When Different Systems Call for the Same Thing
Neely put out another public call over the weekend for a major drop in the S&P. He called for an initial violent decline to below 2200 to “jolt” the markets and establish the pre-jolt high as the top for the next few years. He says the bear market will end with a retest of 1000 three to five years from now.
It just so happens that the violent decline to below 2200 scenario is virtually required by my own charts. ES is working on the blue and red megaphones on the daily chart above. It is redrawing the red megaphone top, which means it will need a trip to the red megaphone bottom after it completes the move out of the March 27 low.
ES also requires a retest of the navy blue megaphone VWAP at roughly 2150. And a fast move to 2150 would complete both the mandatory retrace of the orange rising megaphone and mandatory retest of the navy blue rising megaphone bottom.
The Critical Decision Point
My trading system would then require a retest of the red megaphone VWAP at 2350. From there, my system could put ES into a drop to some megaphone bottoms at 1800 and beyond or it could send ES off upwards into a blowoff top to 3000.
Neely expects the drop.
Neely put out some charts weeks and months ago that anticipated a top at right about where ES is now. My megaphone set-ups suggest a top a bit higher, and taking a bit longer to complete. But since ES is establishing a brand new top on the red megaphone, it could turn any time.
ES is retesting the top of some very long-term trading formations today (the navy blue line I keep writing about). If it gets through 2400 today, it’s recrossing that line.
The bright blue megaphone VWAP is at 2385.