Now we are on the other side of the Gann reset, which takes place every year at the seasonal change point in March, explains Jeff Greenblatt of Lucas Wave International.
We’ve learned the ten-year note responded to the 161-day window and has turned back up at least for the time being. The US dollar did not drop even as it had nice symmetry to follow through to the downside. Kairos failures are important bits of new information as well (as Bill Williams likes to say). In this case it found a higher low at 55 hours from the prior low and it was a 55% retracement. It may have inverted and created a low instead of a high at this reset. All we really care about is the price action, but I find it curious someone might have come to the rescue to buy dollars despite all the trillions being thrown around. It is still likely a bear market rally even as we are now 360dg from the top, which manifested at last year’s Gann reset.
I’ve also been watching the NASDAQ-100 (NDX) with great interest. Last month price action could not retest the gap down when it was close and easy to do so. Right now, it was also within walking distance, yet it displayed uncommon weakness just at the point it appeared to be a no-brainer touch of the gap area. This new weakness makes the whole pattern questionable. I put up the channel line and you can see its flirting with falling back into the bearish zone.
When I talk about the economy not recovering, my comments are based on a version of "smokestack" theory. Back in the day, long-term investors used to determine the bullishness of a company by using their eyeballs to determine economic activity. If there was no smoke billowing from the chimneys, chances are the company wasn’t a good buy. It relates to the here and now. In order for the country to prosper, we need to see some fruit. While we are not a manufacturing base anymore, it would be nice to see businesses filled to capacity.
There is some fruit as suddenly traffic has picked up on the streets of Phoenix over the past 10 days. But there are still way too many problems with the risk politicians will shut down the economy again based on "variants." In my neighborhood we have a big parking lot with a PetSmart, Whole Foods, and several smaller shops. There used to be a Gordon Biersch sports bar that was packed every weekend.
The sports bar went out of business and that side of the mall parking lot was mostly empty until a week ago. Suddenly that parking lot was full. I didn’t get it until I saw they turned the Gordon Biersch building into a vaccine center and the line went around the building. A small slice of life of economic activity in one of the more prosperous areas of the Phoenix valley.
Bottom line is tech is starting to lean bearish while the bond market can recover, and the greenback suddenly doesn’t look like it wants to drop.
For our trading segment I’m going to show you how the Kairos vibrations allowed me to recognize the setup to a big move on the E-Micro. I like the E-Micro because it allows me to take greater risk with the smaller contract size in a very volatile market. I switched over from the E-mini a year ago when Covid started. The logic is quite simple. A 1% move at 30,000 is 300 points while a 1% move at Dow 15,000 is only 150 points. Surely, you can make more on the E-mini, but you can also lose more.
All it takes is one mistake to ruin your morning. This is action from the 23rd. In many cases, the big drop won’t materialize until it consolidates sideways for an hour or more. In this case we had a double high at 32,336. It materialized at 37 minutes after the hour. From there it dropped 44 points, which turned out to be a 74% retracement against the prior uptrend. Most traders have never heard of a 74% retracement. If you only know how to operate within the confines of traditional retracements like 38, 50, 61 and 78%, you are going to miss a lot of opportunities. The 74% retracement was the key that unlocked this opportunity.
Why? Look what happened. In previous posts I’ve taught you about replication. A pattern will repeat the same numbers over and over, just in a different way. In this case, the 332 pivot turns out to be 39 minutes from the :37 high (2 margin of error) but more importantly, the 73 digit is a replication of the 74% retracement at the low. Clearly you can see this turns out to be the absolute best move of the sequence. That’s because it took a while for it to set up.
Clearly, this is not the only way to prosper in trading. But the secret here is we have an edge when price and timeline up. To do well, one must have a methodology where the odds are in your favor, but you are taking the trade before it becomes obvious to the crowd. That’s the key. Whatever method you use, you must act while the risk/reward ratio is in your favor. Then you have to maintain the courage of your convictions in order to stay with the trade while the pattern grinds itself out. Let’s be clear, discerning the right time is incredibly important. Just as important is not falling into the trap of giving up a good position when the inevitable adversity takes the action against you for a short period of time.
For more information about Jeff Greenblatt, visit Lucaswaveinternational.com.