Trends and Triangles; The outlook of 2023
Updated
So this is a longer video, as I discuss more than just the current market, but where I foresee price action heading into at least the first half of the year, and why. I apologize for the painful observance of me trying to switch around on time charts, I'm still getting used to TradingView at times and so it is certainly my issue of being unfamiliar and learning while recording.
My current trade is a short at 4013, and I had believed that the CPI data would spike us up, I didn't really see the spike on that data. Another trader mentioned that perhaps the weekly surge was a prespike on the CPI data we already had, and I can certainly agree with this sentiment. Once I was sure we were failing to get new highs, I went short.
My reasoning for going short, as stated in the video, is that our last 4hr (and 3hr and 6hr) uptrends are all lower highs and are downtrending. We've violated these lower highs for some time now, and I believe price is going to correct itself to pick up at least the 4hr downtrend now. That 4hr downtrend will likely, without some sort of spike reversal, hit around 3900. When it does hit, it will be a lower low based on the previous downtrend at 3980ish. I'll then be looking to see if the 6hr trend will also correct itself at that point.
The trends for today are as follows;
Last Macro Trend Signal Spots
30m - 3970 Downtrend (1/12/2023) Higher Lows
1Hr - 3970 Downtrend (1/12/2023) Higher Lows
2Hr - 3948 Uptrend (1/11/2023) Higher High
3Hr - 3877 Uptrend (12/29/2022) Lower High
4Hr - 3877 Uptrend (12/29/2022) Lower High
6Hr - 3913 Uptrend (1/6/2023) Lower High
12Hr - 3993 Uptrend (1/11/2023) Lower High
Daily - 3810 Downtrend (12/28/2022) Lower Low
Weekly - 4366 Downtrend (2/14/2022) Higher Low
So, now for the longer analysis. As I'm sure we've all done, we see the downtrend of the top of price action of 2022. We attempted to break that downtrend at around 4000 here and again failed (so far, and it appears we are headed south if this price action continues into the open). I believe this rally was mostly based on people who decided that they think that by year end we will be higher, and so they bought back into the market, and don't plan to trade again until the end of the year when they hope there is a moderate return on investment like normal with the S&P (and there most likely will be).
Most strong trend lines are broken within the 20-25% range of their whole. So for the downtrend in price of 2022, we started at 4800 and ended at 3600, all momentary peaks and plummets aside (I switch the line graphs to remove such clutter). The difference of the peak and base there is 1200, 25% of 1200 is 300, so therefore it is likely we can't break this downtrend in price action until we hit against it at 3900 or below. All that to be said, better luck next time Bulls.
On a more Economic Data analysis level, even with cooling inflation, we failed to make new highs. I believe fundamentally this is because at some point, the conversation is coming away from, "Zoinks, inflation and FOMC Rate Levels are driving the market!!!" to "Flustering forecasts, are we going to have a recession?!" Basically, markets have not prepared, priced in, and completely braced, for the pain that the rate hikes and slowing economy is going to have on valuations of stock prices.
Now, I am not 100% in the camp that we will make new lows. I saw a trendline that developed over a decade that went from resistance to support and hit around 3530-3550 early last year, and called for us to bounce off that price action. Well, we saw that rally occur, and it occurred off bad inflation data when there was no reason for the market to rally otherwise. Therefore, I won't see us finding new lows until we break, and hold (as in for about 3 days or more), below that line.
So in the mean time, I expect price action to range from around 3600-4000 (and the higher range is dropping as this downtrend price action continues to descend).
Hope you found the longer video and longer transcript here helpful.
My current sentiment is;
Shorter Term - Bearish
Short Term - Bearish
Medium Term - Bearish
Long Term - Bearish/Neutral
My current trade is a short at 4013, and I had believed that the CPI data would spike us up, I didn't really see the spike on that data. Another trader mentioned that perhaps the weekly surge was a prespike on the CPI data we already had, and I can certainly agree with this sentiment. Once I was sure we were failing to get new highs, I went short.
My reasoning for going short, as stated in the video, is that our last 4hr (and 3hr and 6hr) uptrends are all lower highs and are downtrending. We've violated these lower highs for some time now, and I believe price is going to correct itself to pick up at least the 4hr downtrend now. That 4hr downtrend will likely, without some sort of spike reversal, hit around 3900. When it does hit, it will be a lower low based on the previous downtrend at 3980ish. I'll then be looking to see if the 6hr trend will also correct itself at that point.
The trends for today are as follows;
Last Macro Trend Signal Spots
30m - 3970 Downtrend (1/12/2023) Higher Lows
1Hr - 3970 Downtrend (1/12/2023) Higher Lows
2Hr - 3948 Uptrend (1/11/2023) Higher High
3Hr - 3877 Uptrend (12/29/2022) Lower High
4Hr - 3877 Uptrend (12/29/2022) Lower High
6Hr - 3913 Uptrend (1/6/2023) Lower High
12Hr - 3993 Uptrend (1/11/2023) Lower High
Daily - 3810 Downtrend (12/28/2022) Lower Low
Weekly - 4366 Downtrend (2/14/2022) Higher Low
So, now for the longer analysis. As I'm sure we've all done, we see the downtrend of the top of price action of 2022. We attempted to break that downtrend at around 4000 here and again failed (so far, and it appears we are headed south if this price action continues into the open). I believe this rally was mostly based on people who decided that they think that by year end we will be higher, and so they bought back into the market, and don't plan to trade again until the end of the year when they hope there is a moderate return on investment like normal with the S&P (and there most likely will be).
Most strong trend lines are broken within the 20-25% range of their whole. So for the downtrend in price of 2022, we started at 4800 and ended at 3600, all momentary peaks and plummets aside (I switch the line graphs to remove such clutter). The difference of the peak and base there is 1200, 25% of 1200 is 300, so therefore it is likely we can't break this downtrend in price action until we hit against it at 3900 or below. All that to be said, better luck next time Bulls.
On a more Economic Data analysis level, even with cooling inflation, we failed to make new highs. I believe fundamentally this is because at some point, the conversation is coming away from, "Zoinks, inflation and FOMC Rate Levels are driving the market!!!" to "Flustering forecasts, are we going to have a recession?!" Basically, markets have not prepared, priced in, and completely braced, for the pain that the rate hikes and slowing economy is going to have on valuations of stock prices.
Now, I am not 100% in the camp that we will make new lows. I saw a trendline that developed over a decade that went from resistance to support and hit around 3530-3550 early last year, and called for us to bounce off that price action. Well, we saw that rally occur, and it occurred off bad inflation data when there was no reason for the market to rally otherwise. Therefore, I won't see us finding new lows until we break, and hold (as in for about 3 days or more), below that line.
So in the mean time, I expect price action to range from around 3600-4000 (and the higher range is dropping as this downtrend price action continues to descend).
Hope you found the longer video and longer transcript here helpful.
My current sentiment is;
Shorter Term - Bearish
Short Term - Bearish
Medium Term - Bearish
Long Term - Bearish/Neutral
Note
All of the Earnings were not great. Even the ones who made Earnings have poor forward guidance because of recession fears.Note
Hmmm... bit surprised by the bounce back today, likely going to let things continue and see how they go by the end of the day.Note
I was going to record a new idea, but honestly, nothing has really changed in my assessment. There is not any incredible Economic Data this week, though a few decent points to look at. Earnings season is coming upon us here, mostly starting with financials.Ultimately I am still waiting for us to correct our violation of the 4hr/6hr lower high downtrends. We didn't just recently violate it, and we have heavily violated both that I think they will demand some counter movements down to collect those trends at this point.
Note
So to update on this downward movement. We have solidified the 1hr, 2hr, and 3hr downtrends here that closed at 13:00 eST. The 4hr hasn't quite popped yet. I was expecting it to hit lower, but it'll probably show up here soon. Looking then to see if we make a 6hr downtrend or not, but I might cash out at the 4hr downtrend depending on how it looks.Note
So we've reached both the 4hr and 6hr downtrends here at 3944. I've decided to wait to cash out, but if it begins to move back up I'll be exiting.Note
On second thought, I've decided to cash out when it hit 3943 and reanalyze for a next move. This was a $3500 move, and that satisfies my goal for the week with an extra $1000. There is a bit of mix in terms of trends at the moment, and I'd rather take profit and wait for a clearer picture.
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