At Least We Can Rely on a Strong Domestic Economy … Right???

Stock market bulls have slowly come to the realization that the global synchronized growth that they were counting on since the beginning of 2018, has fizzled out and their only remaining hope for higher S&P 500 profits/PE multiples is the domestic economy.

Since small cap stocks in the US are widely acknowledged as the best barometer for the health of the domestic US economy, it makes sense for equity investors to pay attention to what small caps are doing here recently … let’s start with the bigger picture and then work our way down to the daily chart.

Russell 2000 Small Cap ETF (IWM) – Monthly Chart

So to me, the IWM looks to have completed a 3-wave pattern right at the 1.618x extension target back in August 2018 (ahead of the Sept top in the SPY). The move off of that possible 3rd wave high looks impulsive to me, so I think that Wave 3 to the upside is almost certainly complete. Let’s see if the weekly chart gave a complete wave pattern into that possible monthly Wave 3 high.

Russell 2000 Small Cap ETF (IWM) – Weekly Chart #1

Again, it looks like the August 2018 high completed a 3-wave price pattern on the weekly chart … that makes me completely confident that the monthly chart’s price pattern has completed and that we are now in a corrective pattern on a monthly time frame.

That monthly correction will need to make its way down into the SLOT support zone identified above, and that move lower will take the form of either an ABC or a 3-wave price pattern. Since one of these two patterns is now a certainty, traders should look for support at either the 1.272x (in the case of an ABC move) or the 1.618x level (if the move lower morphs into a 3-wave price pattern).

Where are those levels, and how do they relate to the bigger monthly SLOT support zone?

Russell 2000 Small Cap ETF (IWM) – Weekly Chart #2

Again, let me restate that I am very confident that the monthly chart has completed a 3-wave price pattern to the upside and therefore I think we need to correct that move in the SLOT support zone as drawn above … that implies that one way or another, price is going to get at least to $103.82.

I state that minimum target because if the current move lower finds support at the 1.272x extension target and “solidifies” its characteristics as an ABC move, that to me would be only the first leg of a bigger corrective pattern – i.e., price would bounce from that 1.272x level but that move higher would fail in SLOT resistance before making another move lower into the SLOT support zone.

If price breaks below the 1.272x target level at $112.87, then I would look for price to find support at the 1.618x level (or $96.41) … that type of move would be inside the SLOT support zone and in theory be enough of a correction to have completed IWM’s monthly corrective price pattern.

Even if price were to get to that 1.618x level, that does not guarantee a move back to re-challenge all-time highs, but it does imply a bigger, and a more swing-tradeable bounce for traders to enjoy.

Russell 2000 Small Cap ETF (IWM) – Daily Chart

The daily chart saw price break below its March 8th pivot low this past Friday … everything on the daily chart to me looks weak, and I think the weekly chart is driving the bus here now in the IWM. That means that the daily fib supports shown above will not hold as support and that we are going to break below the December 2018 pivot low. I would expect the S&P 500 and NASDQ 100 Indexes to follow suit as well.

The fear of missing out is likely soon to be replaced by investors’ fear of capital losses … we should be in for a fun 2nd Q 2019.

Cheers … Leaf_West

Bond ETF Update – March 5/19 …

My buddy Francisco mentioned to me today that bonds look like they are ready to move higher … that immediately made sense to me as I knew that bonds had broken out of the downward broadening price pattern at the end of 2018, and from all that I have recently been watching, US equities have run out of juice in the bounce from the late December lows.

I’m not going to put on any swing trades here in bonds yet, but when the bond ETF (TLT) gets back above the 195-min 20-ema and the 20-ema’s signal line (i.e., price gets back into a bullish position), I will just watch it a bit closer and probably look to trade it long intra-day or for a max of 2 or 3-days at a time. Here are the charts …

20-Year Plus US Treasuries Bond ETF (TLT) – Weekly Chart

Like I mentioned above, the TLT price broke out of its downward broadening price pattern in late-2018. Will that be a fake break-out? Maybe, but I think the strength shown by the Relative Strength indicator tells us to expect further strength in TLT in the weeks ahead.

20-Year Plus US Treasuries Bond ETF (TLT) – Daily Chart

So the pullback here in early 2019 has all the looks of a ABC sideways consolidation … price poked below the A-pivot low and therefore it technically has created a complete ABC price pattern. Is price finished with the C-Wave?

20-Year Plus US Treasuries Bond ETF (TLT) – 65 Minute Chart

The 65-min chart is not the best one to rely on for assessing then end to a weekly price pattern … however, all reversals have to begin somewhere. Price broke above the 65-min ATR resistance level today, so traders looking for evidence of the near-term top in equities should take heed.

Again, I think there is a good chance that bonds do well going forward here for the next several months … I do not believe that a new all-time high in bonds is in the offing, but I think that we can at least get a second leg higher out of the broadening price pattern.

So thanks again, Francisco for the heads-up … let’s see if we can make some money in bonds here over the next little while.

Cheers … Leaf_West

NQ Road Map – Jan 10/19 …

Price is getting close to a potential turning point …

NASDQ 100 Index Futures – 60 Minute Chart #1

Sometimes trying to guess too early the shape of a corrective wave can cause you to draw the right conclusion. Typically I like to see a break of the 60-min (or 65-min if using TC2000) ATR levels before I begin to try and count waves to see if a wave price structure can be determined.

The 60-min ATR support for the NQ was broken today so I am now updating what I think the wave count is most likely for this bounce into SLOT resistance.

As you can see, price is just above the 1.272x C-wave extension target and below the upper level of the SLOT (i.e., the 78.6% level). Note that this is also very near to the median resistance/support line of the broadening price pattern I have been following for the NQ futures contract.

From a time perspective, the C-wave will be equal to 100% of the A-wave on the 3pm-4pm candle today (January 10th) … so to me timing and price finding resistance in the SLOT here makes sense.

Now all I really need is to see if I can see an obvious conclusion to a smaller wave structure (i.e., the waves inside of the final C-wave move higher).

NASDQ 100 Index Futures – 60 Minute Chart #2

To me it looks like we could be making the typically expected 3-minor wave C-wave … the high of my 2nd wave is 6645.00 – the high so far today is 6628.25.

One thing to keep aware of is that waves in smaller time frames often fail to complete, in part, because of the stronger forces of the bigger time frame price structure. What I am saying is that if price fails to make a new minor 3rd high for the C-wave, it is still possible that the move higher was actually completed today with that failed iii-wave.

Bottom Line … maybe the bad retailer announcements today along with American Airlines taking down estimates are enough to cause price to fail in the last little leg higher. Be prepared for anything.

I have not seen anything to make me think that my bigger wave count is incorrect, so I am still looking for resistance to take hold.

Cheers … Leaf_West

The A-Low is In for the NQ Futures …

At the close of the 195-min candle at 10:15am eastern today, the futures chart that I am using to trade the direction of the NQ during the corrective move I last posted on this past Saturday broke on a closing basis, the ATR resistance level.

To me, that ATR break allows me to mark an A-Wave low in the NQ’s ABC corrective pattern I am anticipating.  I have adjusted my timing and retracement charts to that new low.  Here are the NQ charts from this past Saturday’s post (click here to read that entire post) …

NASDQ 100 Futures – 195 Minute Chart (from Saturday Oct 27th)

NASDQ 100 Futures – 195 Minute Chart (from Saturday Oct 27th)

NASDQ 100 Futures – 195 Minute Chart (from Saturday Oct 27th)

Here are the updated charts for the action this week …

NASDQ 100 Futures – 195 Minute Chart #1

NASDQ 100 Futures – 195 Minute Chart #2

Note that I am now looking for some chop in the price action to show me that price has accepted the ATR break higher.  The timing windows are approximate, but the B-Wave high is scheduled for the day of the US mid-term election (Nov 6th),  The C-Wave low, bigger support for this corrective pattern is for Nov 15th around mid-day.

Cheers … Leaf_West

 

TSLA Update – March 16, 2018

I last wrote about my short in TSLA on March 1st (click here) … I still have my September monthly TSLA $350 Puts and I continue to write OTM puts and calls while I wait for the real big push lower down into the next obvious level of support.  Here is an update of the charts.

TSLA Weekly Chart – as posted on March 1st

TSLA Weekly Chart – current

The weekly chart has not really started its next major push lower yet, but this week’s candle will be making a new lower low out of the consolidation activity since that March 1st date.  The daily and 195-min charts look like the next expansion phase lower could be happening once we get the March monthly OpEx behind us.

TSLA Daily Chart

You can see that the daily ATR support price is at $324.06 … TSLA is trading today below the $323 level so it is likely that the daily ATR support level is going to be broken with today’s close.  The R/S indicator also looks like it is going to give a sell signal some time in the near future.  I like to see price and relative strength confirming each other.

TSLA 195-Minute Chart

None of the operational data that has been announced this month has really supported an operational turn around at TSLA … lots of senior management have recently left TSLA and that typically is not a great sign/signal for bullish equity investors.  The next major event for TSLA will be the quarterly auto sales figures … they are typically released within the first 5 days after the quarter ends, so that should make the start of April a pivotal one for the battle between the bulls and the bears in TSLA.

Cheers … Leaf_West

Possible Weekly Pivot Reversal Candle in TSLA??

I have been waiting for the right time to begin shorting TSLA again, and today is the day where I decided to begin.  Here is how TSLA’s weekly chart looks to me …

TSLA Weekly Chart #1

The weekly chart has been in a position of ATR resistance for quite a while now … while that has been the condition, relative strength vs the SPY has made a nice looking bear flag or pendant/wedge pattern, and  money flow continues to leave TSLA.  I think this week has a nice chance to be a pivot candle for price to begin heading lower in earnest.  The early February weekly candle was the warning shot and I was waiting for a failure bounce to the upside to begin a put position and begin getting more active at shorting the stock outright (especially intra-day).

Price has hugged the median line from the broadening price pattern and to me it looks like we could be about to break lower and head down to the lower support line as a first real support level.

TSLA Weekly Chart #2

So price made a nice bounce right into the SLOT resistance zone and now it is likely, in my eyes, to begin the next leg lower.  Will that be the “C” wave of an ABC correction pattern, or will it be the next major leg in the death knell of TSLA, i.e., the 2nd wave of a bigger 3-wave pattern.  If it is just a ABC, then price will likely find support around $265 … if it is a bigger move lower, then $230ish is the likely bigger support level.

TSLA 195-Minute Chart

We didn’t go on to make a new higher high before we look like we made a second break of ATR support … this is the “double-crossover” I like to see when trying to catch inflection points.  The 195-min candle closed a couple of minutes ago and it is still holding on … the next candle closes at today’s cash market close (4pm – $336.10).

TSLA 65-Minute Chart

The 65-min chart is in the position of resistance now and Tuesday’s high ($359.99) will not be broken if my price structure read is correct.

Nothing in my following of TSLA’s fundamentals makes me think that we are going to see a great 2018 operationally, so this could very well be a pivotal year for TSLA’s stock price.

Cheers … Leaf_West

AAPL … Looks like a Year-End Ramp Job!

Today is the “triple witching” expiration date where index options and futures expire along with stock options.  Once we get this behind us, institutional managers are free to ramp their favorite stocks into year-end.

One of the stocks that I own call options on into Dec 29th expiry is AAPL …

AAPL – 195 Minute Chart #1

To me it looks like the third wave of a 3-wave price structure is about to officially break the ATR resistance level and “signal” the beginning of the final push into year-end.  $180 is my target … the market likes nice round numbers in part because of stock option strike prices.

AAPL – 195 Minute Chart #2

The Trend Strength histogram looks like it has completed the majority of its consolidation/pullback into the Chop Zone, and that should allow price to make its next push higher.

Price Momentum and the Moving Average Spread Indicators look like they are in a good position as well to get long AAPL into year-end.

Bottom Line – All that we need now is for Trump to not fuck up the last push into year-end!!

Cheers … Leaf_West

GS Update – December 14, 2017 …

My favorite Fast Money talking head, Dan Nathan talked about GS on today’s show so I called up my bigger broadening price pattern to see if I can see the bearish outlook that Dan sees …

GS – Weekly Chart #1

Price is back testing the upper resistance line of the broadening price pattern on the GS weekly chart … with the strength shown in that kick-off move, I would have to assume that price is going to push to new highs.  Question is whether or not we can go much higher if the overall market has any kind of a hiccup during early 2018.  I ask that because of my post yesterday that talked about the extreme trend strength warning on the S&P 500 Index (the first since July 1995).

GS – Weekly Chart #2

All of GS’s weekly chart indicators are pointing higher …

GS – Weekly Chart #3

And it looks like the R/S is about to break out of a consolidation pattern … I love when it does that!!

GS – Weekly Chart #4

I have an audio alert set to warn me when the R/S indicator makes a break higher …

Cheers … Leaf_West

CRM Update – December 13, 2017 …

One of the issues facing traders right now is the pending holiday season which typically sees less active markets.  That lack of conviction or volume in trading can often bring about “fake” movement in stock prices and that can lead traders from getting sucked into getting involved in a longer-dated trade when they should be holding off and waiting for more confirmation.  Is that the case here in CRM? Continue reading

JPM Update – December 11, 2017

One of the best things traders can do as the day winds down is to look at the 30-min charts to see which stocks are setting up for a possible expansion push higher the next trading day.

One of the stocks I noticed today that could be a stock in motion tomorrow is JPM …

JPM – 30 Minute Chart

Maybe tomorrow it coils even tighter, but the two biggest stocks in the XLF Financial Sector ETF (JPM and BRK.B) look like they are coiling and getting ready to make an expansion push higher.

Cheers … Leaf_West