All numbers refer to SPX
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Volatile and dangerous conditions continue with some extremely rapid moves in both directions.
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2022 collapses into a large T structure centered at the late January lows with projections into the early February double tops but this structure itself collapses becoming increasingly bearish with the reaction to economic and geopolitical uncertainty.
A small T forms at the deep 24 February low with a short projection for a high into 02 March and with perhaps further potential, itself starts to collapse with a Cover and Sell Signal on Friday 04 March but closing back above the Sell Signal line at end of day cancelling the Sell signal for now.
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The T volume oscillator 1 made strong Buy Signals after the important price lows on 31 January and 25 February, with the oscillator moving up through the declining cash build up lines2 and confirming the prescence of active T Structures. The structures have, however, turned bearish with subsequent price collapses, indicating (for now) that the current structure is still larger and deeper.
T Theory projects highs from the important price highs and the important oscillator highs with the amount of time spent declining from highs into important lows equal to that of the subsequent price rise.
Of course, the 24 February low may still be an important low and we may be seeing the beginnings of a new large structure under construction.
We are therefore prepared for a recovery but mindful of the potential for lower prices from this level.
1 The T volume oscillator is an indication of Buying Power within the market as a whole
2 The cash build-up line is a declining line drawn above a series of lower highs made in the oscillator.
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The weekly chart provides a bigger picture of the current Large structure centered at the March 2020 low and projected the important early January high from the price peak in mid June 2018.
The logic of the structure would suggest further highs projected from the earlier important highs in 2018 to complete the structure - but probably lower highs - in early April and mid-late May of this year. We should expect quite a bumpy ride in due course.
The bottom of the recent price rise (since June 2021) and the rising trend line would be important levels to hold if this structure is to stay intact.
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The monthly chart shows the series of Large structures that were collectively projecting highs for March and perhaps April 2022. The collapse from the New Year high is rather ominous and is suggesting that the projections came in a little early, in which case the market may now be looking for a more important low for the next larger structure.
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2022 continues with price dropping sharply from the top of a range that has become increasingly expansive since the move above 2500. With price moving within the extremely volatile range from 4100-4600 we can only assume that this expansive price action will continue - in both directions. This is a Brave New World and we should trade accordingly.
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Regardless of whether the market can move higher or whether significant lows are ahead of us, the simplicity of the proprietary price based S/T Signalling System will continue to keep us on the correct side of the market.
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In 2022, I intend to launch a Mentoring Service that will complement and expand upon the Trading the Line Subscription Service. Topics will include: T Theory, Position Trading, Day Trading, Price action, and Trading Psychology, and the intention is to provide traders with the full educational support that they may need to become successful.
If you would like to learn more about the S/T Signalling System , using T Theory or would be interested in the Mentoring Service , please get in touch.
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Be prepared for what is coming next and trade with confidence:
To receive detailed daily analysis, guidance and the updated daily Buy / Sell trigger levels being generated by the Trading the Line system before the market opens, and intra-day alerts when appropriate, please become a Member and Sign up for Alerts & Observations - includes access to Members Area, Explanatory Notes (pdf) for all of the concepts discussed, and Notes on Day Trading (pdf)
Disclaimer: This is the diary of a personal trading system, its methodology and the signals that it is producing. You are welcome to follow along but please understand that the information presented here is for educational purposes only. No recommendations are being made to buy, or sell stocks, options or futures contracts. Please consult your own financial advisor before making any investment decisions.
