“Everything is going in the wrong direction.” Connection, The Rolling Stones
The rally from the August 5th SPX low shows a clear 5 waves up to 6017 high and 6001 close on Monday to the top of a trend channel.
While 609 (6100) perfects 3 price cycles of 360 degrees up from the 349 October 2023 low,
It is worth noting that Monday’s high represents a Time/Price square-out:
November 11th squares out with 6000.
How will we know which setup will hold sway (if either)?
The structure of the impending decline will determine whether a major top is in place.
If it’s impulsive—5 waves—below 5870 ish that is a yellow flag.
Below the trend channel which is rising but currently ties to the open gap from Nov 6th around 5780,
That’s a red flag.
Below the summer Twin Peaks is a blaring siren.
The QQQ has traced out a picture perfect 1 2 3 Bull Flag after exploding on November 6th and 7th.
It’s remarkable that the Q’s have traced out such an apparently bullish continuation pattern this week.
Why? Because it is chip heavy with names like ARM, QCOM, AMD, ADI and MU.
However, what has buoyed the Q’s this week are WDAY, TEAM, CRWD and of course AMZN and TSLA.
In sum, it’s a fragmented tape, It’s not easy connecting the dots.
On the twittersphere folks are saying throw out the techincals just buy for the next 4 years.
Is this really the beginning of a new bull run or is the Matador on deck?
We have ZS, SNOW and MDB sky-rocketing out of textbook patterns.
We have the likes of MNDY and OLED cliff-diving.
And we have earnings Roman Candles like CAVA and CYBR.
The 168/169 square-out on CAVA nailed it.
Despite hovering at record highs, market breadth painted a far more negative picture: net declines dominated, with the NYSE seeing 502 net declines and the NAZ an even steeper 1,438.
The persistent weakness in market internals, continues to deteriorate even as headline indices attempt to stabilize.
It just underscores, that divergences and persistent negative internals can persist for long periods.
They matter when they matter: time is more important than price.
What’s the connection: this is especially true at the end of the year when the Algomatics serve their masters in knowing how to keep things afloat for performance considerations.