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Market Poised for BO 3/28/22

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The hourly chart of the ES, S&P 500 says it all. The market is on the cusp of another upside breakout. Should it clear 4546 today, there's a vacuum overhead until around 4582. The 5 day cycle projection is 4600-4610.

tvc_5809e39d35933d49c00956daf40832cf.png


You can also see the open space when zooming out to a 5 hour bar perspective. I don't even want to talk about the measured move implication of the base breakout. That's longer term stuff that I'll keep to the weekly Technical Trader updates. 

tvc_3cd02e44b84ca8c68ce4c7bb5bf69ffe.png

 

Meanwhile, the 10 year Treasury yield is threatening to blast off to the moon. The next few days are very bearish for the bond market, then there's 6-7 weeks of relief coming

tvc_6aaa6a12f3a4008a7af5e71e5594f103.png

 

Surprise, surprise, Buttcoin has broken out of a monster reversal pattern with a conventional measured move target of 55,000. But it fades heavy resistance around 50,000 first. If it consolidates there and hangs around 55k would be in the bag on the next move. It would need to fall back below 45k to reverse the implications of this pattern. Cycle and momentum indicators are as bullish as it gets. 

tvc_26c9759eb661a3bea1ee2cf180301cac.png

 

The EUR/USD is consolidating around $1.10. But for what? I need to hedge the purchase of my apartment here in NIce, due to close in June. I'll be a buyer of EUR on a move above 1.1050, or below 1.08.

I have already had tremendous appreciation of my USD holdings vs. the EUR over the past year. Now I'm forced to lock that in, which I suppose is a good thing.

I'll continue to earn my income in dollars so this will be an ongoing one way trade. The only question is the timing of EUR purchases required  to cover living expenses and any additional investments I would want to make here. 

Not sure what that might be. I had loved the idea of holiday rental property investment, but European municipal governments are doing their best to destroy that market. They are either virtually outlawing short term rentals or severely restricting them.

The Nice city government just passed such a law in the last month. The politicians have sided with the hotel businesses who lobbied for these laws. Small investors who paid top dollar and established portfolios of holiday rental apartments here in Nice are in for a world of hurt. 

I think that these cities will find some very unpleasant unintended consequences as a result of these laws that don't just harm small investors, but essentially could destroy them. Do they think that the hotel companies will benefit enough to offset that? I think they're in for a surprise, as thousands of rental units are forced onto the market, depressing prices. 

And now, the rest of the story. 

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A SHORT HISTORY OF THE FED BALANCE SHEET

Its all there...plain as day....in the chart of the FED balance sheet.

When did it all start........

Most say in the bail outs of late 2008.......

But perhaps we should look nearer.....in early 2018 when the FED tried to do a bit of QT

So softly softly so the market wouldnt notice........

They propbably thought is was going real swell.

But the hedge funds leveraged into treasuries certainly didnt think so.......

The QT pushed the REPO rate they had to pay on their money up and up and up.

The hedge funds could see their profits disappearing before there very eyes.

Something had to be done about this obviously unacceptable situation.

And so on 17 September 2019....a day that will live forever in financial infamy.... 

The REPO market printed 10%.

And just like magic a $500 Billion REPO facility was created out of thin air to pour the healing balm on troubled waters.

Was'nt that nice of the FED.....

Even better the virus came along shortly afterwards.... crushed treasury rates and provided the perfect opportunity in April 2020 for the hedge funds to get out of thier leveraged bond positions and into stocks.

Shortly afterwards the FED increased the money supply by 40%.....

And its been up up up and away for the FED balance sheet ever since.

Of course this created a lot of inflation and a lot of very over valued stocks.

So the FED had to throw a few bones to the shorts after February 2021 with all its QT talk.......

Though I find the FED's tough QT talk unconvincing.

And its transitory inflation meme was just so ridiculous......

Then the FED created that nice Reverse Repo Program so all the hedge funds could hide in a house made out of bricks while the inflationary Wolf huffed and puffed and blew all the bonds and stocks down. 

All that FED QT tough talk really helped a lot.....

And that folks is where we are now.

Waiting for the real QT.

But will it be GODOT QT???????????

 

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Good morning...

I think as this week matures, we start seeing cracks in the facade.  I'm getting bearish here on the broad markets, so I'll be playing the dark side this go around.  Why am I bearish?  I'm expecting a news event from left field...that's what my work is telling me.  I am putting the odds on March 30th(going into March 31st) as the highest probable target.

I see BTC breaking from the flag at 45k this morning, I'll stick to my previous analysis of BTC.  It's setting up a perfect mirrored repeat of PYPL from the July 26 peak.  For momentum purposes...I'll be using BTC for the canary in my coalmine.  When it loses momentum.  I'll be cranking up the war machine(my trading platform) and putting my gunships in the water.

I'm still watching and waiting here.  I'm not seeing anything that is surprising me here as of yet.  If I do see something...I'll speak up.

Best,

The CoinGuy

oh...and...

As the day progresses, I'll be adding a tutorial on the ^DJI pattern I posted last week.  This one here...

1681364064_Ismellaturn...-March232022.thumb.jpg.08f7b27fed473acae808a9e988f6e87b.jpg

Here is the first one...We've fulfilled the left hand side of the pattern and the right.  If the pattern inverts it will be a "high energy" event.  I'm expecting this to break to the downside...afterall, it's just following the Nasdaq that is one leg ahead of the the S&P and the DJI.

1869057699_Boxupdownup1a-March282022.thumb.jpg.36afa6ab6bf63f4b2a07a5b70f42f8a8.jpg

and here is the second one.  It was this pattern that brought me to CapitalStool in 2001(using my Oral of Omaha handle).  I was leading a team of guys up the Greenspan ramp from 1995...and it was right here where I a) made my bearish call on the markets, and b) lost all of my friends.  Smile.

At any rate, I am showing this for a reason...it's part of a larger pattern that I feel is just getting ready to fulfill itself and once it does and I turn bullish...I want everyone to understand why I'm on the long side...for a while.  Although, overall I'm bearish for years/decades to come.  Just as I did in 2000 and 2008 I'll be playing each wave down.

1142054020_Boxupdownup1b-March282022.thumb.jpg.b69e9a303617181745c07449f47cb0fb.jpg

Here is the 3rd chart, putting the complete pattern together as it falls out of the channel.  The next(and last) chart will show the conclusion of the 2015 pattern as well as what I believe lies ahead for the ^IXIC shortly.  After the completion of the pattern...then...I expect a rally, not before.

1552222714_Boxupdownup1c-March282022.thumb.jpg.f667a14bb0184c09cc188afcabed7b4c.jpg

Here we go.  Final chart in the series.   After the next low I expect a decent rally to set up a larger move to the downside.  I'll be playing it both ways...

961400670_Boxupdownup1d-March282022.thumb.jpg.a55476a068d256a1f370bab89da2ba82.jpg

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1 hour ago, Jimbo said:

A SHORT HISTORY OF THE FED BALANCE SHEET

Its all there...plain as day....in the chart of the FED balance sheet.

When did it all start........

Most say in the bail outs of late 2008.......

But perhaps we should look nearer.....in early 2018 when the FED tried to do a bit of QT

So softly softly so the market wouldnt notice........

They propbably thought is was going real swell.

But the hedge funds leveraged into treasuries certainly didnt think so.......

The QT pushed the REPO rate they had to pay on their money up and up and up.

The hedge funds could see their profits disappearing before there very eyes.

Something had to be done about this obviously unacceptable situation.

And so on 17 September 2019....a day that will live forever in financial infamy.... 

The REPO market printed 10%.

And just like magic a $500 Billion REPO facility was created out of thin air to pour the healing balm on troubled waters.

Was'nt that nice of the FED.....

Even better the virus came along shortly afterwards.... crushed treasury rates and provided the perfect opportunity in April 2020 for the hedge funds to get out of thier leveraged bond positions and into stocks.

Shortly afterwards the FED increased the money supply by 40%.....

And its been up up up and away for the FED balance sheet ever since.

Of course this created a lot of inflation and a lot of very over valued stocks.

So the FED had to throw a few bones to the shorts after February 2021 with all its QT talk.......

Though I find the FED's tough QT talk unconvincing.

And its transitory inflation meme was just so ridiculous......

Then the FED created that nice Reverse Repo Program so all the hedge funds could hide in a house made out of bricks while the inflationary Wolf huffed and puffed and blew all the bonds and stocks down. 

All that FED QT tough talk really helped a lot.....

And that folks is where we are now.

Waiting for the real QT.

But will it be GODOT QT???????????

 

Brilliant summation. 

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I'll keep it real simple.  If we crack 325 on the ^HUI  "AND" hold it...my forecasting days are over.

I guess the real question that needs to be answered is this...which markets are going to trade inverse to each other.

As of this moment...I think all are going to trade together. 

Just waiting...for an event.

Best,

The CoinGuy

1381420735_325orbust....thumb.jpg.1195ebba4946f143dfd6594ff2ea1a6e.jpg

 

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This will be my last comment/chart before the turn.

Was 2008 all that long ago? I thought our current pattern would be easily recognizable?

34k to 35k is no man's land.  Bullish above...bearish below.

1094607868_Was2008thatlongago-March282022.thumb.png.b09de3df0d5611b242446ad16ce5f3a7.png

I am first of all..a teacher so I have to mention...see the inversions within the pattern?

THIS...is a beautiful chart, my quiver is full of them.

Have a GREAT week gentlemen...

The CoinGuy

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1 hour ago, The CoinGuy said:

This will be my last comment/chart before the turn.

Was 2008 all that long ago? I thought our current pattern would be easily recognizable?

34k to 35k is no man's land.  Bullish above...bearish below.

1094607868_Was2008thatlongago-March282022.thumb.png.b09de3df0d5611b242446ad16ce5f3a7.png

I am first of all..a teacher so I have to mention...see the inversions within the pattern?

THIS...is a beautiful chart, my quiver is full of them.

Have a GREAT week gentlemen...

The CoinGuy

That's quite an analog. 

I have to get used to what you label as a Head and Shoulders. They are not the traditional head and shoulders patterns I learned from Edwards and Magee. On an inverse H&S shoulders would not be lower than the head. The head would the lowest point in the pattern. 

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3 hours ago, DrStool said:

That's quite an analog. 

I have to get used to what you label as a Head and Shoulders. They are not the traditional head and shoulders patterns I learned from Edwards and Magee. On an inverse H&S shoulders would not be lower than the head. The head would the lowest point in the pattern. 

I've always been a Schabacker man myself....I think most of the ideas E&M used came from Richard.  Although, that particular pattern I learned from my father.   I've taught it through the years.  I only had a few guys take it seriously. I even taught the formation to several guys in Stool's Gold back in the day...It's real interesting at the turns.  

Briefly...you're using the center of the pattern to determine the cycle AND you plan from center to center instead of the beginning of the wave to the end!  It basically gives you a 48-72 hour window where the energy is likely to be released into the market.

It's at that moment...it's going to break hard with you...or against you.  As long as you've been around markets...I know you understand what I'm saying.

Timing the release of energy....is what the pattern seeks to exploit.

There are 3(actually a rare 4th) different variations to the pattern, I'll make sure to post a chart outlining the different variations.  Until then, perhaps instead of just looking at the market in terms of 5 wave advances and 3 wave declines in bull markets and the opposite in bear markets, a person could start to view completed waves from the center OUT.   You might just start to notice a different pattern to the stock market.  In fact...I know you will.  Now, just start to add those inversions I've been speaking of...and you're on your way.

Best,

TCG

oh...and...

I'm going to leave this chart here as a small example of the type of behavior I'll be discussing as we go forward.  From the center...out.1648167216_TheBethlehemStarGSPC2_10_21.thumb.jpg.86f29cec7fb374379929ad4ae6eb03ac.jpg

 

 

 

 

 

 

 

 

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ONE ETF (OR IS THAT 2) TO RULE THEM ALL

And the outstanding ETF of this entire bull market since late 2008.......

Has been SPXL.

The Direxion 3 times leveraged bull S&P 500 ETF.

A 28% return per annum from its founding on 5 November 2008.

And the timing for its creation was just perfect.

And the FED providing all the cheap leverage it needed......

PERFECT FRAME!!!!!!

An ETF could not have been designed better to take advantage of the QE gravy train and ride the frame forces.

But not anymore.....has lost 24% since the start of the year.

But the SPXS the short alternative has gained 24%.

Smart money has made the switch!!!! 

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