Election Projection, 2016

Trends are trends are trends, that is until they quit working - Here’s a couple possible projections of trends come election day….    Who knows….

This was a pretty fun little project and something I'll be interested in doing more of in the future. One of the tools, the Cycle Drawer is a bit tricky to fit. Things to consider are if the pullback/peaks are naturally(?) occurring or induced by some external/political event.

The YM Dow E-Mini

The Dow E-Mini

20160923 - Today was a calm day so I took up some time to sketch out the Dow YM E-Mini.

Here's a 90 Day look back that includes the Brexit Event. Prior to the Brexit, price had been stuck at this level since the 3rd Quarter of 2015 with adventures south thanks to the China Meltdown and the 2016Q1 Correction (oil wipeout).

After Brexit, price catapulted into white space between July to August, what I would call the Barnacle Island with it's own area of high volume. During the Z16 contract rollover liquidated to the top of the Brexit activity and proceeded to do business for the first three weeks in September welding together the Base Camp to The Barnacle Island.

Which gets us today, September 23 when price returned to the Barnacle Island. Technically, price can stay here until the cows come home during the upcoming elections (historians would support this), or price can continue climbing into the heavens (the commoners would love this), or price can reject life on this northern barnacle island and head back south (Fundamental Leading indicators would suggest that scenario).

Guess we'll have to watch the road from here...

The zoom out view for reference

20160921 - So the BoJ Promises to work on the Yield Curve and the FOMC...

does nothing.....

MENTAL STATE: I can do this….    Simply wait for the the congestion to settle out, for the confluence to kick in, then make the trade….

As the process gel's, my products that help me think and see are shaping up....

MONTHLY: Eight straight months of rally.    I managed to print out a Monthly MP plot showing the ES only making it back to the gap from 9/9-9/10.   If the ES can climb back over 2150, then the rally is intact, fundamentals be damned.  The NQ must have a different mindset as it’s Monthly MP still shows a strong P formation.

Scanning across the 3x3, all of the monthlys are framing long….   This initially raised question (i.e. ZB vs YM) until I found out that bonds actually track equities during period of deflation so there….

WEEKLY

The weekly does in fact show bonds framing lower.   Examination of the Equities shows that ES actually rotated lower momentarily.  Otherwise, EVERYTHING is ticking higher…

The MP version of the weekly better shows the resistance the ES must get through before the Bulls can stampede.   Also, the history the NQ has had at All Time Highs is more akin to grazing Bulls wandering slowly north with very little volume.   We will continue to monitor…

DAILY

The daily chart better shows the horizontal S/R level we have with the ES at 2155’ish that we gotta deal with.

Now “this” chart is interesting, showing that we are “still” framing lower in YM, ES, CL, NG, GC.   I believe Mr. Dow would say that the tide is long but the intermediate waves are short…

MP View

ThinkorSwim doesn’t let me see the story like this one showing the NQ in Zero G whitespace and the ES with what might be a cement ceiling above.   We will have to see…

YESTERDAY'S Price Action:

What i can’t believe is how we waited all week for this. In the morning, I had some issues with Price being either above or below the SMA 200 creating ambiguous entry and not clearing up until after the initial balance period (blue bar) which was about ½ to ¾ the typical Initial balance range   I was  able to sim some honest trades using a confluence of SMA & HVA & Charlie’s methods that was very gratifying - I’m feeling good with this setup and looking forward to taking it live.

Price during the morning was very mechanical and morning volume was 75% norm.

Then at 14:00, oil made a move that coincided with the FOMC decision for no change…..   Funny….    I score today’s moved as methodically planned with final volume at 140% versus masses celebrating wildly in the streets.

• VOLUME - Overnight was norminal, morning was at 75%, final at 145%

• POSITION/STRUCTURE - Settled nicely within the MP structure.

• Runaway / Excess / Spikes - Yes…   The overnight lows had a strong spike off defined support.  During the afternoon rally (meandering bull migration north), the MP structure was very weak and appears vulnerable to being revisited in the days ahead.

• Key levels reached - Defined support levels were used to trampoline from.  The NQ is back into white space (expect sluggish action there).  The ES rally halted at the 9/9-9/10 gap

• Pivots / Charlie’s Charts - I’m really debating throwing pivots overboard and using the other defined visual levels

• WHERE IS THE COMPOSITE POC? ES has the Barnacle Island directly overhead while the NQ is in white space.

• MP POC/VA/LOD/LOD Feature relationships (higher, lower?) - Well discussed already.
• TEMPO - Based on volume and location alone, one would call this a strong move.   I’m thinking it more of a lumbering move.

END OF DAY CARRYOVER SUMMARY:   

I think we are where we need to be….   The NQ is in white space and I’m suspecting that it will be allowed to extend the Barnacle island higher while the ES is “finally” situated in an LVA right beneath it’s Barnacle Island that I’ve felt needing filling for several days now.   While out of step, this may actually work….   

MP Lookbacks using ThinkorSwim

Everybody seemed to draw there High Volume Areas differently.   Here's how I do it using TOS...


First, I draw my HVA based on one year back (or further) if i am needing data where none currently exists -or- for where I am seeking a "market memory"...



Above the main one year HVA, you can see two smaller HVAs. For the ES, these could also be captured on the 90 day or 30 day look back...



I select a 90 day look back as that would envelope many current Equities contracts. I feel this is important for long term money revisit points whenever long time frame money feels the need to revisit old prices. In the figure below, the 90 day look back is at the top





The moderator of a trade room I visit uses the 30 day time frame for HVA's so I draw those to be on the same page with that room. Most traders I understand rarely look further back than 30 days whereas investors may. Finally, I sometimes draw HVA's within HVA's as price seems to obey such....

Valero

20160920

Valero is an issue that popped up on one of my queries - Major with low P/E

A quick gander seemed appropriate...

On the 20 year view, this issue has had quite a ride and appears to be towards the bottom of it's 20 year HVA #2 (HVA #1 is much further below)....

Zooming in on the 10 year, it appears that VLO is not only bouncing off the bottom of the 20 year HVA but also it's SMA 200.   This is a bull signal...

Zooming in closer at the 90 Day chart for a better view, we see not only how price bullishly crossed the 90D SMA 200, but also retested at $49 (the sign of well behaved price action), and proceeded long, presently at $55 (10% rally to date) with a historical level of $70 as a target. Because VLO is a refiner and a driller, this issue should not be as closely coupled to CL as would the producers....

Wondering if we missed the bus, it appears that we are at the HVA edge where price will either return to the mean, or escape and continue to rally...

Continue with due diligence - I'll report back again if I take a position or if something changes.

Bonds

"In an inflationary world, stocks and bonds move in opposite directions of one another. In theory, if inflation is rising, stock prices can absorb some inflation through higher nominal corporate revenues while higher inflation expectations drive nominal bond prices lower as the purchasing power of future coupon payments declines. When deflation is the primary concern, stocks and bond yields tend to move in the same direction as we have seen over the past several years."  Value Walk

My chart of the ZB, ZN and YM - Periods of in tandem and inverse behaviour.

20160920 - Taking a fly over to see where the 30 year is sitting...

30 Year Bonds in balance at it’s 1 year POC

3 Year View - 30 year bonds are climbing, much like the equities inferring we have been in a deflationary period...

30 year bonds - We are way above balance and trending higher...

20160919 - Monday Morning Review

Friday's Price Action:

Very Boring.   Good volume but very range bound in a jungle of support and resistances.    NQ wanted to go higher but would definitely broken the formation so price simply sat.

• VOLUME  Lighter volume than yesterday (which was lighter than the day prior)

• POSITION/STRUCTURE - NQ is up high and ES is still down low messing up uniform movements.   Waiting for a break with these two either start acting in synch or disconnect completely..   Very tightly defined D formation...

• Runaway / Excess / Spikes - We are range bound with static  levels above and below.
• Key levels reached - See prior writeup
• WHERE IS THE COMPOSITE POC?
• MP POC/VA/LOD/LOD Feature relationships (higher, lower?)
• TEMPO - Pouring cement kind of day...
• Has one time framing failed?  Watch out tomorrow!

We are unclear, undecided and weakening….

END OF DAY CARRYOVER SUMMARY:   

• Either we are going to simply sit here for the FOMC or we will have somebody move the NQ overnight to a new high, just because…
• Lots of talk on how overvalued al the equities are with mediocre growth. Watch for bubble?

MONTHLY: New Money charts

• Everybody and their brother is presently bullish

WEEKLY

YM Bear

ES Bear

NQ BUll (barely)

nQ Bear

CL Bull

NQ Bull

GC Bull (barely)

SI Bull (Barely)

DAILY

YM -6

ES -6

NQ +2

LMT -24

CL -2

NG +5

GC -2

SI  -5

YESTERDAY'S Price Action:

Very Boring.   Good volume but very range bound in a jungle of support and resistances.    NQ wanted to go higher but would definitely broken the formation so price simply sat.

• VOLUME  Lighter volume than yesterday (which was lighter than the day prior)

• POSITION/STRUCTURE - NQ is up high and ES is still down low messing up uniform movements.   Waiting for a break with these two either start acting in synch or disconnect completely..   Very tightly defined D formation...

• Runaway / Excess / Spikes - We are range bound with static  levels above and below.
• Key levels reached - See prior writeup
• WHERE IS THE COMPOSITE POC?
• MP POC/VA/LOD/LOD Feature relationships (higher, lower?)
• TEMPO - Pouring cement kind of day...
• Has one time framing failed?  Watch out tomorrow!

We are unclear, undecided and weakening….

END OF DAY CARRYOVER SUMMARY:   

• Either we are going to simply sit here for the FOMC or we will have somebody move the NQ overnight to a new high, just because…
• Lots of talk on how overvalued al the equities are with mediocre growth. Watch for bubble?

OVERNIGHT ASSESSMENT

Well I’ll be a monkey’s uncle, Europe took the NQ to All Time Highs and the ES towards the upper end of it’s LVA zone that was needing to be filled.   Structurally, these two markets are still out of synch so I’m thinking that they’ll simply fill in these two areas (after a possible gap close perhaps) while waiting for the FOMC announcements this week.

I the readings, picking up how people are pondering markets under a Trump Administration….

• G. OVERNIGHT INVENTORY  from yesterday’s settle:is __x_ Long ___ Short ___ Neutral Approx 65%

See counter auction relative to overnight inventory to rebalance.

Extenuating circumstances:

• H. ARE WE GOING TO OPEN IN OR OUT OF BALANCE AND TO WHAT DEGREE?
• ___ In _x__ Out ___ Near extreme of balance

CARRY OVER CONCLUSIONS

Expecting a possibly opening liquidation break to close the gap, then to trade in the globex range while waiting for FOMC.