{"id":113903,"date":"2017-10-02T08:46:51","date_gmt":"2017-10-02T12:46:51","guid":{"rendered":"http:\/\/countingpips.com\/?p=113903"},"modified":"2017-10-02T08:46:51","modified_gmt":"2017-10-02T12:46:51","slug":"are-the-us-markets-setting-up-for-an-early-october-surprise","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/10\/are-the-us-markets-setting-up-for-an-early-october-surprise\/","title":{"rendered":"Are the US Markets setting up for an Early October Surprise?"},"content":{"rendered":"
October 2, 2017<\/div>
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By\u00a0www.ActiveTradingPartners.com<\/a><\/strong><\/p>\n

Many analysts have recently warned that the US markets are setting up for a potentially massive correction, 40~70% some warn. \u00a0Our own analysis\u00a0has shown massive market cycles that correlate with an October market correction.\u00a0 Our VIX cycle analysis indicates that we should be expecting a spike in the VIX right now (within the next 3~4 days).\u00a0 What does all this mean in reality for the average investor?<\/p>\n

As investors, we have to determine the amount of risk compared to the amount of potential gain in any trade.\u00a0 Our job is to measure this relationship properly and to attempt to find opportunities in taking risks for an adequate amount of gain.\u00a0 Often, this business is difficult to manage expectations and presumed risk factors for traders.\u00a0 We\u2019ve been trading, combined, for over 40+ years and have learned that the markets don\u2019t always do what we expect them to do.\u00a0 A perfect example is our most recent VIX Spike call for Sept 9th<\/sup>\u00a0~ 12th<\/sup>.\u00a0 Even though our analysis was valid and accurate, we did not see the VIX spike levels we had projected to happen \u2013 such is life in the markets.\u00a0 We strive every week to deliver superior analysis, trading triggers\/alerts and daily markets updates to our clients.\u00a0 Right or wrong, we live by our abilities to call successful trading triggers and provide timely and accurate market research.<\/p>\n

Right now, a number of US major markets are setting up with divergence between price and common technical indicators.\u00a0 Because many investors fail to even review or focus on longer term charts, very few may be aware of these setups.\u00a0 Given the size and strength of the recent moves, we are not making predictions regarding the downside price potential (although it could be substantial).\u00a0 We are simply pointing out that these divergence patterns are setting up in a number of US major markets and we believe this is a significant correlation pattern of a future event.<\/p>\n

This Daily NASDAQ chart provides one of the clearest examples of the divergence patterns.\u00a0 Price has continually tightened within an upward sloping trend channel and has recently formed a bear flag formation.\u00a0 MACD has related multiple divergence tops over the past 3+ months and RSI has hovered just above 45 throughout this trend to support the upward move.\u00a0 As washout high reversal early this week would be a perfect setup for a divergent reversal. A prices spike a bit higher early this week followed by a deep market correction.<\/p>\n

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\"Chart_17-09-28_13-29-24\"<\/p>\n

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This second chart of the ES provides even further evidence of the setup.\u00a0 This chart is a Weekly ES (S&P) chart that shows the divergent price action going all the way back to February\/March of 2017.\u00a0 The cyan blue trend channel (support level) is clearly our potential downside target and the RSI is continuing to hover above 58 as this trend continues.\u00a0 Could the extended divergence be warning of a potentially massive correction?\u00a0 If so, the RSI would quickly fall to below 50 and price would attempt to retest the support channel (-200 pts from current levels).<\/p>

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\"Chart_17-10-01_ES_W_Div\"<\/p>\n

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The following chart of the INDU, again, shows the US majors are all setting up in a similar pattern.\u00a0 One can clearly see the continued divergence price pattern from early 2017 and the continued RSI support above 60.\u00a0 The confluence of these divergence patterns is causing us to be concerned of a surprise price rotation in early October.\u00a0 We\u2019ve seen what we call a \u201cwashout price rotation\u201d happen over and over in the markets near critical tops and bottoms.\u00a0 The telltale signs of these moves is extended weakness of a trend (as indicated by the MACD divergence), technical failure (which would be the resulting RSI breakdown) and a moderately high volume \u201clast price advance\u201d followed by a clear and quick price reversal (the \u201cwashout setup\u201d).<\/p>\n

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\"Chart_17-10-01_INDU_W\"<\/p>\n

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To further assist you in understanding this type of setup\/reversal, we\u2019ve provided a clear Intraday NQ Washout reversal setup for you to see what it looks like.\u00a0 This is a nearly perfect example of bigger volume and price range at the end of a trend (what we call the exhaustion move) that sets up the new bullish trend.\u00a0 You can see the NQ market had been moving lower and had been consolidating briefly.\u00a0 Just before this washout move, it appears the market was \u201cpausing a bit\u201d.\u00a0 Then, seemingly out of the blue, a big down move generated lots of renewed interest from sellers.\u00a0 Only to have that \u201cexhaustion move\u201d, or what we term the \u201cwashout low\u201d to sucker in the sellers, stop out the longs and, eventually, continue much higher.<\/p>\n

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\"Chart_17-10-01_NQ<\/p>\n

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Could this be setting up this week with an early Monday\/Tuesday washout high price rotation in the US markets?\u00a0\u00a0Could this be the setup reversal that coordinates with our VIX Spike trigger?<\/p>\n

Two items we will be watching early this week are the NQ (tech heavy and usually an early indication of any general market weakness) the XLF (US banking sector).\u00a0 The recent hurricanes and natural event disasters are surely to take a toll on the US consumer for a while.\u00a0 Recent news has suggested that consumer spending is flat in certain areas and that GDP may flatten out a bit.\u00a0 We assume delinquencies will begin to skyrocket based on displaced workers and jobs over the next 6+ months.\u00a0 This leads us to believe a market correction would be a natural, and healthy, event in the immediate near future.<\/p>\n

Markets just don\u2019t \u201cgo up\u201d perpetually.\u00a0 This recent move higher has been one of the longest in history to not see a 5% or greater correction.\u00a0 Markets need breadth in order to have healthy rotation and we are simply not seeing it recently.\u00a0 This is why we believe any rotation or correction at this time could be bigger than most think.\u00a0 Possibly retesting 2016 lows.<\/p>\n

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\"Chart_17-10-01_XLF_Washout\"<\/p>\n

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Notice the similarities in all of these charts.\u00a0 It is almost like everything has been running on autopilot in terms of price appreciation within the US majors.\u00a0 We do not have any indication of a sell trigger yet.\u00a0 We would warn investors to be cautious at this time and to protect open long positions.\u00a0 We do believe a price reversal in these US majors will begin before Oct 19th<\/sup>\u00a0and quite possibly as early as October 4th<\/sup>\u00a0or 5th<\/sup>.\u00a0 Any moderate price advance early this week followed by immediate price weakness and rotation could be the setup of a much deeper price move.<\/p>\n

If you want to continue to receive these types of detailed analysis reports, timely market triggers and analysis as well as Daily market updates, visit\u00a0www.ActiveTradingPartners.com\u00a0today and see why our members continue to value our content.\u00a0 We are dedicated to assisting you in making better trading decisions and seeing what is in the future with our detailed market analysis and research.<\/p>\n

\"RecentWinners\"<\/p>\n

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Are you prepared for the next major market move?\u00a0 If not, visit\u00a0www.ActiveTradingPartners.com<\/a>\u00a0today and see why you should consider joining our team of valued members.\u00a0 Isn\u2019t it time you invested in your future success?<\/p>\n

Chris Vermeulen<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By\u00a0www.ActiveTradingPartners.com Many analysts have recently warned that the US markets are setting up for a potentially massive correction, 40~70% some warn. \u00a0Our own analysis\u00a0has shown massive market cycles that correlate with an October market correction.\u00a0 Our VIX cycle analysis indicates that we should be expecting a spike in the VIX right now (within the next […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-113903","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/113903","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=113903"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/113903\/revisions"}],"predecessor-version":[{"id":113904,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/113903\/revisions\/113904"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=113903"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=113903"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=113903"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}