I will not be fooled into thinking that there will be no bear market like many others are starting to doubt. We finally have a nice clear higher timeframe bearish divergence seen on the 4 hours. As of this point in time the only divergences could have been seen on the 1 hr. Fed broadcast yesterday was interesting because he really didn't reveal anything that new, and still refers back to their original plans as a good plan. Note: Very interesting question one reporter (maybe wall st journal) when asked about market collapse could provide an opportunity for us to beat out some of these emerging markets in the long term economic power struggle. Watch that part of the Q&A and how Powell reacts.
I had been trading off of this purple flag consolidation period since October 16 (yes in fact before it was even tested and found supportive on Oct 29th I had already had it penciled in. Now we are coming back within its realm and are currently barely inside of it by a hair. Great time to get BULLISH because we broke through resistance and so now its support right? I think not, at least not in my book. To me, this is the confusion/ gray areas in technical analysis that is needed for institutions to get their liquidity and be able to get out of the market/and or get short. These markets are slow movers, but these past 3 months have actually been in hyperspeed compared to its typical trading ranges/volatility. If we were to actually be bullish I would heavily lean toward the need for a double bottom or something similar. In fact, to me the fact that we have had very little pullbacks within this bounce makes me assume that we will go down the same way we came up. Without a lot of relief rally/retracements. Levels are pretty easy, but timing this beast really isn't. I'm not into fractals but when figuring the timing I am more or less creating a mirror image of how it came up and giving it a little bit of buffer time in its consolidation could be a good place to start. This market will need time to work itself out so I provided a random path (charted above) that the market could take over the coming months, but there is absolutely no way to predict the timeframes with markets.
As one person said (skyman9025) on here who I must repeat, "How can we go from the longest bull run in history to the shortest bear market in history" To base our bull market versus bear market I personally am in the camp on the 21 Monthly EMA which is now below us. But being on a monthly it deserves some wiggle room and patience. It comes in at about 262. Some others like to use the 50 v 200 daily MA's and depending on which is above the other, with this technique we are still bearish as well.
Our daily stochastic is back in the overbought regions after doing a bit of a fake out the last time at this point of the bounce and how we had been living in the overbought area for so long, came out of it and came right back into with no overbought conditions just keeps ammassing more selling energy ready to release.
I have plotted the 200 MA on the 4 hr chart. So far it has done a great job at acting as resistance for price action. We will see if it continues or not. For me, the market would have to do some extreme things to get be bullish long term. It would be a start if it can comfortably live for an extended period (wks) of time within my purple consolidation flag once again and not just be a short term break and fade. I will say that this bounce has been stronger than I anticipated. But, other traders, as well as myself, assumed that we would either come short of the 260 highly watched areas or surpass them, in order to blindside them or to shake out the market participants. Now I assume was doing the shake out. We could even go up to 280 resistance, and I still would remain Bearish on this market long term. Expect fake outs, expect bull traps.. .expect to experience the ruthlessness of the bourgeoisie trying to hold onto their exclusive rights to make money shorting this market off the backs of the blue collar backbone 401ks.