Lombard
All numbers refer to SPX
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Bearish, volatile and dangerous conditions continue with some extremely rapid moves in both directions and with selling into recovery advances becoming a hallmark of 2022.
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2022 continues the theme of collapse with drops into deeper lows followed by strong recoveries to previous points of disappointment.
A rapid and destructive decline from the late March high – a token high above the February highs – and itself a point of previous strong buying prior to the January collapse.
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The T volume oscillator 1 made a series of Buy Signals in the early Febraury timeframe and this led to the strong thrust higher in March. We have seen similar oscilaltor Buy Signals in recent days but with strong selling as the market reverses lower. This is of itself unfortunately a warning sign of significant weakness in the market as a whole.
What we can say is that the market is looking for a deep low or series of lows – a platform – from which to stage the next advance.
We are looking for some real signs of stabilization, a 'v' or 'w' pattern in price and oscillator and given the bearish price action we should look for the market to take out a previous high with strength, preferably with the T volume oscillator moving upwards through the long declining cash build up line 2.
When that occurs we should see a significant lasting move back higher.
We are therefore prepared for a recovery but mindful of the potential for lower prices from this level.
1 The T volume oscillator is an indication of Buying Power within the market as a whole
2 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 provides a bigger picture of the current Large structure centered at the March 2020 low and projected the important early January high from the price peak in mid June 2018.
The collapse of this structure is looking increasingly bearish as price looks for a significant support level which of course could be a lot lower.
We are of course looking at the left-hand side of a large T structure in its early development with its center yet to defined.
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The monthly chart shows the series of Large structures that were collectively projecting highs for March and April 2022 and were extending the much larger Mega T structure. The collapse from the New Year high was rather ominous and was suggesting that the projections came in a little early, in which case the market is looking for a much more important low or series of lows for the next larger structure.
That could of course be much lower.
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2022 continues with price dropping sharply from the top of a range that has become increasingly expansive since the move above 2500. With price moving below the extremely volatile range from 4100-4600 we can only assume that this expansive price action will continue – in both directions. This is a Brave New World and we should trade accordingly.
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Regardless of whether the market can move 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, currently indicating a Sell Signal since 05 May at 4202.
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Although the market is keeping me extremely busy, I intend to launch a Mentoring Service in 2022 that will complement and expand upon the Trading the Line Subscription Service. Topics will include: T Theory, Position Trading, Day Trading, Price action, and Trading Psychology, and the intention is to provide traders with the full educational support that they may need to become successful.
If you would like to learn more about the S/T Signalling System , using T Theory or would be interested in the Mentoring Service , 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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