IWM Megaphone Update

IWM Megaphone

IWM is Still Neatly Turning at the Top of its Red Megaphone & Needs a Retrace to at Least VWAP at 113

IWM is getting closer to the bottom or right side of its pink rising megaphone and that means we’re likely closing in on the dip or correction we’ve been waiting for.

IWM could put in a swoosh to its little light blue megaphone bottom any time, then put in a triangle right shoulder for a head and shoulders top before a breakout from the pink rising megaphone to at least its bottom near the red megaphone VWAP.

IWM has been turning neatly at its big red megaphone top.  It could still break through that top in the purple scenario, which would greatly raise the odds of a trip to the red megaphone bottom.

The green scenario, which is a Sornette bubble set-up, is a set-up for a melt-up to close to 200.  The light blue scenario, a Sornette set-up failure, would set up a crash to roughly 60.  The purple and orange scenarios could keep IWM in the red megaphone for a very long time.

Neely is looking for a crash or blow-off top before a crash.

IWM Megaphone Update

IWM Looks Like it will Put in the Rest of the Leg Down to its Bright Blue Megaphone Bottom

IWM Looks Like it will Put in the Rest of the Leg Down to its Bright Blue Megaphone Bottom

ES pushed a feeler through the top of the megaphone it’s been forming for a year (see yesterday’s post) but without really breaking out through the top.

And IWM looks like it’s going to continue down to the bottom of its bright blue topping megaphone, suggesting ES may have another leg down coming too.

IWM is closing in on the bottom of its pink rising megaphone, which means we’re getting close to a breakdown to at least the red megaphone VWAP.  The IWM top before that move could even already be in.

IWM could go all the way for its red megaphone bottom on this dip, but if it does it’s a strong favorite to make another trip to its top after.

And this blue topping megaphone, with its precise reverses on the red megaphone top, increases the odds of a reversal at or near the red megaphone VWAP for a breakout upwards into a 50-point melt-up.

IWM Technical Top vs Passionate Top

Crashes Don’t Start on Technical Trading

IWM Keeps Reversing on Exact Touches of its Red Megaphone Top

IWM Keeps Reversing on Exact Touches of its Red Megaphone Top

IWM keeps reversing on exact touches of its 3 1/2 year red megaphone top. It could do that all the way to a breakout from the pink rising megaphone.

If it does, the green or blue scenarios become the favorite.  Great crashes don’t start on exact reversals from important lines.

If IWM can break through the red megaphone top by enough to form a topping pattern up there, it becomes a favorite to go all the way for the red megaphone bottom after it completes a top and breaks out of the pink rising megaphone.

Potential Set-Up for One of the Great Bull Markets of All Time

Note that the green scenario’s reversal at the red megaphone VWAP would lead to either a second trip to the red megaphone top before a crash to its bottom, or a genuine breakout from the red megaphone (blue scenario) with a technical target of at least 200, and the breakout could lead into one of the great bull markets (or bubbles) of all time.

The blue scenario would essentially convert the red megaphone into a giant Sornette melt-up set-up.

I posted a few days ago that Neely is looking for a market crash.  When you have a set-up for a crash, and the market won’t crash, that’s a great set-up for a melt-up.

 

Crash Set-Ups

Neely Crash Call

IWM Megaphone Crash Set-Up

IWM has a Clear Crash Set-Up to the Bottom of its 3-Year+ Red Megaphone

Yesterday I posted that Glenn Neely has put out a public crash warning. He says the only other times he’s had this crash set-up were at the tops in 1987, 2000, 2007 and August 2015.

He said his crash call was based on current wave structure, U.S. margin debt, insider selling, overbought warnings from his Moat Index, a rising interest rate environment and the volume of new accounts being opened at brokerage firms in 2017 around the country.

Neely didn’t mention the collapse in new loans or the recent federal budget surpluses, but I’ve been concerned about those. The crash in new loans suggests a lack of new money formation. And Warren Mosler has written at length about the connection of Bill Clinton’s budget surpluses to the 2000 dotcom crash.

IWM Megaphone Crash Set-Up

And the long-term charts have great technical set-ups for a crash as well.  IWM is working on a top for the pink rising megaphone at the top of its 3-year+ red megaphone.  The red megaphone requires a move to at least VWAP when that top completes.  Neely is calling for a bigger crash, which would mean a move all the way to the red megaphone bottom. That would be the favorite scenario if IWM breaks through the red megaphone top to complete a top on the pink rising megaphone (purple scenario).

Neely is looking for his crash within the next 1-3 months.  IWM needs to work its way across the pink rising megaphone while forming a top, and that’s about how long that process will take.

ES Flat-Bottomed Megaphone Crash Set-Up

ES Flat-Bottomed Megaphone Top

ES has a Flat-Bottomed Megaphone Top on the Long-Term Chart with a Technical Target of 1200ish

ES has a series of rising megaphones in rising megaphones on its long-term chart as well as a huge flat-bottomed megaphone (red), which is also a head and shoulders with a megaphone right shoulder.  A breakout through the neckline at roughly 1800 would target roughly 1200.

Right now ES is working on interior rising megaphones (gray and navy blue) and is likely to complete a head and shoulders inside the bright blue rising megaphone before breakout.  In that case, a breakout from the blue rising megaphone would be a strong set-up to short.

QQQ Crash Set-Up

QQQ Needs a Retrace to its Silver Megaphone VWAP

QQQ Needs a Retrace to its Silver Megaphone VWAP

QQQ not only needs a retrace to VWAP of its silver megaphone, which started forming in June 2005, but also a retrace to its pink and blue rising megaphone bottoms near that VWAP.

It’s also working on the red megaphone and needs a crash to its bottom.

QQQ is working on an extended rising wedge top and is likely to complete a head and shoulders top inside the pink rising megaphone.  A combined breakout from that and the pink rising megaphone would be a strong set-up to short.

Crashes Usually Form Price Channels

A crash usually forms a price channel very close to the start of the crash. So I’ll be posting any price channel melt-down set-ups if we get one.

Better Entries

The heads of H&S tops inside rising megaphones usually form small H&S tops of their own. These are usually a terrific way to get into a crash set-up at the very top. I’ll post them if we get them.

Alternatives to a Crash

Every index has outs on the chart that could avert a crash, though every one requires at least some kind of significant dip soon. If those dips convert into more upward extensions, I’ll post that here.