The US stock markets fell for a second consecutive month and had a tough week what is problematic, at least for early November. Pick up in volume points to more downside in store and there is indication that the Institutions exit this market, especially the Big Tech`s.
Collectively, with the charts are on the cusp of more downside risk and the many variables going into next week given the uncertainties surrounding the US elections the broader markets are not looking constructive, yeah, have rather even charged themselves so massively negative that even the smallest spark should be enough to plunge them into the abyss.
Here’s the breakdown of what could happen besides the large swath of price movements as volatility is elevated and markets hang around at their main supports.
Today I would like to forecast the NASDAQ-100 & the S&P 500 with the help of their emini futures contracts.
Let's start with the NASDAQ-100 emini (NQ #), because it is currently once again the most important US equity index when it comes to the short and medium term signaling.
In order to understand the tremendous scope of possible triggered signals for the coming week, we first have to take a small step back and familiarize ourselves with the big picture of the US stock markets.
This and the next monthly chart of the NQ # show the closing price of the market on August 28, 2020, shortly before reaching its all-time high (ATH), which was traded at 12465.25 on September 2.
Among other important stuff I have sufficiently analyzed these two charts in connection with the then monthly counts of the NQ # in the issue of the free GUNNER24 Forecasts of August 30: "4 Red Flags that can cause the US stock markets to collapse NOW!" - click here on blue to re-read.
Late-August the GUNNER24 Method gave an impressive warning and raised 4 deep-Red Flags that there is danger of the next MAJOR US stock market highs as time meets price and US stock markets could find their next MAJOR highs and perhaps even FINAL YEAR HIGHS within the next 10 days.
As well-trained time traders, the concept is extremely important to us, that when the price factor and time unite, extremely important turns may occur with some safety after a possibly imminent price extreme.
At that time on the NASDAQ-100 emini, SOME!!! price/time constellations have emerged which together indicated that the next MAJOR bull market top could be printed very, very soon. Namely in the course of the early-September 2020!
Within above shown monthly NQ # candlestick chart we recognize the MOST IMPORTANT upleg counts of this NQ # secular bull market that started at the 2008 Bear Market Low. The first long and relatively flat major upleg of this secular bull market lasted 88 month candles and this obviously repected the 89 Fib number.
This wave found major important higher bull market low at final low of 2016, what is the starting point of the second, steep major upleg – onlookers in the future may call it "Trump-Bull-Market" – what with the September 2020 is at month candle # 56, what is of course 56 - 1 = 55 Fibonacci number.
The major upleg 2016 Low to 2020 High splits into a first 35 = 34 Fib number + 1 months lasting cycle what finally bottomed at famous 2018 Xmas next higher major important bull market low and ...
... the bull market upwave from 2018 Xmas Low into then August 2020 alltime-high. The September 2020 included the count is at 22 - 1 = 21 Fib number.
==> As markets have inertia and know about the Fib numbers – especially the Algos ... – the foundations were laid for important highs in the month of September. Highs that would either have to trigger a sustainable sideways trend or could also trigger a new longerterm bear market = according to traditional chart technique a decline of at least -20%.
Let's jump into the present and continue with the NQ # for now. What is the status of its current signal situation? What chart pattern has developed since the September-ATH. Where is its next important sell-short level one has to watch and what probably will be triggered in the next wild US election week. What could happen throughout November, where a multi-week sell-off is in the cards!?
Remember: ==> The markets have inertia and know about the Fib numbers – especially the Algos ...
... what often leads to a major trend change ...
One important secular bull market cycle started at # 1 // final low of 2018.
The above at # 1 // 2018 important higher secular bull market Xmas low anchorable weekly 31/32 Candle GUNNER24 Up shows that this sustainable to the 34 Fib number oriented initial up impulse formed natural initial resistance at lower line of 3rd double arc. There the price topped after a 89 weeks long uptrend 100% accurately into ATH.
The ATH price came in at price/time magnet and this changed the trend from up to at least sideways (Triangle) or from up to down.
A bull market cycle what presented above average bullish and exactly topping after a 89 Fib number run exactly turning at a circular natural GUNNER24 Arc Uptarget/Natural Resistance allows a MAJOR bull market high is finally set with printed ATH, what might be followed by a monthslong downtrend or sideways cycle or even a +1 year long bear market.
Watch that lower line of 3rd is EXACTLY defined resistance arc as there a negative backtest occured at the lower October high compared to the September # 89-ATH. Dark-red resistance squares.
This lower line of 3rd is confirmed falling ATH resistance arc, so it is at same time a combined yearly and weekly resistance arc.
This arc triggered a probably monthslong topping process.
Watch also what is the strongest main support of the bull market cycle starting at # 1 // 2018 Xmas low what is the 1*1 Bull Market Angle that was again successfully tested at this past week Friday low and triggered the sharp bounce into 11089 pts week close.
Before that the 1*1 Bull Market Angle was successfully tested 6 week candles ago at so far printed Triangle correction lows, I`ve highlighted with the dark-green support square.
==> This above 1*1 Bull Market Angle is now 2 times successfully tested rising Triangle support, but above all this 1*1 Bull Market Angle is the main support rail the entire bull market is oriented to. For this watch all the former important testing and tradings at 1*1 Bull Market Angle I`ve highlighted with the orange arrows.
Within GUNNER24 Up Setups this rule is always true: above a confirmed 1*1 Bull Market Angle support the market is always bullish vs. trading below a confirmed 1*1 Bull Market Angle the market always is in bear mode.
Or, until today the NQ # remains in bull mode as the 1*1 Bull Market Angle was again defended at # 9-low second test.
This also means IF the 1*1 Bull Market Angle fails to hold at this current test. Perhaps in course of the # 10-US election week = when Triangle support would fail to hold, the next lower confirmed natural Gann Angle support with a +80% probability has to be reached in (down) trend direction.
IMPORTANT GUNNER24 Sell-Short signal ==> If next week, the 10th of ongoing correction, delivers a close below yearslong 1*1 Bull Market Support – a close below the 10940 pts – the „Support Angle" becomes next bear target and likely has to be worked off until end of November 2020 at around 10075 pts.
Also this option might be absolutely necessary when # 10-election week ends below the 10940, when yearslong important 1*1 Bull Market Angle breaks: count on the classic backtest of the BIG ROUND 10.000 pts, now yearly support number, in course of November. When 1*1 Bull Market Angle gives way in course of next week # 10 the downtrend should run for at least 14 week candles.
When the for years upward pushing 1*1 Bull Market Angle fails to hold in course of the next few weeks we should have received an unusual strong confirmation that # 89-ATH is a MAJOR bull market top and then and there a next monthslong bear market was triggered.
Since alltime-highs the US tech indexes are working on a Triangle pattern. Such a multimonth long Triangle in the end could mean the often necessary long and above all frustating topping process which completes a Major Top when it gives way sometime in the future.
But of course there is a very good chance that the 1*1 Bull Market Angle = at same time monthslong Triangle support is getting defended again at current test. After all the 1*1 Bull Market Angle is an unusual strong rising support on yearly base that has determined and shaped the steepness of the enitre 4 years long bull market so far. And such strong behaving yearly support rails tend not to break without much resistance from the bulls. This could lead to the above drawn orange-dotted scenario.
The 1*1 Angle could support again, and keeps market from selling off hard and triggers another weekly Triangle upleg what might test the lower line of 3rd ATH resistance for the third time.
There we would get another very safe and good sell-short opportunity, perhaps due towards end of November 2020. Perhaps followed by a deep sell-off or sustainable bear market cycle within the 1*2 Angle could become important downtarget near 8900 pts for spring 2021. Then a bear market could be oriented to the 21 Fib number = maybe 21 weeks of bear market triggered after the # 89-ATH!
In any case this important Gann Angle trading rule is valid: ANY decisive weekly close below the 1*1 Bull Market Angle is the next very serious sell signal on yearly base what activates the test of the 1*2/Possible 2021 Main Downtarget Angle in (down) trend direction.
This GUNNER24 Bull Market continuation rule is also valid: A first weekly close above the 3rd double arc ATH resistance environment until end of 2020 is the next big (bull market) trend continuation signal.
Finally my view on the S&P 500 emini and what should happen if it triggers this important sell signal in course of the election week:
For this we have a look on the ES # daily chart and anchor a classic daily 5 Fib number up setup at printed 2020 Low. Also there we recognize the importance of the 1*1 Angle on price and trend. The entire 2020 rally cycle into ATH the price traded far, far above the 1*1 Gann Angle.
The downleg that was triggered at ATH and a GUNNER24 Horizontal Support first tested the 1*1 Gann Angle successfully from above at dark-green square, just for finally breaking the most important bull market support a few days later. After so far at 3198 pts cemented correction low another uptrend began what tested AT THE SAME TIME the 1*1 Angle from below and the natural uptarget of the 4th double arc. This test became very negative at printed final October high what is lower high compared to September ATH. This event is a textbook KISS of DEATH and this mostly always heavy bear stuff triggered the now underway daily and weekly downcycle.
This downtrend is obviously oriented to and influence by the downward oriented 4th double arc. Now combined daily and weekly main resistance. This is why any first future close above the strong downward pressing 4th is a strong signal that a strong daily uptrend was triggered before.
But until that joker should be drawn, the 4th offers very well predefined daily resistance lines that we have to use for sharp-defined short entrys!
Well and first the final downside break of the 1*1 Angle & second the ugly-bearish KISS OF DEATH at backtest of the 1*1 Angle at final October highs fired that the 1*2 Angle work off is an about 85% odd must have!
==> The 1*2 Angle is now activated downtarget and with high odd has to be worked off in the now running weekly and monthly downcycle.
So it should be the final outcome that the yearly horizontal support zone residing between 3215 and 3195 pts pts will give up soon. Possibly in course of the US election week.
A first daily close below so far printed 3198 pts correction low until next week Friday should be a very serious sell signal and would additionally confirm that the ES # should test back the round 3000 pts yearly W.D. Gann support number at „Already!!! activated 1*2 Gann Angle" downmagnet towards end of November 2020!
Be prepared!
Eduard Altmann