Given that nearly everyone was bullish and buying tops while I was signaling a retrace to lower levels, I thought I'd share where we are now with NAS500 / Stocks.
What you see here is a familiar picture. The narrative is that we have broken the downtrend and are on our way up. While this is certainly possible, pay special attention to the ascending channel that we are currently in, its rejections, and the current short-term uptrend's position. We have rejected multiple times at similar levels, and our most recent test of the top of our ascending channel has yet to re-test previous lows. It is also entirely possible that this ascending channel, rather than a change of trend, is merely a bearish consolidation phase before dropping further. The interest rate decision will likely lead the way, but either way, we are in an overbought status, which is why we saw stocks dip the last few days.
This is further confirmed by understanding correlation and how it relates to stocks, gold, silver, and oil. Most of these assets are at the top of their channel, overbought, and have not retested previous lows. The same can be seen on individual stocks that are big movers, such as Apple, Amazon, etc. - these assets are either in a strong downtrend channel with strong momentum, or testing the top of their channel and overbought. Correlation delays between assets and when they react to market moves is the only reason these charts do not look identical.
Going forward: if news tonight is bearish for stocks, we will see, at minimum, a retest of the low of the current price channel, which is a re-test of the top of the previous downtrend channel (3940 area). Depending on the announcement we could also see a much deeper drop, if price confirms that our ascending channel is indeed a bearish consolidation. In that case, we could approach the 3K price region. There will always be retraces and retests, of course, and news could invalidate what we see on the charts today, if it turns out to be bullish for stocks. In that case, expect stocks, gold, silver, and oil to all make new highs, with a potential resistance area around 4300.
Note: if you are interested in the Kagi or PnF view, both confirm the above, but I'm happy to post it or explain it, upon request.
What you see here is a familiar picture. The narrative is that we have broken the downtrend and are on our way up. While this is certainly possible, pay special attention to the ascending channel that we are currently in, its rejections, and the current short-term uptrend's position. We have rejected multiple times at similar levels, and our most recent test of the top of our ascending channel has yet to re-test previous lows. It is also entirely possible that this ascending channel, rather than a change of trend, is merely a bearish consolidation phase before dropping further. The interest rate decision will likely lead the way, but either way, we are in an overbought status, which is why we saw stocks dip the last few days.
This is further confirmed by understanding correlation and how it relates to stocks, gold, silver, and oil. Most of these assets are at the top of their channel, overbought, and have not retested previous lows. The same can be seen on individual stocks that are big movers, such as Apple, Amazon, etc. - these assets are either in a strong downtrend channel with strong momentum, or testing the top of their channel and overbought. Correlation delays between assets and when they react to market moves is the only reason these charts do not look identical.
Going forward: if news tonight is bearish for stocks, we will see, at minimum, a retest of the low of the current price channel, which is a re-test of the top of the previous downtrend channel (3940 area). Depending on the announcement we could also see a much deeper drop, if price confirms that our ascending channel is indeed a bearish consolidation. In that case, we could approach the 3K price region. There will always be retraces and retests, of course, and news could invalidate what we see on the charts today, if it turns out to be bullish for stocks. In that case, expect stocks, gold, silver, and oil to all make new highs, with a potential resistance area around 4300.
Note: if you are interested in the Kagi or PnF view, both confirm the above, but I'm happy to post it or explain it, upon request.