I always talk about hidden levels in the markets. They are hidden because no one sees them. They are not normal levels and that is why the move off of them can be so powerful.
Looking at the DOW daily chart the question right now is which high are we are that was in the past. If we look back at the past we can gain odds on the future. Looking at HIGH A and HIGH B I could make an agreement that the current price as of today looks like both of them. So looking back .275% has value on each pull back.
Now if you look at the high of this week to the low that was put in place after hours last night you will see that the move down stopped right at .275%.
Did you get short squeezed from the 11.16 low? Watch this video again and see how you can gain odds on the market –
This means the low that was put in last night could be the low and the market short squeezes from the close of today. If we look back the wave extended up to 1.270%. If we do that on the current wave the target on this wave is 13,601.
If the DOW does go to 13,601 it could then pullback down to 13k and then from there the monthly chart actually kicks in to the upside OR the downside. The key thing is if it went to 12,600 then down to 13k it would NOT change the bullish structure of the monthly chart.
If the monthly candle closes above DOW 13,300 then on the monthly chart we would be closing above the high of last month. We talked about the 13,300 in the webinar. The key thing will be if the DOW closes the month above 13,300 not just trading above 13,300. If we do get a monthly close above 13,300 then there could be a short squeeze and the market bypasses to correction back to 13k in scenario #1
The DOW holds the high of this week and pulls back to 12,800 and makes support. From there it either breaks support and the market is in big trouble or it is just a higher low on the daily and the market still goes higher.
Bonus Two Hour Monthly DOW Chart Video
On QQQ we talked about how the current action could be back and forth like it was in June to July of this year. If you look at the chart you will see that the action looks very similar in the fact there is triple tops and bottoms. Even though the current action is in a tighter range it is still duplicating almost perfectly. You can look and see what happened off the triple bottom in July.
This is not typical technical analysis. This is breaking the market down wave to wave looking for it to duplicate. Does it always duplicate? No, but if you look back and see what it “Should” look like you will get odds of when it 1) does duplicate or 2) it fails to duplicate therefore giving you odds that the market will go the other way. A true trend change is when true support breaks in a uptrend , or true resistance breaks in a downtrend.
This is so much more important than any MACD with special settings or a RSI being over 80. Those things have value on certain waves on specific time frames. They will not help you know that .275% had value in the past and that the low of today was exactly at the same level.
It is almost like the market gives everyone the standard indicators to stack the odds against the trader. Think about it. How many people you know make money using them for an entry and exit? Maybe for the longer term trend a MACD has value, but it will not tell you where to get in or out, and that is what everyone is looking for. Really think about it and you will see the indicators hurt traders. Think about how everyone is looking at the same thing but they all say “if I would just do the opposite I would make money”. Really sit there and think about it and it will start to make sense.
Ok back to the point-
The point is there is a reason for the low today. Over the last year holidays have been the starting point for rallies. Today had timing low that I knew weeks ago. Timing lows usually have spikes into a low with hard action which we got last night into Friday. The monthly chart is bullish.
Ok so everything listed above is odds. Odds are odds they are not 100% but we do not want to trade against the odds. If we do trade against the odds then it is aggressive. I am not saying I wont go short but we would need a good signal.
The real value over the last 2-3 weeks is that we did not go short over and over again like so many did, hoping the market would break down. Anyone can draw in the rising wedge and dream of catching the BIG SHORT but in reality few do, why? Because they short it 100 times before the big short happens and by the time the big short happens they are not convinced it is going up and they are long from the top of the wave.
We all know that anytime they could come on TV and mess with our hard work and analysis, but we have to do the work and I want to share the work so you can see for yourself what is going on. I am not here to convince you of structure, symmetry and patterns. I did not make the patterns I am just pointing out what the chart is showing me as it goes.
Have a great Christmas!