“They say I’m crazy, but I have a good time
I’m just looking for clues at the scene of the crime.” Life’s Been Good, Joe Walsh
Can the Roadmap keep hitting homer’s?
Over the weekend we took a look at the theoretical projections for the Roadmap for the entire week.
It indicated an up, down, up, down, down week.
An up Monday proved to be a remarkable forecast. In fact Monday was a powerful Gap & Go up 92 points on the heels of Friday’s breakdown.
A stunning call by RM.
Tuesday we got a down day.
Wednesday’s forecast for another rally played with a 45 point SPX closing rally.
Thursday and Friday are projected to be down days.
One of the reasons that is interesting is the DJIA daily below that shows a turn date of August 7th.
The brown line shows the triple top for the DJIA at the red down arrows.
The prices for each high are listed and each successive high is a lower high.
The Rising Wedge Pattern shows it was broken last Wednesday. Price advanced to fill the gap.
The apex of the Rising Wedge pattern meets on August 7.
I have no idea whether this will be meaningful, but the confluence bears mentioning.
Keep in mind with all the fireworks on the tape, the DJIA has not eclipsed its December 4 all-time high of 45,073.
You may take that in stride, but if you had been told in December about the vertical moves that were ahead in marque names, I don’t think you would have bet $1 that the DJIA would still not have struck a new high.
Never say never when it comes to Mr. Market.
I can’t help but wonder that when the DJIA finally scores a new high that it will be the end of something , not the beginning.
Indeed a new high on the DJIA will complete a possible Megaphone Top pattern.
Below is an hourly SPX with a wave count that I created on August 5, prior to Wednesday’s fulfillment of a strong rally by the Roadmap.
Yesterday may have completed or come close to completing 5 waves up in a C wave of an A B C corrective rally.
The A B C corrective rally is part of a corrective wave 2 countertrend rebound following the sharp wave 1 down off the all-time high.
If correct, the next downturn will be a powerful wave 3.
In the context of the sharp drop for wave 1, wave 3 should surprise most market participants who assume that Buy The Dip is in charge.
Not show is the 20/50 moving average Bowtie which is situated at 6325/6330 currently.
Breakage below the Bowtie opens the door to 6305 hourly support and my hourly Pocket Pivot Indicator.
Below that the open gap at 6250 is targeted.
In sum it’s a truly split tape,
Names like SHOP, DASH, ALAB and ANET explode on earnings while leaders AMD, CRS, STX and NRG get taken to the woodshed.
It’s a very unforgiving market—both ways.
The Three Momentum Amigo’s RBLX, CRDO and NET charged through several red ‘flags’ on Wednesday…not because they had pristine buy setups but because they are the go to names at the head of the Algomatics conga line.
If the markets not getting hit, these are the top of the list of names that get dialed in.
Hot IPO’s FIG and CRCL caught bids for a bounce yesterday.
Ditto NFLX and SPOT….two generals that have lost some stars.
Recent Snapback names, RH, BLDR and ELF look like they’re starting to roll over.
In sum, Wednesday’s market action had something for everyone while it painted a deceptive picture of strength.
The SPX gained 46 points and the NDX surged 252 points led almost entirely by oversized moves in a The A Team Megacaps: AAPL + 6.8%, AMZN +7.8%,
You can’t say ‘They’ don’t know how to ‘save the baby’.
On the NYSE declining issues outpaced advancers by 228, and on the NAZ by 167.
More tellingly 60% of NYSE volume was concentrated in declining stocks—confirming that the rally in the indexes is masking broader market weakness.
These stats suggest deterioration and distribution—irrespective of whether the SPX manages a new record high…despite the index sporting a Key Reversal Week.
The normal expectation is that clearing last week’s KRD would produce a strong extension higher—
That a weekly Keyser Soze (Reversal of a Reversal) would see bulls rush in.
But, we know that fast moves come from false moves as Mr. Market’s job numero uno is to deceive.
Tomorrow’s report will take a look at one of the mother’s of deceptive moves.