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The following is a combination of an old article from 2021 and a recent bias update for 2024. The majority of my trades are intraday and these charts are zoomed out to demonstrate the 10,000 foot view or put another way how stock news is more or less soap opera for market participants and has no effect on long term market structure. Catalysts are agnostic:What does this mean? Don’t assume bullish news will produce bullish price action and bearish news will produce bearish price action. In fact it is best to simply acknowledge there is a looming catalyst and size down near the time of release. If you opt to play a catalyst with fundamental bias and ignore price action you are gambling. Example:In February 2021 I was primarily still on Reddit before branching out to Substack and published a post about the market likely heading down – This is a copy of that post from late 2021: One theme that keeps ringing through here. That (1) the market is reactive to news and (2) the view that algos drop prices cynically to secure equities at better prices. Inverted SPY questions “is this bullish?” I simplified my charts to just candles and a trend system to illustrate my point. $MMTH. This is the percent of stocks on the market above their 200 day SMA. 2/3 of stocks are currently below their 200! However SPY was just at ATH on January 2022, how can this be? The market is sick. TWO years in a ridiculously bullish market SKEWS perceptions. This happens again, and again, and again all that changes is the type of tulip. So was the market just dropping randomly today because the news of Ukraine was unexpected? Because Bullard keeps talking? of course not. Don’t mistake the excuse for the rationale. SPDR gold trust: $GLD broke out of an 18 month long bull flag today, bearish but not random. $PBT, one of many OIL trusts that have been bull flagging long before the “bad news” bearish but not random I’m on the older side and have been trading for a minute, people used to claim “IWM is the leading indicator” as far as the indices, which I believe. Here is IWM on the M1 (monthly) chart. So why is IWM currently bleeding less than SPY when it has been a DOG for the last few months? the arrow on the chart shows IWM bounced off a channel that has existed since 2012. IE it’s started to correct towards pre Covid levels. In the QQQ the 50 death-crossed the 100 on the D1 and is currently bear flagging. The monthly chart similar to IWM in beginning of January, notice where a true correction could take place with the removal of QE if it were to follow IWM’s path Here’s spy on the monthly Similar to what IWM already went through, and what QQQ is currently going through? Does this mean SPY is going to crash, I don’t know I’m not that smart. What I do know though is if it hits ATH I would be watching it like when IWM did I turned on cumulative volume to better visualize hitting the ATH on low volume. The leading index looks like Wyckoff distribution The point of this is to cast doubt that the market is as reactive to news as assumed. When stocks are distributing it doesn’t matter if the earnings were slightly bullish or bearish, the directionality is predisposed. The same goes for the indices, whatever happens has been already happening for months, the daily news doesn’t matter and the chart can’t lie, especially in regards to long held trends.
Charts can’t lie:My favorite chart from the above post is of the Qs: And an update as of this morning 18 months later: After all the FED speech, CPI data, NFP data, Ukraine news, political power shifts etc etc constantly whipping around price where did it end up? right where it should’ve if the goal was to achieve a standard correction. This is happening again:A bottoming pattern was put in last October as price reached a key target for bear rallies, the 200 week SMA. If you recall the news then was abysmal and we were having back to back 3% red capitulation days in SPY. However the chart can’t lie – below is a case for an uptrend with a bias established 100% from high time frame candles. Sentiment at time of posting:During the time of the first Reddit post referenced the market was still bullish – price was experiencing 2 years of a euphoric run. The market also had a recent large influx of newly minted retail trade experts during COVID who didn’t yet know what a correction looked like. Even within this thread itself comments of supposed price action traders dismissed the thesis as a bad idea because there was no major catalyst supporting the down turn. People who wait for catalysts are always late – always. When I say the news is manipulation it doesn’t mean the news itself is false. It means when the financial insiders leak leads to the lazy journalists who immediately publish said ideas the timing of the dissemination is manipulative. In regards to the upcoming debt ceiling don’t assume because the news is bullish or bearish that price will respond accordingly. Better yet don’t try to interpret it at all. When price hits the targets were currently tracking it is due for a drawdown correction – the targets will be outlined at a relevant time but meanwhile I caution using your personal bias and ideas about the economy or world to influence what decisions we will need to inevitably make intraday. There will be a time mid summer where the narrative will be “AI is fueling a new bull market”. No, the new bull market is being fueled by accumulation in October 2022 which needs to be distributed at a higher price. This is when retail typically buys the high and gets rugged. High time frame bias matters:Even to those who only want intraday positions and to be flat at the end of the day. Longer held swing positions should always be in the direction of the trend with pullbacks being used for positioning and counter trend trades should typically be limited to scalps. More importantly counter trend trades against a higher time frame are always going to leave your short term intraday trades exposed to the potential false breakdown or short squeeze. TL;DRRetail sentiment, online news sources and especially fintwit fundamental interpretation of bullish/bearish catalysts are at best useless and at most harmful to your bottom line. These people have no edge and it will only give you doubt when trying to make the correct decision based on price action – which is objective, statistically back tested and can’t be lied about or faked. Those who are actually moving the markets or are dialed into significant world events which will inevitably move them aren’t sharing their execution timing with us and certainly not taking cues from intraday FOX business reporting. It can be entertaining to listen to the FED talks or interpret NFP or CPI data as hot or cold but don’t hit a red or green button based on those feelings. An update for 2024: HTF BIAS — In January we looked for 5700 It was hit in July In March the bias was updated: The timing worked in July. The rationale worked with DXY. The same people telling you to short the news now are the ones who said to long the tops in 2021 or short the bottom in 2023. This isn’t their fault (unless they claim to be something they’re not) it is just an extension of fear and greed. At the end of the day price corrected in 2021 like it should have. It bounced in 2023 like it should have and NONE of the interim news changed the picture on the highest time frame. At the end of the day all that mattered was price action. Lastly here is a video in DEFENCE of the recent high time frame uptrend: submitted by /u/efficientenzyme to r/EEtrades |