Potential Incomplete Bottoming Process

9/26/21 Update: Lower Chart- Bollinger Band study on SVXY + DOW overlay from 2020 top and current. Two big take-aways are: a] the SVXY MACD is pretty much at the same numerical level for both years turning down b] volatility turn signals <up> have printed on multiple occasions in the last two months. Normally an average of one every 12-18+ months has printed. This set up looks like it's about to get extremely interesting.

Commentary: it has been noted in the past close to tops that there are some 'crash' concern articles suddenly appearing followed a time later by 'going to the moon' analyses. That is being observed currently. Just a behavior observation, not a flag. Some distance to go yet but may not be huge to the upside. We shall have to see.

Original post-
The ratio of price difference in the spread across high and low ranges of indexes and instruments in the overall picture may be giving a clue. The daily closing prices are mostly inside the bounded boxes shown. Look at the ratio across all the highs together and then the lows together as groups and the geometry of the box they land in at their lows prior to the 2020 top. Now look at a geometric box surrounding the recent pullback here in 2021. The obvious size and ratio difference may well be a clue to why the terminal top is some distance away. There likely needs to be a tighter ratio on indexes and derivatives at the lows. Whether the bounding box will be lower may not be relevant just so long as it can be seen to approach a percentage closer to what is considered normal. Of course, this could not have any meaning but it should be pointed out as it does fit with more recent analyses.

If there is a price acceleration in either direction that takes out the range quickly then a new analysis will be required.

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Big Investment Houses Likely Will Not Spook You

EOD: On the day, there is a possible oversold condition on VXX. It is just a few pennies away from it's low which most of the time indicates it will take it out but the market is not in a 'typical' position right now. The coming sessions will give a better clue as to whether it's going to take it's lows out. The closing breadth printed another weekly negative signal.

2:37pm EST: There is a gap higher on SVXY from the decline in early 2020 at 63.48 which is nominally 10% above the current price assuming there's no overlap. That has been on the radar for a while and it certainly could be a target zone as volatility derivatives are currently pushing the prior lows / highs. It is not required however, in 2015, a high retest left a long-term gap open before a terminal decline in SVXY under similar circumstances where an attenuated price pattern was also in play.

Original post-
Listening to one of the very biggest investment 'houses' in the USA recently, the message was clearly business as usual - some corrections equals 'normal' on a monthly basis. Some may get larger. This, of course, is the safe message. If they had real super-knowledge from the decades of investment education passed down from manager to manager, they will keep it close to their chests. Who exactly is going to cause a run on investor withdrawals and who would risk being wrong about that event even happening?

After decades of listening to main stream pundits, managers, 'expert' market timers, the conclusion is that if they 'know', the secret is safe with them [there is a tiny number of reliable analysts- no disrespect to them]. The market does not give up it's secrets easily.

Still on track for a summation index to peak somewhere after a retest of low ranges has happened. A terminal top is still in view even if new highs in the market print. Watching volatility derivatives VXX and SVXY to see if they print lower / higher numbers respectively. A new analysis will be posted in that case.

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Multi-Decade Related Charts Are Flashing

12:36pm EST: If the vectors continue as they are so far into the close, there is the possibility of a retest of the low range in the coming sessions before the continuation up restores. This is somewhat supported by the data on the summation index [daily] that is still printing 'bottoming' values and needs to yet gain upward traction and it's own rollover later on that typically flags a potential top.

Commentary: "Investors Ignoring Fed Tapering". The "ignoring" part is hardly an endorsement for charging ahead say in the case of ignoring gravity while approaching a cliff edge. Regarding the Fed- those decisions are already made for them by conditions. The same conditions exist in the trading environment. When one tapers, the other may also 'taper'- however the speed of the other 'taper' may approach super-sonic under the right conditions.

Original post-
ARMS index is not typically looked at but that doesn't negate looking at it another way. Readers of this blog will appreciate the way an index can be displayed by using only a moving average and discerning a pattern of behavior over the long haul.

The 200ma on the ARMS index is plotted below and the overlay is the summation index / sp-500 moving ratio. This is an unconventional approach but the repeating pattern of continuous shrinking right triangles is unmistakable. That pattern is not a 'quirk' of data alone- it appears to have consistency related to the market situation that all other large studies agree with.

For example- since 2013 the 200ma on the summation weekly has dropped 15% while SP-500 has increased 119% so a 'shrinkage' in [summ. / SP-500 ] is expected but cannot all be accounted for solely on the increase in SP-500. In the case of a sole increase in SP-500 with a level summation index, the last triangle should be of larger amplitude and the top closer to 1145 - 1150 not 1125 which may not sound like much but is statistically relevant to the decline that's on-going currently at a larger degree.

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Re-Visit Summation Index Supports Current Scenario

11:51am EST: Intraday vectors shows a one-sided support for a move up which does not demonstrate a 'turn signal' up at a higher degree. A companion signal is required to accomplish that set up. This still leaves open the expectation that a topping process cannot be ruled out whether or not higher market prices print later. Let's see how the day's vectors close as they rarely finish the day with similar ratios to those at mid-day. After gaps close, there will likely be a modest retest of the lower ranges. A turn signal up, if it is going to occur, may be more likely to show up then but it is more likely not going to print in order for a top to complete. Could be range-bound for another week or two while summation index tries for a terminal pop upwards. Please note that 'Fed Speak' etc. will likely not change the ultimate destination- it only ever occasionally creates a whipsaw up or down and then the market completes whatever it intended to do up to that point.

Note that week-ending 9/10/21 printed an extended-size [x3] *companion pair* volatility turn signal up on the weekly chart. The associated low prices in volatility derivatives since then have yet to be taken out.

*  A 'companion pair' descriptor is associated with a higher degree turn signal. In this case it supports alignments just described towards a market decline pending.

Original post-
In yesterday's post it was observed that alignments were most likely occurring and that in order to complete the picture the summation index needed a secondary peak. A possible route to that is demonstrated below-

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Updated Weekly Vectors Are At Target And Vix Spike Is Aligning

1:53pm EST: Market is attempting to reverse up to close gaps and likely finish the leg. A turn signal up will be a sign that this is getting closer. So far today, the vectors appear to support the attempt but a few more sessions may be required to confirm.

Original post-
The original fibonacci extension used from the 3/23/20 bottom was short. Looking at an extension for VXX: [wave 3] = 2 x [wave 1] now appears to be coincident with the converging pattern below. This is occurring while breadth is printing steady negative values and other surrounding criteria are at significant zones. Summation index may need to print a secondary peak on the weekly chart which could happen in the coming weeks as the market fills gaps created on this recent decline. There is always room for new market highs to print but they may be short-lived if they diverge from increasing volatility.

Vix has spiked to 25.5 which was close to spike at 27.5  previously on 5/12/21 and often, as a pair. they flag at the beginning and end of a terminating bullish sequence somewhere about 50-70% up the overall leg particularly when they align with the declining [VectorSpike] indicator as shown below [note- 'roll over' accelerates down almost exactly in the May date window of the first VIX spike].

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Next All Time High Zone May Herald A Scare Or Three

12:17pm EST: Per the projection a few days back, SVXY [and the market] look to be positioning for a very short term low before striking to a new all time high zone. SVXY 50ma daily lies at 55.77 which is 2% lower than current intra-day- so watching that zone seems appropriate. Look out after a new high happens. Potential reversion back to May 2021 lows and possibly November 2020 price zone before the next leg up initiates. 

Unimpressive market price advances vs. moderately impressive weekly breadth declines often precludes a pull back. The red curve printed from 2019 on the MACD looks parabolic though a data analysis of the plot has not been conducted. Parabolic moves, especially of this size, do not end well when they hit a tipping point

See: the lower chart on this post for additional observations

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Tickling The Bear May Not End Well

11:19 am EST: Signs that vectors are moving towards a very short-term bottom for SVXY / SP-500 may finally be printing. If that occurs, then looking for a higher completion to be followed potentially by a deep reversion. Either way- a higher market completion is expected soon. Daily breadth intra-day today is (NYAD SUM [macd param])  -200, yesterday's was -70 so let's see how that closes today and on tomorrow's week-ending number. Those values are definitely warning flags moving forward especially when converted to weekly data. Week ending coming in to this one was already -200.

Original post:
Price advances are unimpressive compared to breadth declines which is often a key 'tell'. Cumulative breadth [lower chart] has flattened for a few months and is clearly converging on the sp-500 - the size is telegraphing a pending big move. 

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Leg Up Likely About To Hit Target Zone- Potential Reversion On Tap Next

SP-500 and SVXY are both looking like short-term ending diagonals along with some other instruments. After reversion completes, new all time highs are expected but not necessarily due to a leading diagonal having completed. A 'tail down' on weekly breadth 50ma is still required and this move, if it materializes, may contribute towards that requirement prior to a terminal top printing. In the SVXY chart- a confirmation that it has hit it's local low within a few days proximity needs to print next. After that, a move to 62.5 price zone is expected.

Commentary- anyone remember the height of mortgage and other derivatives investments in 2007 prior to a huge slam down in the overall market? Crypto junk bonds are now going main stream...'getting in on the action'..yeah..that's how these  flags are hoisted.. please do not ignore historical greed-markers that warn of pending euphoria peaks..yes money can be made but risk is elevated the higher these flags fly..

"The warm welcome from fixed-income investors shows that cryptocurrency is no longer a sector reserved for venture-capital funding, as debt investors including pension funds and hedge funds look to get in on the action.“The strong demand is clearly a big endorsement by debt investors,” said Julie Chariell, an analyst at Bloomberg Intelligence..."

When a great many traders are buying every dip or 'getting in on the action' with no slam downs to scare them a little, time to really look more closely at the behind-the-scenes patterns. It always takes more time than most expect but when it does go it can be like skidding through a busy intersection where the prior driving comfort just got nixed.

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SP-500 4600 Zone Beckons

Looks like an ending diagonal potentially short term. Surrounding criteria do not support a leading diagonal but this is likely a minor corrective pullback and a new high will probably be necessary to set it off. Price patterns by themselves [diagonals  head and shoulders etc] only have a 67% chance of reliability statistically but with multiple surrounding criteria vectors and breadth patterns, that increases it to better than 85% so we shall see. If it materializes, there is a gap open at the 4020 zone below which may be tempting and is entirely achievable according to vector projection calculations as they stand currently. Any change to the expected pattern developments will cause a re-evaluation of the analysis and an updated post.

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Revised Outlook - Short and Long Term

11:22AM EST: VIX LOWER GAP MOST LIKELY BECKONS. Once that has been closed, we can pay closer attention. Until then- do holiday stuff/hobbies or projects at home/work for a while. Peace.

Upper chart shows current status of SVXY. Readers of this blog are by now aware that volatility derivatives often give a better underpinning to market intent rather than market price moves alone. The current set up shows the third MACD peak about to roll over. The third peak [if and when it materializes] can often print a larger decline than the ones following the previous peaks in the 3-wave leg.

Lower chart: 'decline pending 2]' may be about to print based on upper chart current set up if SVXY crosses down on the macd. Terminal top is likely in the future after a pivot prints now or later. All the large-ish crash talk [read 'trash talk' - chuckle] never gets the timing right but dramatic mini declines could certainly materialize.

Lower chart shows a potential expanding triangle [megaphone] in yellow from 2007 and one huge triangle currently printing that could show similar intent. The large red declining line is a similar looking trend line. A potential 'current equivalent' label places the current live environment at a similar juncture.

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Watching This Moving Average Is Key

EOD: Nothing happening. Not necessarily holiday week behavior. If this is a multi-year major top developing, there is a distinct possibility that we stay range-bound for an extended period with a few up and down bumps along the way. 2015 printed 8 months of nothing. 2000 top - 8 months. 2007 - 5 months.

Anyone remember Bing Crosby song - 'We're Busy Going Nowhere' ? Just about sums up price action HOWEVER- underneath could be a very significant 'going somewhere' about to declare itself. Watch that +250 a/d level on the weekly. Usually prints on Friday but holiday weeks can go to the following Monday before an update prints.

Unless day-trading or swing trading, most likely not much point watching intra-day at the moment. Week-ending and daily close every few days is about the best information that is printing and that's being generous. If the lower VIX gaps close than perhaps something may stir.

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Vectors Showing Potential Maximum Volatility Derivative Print On 9/2/21 [Mkt Mini-Top]

Topping action looks promising based on Friday's lower high in SVXY where a Friday closing marginal -5% movement ratio in SVXY down vs actual volatility gain likely indicated an overbought set-up. This leaves room for SVXY to decline. However it is often more reliable to see a matched pair of turn signals based on combined volatility derivatives to confirm a market decline in the coming sessions. This could happen if the SVXY high of 9/2/21 is not taken out in the meanwhile.

The market may or may not print new highs [SP-500] vs volatility derivatives. That would be typical. Also- breadth is now 6 weeks into negative red signal territory however a little more daily degree divergence in cumulative breadth might look better.

The declining solid line overlay shows a VectorSpike internal indicator printing bearish divergences.

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Potential Timing Wave Lengths In SVXY

9/4/21: Calculated market top target day estimate is Th.9/16 - Fr.9/17 based off the observed wavelengths seen so far. There may be one or two smallish decline 'bumps' prior to this date window.

EOD: Thursday's action looked like breadth was heading up into a new market up leg but today's action kept the weekly red signal print in negative territory. That makes 6 back-to-back weeks of negative breadth at the weekly degree. This is now seriously pushing on the historical time window previously seen before a correction occurs.

Original post-
Potential timing wave lengths in SVXY- 
- ALSO SEE previous post regarding advance-decline implications.

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Large Divergence On Different Time Frames- What Are The Implications?

Current advance decline patterns on the weekly and daily chart are demonstrating a significant departure from each other. Differences within the same indicator on different time frames by this much will require resolving. The resolution will most likely involve a market price movement.

Since patterns within very large structures can and often do 'alternate' somewhat, there could be two moves similar to both tops in 2018- at purple [A] and half way to [B]. In that case, a pending first decline in the market may complete at white 'e' [lower right hand side on diagram]- which could be a similar leading diagonal down. The terminal move in the larger structure could then appear as a retrace of that leading diagonal as it completes. The current structure could morph into something else of course but this is the best we have for now based on expectations going forward [a large-ish pivot top and then a terminal top]. This would also 'fit' somewhat into a megaphone [expanding triangle] that's shown - purple labels A-B-C-D-E on the upper weekly chart with two higher market hits landing more or less in the 'E' area, [E' and E'' would be typical behavior].

If the above prognosis materializes, it could well be a few magnitudes more dramatic than those in 2018. Most definitely, it will not be a replica- only similar in it's intent to resolve divergences and corrective impulses in the market.

See how this fits in the short-term with the current market status referencing volatility derivative SVXY.

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This Internal Indicator Historically Has Been Right On Cue

Considering the similarities in surrounding advanced market criteria in at least three tops since 2018, this may be a heads-up scenario developing. Still leaning towards a non-terminal top but nevertheless, could be a scary decline prior to a final top. Posts will call it as the analysis sees it in the live environment.

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Target Extensions Updates ES 4600 Zone On Tap

EOD: VXX ended the day with an oversold ratio of 1.17- anything over 1.0 often means that the closing value is 'pegged' for a little while so we will see if a small pullback in the market begins.

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