Source: slopeofhope: ES Quantitative Analysis | Slope of Hope

Very brief post today, just to provide some market direction guidance.

It seems that everybody is betting on typical zigzags that see a market bounce and then go down again (see below).

What is the problem with the above?

Simple: it’s a FANTASY.

We are not saying it cannot happen.

We are saying: let’s have a look at the odds (below).

The WEEKLY odds at 1763 are still 90.32%, these are extreme odds. It means: go LONG, no matter what.

Our reasoning is very simple: the WEEKLY time period is like an elastic rubber band: if it stretches to certain limits, it will go back to an homeostatic state (not stretched). In fact, the imminent bounce we hypothesized on Monday may have finally started.

The MONTHLY at the 1765 level is kind of supportive of our theory: 33% odds, which is not incredible, far from it, but at the next level, 1718, the odds MONTHLY are 53%, which means between 1765 and 1718 the market has odds between 33% and 53%, make it 40% to make an average.

Plus you can add to this the fact that the market is closing down 4 weeks in a row, TIME STRETCH perspective, today we need a Close above 1776.50 to have this Week close UP and eliminate the CCOC WEEKLY LONG signal.

Making sense of all we have said above, in conclusion:

- you can go SHORT at the moment, but if the market closes this week down again, the odds for a LONG trade increase and next week we most likely see a LONG  bounce (i.e. exit your shorts) – short profitability is capped anyway because of good odds on LONG WEEKLY levels pointing already to an imminent bounce

- you can go LONG today, if the market is down and reaches levels with good odds (and this applies to the coming days as well: if the market keeps tanking the odds will become just better and better for a LONG trade, take the occasion to BUY).

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