ES Megaphone Welter

ES Red Flat-Topped Megaphone

ES Red Flat-Topped Megaphone vs Blue Megaphone

First, ES has nothing that even resembles a legal top on the daily chart yet.

Second, ES is trapped in a welter of megaphones inside megaphones within its trading range since the March 1 high. No way it escapes this mess easily.

ES has a kinda sorta flat-topped megaphone on the chart (red) and has put in a false breakout through its top at roughly the March 1 high.  That would usually mean a trip down to take out the formation low (green scenario) before a breakout through the top to morph the whole mess into the blue megaphone.

Or ES could still be working on getting straight to the area of the blue megaphone top (purple scenario).

There’s a small rising megaphone on the chart out of the April 17 low that didn’t top properly with a head and shoulders inside the formation.  That would usually mean we see another stab through 2400 even if the flat-topped megaphone is in play (orange scenario).

The proper attitude toward any move within the recent trading range right now is high skepticism.  The only exception would be if a price channel meltdown sets up.  No sign of that yet.

 

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.

 

QQQ Rising Megaphone in Rising Wedge

QQQ has Formed a Rising Megaphone (Bright Blue) in its Red Rising Wedge

QQQ has Formed a Rising Megaphone (Bright Blue) in its Red Rising Wedge

QQQ is now creeping up the top of the red rising wedge it began forming a year ago.  It’s working on the top for a price-channeled move within the rising wedge, and has also formed a rising megaphone (bright blue) inside the wedge.

That blue rising megaphone counts as a way of extending the wedge.  An extended rising wedge is a strong favorite to correct to its bottom once it finally breaks down.

The rising wedge has carried QQQ to the top of a rising megaphone that began in 2010 as well as the navy blue megaphone that began forming in the summer of 2014.

QQQ needs to retrace to at least VWAP of the orange megaphone, which would take it to the bottom of the red rising wedge.  It’s a favorite to correct sooner or later to the bottom of the navy blue rising megaphone at roughly 42.

And QQQ could remain stuck in the navy blue megaphone for years to come.

QQQ Long-Term Chart

QQQ Long-Term Chart

I’ve drawn a smallish fast top on the navy blue megaphone, but tops like this can take months to form.

Note also that the green scenario is a simple, standard way for the navy blue rising megaphone to extend.  That is another trading formation that could extend for years, though usually we’d see a return to the formation bottom first.

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.