Weekend Prep 4/16

*disclaimer: Not financial advice. This is my personal trade plan only. I am not qualified or licensed to advise anyone on their specific positions or trades, I am sharing my personal opinions only. Never make financial decisions based on any information on this site or any associated platforms. Always consult a professional for investment related advice and do your due diligence*

Hello everyone! I am back in the office and excited to attack the upcoming week. Thank you again for your patience as I enjoyed a week off, newsletter updates will be back on the normal schedule going forward.

Those who have been following my newsletter over the past couple years are aware of the running joke (which is rooted in reality) that any time I take a day off the markets seem to make a huge move. For once, it seemed I didn’t miss much… finally!

Markets rejected from supply early in the week but failed to push lower with any real momentum. The rest of the week was spent in ugly, sideways, corrective chop. The character of this move fits the shallow and sideways X wave thesis. Recall from the April 5th update… “meaning this may be a correction in time rather than price (that is to say it could be an ugly rotten mess). I suspect this correction will take on a complex sideways structure on the way into demand”… While I would have preferred $ES to follow $NQ into demand, the mid/high timeframe counts were unaffected by the past week’s action.

From this consolidation I will be looking for the next expansive move. Let’s dive in…

Macro Context:

$ES 1W

$NQ 1W

• No changes to the macro count. Notice that the indices are still in a counter trend, macro corrective move within a broader correction. I’m sure you’re all tired of hearing this from me, but it remains true… These are still really poor trading conditions, stay nimble!
  
  *For those who participated in the workshop a few weeks back, compare the current macro conditions to slide 43*

Trend Analysis:

HTF

MTF

LTF

• HTF – Down
  MTF – Up
  LTF – Up
  
  No changes to the trend situation. The mid/low timeframe trends remain up as they fight the broader macro trend.

Mid Term Outlook:

$ES 1D

$NQ 1D

• I remain temporarily bullish in an intermediate sense. I expect $ES to, at the very least, reach the February highs before completing this macro X wave. I suspect the higher degree turn will begin closer to 4350-4400 as $NQ extends towards 14k.
  
  As you know, I will certainly not be attempting to catch the exact top. I will wait for a proper reversal as always; however, I will take a very cautious approach once price arrives to these major areas of interest.
  
  In the meantime… my focus is on the waves circled in orange. I have used both “(A)” and “(W)” to illustrate the structures that the indices could take higher. We could see a simple zigzag (abc) or a more complex combo (wxy). Both are equally valid and the result is nearly identical. The main takeaway is that the final leg up should unfold in a 3 wave pattern, not 5.

Short Term Outlook:

$ES 2H Primary

$NQ 2H Primary

• The short term outlook is a bit less certain, but my expectation is that price heads north sooner rather than later. The impulsive rally at the end of last week appears to be the initial move within the (W)/(A) waves circled in orange above. With 1H demand holding and LTF trend in favor of the bulls, I must give this count the benefit of the doubt. If buyers fail to hold the hourly demand zones, the following alternate counts would take over.

$ES 2H Alternate

$NQ 2H Alternate

• If bears manage to send price through the 1H demand zones my attention would turn towards the 4080/12.8k areas. In this scenario, the most recent impulsive leg up would fit as wave C within a connecting flat and $ES would sweep the lows in an expanded flat/combo.
  
  Even if this alternate does play out, my overall outlook is still to the upside. Unless something major changes, my participation in shorts will only be in the form of LTF scalps this week.

Zooming In Further…

$ES 15m

$NQ 15m

• Demand and trend are in favor of buyers to start the week. My game plan heading into the week is to hunt longs as long as trend, structure and zones continue to tell this story. If the bullish trend/zones/structures break, I will pump the breaks and enter ‘scalp or sit’ mode until the next move becomes clear.

Key Stocks:

$GOOG 1D

$TSLA 2D

$AAPL 2D

• Google, Apple and Tesla remain at the top of my ‘swing watchlist’ as they enter major areas of interest. With the indices still appearing to have some upside remaining it seems plausible, dare I say probable, that these three stocks will push towards the higher edges of these zones.
  
  When my entire twitter feed is flooded with “$AAPL breaking out of a massive bull flag” posts, I will be at DEFCON 1… maximum caution.

$DXY 4D

• Last but not least, the dollar continues to support my general thesis for the indices. A break below 101 would likely coincide with markets making that final push to supply before reversing, in line with $DXY reversing from fresh monthly demand below. The inverse correlation between equities and USD is far from perfect, but in this situation I will continue to monitor the dollar for hints and confluence.