ES Journal - 2021/2022

[vanzandt]

I heard some old dude on Bloomberg earlier today, I forget his name but he is supposedly one of the greatest of all times.

Talked about 2 sigma and 3 sigma deviations from the trendline. Said we're in some kind of super-bubble. 100 year type thing. His foundation is short the Russell 2000. He said the biggest thing about why he was not shorting the Nasdaq was because it's controlled by the fang stocks. The Russell isn't. Makes sense I guess.
Either way, I remembered this post from late Oct. It was pretty obvious to me at the time.

You'll get it. That 4000 level is ripe for testing. I get 3980 when I draw the lines.
Wanna see something scary?
Look at a 15 year of the Russell. (IWM)
That one has a 10% drop in it easy. Easy!

4 months later:

According to this guy, there's more room to fall.
He may be right. I wonder when he jumped in.

 

[Concinnity]

I mean personally focusing almost exclusively on intra-day action so I don't really need to focus or necessarily care the long term view from that perspective.

However, from a long term technical stand point it looks like pretty good probability to me that we're going lower. Once charts start to make the pattern that the Daily and soon to be Weekly are making, typically the best you can hope for is temporary pops that will just get sold into.

We've been failing to regain and close above key levels on Daily chart to have any chance at a substantial bull move so far. So, until that happens or the Daily chart gets back into a position where a deep buy typically comes from, I'll be keeping my bearish bias and prefer to short and only take A+ buy setups.

It is interesting both you and him mention the RTY. It certainly gave hints pretty far in advance to the other markets. Back in late November 2021, is when RTY weekly signaled to me that probability of new highs had dropped by a lot and they we're going to switch patterns from attacking and making news lows, as oppose to new highs. Once that pattern starts, it normally takes time for it to reserve. Very rare you just get a huge move that holds and pushes back to the highs or even relative highs.

 

[Laissez Faire]

I heard some old dude on Bloomberg earlier today, I forget his name but he is supposedly one of the greatest of all times.

Talked about 2 sigma and 3 sigma deviations from the trendline. Said we're in some kind of super-bubble. 100 year type thing.

I think there are plenty of smart people who shares that view and which have been wrong over the last few years. It seems like the FED's hands are finally tied down, though, so maybe this time it's different?

There still seems to be plenty of money in the world and demand for stocks, so who knows. It's been so many times over the last few years where the market seems to finally break and then we rally to new highs once again.

From my point of view it seems like a test of 4300 is due from here. Reversing higher or accelerating to the downside both seems to be perfectly possible from here (there). Right now, a lot seems to hinge on what's going on in Ukraine, although one could argue that the markets have other concerns even if that should resolve peacefully.

 

[Concinnity]

I think there are plenty of smart people who shares that view and which have been wrong over the last few years. It seems like the FED's hands are finally tied down, though, so maybe this time it's different?

There still seems to be plenty of money in the world and demand for stocks, so who knows. It's been so many times over the last few years where the market seems to finally break and then we rally to new highs once again.

From my point of view it seems like a test of 4300 is due from here. Reversing higher or accelerating to the downside both seems to be perfectly possible from here (there). Right now, a lot seems to hinge on what's going on in Ukraine, although one could argue that the markets have other concerns even if that should resolve peacefully.

View attachment 278603

That's fair and this part is anecdotal evidence on my part, but I still don't see that many people being that bearish or bearish enough. In other words in a lot of forms and places I visit people are still discussing neutral to not that bearish moves. Would seem to me moving markets lower and flushing out current holders and any new buyers would be the path of least resistance at this point, allowing for entries much lower. This is just a lot of conjecture though. I understand that.

So, that plus the technical's this time is certainly different from a probability standpoint. The last time we had readings pretty close to this, the market made at least another 2 daily candles down with a lower low, followed by the Daily NQ chart getting in a position where deep buy comes in. We than got a buy signal and rallied back close to the last relative highs (which would be 15068 in this scenario) and proceeded to than sell off and take out the lows and move 700 points lower from there before rebounding.


Remember market is currently in the pattern of hunting lows, not highs right now. So, this is why even if we do get that rally back above or close to the 15068, it's going to set up a nice risk / reward short particularly if we regain 15068 or 15260 and than lose it and trade back below.

This is how I am going to continue to play it. Looking lower as long as we are trading below important benchmark area's. No need to rush and try to find the low in my opinion, I'd rather wait for an actual buy signal down here or for us to start trading above some important benchmarks and than there will still be some meat left to take off the bones, just with higher probability than trying to stab the low down here. Sure, it may work and I am sure some people will get in near the low, but if they aren't doing it based upon an actual repeatable process or system, it's just luck and no way to trade long term.

I can be bad at explaining things and long winded. So, apologize in advance if this isn't clear what I am saying or if people thinks it makes no sense. Just my view.

 

[Spooz Top 2]

That is one hell of a H&S set up!!! 2 Top right shoulder...... Ooooofa !

 

[wiesman02]

There still seems to be plenty of money in the world and demand for stocks, so who knows. It's been so many times over the last few years where the market seems to finally break and then we rally to new highs once again.

From my point of view it seems like a test of 4300 is due from here. Reversing higher or accelerating to the downside both seems to be perfectly possible from here (there). Right now, a lot seems to hinge on what's going on in Ukraine, although one could argue that the markets have other concerns even if that should resolve peacefully.

100% agree

 

[formikatrading]

I'm not a perma bear but the more I look at the "big picture," the more it looks like the stock market will be down on the year but I think gold and oil will finish higher on the year. Right now, I'm looking for a good long (multi-week) set-up in the stock market in the 2nd quarter (which could start sometime in March).

 

[formikatrading]

Vanzandt:

It was Jeremy Grantham. I had ignored him previously because I felt pretty confident, at the time (he typically is early on his calls), that the market was fine. Now, I'm not so sure. As always, I want to stay flexible.

I heard some old dude on Bloomberg earlier today, I forget his name but he is supposedly one of the greatest of all times.

Talked about 2 sigma and 3 sigma deviations from the trendline. Said we're in some kind of super-bubble. 100 year type thing. His foundation is short the Russell 2000. He said the biggest thing about why he was not shorting the Nasdaq was because it's controlled by the fang stocks. The Russell isn't. Makes sense I guess.
Either way, I remembered this post from late Oct. It was pretty obvious to me at the time.



4 months later:

View attachment 278589

According to this guy, there's more room to fall.
He may be right. I wonder when he jumped in.

 

[Laissez Faire]

2 weeks in a row - each closing near the week low and both making a lower low compared to the prior week. A fairly rare pattern over the last 17 years.

Each occurrence saw new lows in the week to come.

My guess is more range bound action with pressure to the down side. A dip to 4300/4280 can be a sexy long if only for a nice bounce. It may get legs, too. Only God knows.

 

[wiesman02]

Anal gap(e) down. Seriously though, I haven't seen a Sunday night gap down in a long long time. Maybe my memory is bad though.