals continue:

Arms index levels are high again (3 days in row), cumulatively high and bullish.

The T volume oscillator has declined towards zero, flashing a warning, and indicating a reduction in liquidity and buying power.

The Osc oscillator flattens off indicating a slowing of momentum.

Price remains above the Buy Signal level but it looks like risk is increasing and the current structure may be completing or moving towards completion.

The next important projection is 24 September which is also a scheduled echo high.

Daily chart of S&P 500 for 20 September 2019

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Daily chart of S&P 500 for 20 September 2019

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Although the S/T System is not a day trading system, I am frequently asked about day trading and have now included my Notes on Day Trading (pdf) in the membership package.

Notes on Day Trading

Trading the Line Membership includes:

Daily pre-market Newsletter with the S/T Buy, Cover, and Sell Signal levels and other observations

Email alerts prior to and at Signal change

Members Login for archive of observations etc

Explanatory Notes (pdf)

Day Trading Notes (pdf)

More information…

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 2887 on 28 August 2019

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.

 

P is for patience

The market rips higher in September and all of a sudden we are back at 3000 and back in the Zone – the Zone that the last wave of selling started at.

As we can see those 3 important August lows with signs of divergence developing in both oscillators suggested a positive outcome as the market refused to break lower than the initial low on 05 August, revealing that the process was one of consolidation, and that patience was required.

So, back near all time highs and at a projection for an initial high from the current T structure and an active Buy Signal.

Is there more?

Daily chart of S&P 500 for 16 September 2019

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As we can see in the chart below with the T volume oscillator*, the oscillator was generally recovering throughout August, hinting of an increase in liquidity and buying power, and that it has now reached a similar level as it did in the early July period – the momentum peak of the last advance.

We can see that the oscillator peaks are not usually associated with the final price highs in the advance except when these occur in bear market rallies, and we can see instead that price usually continues to advance until the oscillator starts to fade, and especially when it drops below zero, making the market vulnerable to a steep decline.

The declining oscillator can therefore be seen as profit-taking, providing the liquidity for buying the dips until such time as price becomes exhausted.

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

Chart of S&P 500 for 16 September 2019

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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 and with price now making another attempt on the previous highs.

The oscillator continues to be weak and continues to suggest exploration of the downside ahead, but for now, with price above 2940 or so, the long term trend is still up.

Weekly Chart of S&P 500 for 16 September 2019

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The monthly chart highlights the important resistance above coinciding with the 4 important peaks.

The Mega T structure projects another important high for October, and the oscillator remains strong supporting the possibility of new highs and perhaps ultimately a break out above that resistance line in due course.

Monthly chart of S&P 500 for 16 September 2019

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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 2887 on 28 August 2019

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

Be prepared for whatever 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 intra-day 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.

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.

 

V is for volatility

Three thousand in July and a rough August with some chaotic selling action and 3 recent important looking lows as the market pumps and dumps in the box from 2820 to 2940.

With similarities from previous drops out of all time highs and volatility becoming a signature for consolidation, we look forward to an action packed Fall.

And a market very much in a place of mixed signals.

Daily chart of S&P 500 for 04 September 2019

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As we can see in the chart below with the T volume oscillator*, the oscillator started to flash warning signs at the 15 July high, hinting of exhaustion.

The early August low makes an impact low in the oscillator and the oscillator has subsequently been rising throughout the recent consolidation pattern.

This is, of course, a complex structure that could resolve to either the upside or collapse into a more important lower low.

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

Chart of S&P 500 for 04 September 2019

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The weekly chart continues to show a bullish market within the context of a long term trajectory having found support at the long term rising angle.

However, the oscillator is weakening again, hinting at the possibility of further exploration of the downside, and a break below the recent lows would quickly target the May low at 2750 and possibly the more important support levels below that.

Weekly Chart of S&P 500 for 04 September 2019

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The monthly chart highlights the important resistance above coinciding with the 4 important peaks.

The Mega T structure projects another important high for October, and the oscillator remains strong supporting the possibility of new highs and perhaps ultimately a break out above that resistance line in due course.

Monthly chart of S&P 500 for 04 September 2019

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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 back on a Buy Signal.

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

Be prepared for whatever 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 intra-day 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.

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.

 

Three thousand

A Buy Signal on 28 June sees the market push into an Independence Day high at 2995 and subsequently a few days above 3000 before pulling back last week and confirming the high with a quick re-visit on 19 July.

And so the market is back at a neutral place, with a Cover Signal, at recent price support and looking somewhat vulnerable as much further weakness will likely trigger a Sell Signal.

Daily chart of S&P 500 for 22 July 2019

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As we can see in the chart below with the T volume oscillator*, the oscillator has been generally in decline since the surge into Independence day, therefore displaying a tendency towards profit-taking and distribution at the subsequent high. As you can see, a declining oscillator, especially below the zero level, is an indication of weakness.

We now want to see the oscillator start to move upwards through the declining cash build up line of lower highs in the oscilllator to indicate that a new advance is underway. This is often accompanied with a w shaped pattern and price makes a lower low whilst the oscillator does not.

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

Chart of S&P 500 for 22 July 2019

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In the weekly chart below we can see that the recent high was fairly close to potential longer term target resistance and looking relatively strong since the early June bounce, but also at a projection for a high from the larger T structure centered at the December low.

Weekly Chart of S&P 500 for 22 July 2019

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The monthly chart continues to show a bullish market attempting to push through the long term rising resistance from the major 2000 high and so far failing to do so, but once successful there is presumably significant upside.

There are some similarities in price action to the 2014-2016 period when the market processed the move up to and just beyond 2000 with the volatile choppy action that ultimately led to the relentless move higher in late 2017.

Monthly chart of S&P 500 for 22 July 2019

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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 pausing just below all time highs

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

Be prepared for whatever 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.

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.

 

Vespa

A Bear Market Warning in late May is quickly cancelled as the market rapidly recovers with a Buy Signal on 04 June seeing new all time highs before backing off at the echo high on 24 June.

Some rapid selling from the high finds support around 2915 and subsequent recovery triggers a new Buy Signal on Friday 28 June.

You can't make this stuff up.

Daily chart of S&P 500 for 01 July 2019

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As we can see in the chart below with the T volume oscillator*, the 04 June recovery was accompanied by a rapid rise in the T volume oscillator up through the declining cash build-up line and this in turn describes a new T structure, activating projections from the previous highs in price and/or oscillator.

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

Chart of S&P 500 for 01 July 2019

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Zooming out to the weekly chart below.

Selling in May from the previous high, presumably in response to the potential of a double top, found support at the 55 week exponential moving average, a longer term pivot, and the market is now back at the previous resistance, with trend line resistance above around 3030. The rapid recovery from the May low suggests that the Large T structure centered at the December low is still active and drawing power from the declines throughout 2018. The full scale of this structure points to highs in October and November but with the potential for many bumps along the way.

Weekly Chart of S&P 500 for 01 July 2019

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As we can see in the monthly chart the rising trend line from the 2000 high continues to be very strong resistance, but as we can see from the lower parallel trend line from the 2007 high, if this level is penetrated as the lower one was in early 2017, it could unlock significant gains.

The 10 month exponential moving average continues to be a good indicator of strength, and weakness below would be another Bear Market warning.

Monthly chart of S&P 500 for 01 July 2019

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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 deeper 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 back above Buy Signal levels and close to all time highs.

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

Fair warning: Subscription fees have not been increased since 2017 but will be increased in August 2019. I would therefore like to encourage those considering membership to do so sooner than later.

Be prepared for whatever 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.

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.

 

Under Pressure

Welcome to the Trading the Line Special Report.

The market is back under pressure as a series of gaps down and manic attempts to recover reveal the distributive nature of May and find the market back below the important 200 day moving average.

For me, that is a Bear Market Warning flashing.

Of course, a rapid recovery back above the 200 day moving average would be a very welcome sign, but in the meantime the market continues to look for stability in what looks like an increasingly unstable World.

Daily chart of S&P 500 for 03 June 2019

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As we can see in the chart below with the T volume oscillator*, the market was starting to weaken from mid April – as the oscillator starts to diverge with price. The oscillator is declining below zero whilst price is making new highs.

The market was running on vapors, and it was running out of time.

The large T structure projected a high on about 16 April with a possible subsequent high on about 09-10 May but the 01 May engulfing down day was enough to signal the end of the spring advance as each subsequent attempt to move back up has been rapidly sold into.

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

Chart of S&P 500 for 03 June 2019

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Zooming out to the weekly chart below.

We can see that the market stretched up through the previous resistance levels at 2800 and 2870 into a token new high at 2950 before its completion of the Spring advance.

The weekly and monthly close below important support looks, at least for now, rather ominous.

As we can see there is important rising support in the 2690s, but much lower starts another tipping over effect, and the 'delights' of Pandora's Box below that.

Weekly Chart of S&P 500 for 03 June 2019

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As we can see in the monthly chart the rising trend line from the 2000 high continues to be very strong resistance.

The monthly close below 2780 (10 ema) is a bearish indication. Whilst strong potential support lies at the 2690 level (21 ema), further weakness would be a very ominous sign.

The next very long range projection for a high is in the September – October time frame. If the market is to recover and proceed back to new all time highs or perhaps an important lower high, we need to see some kind of recovery back above the 10 ema.

The long range oscillator continues to be in decline and is potentially warning of further trouble ahead.

Monthly chart of S&P 500 for 03 June 2019

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All in all, 2019 continues the dynamic range of 2018 – far beyond the experience of the previous years. We should expect price volatility and price expansion to continue and trade accordingly. This is a Brave New World.

Regardless of whether the market can recover or whether deeper low(s) 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 firmly below Sell Signal levels.

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

Be prepared for whatever 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.

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.

 

Schmexit

Another period of stabilization. This time at the important 2800 level as the market toyed with the idea of lower prices and fired off a series of disappointing signals with no follow through, before finally ejecting to the upside on the close of the quarter.

Political confusion and economic disappointment continue to be shrugged off as the market, in its now characteristic bump and jump chases higher, with catch up quick or get left behind fear of missing out in control.

So, another Buy Signal in motion and 2900 not that far away. What gives?

Daily chart of S&P 500 for 02 April 2019

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As we can see in the chart below, the T volume oscillator – an indication of Buying Power within the market as a whole – was declining into the late February / early March highs indicating relative weakness and profit-taking.

The bounce on 08 March led to another small T structure and another Buy Signal into the March highs.

We can see that the recent action has seen a rising oscillator pattern – the signature of a new T structure and a rise through the declining line of the oscillator – the long cash build up line.

If you need a reason to buy, this is a good one, as the stabilisation in the oscillator followed by a rise, indicates an increase in liquidity and buying power.

Chart of S&P 500 for02 April 2019

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Zooming out to the weekly chart below. Having established a major support level (ie where exceptional value lies) at 2350, we can see that the market is now testing the strong resistance at and above 2800 where one might have expected a natural decline to occur.

Strength above here suggests a continuation of the very strong trend higher with the potential for new all time highs and a major long range T structure drawing power from all of the declines since the January 2018 high.

Weekly Chart of S&P 500 for 02 April 2019

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As we can see in the monthly chart the continued strong rise above the important monthly levels of 2676 (21 ema) and 2780 (10 ema) is very encouraging.

If the market is to continue to recover and proceed to new all time highs, as per the next very long range monthly projection for a high in the September – October time frame, we would like to see continued support at and above the monthly 10 ema.

The long range oscillator is still declining and potentially warning of trouble ahead but, for now, price is signalling otherwise, as it did in the recovery from the 2015 and 2016 lows.

Monthly chart of S&P 500 for 02 April 2019

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All in all, 2019 has started with a move that continues the dynamic range of 2018 – far beyond the experience of the previous years. We should expect price volatility to continue and trade accordingly. This is a Brave New World.

Regardless of whether the market can continue to recover or whether deeper low(s) 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, providing another timely Buy Signal at the end of last week.

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

Be prepared for whatever 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.

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.

 

 

Washington

Since my last report the market has continued to surge higher with some stabilization at the 2600 level and again at the 2700 level. The drop on 07 February signalled to cover but the important 2680 level held firm and buying has pushed the market back up through the important target 2740 area with a continuation S/T Buy Signal confirmed on 12 February.

Daily chart of S&P 500 for 19 February 2019

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As we can see in the chart below, the T volume oscillator – an indication of relative Buying Power within the market as a whole – continues to be very strong and supportative of a continued recovery into (at least) the next series of projections for highs, and until we see significant profit-taking going on under the hood * , we should assume that the panic is over (at least for now) and that bullish liquidity and momentum are supportative of the market in general.

* For an example: Looking back a year ago to the January 2018 move, we can see that the T volume oscillator was already declining towards zero well before the end of the huge rise into the January peak.

Chart of S&P 500 for19 February 2019

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Zooming out to the weekly chart below. What I am seeing is that the market has been going through a process of re-establishing major support (ie where exceptional value lies) and that this is something necessary after moving upwards through an important trend line.

The movement upwards above 2400 in summer 2017 which accelerated into the January 2018 peak became unsustainable above the long term rising trend line, and therefore led to to the February collapse, and subsequently also to the April collapse.

When the market recovered to new all time highs – again above the long term trend-line – it became unstable again and looked for support once again. This time the market was considerably weaker and looked for more important support below the original breakout area of 2400 and at the important untested Summer 2017 lows.

Once the secondary support level was reached the market's reaction was very swift and sure indicating significant support and exceptional value.

If this ricochet move off the December lows is anything similar to the rise off the February 2016 low, then we should see a challenge to the most recent area of price resistance (2800) and once (or if) that challenge is successful, we could see another very large and extended move higher in due course, in the right-hand side of a very long range T structure of similar proportion to the 2016 structure.

Weekly Chart of S&P 500 for 19 February 2019

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As we can see in the monthly chart the strong bounce back above the warning level of 2639 (21 ema) and the subsequent move back above the important bull market support level of 2751 (10 ema) is very encouraging.

If the market is to continue to recover and proceed to new all time highs, as per the next monthly projection for a high in the September – October time frame, we would like to see continued support at and above the monthly 10 ema.

The caveat is that the long range oscillator is warning of potential further trouble ahead, and so we should not discount the possibility of a re-test and a double dip of some sort as we saw in 2016 when the market recovered to its challenge area and then moved back lower.

Monthly chart of S&P 500 for 19 February 2019

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All in all, 2019 has started with a move that continues the dynamic range of 2018 – far beyond the experience of the previous years. We should expect price volatility to continue and trade accordingly. This is a Brave New World.

Be prepared for whatever 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.

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.

 

 

Out of the Box

Welcome to the Trading the Line Special Report.

Since my last report the market has continued to surge higher shrugging off the possibility of any weakness at that time and at the critical 2600 level.

As mentioned, the first major projection for a high from the new T structure was 14 January with the expectation of a pullback of some kind last week, and that put us on alert to the possibility of another rapid decline.

As we have seen, the shallowest of pullbacks on 14 January provided no more than entry for a continuation higher and the current S/T Buy signal has continued without a cover signal. In effect this confirms the strength of the T structure overall, and is activating the next projection, from the earlier high on 08 November for another high at the end of January, and quite possibly beyond.

Daily chart of S&P 500 for 22 January 2019

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As we can see in the chart below, the very strong oscillator – an indcation of buying power in the market as a whole – has fully supported the recent move higher which has now taken the market above some of the potential obstacles to a recovery.

The collapse in price below 2625 in November opened Pandora's Box of price discovery as the market quickly dropped throughout December, and so, should we now assume that the recovery back above 2625 will set the path back to 2800 and beyond?

In this bi-polar market there seems to be little choice, either down relentlessly or up relentlessly.

Would I be correct in saying that this bi-polar characteristic is increasing with more dramatic movement up or down? And if so, is this, in of itself a warning of something more significant to come…?

Could this expanding range be described as a megaphone?

Chart of S&P 500 for 22 January 2019

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Zooming out to the weekly chart contextualizes the market's recent activity of pushing higher and lower in a range that appears to be increasing.

As you can see 2800 presents itself as strong resistance to higher prices with the possibility of a re-test of the panic low and perhaps even lower, but if 2800 is overcome this should re-open the possibility of another all time high.

Weekly Chart of S&P 500 for 22 January 2019

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As we can see in the monthly chart the strong bounce back above the warning level of 2622 is very encouraging but still well within the context of either a full recovery or a dead-cat bounce . The next negotiation is the down-trending monthly 10 ema currently at about 2735 and what happens in this area – if reached – will be revealing.

Monthly chart of S&P 500 for 22 January 2019

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All in all, 2019 has started with a move that continues the dynamic range of 2018 – far beyond the experience of previous years. We should expect price volatility to continue and trade accordingly. This is a Brave New World.

Regardless of whether the market can continue to recover or whether deeper low(s) 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, providing a timely Buy Signal in early January that is still active.

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

Be prepared for whatever 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.

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.

 

Jack in the Box

A very Happy New Year to you all.

2019 begins with the market in recovery from the December meltdown.

After a quick look lower at the 2440s in a one day Sell Signal on 03 January, a renewed Buy Signal on 04 January at 2483 has now taken the market back up towards the important 2600 level.

The panic low on 24 December forms the center of a new T structure that has its first major projection on Monday 14 January. So far this is a simple high to low T structure drawn from the point where the selling started on 04 December to the price and oscillator low on 24 December. Time symmetry projects the series of upcoming highs from the low, and what happens after each high will then effect the new structure as it develops and matures.

Daily chart of S&P 500 for 14 January 2019

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The T structure is confirmed when the declining cash-build up line (green line in the chart below) of the oscillator drawn at the declining oscillator highs is intersected by the oscillator moving upwards. This indicates graphically that buying pressure has overcome selling pressure and is confirmed by price. The price movement above the proprietary S/T channel creates an S/T Buy Signal.

As the oscillator moves upwards it activates further sections of the T structure potentially drawing power from previous declines, and so as the oscillator has now risen drammatically above its previous highs, it raises the possibility that the new structure is larger.

The first major projection is 14 January and so it would seem very likely that the market will experience some kind of pullback next week. If it does, then how deep will determine whether the T structure remains intact or whether it starts to morph or collapse into a more complex, perhaps bearish structure, like those previous ones.
There is plenty of room for a pullback in price without damaging the structure significantly, and price and oscillator currently look very strong. However, price much below 2550 and/or the oscillator back below zero would be the indication of another change in character.

Chart of S&P 500 for 14 January 2019

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As mentioned in the last report, there was little in the way of 'support' below 2600, and once challenged the market opened up Pandora's Box of price discovery with a straight down move to 2350.

Zooming out to the weekly chart, we can see that price has now re-visited the targeted secondary support level at 2420 – site of the August 2017 low – and came close to the lower 2320 level – the site of the April 2017 low.

One of the things that I have discussed previously is that when the market pushes upwards through a major trend line as it did in June 2014 and September 2017, we have a challenge to price. The price rise eventually becomes unsustainable and price needs to correct and re-establish itself through a process of probing back lower to find out where the value in price lies. Re-visiting these lows was always a possibility especially after the unrestrained advance in late 2017.

For now, it seems that the market has re-established that value in price lies at 2350. We may of course need to re-visit that level again, as we did with the primary support level at 2600. We shall have to wait and see.

Weekly Chart of S&P 500 for 14 January 2019

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It is interesting to look at the much larger time frame occasionally, and on the monthly chart below we can contextualise the market in relation to its historical lows in 2002 and 2009.

It is clear that the market had been rising generally since the low in March 2009, and therefore within the right-hand side of a Mega T structure. According to this we have seen a projected high from the April 2000 peak in January-February 2018 (pink), and subsequently another projected high from the July 1999 high (red) in October 2018. This was potentially the momentum peak of the Mega large T structure. Another wave from the July 1998 high would project another major high in October 2019 – not necessarily a higher high though, but it could be.

I have drawn each projection from the price highs prior to the major low that are above that low . In the red T structure at the 2002 low we can see that the ultimate projection for the 2007 high came from the 1997 high which is of course much earlier than the final high in that bull market. Using the same logic for the current mega T we should keep an eye on the projections from the earlier highs. These are October 2019, August 2020, and January 2021.

As you can see the market is generally supported at its 10 month exponential moving average (ema) during bullish phases and subsequently at its 21 ema on major pullbacks. If the market is to enter a serious Bear Market it must then continue to decline below the 21 ema – which is what occurred in December. The market is now coming back up towards the 21 ema. Note also that the long-range 8 / 55 oscillator also provides a confirmation of the change in momentum.

The low on 24 December coincided with the lower monthly bollinger band at about 2350 and that was previously temporary support during December 2000, March 2008, and February 2016. With the recovery bounce underway we should be mindful that the monthly 10 and 21 emas may now be strong resistance IF the Bear Market is to continue.

Monthly chart of S&P 500 for 14 January 2019

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All in all, 2019 should bring with it some excellent opportunity with an expected range like 2018 – far beyond the experience of recent years. We should expect price volatility to continue and trade accordingly. This is a Brave New World.

Regardless of whether the market can continue to recover or whether deeper low(s) 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, providing a timely Buy signal in early January.

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

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