Strategy and Tactics #22

We highlighted the overall timing of the market in yesterday's MarketMap™ Weekly, as well as the ContraryThinker™ publication on Substack (public domain editorial), noting the change-of-trend date that was due in the first days of April.

In Volatility Reports — our private group on LinkedIn — I continued with the suggestion that the action we saw yesterday, based on narrative, based on storytelling from the White House, was counter-trend based on market price structure. That the action would be similar to March 19th a one-day wonder.

It is worth repeating: "Traders will be looking for old-school resistance in the range from Point 3 to Point 4 on these intraday charts. That range coincides with the 38% retracement of the initial bear market leg down. Expectations are for this correction — this countertrend rally — to be over today." I clarified that, based on time, there was still some duration yet to work off. After the globex sell-off of 700 Dow points today, the market found some bids and a gaggle of buyers, giving some buoyancy going into the long holiday weekend.

The featured chart above is the updated bar chart shown yesterday across several media. It shows how resistance appeared in the range of the fourth wave from Point 3 to Point 4, retracing 38% of the decline that started from the all-time highs — that's the yellow dashed line.

Furthermore, it is textbook counter-trend rally, unfolding in a three-wave structure where wave C is approximately 1.618 times the length of wave A. That is another way to measure a counter-trend move, and it is coincidental with the 38% retracement price level.

For the old school, here's something to pay attention to: volatility models suggested yesterday, on an intraday basis, that the advance was emotionally driven — purely short covering because it registered FOMO on our volatility measurement. Ninety percent of the time, that is a high pivot. Thus far, we've seen that pivoting action unfold today, and we suspect next week will open to the downside.

Trade recommendations are pretty bearish. The precious metals will be making sense again soon. We are still expecting one more nominal new low in the current time frame, going into April 20th, plus or minus a day — which is when we think the current decline in the stock market will have a change of trend of some proportion.

Refer to the MarketMap Monthly for our general outlook regarding all the markets. We are happy, always happy, to respond to any of our clients asking for any insights regarding a market of their interest. Onshore or offshore, it doesn't matter; individual stocks, ask.