Last week I pointed out that the breakdown of the top of the latest rally in the ES, 24 hour S&P 500 fugutures, resulted in a conventional measured move target of 3900-3910. We are 10 points above that as of 5:30 AM New York time.
They tried multiple times to break the downtrend yesterday and it looked like they were succeeding but then they gave up the ghost in the afternoon. Now they’re closer to another breakdown than an upside reversal. A break of the 3909 level would put the ES in a support vacuum down to around 3870, and below that, 3850.
In the even they’re able to hold here, there are multiple resistance lines overhead. The first is around 3935, and then there’s a cluster from 3853 to 3878 that would be tough to crack. In other words, the path of least resistance still appears to be down. In fact, if they do take out 3920, then the 5 day cycle projection would be around 3775, at least.
I also called attention to the fact that $57 billion in Treasury coupon paper was settling yesterday and that that should put pressure on bond prices, i.e. higher yields. Sure enough. Not only did yields rise yesterday, they broke out, signaling continuing acceleration in the uptrend. You can see that clearly in the hourly chart of the 10 year yield over the past month.
As for the yellow relic, I just hope that what’s going on on this chart for the past 2 1/2 years is a high base and not an epochal top. But there’s absolutely nothing here that says this won’t break down. The path of least resistance is down until that support line is tested, holds, and generates a powerful upthrust. If those things don’t happen, kiss this goodbye. The measured move target of a breakdown would be 1350.
As for the miners, not a good look. The GDX needs to get back above 25.45 by next week or its curtains. Curtains! I tell ya!
From the Department of BTC Leads, this is one shred of hope for the equity bulls that stocks won’t break down further here. Now, over many months, we’ve seen BTC lead stocks, frequently. But once in a while, it works the other way. So I wouldn’t hang my hat on this. I’ve never been a big believer in intermarket relationships. They tend to change over time. Trade the chart that you’re trading.
Besides, over time BTC is going to 5000 below zero.
Meanwhile, Technical Trader Swing Trade Screen picks are doing very well indeed, currently 15 picks, 15 gains, with an average gain of 6.2% on an average holding period of a week and a day. Too bad we can’t annualize that, but moves like this are few during the year. We just need to catch them, and the screens do that. They’ve also been helpful in keeping losses to a minimum in churning, rangebound markets that are meat grinders for swing trading. Taking advantage of trends and keeping loss exposure low when the market is simply churning, is what it’s about.
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- The Bond Rally That Fooled The Majority And Didn’t Help Dealers July 27, 2022
If you’re serious about the underlying forces of supply and demand that drive the markets, join me!
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