US and Euro stocks mounting one more rally before crashing?

Typical! I'd've been stopped out anyway on my short. Poor data out of the US, but enough of a catalyst to send the markets down 1000 pips or more? Time will tell.

Exit +140

I had supports on 1h at 978. But if that breaks, then at least Pivot and most likely back to 880-900.

My feeds are not clean. Got "news" gaps on dow, likely to be revisited, or even higher if dump and pump but decent profits taken already. Still have a bit of dow, and a dax from top. Gold is cut partially too. Now it's just waiting.

One can't ignore a CAD/JPY at this level. Gave the risk-off clue for news time.

I entered another short at 011. Will see with this one. Off the 7sma of 10m

Closed all dow. Tempted to buy a retrace.

Exit for 50 on that one.

Not sure it's a good idea to buy any retraces just yet. This sell off on the Dow could turn into a powerful wave 3 down - in which case these early retraces could turn out to be very shallow.

I am grateful to parisboy for inspiring me to explore the multi-scale nature of the markets.

And to cat for hosting this thread. Thus this post.

Here's an example of something I discovered, which was helpful today.

The drop in the Dow came off a downward sloping 256 period linear regression line, and ended at the lower two standard deviations band of the 64 period linear regression line. This is an hourly chart.

Indeed, patience is Queen.

I do not know much about MA or linear regression but enjoyed a quiet and clear retrace to finish the week.

1. supply flushed with immediate return and break north
2. accumulation to absorb supply from the sellers orders block on the left.
3. Further breakout north, return to the source of the move up in form of a flag, more accumulation.
4. final push up to targets, all tp hits.

Have a great weekend all.

EDIT: added a final scalp south for +50. Hidden in plain sight!

Just like to say a big thank you to all of you for the recent, always informative, intelligent and objective posts, because I was a lone voice here on this thread for quite a while ( except for good old tomase who kept me company ) and I was beginning to wonder why I bothered continuing to post, but not now.

So, we have our Dow doji, the first negative weekly candle for over two months, right up at the level I have considered critical for quite some time.

For those who have been followers of this thread, you'll know how we were pretty excited about the massive weekly shooting star 1st-8th October, followed by a fall of almost 5000 pips, and also the two pullbacks which we also plotted before the price collapsed down to its weekly 200ema. Now this weekly doji, at this level, is also cause for a wee bit of excitement.

A candle in isolation is nothing to get excited about, but I will tell you that for the October fall, my weekly moving averages were in semi bearish formation. What I mean by this is A,B,C, so in the correct order, indicates maximum bullishness, or no change. However in October last year, B had got above A, with C, still lowest. This is a sell signal combined with confirmation, which we had with very powerful diversion, and , that shooting star. Now however, my B and C moving averages are up there together, right on top of the price. It is the strongest sell signal I can have on any one time frame. Combined with this doji, and a head and shoulder pattern, and we have the potential for some very big selling just round the corner.

Move up another time frame, to the monthly, and all my moving averages are in order, ABC, so, this could, and might, override the weekly configuration. Leading up to the 2008-9 crash, my monthlies were in their most bearish configuration, not as they are now. It is this which leads me to believe that the ' Big one ' is not due, not yet. That will most likely be next year the way I see it atm. We could however be on the cusp of another significant fall.

Many of you will know this of course as you have your own methodology, so I apologize if it sounds like I am trying to teach my grandmother to sucks eggs. I'm just voicing my nonsense for all who are willing to listen.

Catch you all next week, and have a good one!

Medici thanks for your kind words

Food for Thoughts

"Multi-scale nature of the market " is another word for "fractalization" or "self-similarity"

In the real word it means that whatever timeframe you use for your chart - the "look and feel" is roughly the same , the patterns are the same - triangle, head and shoulders etc, cycles, waves etc

why ? because most of the time markets develops a "trend" following an exponential or parabolic growth

and Fibonacci relationship is a very close representation of such "growth"

I mean "relationship" and not "serie" because naive Fibonacci promoters sold us the "Fibonacci serie" essentializing the numbers 1, 2, 3, 5, 8, 13 etc

Fact is what is key in Fibonacci, it is the relationship between numbers. The "serie" is just one specific example : choose randomly 2 numbers, add them Fibonacci-like and after 10/12 occurences the relationship (ratio) between 2 adjacent numbers tends towards 1,618 / 0,618

Yes, exactly.


Hmm, no, not quite.

Markets don't follow exponential trends most of the time. Currency and fixed income markets are notable examples. Still, they have a multi-fractal structure. So exponential growth cannot be the explanation. The fact that equity markets exhibit behaviour that resembles exponential growth has to do with the underlying socio-economic dynamic rather than with market dynamics.

So exponential trends cannot be the explanation for multi-fractality, nor can it explain the phenomenon of Fibonacci ratios in the markets. The more relevant explanation has to do fo with the phenomenon of logarithmic spirals

Logarithmic spirals, and Fibonacci like ratios, occur in natur in many places - from romaneso broccoli in the supermarket to spiral galaxies. These spirals are but an expression of a general phenomenon - that living, and also physical, systems need to find a form that's stable while allowing for the dynamics of life and growth.

This is a more profound phenomenon than the collection of curious examples usually associated with the Fibonacci lore. At a physical level, the phenomenon is exemplified by solitons. Solitons are non-linear wave-packets that maintain their shape while moving about in their medium. This phenomenon was first observed by Sir John Scott Russell. See https://www.macs.hw.ac.uk/~chris/scott_russell.html

More recently, Chinese researchers have discovered soliton like behaviour in the collective vibrational behaviour of, among other biomolecules, DNA.

Similarly, it's the collective behaviour of market participants that give rise to a similar dynamic in the markets.

To illustrate that, one may position a logarithmic spiral, such as the one below, in a coordinate system with market sentiment along the horisontal axis, and price percentage change along the vertical axis.

The projection of the dynamic of the spiral onto the time-price plane gives rise to the fundamental 1-2-3 pattern seen in markets, and it also explains the phenomenon of Fibonacci ratios in markets. And the spiral in the pic below would actually give rise to an a-b-c move down.

That explains Fibonacci ratios, and the 1-2-3/a-b-c wave patterns found in the markets - the fundamental importance of which was noted by W D Gann.

But it doesn't explain the multi-fractality of markets. It explains the dynamics of expansion and contraction, but not what structure holds the system together, producing the phenomenon of multi-scale self-similarity.

To draw an analogy with spiral galaxies - just like the attraction of sparse matter into the galaxy provides the energy for growth, the economy provides the energy for the dynamics of markets. But the attraction of matter to the galaxy only explains growth, not what holds the structure together- which, simply put, is the law of gravitation. One needs these balancing forces for the structure to emerge.

The 1-2-3 pattern is dynamic and unstable. Natural systems are cyclic in nature. And markets do form cycles of "boom and bust". So apart from the driving dynamic of the 1-2-3 pattern, there needs to be a balancing force in the markets - analogous to the law of gravitation for spiral galaxies. And in the markets, that balancing force is related to the phenomenon of mean reversion.

More about some other time.

The sort of song I'd have posted onto my Trader's Academy thread, but as that's dead these days, let's put it here. Seems to sum up pretty well the trader's journey. We've all been there, most of us still are, but there is a way, there is a way!

Just out of interest - my spreadbetting broker has increased the spread on the cash Dow from 1.6 (last Friday) to 3.6 this morning, whilst The Dax stays at 0.8. They claim it is a "commercial" decision and in line with other brokers. Can anyone using IG or any other spreadbet broker confirm this?

Currently 2.4pts on Dow, but its still after market hours, so I suspect this will drop to 1pt on NYSE trading hours.

Dax is 1pt spread during trading hours.