It has been an interesting few years in the markets. One of the hottest bull runs coming off the Pandemic lows to a 7 month bear market in 2022, followed by another epic bull run! We are now at a major decision point for markets. Up or Down! Recession fears abound while small caps are ready to pop waiting on rate cuts. The S&P as lopsided as ever with Mag 7 carrying the entire index for 2 years. Where are we going next?
At every "potential" market top, the convergence between an ascending channel meets a potential descending channel forming a diamond shaped pattern. This pattern is the indecision point of any given market, but don't get bearish yet. A diamond reversal pattern can break in either direction, reversal or continuation.
I have documented both the historical moves and the future potential paths. Remember that markets are not pre-ordained to do anything. They have to make decisions, and while you may have already decided your personal view, you can let the market confirm your biases one step at a time.
React! Don't predict!
1) Halfway mark from 10/23 run to $6000 target
-4/19 bottom starts 2nd leg
-Bull Flag Consolidation
2) Diamond Reversal (Minor)
-Rate cuts? Yes/No
-And Why? Economy vs Inflation
**Upside Breakout on 9/13
3) Rate cuts hinted for Sep FOMC
-Halted 38% run from 10/23
-Halted 62% run from 10/22
4) Required drop to form minor/major diamond of indecision.
-Blamed on Japanese Carry Trade*
-Note the drop is perfect 78.6% retrace from 4/19 Run
*Japanese Carry Trade margin collapse was instead caused by formation.
**This was also opportunistic early rotation into treasuries.
5) Bullish rejection of minor diamond
-Resilient CPI and Jobs provide cover for soft landing narrative.
-Note the rejection confirms on diamond neutral line @ 38.2% 4/19 fib and healthy 20WMA bounce
6) Rate Cuts!!!
-Rate cut odds are near equal between .25 vs .50
-Note a rejection confirms Double Top
-Breakout confirms $6000
7) Blow off top!!!
-Note the identical pattern to 2022 top
*The Ancient Trendline is based on a back-dated creation of the S&P 500 by Standard & Poors as the index was founded in 1957
8) Bullish Ascending Channel starts in Jun-Oct 2022
-A short break here confirms new bearish descending channel and major diamond reversal.
-This will be your bearish hint towards bearish 2025 but don't short yet!!
-No break confirms ascending channel but EOY will give one more opportunity for a break.
9) End of Year typical Tax Loss Harvesting, Santa Rally, etc.
-Unlikely to see a bullish breakout here
-If Continuation occurs, it will be Jan into Feb
10) Last chance for Bears!
-Need bearish breakdown to confirm both diamond and descending channel
11) Descension confirmation marks several opportunities on path down for bullish break outs
-Initial Support @ $4800 (20% drop from top)
-Secondary Support @ $4450 (25% drop from top)
-Massive Support @ $4144 (30% drop from top)
Best of luck in 2025 whatever you decide! Game on!
At every "potential" market top, the convergence between an ascending channel meets a potential descending channel forming a diamond shaped pattern. This pattern is the indecision point of any given market, but don't get bearish yet. A diamond reversal pattern can break in either direction, reversal or continuation.
I have documented both the historical moves and the future potential paths. Remember that markets are not pre-ordained to do anything. They have to make decisions, and while you may have already decided your personal view, you can let the market confirm your biases one step at a time.
React! Don't predict!
1) Halfway mark from 10/23 run to $6000 target
-4/19 bottom starts 2nd leg
-Bull Flag Consolidation
2) Diamond Reversal (Minor)
-Rate cuts? Yes/No
-And Why? Economy vs Inflation
**Upside Breakout on 9/13
3) Rate cuts hinted for Sep FOMC
-Halted 38% run from 10/23
-Halted 62% run from 10/22
4) Required drop to form minor/major diamond of indecision.
-Blamed on Japanese Carry Trade*
-Note the drop is perfect 78.6% retrace from 4/19 Run
*Japanese Carry Trade margin collapse was instead caused by formation.
**This was also opportunistic early rotation into treasuries.
5) Bullish rejection of minor diamond
-Resilient CPI and Jobs provide cover for soft landing narrative.
-Note the rejection confirms on diamond neutral line @ 38.2% 4/19 fib and healthy 20WMA bounce
6) Rate Cuts!!!
-Rate cut odds are near equal between .25 vs .50
-Note a rejection confirms Double Top
-Breakout confirms $6000
7) Blow off top!!!
-Note the identical pattern to 2022 top
*The Ancient Trendline is based on a back-dated creation of the S&P 500 by Standard & Poors as the index was founded in 1957
8) Bullish Ascending Channel starts in Jun-Oct 2022
-A short break here confirms new bearish descending channel and major diamond reversal.
-This will be your bearish hint towards bearish 2025 but don't short yet!!
-No break confirms ascending channel but EOY will give one more opportunity for a break.
9) End of Year typical Tax Loss Harvesting, Santa Rally, etc.
-Unlikely to see a bullish breakout here
-If Continuation occurs, it will be Jan into Feb
10) Last chance for Bears!
-Need bearish breakdown to confirm both diamond and descending channel
11) Descension confirmation marks several opportunities on path down for bullish break outs
-Initial Support @ $4800 (20% drop from top)
-Secondary Support @ $4450 (25% drop from top)
-Massive Support @ $4144 (30% drop from top)
Best of luck in 2025 whatever you decide! Game on!
Nota
**Hover over numbered notes on chart to see analysis details step by step
Penafian
Maklumat dan penerbitan adalah tidak dimaksudkan untuk menjadi, dan tidak membentuk, nasihat untuk kewangan, pelaburan, perdagangan dan jenis-jenis lain atau cadangan yang dibekalkan atau disahkan oleh TradingView. Baca dengan lebih lanjut di Terma Penggunaan.
Penafian
Maklumat dan penerbitan adalah tidak dimaksudkan untuk menjadi, dan tidak membentuk, nasihat untuk kewangan, pelaburan, perdagangan dan jenis-jenis lain atau cadangan yang dibekalkan atau disahkan oleh TradingView. Baca dengan lebih lanjut di Terma Penggunaan.