ES 4300+ Was Always Coming Eventually

EOD:   The market is now in the 5-6 week timing window for VIX to begin incremental moves up. The timing is calculated from the date of the previous low for VIX on 4/14/21. It is also in the normal percent range of 4-6% above the previous low so we will be watching to see if this commences. During this 'phase' the market may generally progress up and VXX makes new lows while VIX makes higher lows. The next event will likely be a market move to correct at some degree. Today did see a move up in VIX near the close so let's see if VIX does continue to progress up- that will be a 'heads-up' situation where we focus on micro moves up in volatility around low targets in VXX. This is not the top but signs on the way.

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I Got Bit By Bitcoin

Time to say something about "dot.com's" adopted son- Bitcoin because that is what it actually is. Like the previous boom/bust, the family resemblance has been fully acquired. Let's be real- it cannot exist without: a) huge energy-consuming computing power b) internet connectivity c) pure hope from investors. It has no presence or practical persistence away from these. Quite possibly it will lead to something more sustainable in the future but right now, it is an excited teenager with hormonal surges. Oh and it is a hijacker/kidnapper/villain's dream target wallet! Better than gold or cash (untraceable).

Speculative frenzies are not all bad as they can often lead to some improved thing later on. as in the 'dot.com' boom. We now have wonderful interconnectivity structures and services as a result. An engine for change perhaps. A lot of talk currently sounds like it has already 'arrived' so logic requires sensible analysis by the 'experts' who are also generally in the 'crypto' business somewhere. Most of us are not going to be able to read those particular tea leaves so honestly- better to leave it alone and sleep nights. What good is it to gain the whole world but lay awake nights? etc. If anyone who bought into tulip bulbs was still around, they would definitely recognize this (except for the magical computer abacus). 17th century tulip mania.

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Current Target Higher On the Radar & [This] Has Occurred Only Once Before In 14 Years

11:44am EST: Looking at the bottom chart, it is important to remember that all this is happening while VIX weekly has been well into a 50ma/200ma  'golden cross' since late 2018 with a successful retest in early 2020. It remains elevated.

 There has been much speculating at VectorSpike regarding the advanced condition of the market and how to resolve the critical markers we use. A large item 'in the room' has been the weekly NYAD MACD which typically shows a negative status by this time. After digging further back, we may have a resolution for it's lack of negative printing [for the majority of tops a negative NYAD MACD usually prints]. Now see the chart for a revelation detail. Only once before has a similar situation occurred and that was in 2007 top. Here we see a weekly 50ma summation index peak that coincides with a positive weekly NYAD MACD. Note that this is also what we have been referring to when we talk about a 'pivot'. A pivot is the penultimate move before a terminal top. This could well be what the current situation is shaping up to be. Interestingly enough we are in the same month sequence when this happened in 2007 if that is what this transpires to be. Albeit, the current structure is not quite as large as in 2007 but it could still be a significant development.

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Caution May Be Warrantied

EOD: VXX did decline as expected but prices not so much. Meanwhile breadth is looking marginal strength and diverging negatively on daily and more especially on the weekly [8 weeks and counting]. The weekly breadth print is 'floating' in positive territory but there is lots of fresh air below it before the histo bars show up. Not usually a reliable set up and very unusual for this length of time. There could be fireworks if it breaks free up or down. 50ma summation has peaked and is now turning down so odds are on a decline after the next high [any high]  Still not at a terminal top.

pre-open 5/26: There is the potential for VXX to decline as per the 'bullish' vector influence from yesterday [5/25 post] but for ES to fail to reach it's upper target due to the summation index very much appearing to have peaked on the weekly 50ma which historically proves significant regarding tops at various degrees. At most, a corrective down still has the potential to materialize either here or with a higher ES print anywhere above [ES 4220 zone is a classic maximum calculated extension from wave 'ii' low]. STILL LIKELY NOT AT A TERMINAL TOP of the leg from 3/23/20.

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Pull Back Into Bullish Set Up Targets

pre-open 5/26: There is the potential for VXX to decline as per the 'bullish' vector influence from yesterday [5/25 post] but for ES to fail to reach it's upper target due to the summation index very much appearing to have peaked. At most, a corrective down still has the potential to materialize either here or with a higher ES print anywhere above,

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What Does A Phase Three Speculation Pattern Look Like?

12:38 pm EST: ES 4202- 4220 zones are target areas for wave iii today/this week. Expectation for a mild pullback to occur soon when NYAD MACD weekly red signal line turns down with higher prices [waves iii thru v] on ES cash. It may still be peaking. Daily is turning up from a negative position, This would be typical when approaching a diverging price peak. Today could be a likely looking candidate for wave iii-up to hit.

original post:
Speculation pattern sequence is basically how the market works. It is the engine that also assists in driving the economy necessary for progress. Push the gas for longer than 'normal' and various failures can occur. Brakes overheat, engine overheats, fuel runs low etc. This looks like a similar situation brewing. The trend guides cut through all the noise on this daily chart but it is clear we have a dinosaur in the making. No large degree top in sight yet either [but we do expect a relatively mild correction about to unfold down to ES 3960 first draft target].

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ES, Summation And Breadth Point To Corrective Move

Chart 1: The cash gap from 4/1/2021 has been feeling neglected with all the exuberant buying of late. The potential for it to finally get handled may be about to materialize. There is room for a little more upside on the current ES print with a lower target on VXX before a market decline- if that's what it has in mind. ES 3960.00 zone is a first draft target possibility. Any move that closes the gap will also work.

Chart 2: Weekly summation 50ma is a signal that gives a good heads up on where things are when analyzed with everything else. The previous idea of a single peak no longer fits given the overall expectation for the market. Either a flatish  or double peak could print. The first peak may have just topped.

Chart 3: Historically the pre-top move (pivot) occurs with negative signals on weekly breadth [chart 3] and we are a long way from that set up according to the current signal line [red]- the MACD plot and histo bars are all very positive. HOWEVER- there is a negative divergence & daily is a different picture with a negative print on the red signal line. This is supportive of a corrective pattern pending. Once again- if ES lurches upward through the current top- a new analysis will be required.

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All The Way Around The Block To Hit A Target

EOD:  This now looks more like a short term corrective pullback about to materialize. Check back for weekend updates on the summation pattern which now has a new analysis as well as developing negative divergence on breadth. Pivot will most likely commence higher up after a corrective decline that likely closes the gap from 4/1/21 which we have been watching. Now it could be getting closer to finally filling it.

Wave labelling technicians probably have a better standard analysis but this is an equivalent action we have seen more than once. If it holds, it will be one more example of whatever wave theory this fits.

Expectation is to stay range-bound for quite a while as the market needs to unwind a lot of accumulated breadth. The range most likely will be large enough to shake up bulls and bears. The market top is some distance away.

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Warming Up Targets

Open: ES 4053/4060/4063 are calculated fib extension low zones. Next lower are ES 4048 and 4027 zones.

Lots of gaps to be handled which is typical during the initial decline part of a pivot if that is what this is [anything more will become apparent quickly]. New ath after pivot hits it's low. Could be a lower low than 'typical' in this environment [SP-500@3965 zone or lower]. Will scare most but the bounce to a new ath next will bring exuberant relief. However, that may be it for this leg from 3/23/2020.

A lot of positive weekly breadth numbers needs to unwind for a pivot to succeed so this could take a while unless a sudden directional change ensues then a new analysis will be required.

Commentary: Lots of 'crypto', 'dollar', 'gold', 'inflation' and of course 'fed speak' [not to mention Musk speak]- take your pick but do any of these tell you what the underlying market data actually is saying? Well maybe there are coincident price moves that look like the tea leaves have predicted. The prevailing sentiment here is 'worry' and that creates a wall to be climbed as 'we' all know. However, it is not as big a worry wall as it once was during previous years. Tops come on happiness and contentment when all time highs come back during which the prevailing weekly breadth numbers are painting a negative signal. Not there yet...

Crypto collapse? .. is anyone shocked? Computer driven versions of tulip bulb or beenie baby manias can only end one way. Tears for some, cash accumulation for others. Flip a coin!- pun intended. Genuinely sorry for those who got caught inside these 'get rich quick' juggernauts. Probably not the end of this story but some will be forever afraid after suffering losses.

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Volatility Hitting Targets

Pre-open: Still anticipating a larger decline to a low and then sling shot from there to new highs [from a pivot low.] It could consolidate in a range for a while as a significant unwind in breadth still needs to occur and that may take time to accomplish perhaps in a stealth-like fashion so as not to scare everyone.

VXX did hit an adjusted live target this morning at 39.01 and may be trying to bounce higher from there. Lower targets still wait to clear as shown on the chart posted.

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Consolidate Around Gaps Then Move To Targets

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Summation Rollover Getting Closer

Weekly summation index 50ma has provided good signals historically at these levels and the current development may be telling. It looks to be coinciding at price levels well into a potential high degree fifth wave (or 'C' or 'Z' or whatever label assignments are preferred). It may take another week of consolidating around the highs in ES before there are confirming signs it will continue to roll. After that, expect new all-time terminal highs to print.

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Long, Drawn Out Pivot Targets- ES Cash

EOD:


So far, a good impression of a slightly bigger than 'normal' pivot in keeping with what we expect this leg to be in this highly changeable market- (a high degree wave 5 can move dramatically). Otherwise, a whipsaw will fly out the top quickly to start the real pivot higher up. Could still be a large retrace when you look at the cash gaps above and the volatility gaps (VXX). The 5-6% decline that was indicated in a prior post looks achievable. Then off to all-time highs to finish the high degree wave 5 leg. Breadth and price was very much overbought going into this potential pivot beginning April 1 2021. If a pivot structure is unfolding, those price levels likely will be tested/taken out (lowest cash gap in that time window at 6% decline).

Also note that VXX daily MACD is ready to test the (-)1.2 level [thicker, green line]. Once it settles above that value, all bets are off as wave 5 top is the next and final target together with a stronger VXX set up that very likely will be positioned to pounce on the VXX target low currently in the 30.00 zone about 18% below the current low. A long way to go before we get there.

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Anticipated Decline On Target

Likely in a pivot but still an outside chance of a whipsaw that will make new highs to be followed by the real pivot. Breadth weekly NYAD MACD red signal line is well above the zero datum and is not usually the place where pivots commence so we shall see. It isn't a rule necessarily especially given the nature of this market.

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Pivot Targets - Decline + New Highs

EOD: The projected low at 4100 zone (wave 'v') could be it for the week's low or it could be retested/taken out a small amount. If a whipsaw takes over then new highs will be quickly following and we will wait for the pivot to begin somewhere higher up.

11:35 am EST: Some relief on the oversold breadth intraday so we will see if this is simply a whipsaw or if there will be a two week persistence producing an overall breadth and market decline [aka 'pivot']. Not a major decline according to the vectors so far which gives credence to a pivot structure unfolding. Could even extend to three weeks as there is a lot of ground to cover regarding an unwind of the market and the associated parameters. There are volatility gaps that likely require filling which should also drive a bounce/range bound moves. A first week ending decline around (-)1% to (-)1.5 % in the market could be expected inside a pivot structure.

11:10 am EST: If this decline recovers to new highs in a matter of days, then likely a whipsaw and the pivot is yet still to come. Breadth is looking at daily oversold numbers so could be a bounce looming.

So far behavior is supportive of a pivot action- not a major decline. Main take away is to achieve 1) weekly breadth decline for at least two consecutive weeks on the histo bars for NYAD MACD 2) a summation weekly rollover with a market decline and then 3) new highs [similar action to a wave iv / wave v topping]. Let's see if that continues. The proximity to a large degree wave 5 terminating looks promising.

Commentary: A note on abstract 'reasoning' and how it fits trading strategies: 'catch-phrase' ideas do not necessarily fit well with reality when it comes to trading. Trading is primarily about agreement between parties to buy and sell whatever is being peddled and the only barometer is what the data says. Nothing more. So ideas like 'sell in May', 'it's a bubble', 'wall of worry' etc. can be stated after some repeated observations but give no real clue as to what you should trade and when. The real work that has to be done involves investing time, analyzing data correctly and throwing out any distractions that do not involve demonstrable results over time. Hopefully, we can keep that goal in front of us as we navigate the machinery of trading behaviors.

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Pivot Potential On-Going Targets

EOD: 4172 low price zone looks like a wave 'iii' down so could continue up from there.

1% decline could prelude a 3% decline to a pivot low. Downside follow-through needed.Vectors have been aligning for a week now. Not 'the' top yet. New ath later on- [large degree wave 5]
 
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Daily SP-500 Wave 5 Projection

Possible VXX projection shown at right inset. The pivot should coincide with the weekly summation index rollover which looks to be approaching.

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About To Hit Critical Target Level - Not The Top

EOD: UVXY printed a lower target on a 3-tier fib decline [4.44=fib 0, 4.27=fib -0.38 and 4.01=fib -1.0] which was a running adjustment to the previous target. The low printed at 4.02 so we will see next week if that is all she wrote on UVXY. It could stay on that price while ES prints higher which would be typical behavior. ES has a target for wave [iii] at 4234.75 zone. VXX had a similar 3-tier decline in fib targets hitting it's low at the close [36.58].


Not the top but could be the pivot kick-off zone. This was the original target zone on 4/29 [purple construction line] when the projected wave 'V' failed and retested the lows at 'D'. Looks like finally getting there. Negative breadth divergence is developing on the weekly NYAD MACD now in it's 5th week from it's high but still is well above the zero datum so any decline could well be a pivot structure part one. UVXY is threatening to hit the next target low at 4.09 zone so the set up looks like a possibility for a pivot to occur soon.

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Diamond Mini-Top #2 Targets- But Watch For Ambush

EOD: Diamond morphed into megaphone and megaphone structure in right shoulder position is more often bullish so we shall have to see by week-ending exactly how bullish. Summation index is still threatening to roll and the subsequent decline and thrust to a terminal high is likely.

12:25pm EST: Right shoulder scenario may be gone now- looks like trying for a double top up at 4208.50 zone for a week- ending bust to the upside per usual. In this case, the pivot may also be nixed unless it is the alt two-part scenario. Let's see how it closes first- still many options available.

11:52am EST: Looking more closely at a potential time pattern for a h/s set up- a right shoulder completion could stretch into midweek next week. Left shoulder approx 4 x Pi days [4/16 - 4/29] = 13 calendar days and right shoulder [4/29 - 5/12 ] = 13 calendar days. Just for giggles at this stage. Best laid plans and all that.

Also- as was stated previously- fifth wavea at any degree have meandered and overlapped all over the place this year and a target for '[v]' could still be valid at approximately 4187.5 minimum price zone. That would still be in left-right shoulder range symmetry if this is a h/s developing.

11:04am EST: Currently inside the week ending cash target zone- "1st week cash ending possible" so prices could possibly hold in that range through tomorrow.

Looks suspicious this close to #1 but could be alt pivot scenario. 50/50 odds on any direction again but without a swift dramatic move to large new highs- still looking for a terminal pivot structure to develop. IF the structure is a pivot, this first week may well look very non-threatening and the expectation for it to close inside the two horizontal lines roughly would be appropriate.

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