Before you start reading this week’s post, I suggest you look at the link below. It will take you to a StockCharts TV (StockCharts.com) video where the legendary Larry Williams is sharing his thoughts about two major markets Bonds and Stocks. Really useful video with a lot of trading lessons inside. Enjoy it -> https://www.youtube.com/watch?v=pOMG2-h78LE&feature=youtu.be
What Larry did is actually showing us two setups. Now it is up to us to find the entries and exits
The first one is for 30-year treasury bonds. I will not spend too much time on this because few retail traders are trading T-Bonds futures. However, he is expecting a large move to the downside here so keep this instrument in your watch list.
Having in mind that the small speculators are very excited about this market at some moment, we can expect a few large range bars to the downside which will kick most of those non-reportables out the market. After that, some form of basing will start, which will build the foundations of the next move.
The second one is for the stock market. Where we have seen another panic attack. You probably not believe in cycles or use them. But I can tell you from my experience that Larry forecasted correctly a lot of market bottoms. So when he is expecting a bottom around 12th of June, the least we can do is to look at other things, which can confirm this.
There is no change in the fundamental picture. The sentiment is getting more extreme to the sell side (where we want it to be for a good buy point). Technical analysis suggests a target area between 2730-2706 for E-minis. With VIX showing positive divergence and the stopping volume from Friday this light-yellow-green (don’t ask me how I’ve picked up this colour), support might hold next week. For an up move to start and to consider buying we need at least a single daily high breakout. The best will be to wait until the market makes a higher short-term low.
It fascinates me how the market is falling while some companies are holding their grounds :)
I’ll end this week’s piece with a specific pattern I’ve seen many times. Which shows good swing trading opportunity in Corn. Take a look at the next chart.
Based on the present volume levels and COT data, we can conclude that we are close to a top here. We can expect a week or so (see the seasonal chart) continuation of the existing upside move. Then my work suggests a move to the south. This might be a good option play because targets associated with this pattern are usually located around the previous bottom (May 2019 at 350).
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Trades mentioned here are either taken or will be taken by the author if the right conditions appear. They are NOT recommendations nor any of this constitute investment advice. Please read the Risk Disclaimer
Seasonal chart indicator by Larry Williams, www.ireallytrade.com. Charts made with TradeStation.
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