Harmonic Update
There has never been a more hyper-excited market environment than NOW! Bullish readings, investor sentiment and Put/Call ratios are at historic extremes. Meanwhile, there seems to be an endless parade of stimulus money around the world. Will it ever end? I don’t think any of us want it to because that is the only thing driving the market now. More on this later but two weeks into the year, the markets remain on track to fulfill several notable scenarios. Specifically, the NASDAQ, S&P 500 and other equity-related indices are closing in on the completion of substantial extension targets that began from the lows back in March. In many cases, the 1.618 or even 2.0 weekly objectives have nearly been reached. Although this does not necessarily mean an immediate correction, we do want to begin to look for those signs of early trend changes. Other markets are clearly quite bullish and seem to be never ending in their pursuit of new all-time highs. However, even in the most aggressive market conditions it is always prudent to be considering potential causes for concern.
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LAST CHANCE – Annual Package!
Now that I have posted the HPC Course, the GOLD Membership provides the complete solution for Harmonic Traders. Along with BOTH VERSIONS of the HPC software, the Annual Package provides everything you need to integrate the powerful tools within the Harmonic Pattern Collection into your trading. The Annual Package has been extended until January 30th and then will no longer be offered. Access here:
I want to thank everyone who attended and I believe it was a positive experience worth the preparation required to produce a thorough presentation. I believe that we have an opportunity to look at specific strategies and take time to break down current examples so that the community can learn even more about the advanced signals that define the best opportunities.
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NASDAQ 100
Still targeting 13,600! Although I believed that this level would have been realized by now, I maintain that the index will hit the long-term objectives – approximately 5% from current levels. https://twitter.com/harmonictrader/status/1351200235947757570/photo/1
S&P 500
This market has continued to rally up against long-term extreme limits. The 4000 level seems to be a consensus target as well as the top-end for our measured levels that start around 3910. The Deep Crab looks like this and it will likely test the entire zone within the next 2-4 weeks.
https://twitter.com/harmonictrader/status/1351215555727011843/photo/1
We are witnessing MANY long-term harmonic patterns develop on daily and weekly charts. I recently posted AMC Entertainment (AMC) as a new speculative consideration.
AMC Bullish Deep Crab Daily
https://twitter.com/harmonictrader/status/1350168048825737216/photo/1
AMC Bullish Gartley Daily
https://twitter.com/harmonictrader/status/1350160305347833856/photo/1
(I am long the stock AND options.)
Crude Oil
This is getting interesting! Take a look at the Crude chart continuing to make progress against the long term weekly Deep Crab pattern that may stretch more towards the 60 level if we continue week over a week as we have.
https://twitter.com/harmonictrader/status/1351238844126023693/photo/1
The XLE Energy ETF has been surprising as well, and it seems to be a reversal in the works that is happening now NOT later!
https://twitter.com/harmonictrader/status/1351200506077708291/photo/1
Despite the sell off on Friday, Exxon Mobil (XOM) is one stock of several energy-related companies we have featured in recent months that is now exploding along with the sector. Marathon (MRO) is another still in recovery mode from a substantial long-term pattern. MRO has nearly doubled since we started talking about it and has room to run.
https://twitter.com/harmonictrader/status/1351200623094616064/photo/1
I believe these stocks hold remarkable potential as we need to consider a new scenario going forward where Crude Oil will likely retest pattern highs @ $60 in the next 3-6 months AFTER we retrace from the immediate Bearish Deep Crab on the daily.
https://twitter.com/harmonictrader/status/1351239264277848066/photo/1
Final Thoughts
I normally don’t like to speak about larger economic concerns outside of the charts however people must understand that a “Wall of Money” has been created in the past year. The expansion of the overall Federal Reserve balance sheet has enormous consequences for market valuations. Simply stated, the Federal Reserve dictates stock market trends based upon their policy. Let’s not dismiss the fact that they are directly intervening in the markets, buying bonds and other instruments as a means of “securing” the economy. The following chart reflects the unprecedented expansion as a result of the events of the past year.
https://fred.stlouisfed.org/series/M1
The “Wall of Money” phenomenon really started about 10 years ago after the Financial Crisis of 2008 and the corresponding remedies created – QE1, QE2, and QE3… now QE infinity. The Federal Reserve has expanded their balance sheet nearly 10x in the last 20 years! What does this all mean? As famous fund manager Marty Zweig said, “Don’t Fight the Fed“ – we can never go against the fact that this unprecedented monetary creation will flow into these markets over the next several years. I must emphasize that this will not be an immediate correlation, although we are seeing the early influence of such extreme policy. With all this being said, we need to stick to the measurements and patterns that define the framework of opportunities for all trading decisions. We will discuss these situations and update a few new opportunities tomorrow when LIVE Harmonic Trading returns at 9a EST. If you have questions, please contact me at this address.
Great Harmonic Trading to You,
Scott Carney
The Harmonic Trader Team
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