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Consistency is the name of the game - Thomas Ng memo 27 Jun 2023





On Tues 27 Jun 2023 11pm, I emailed Clients my latest post titled 'Consistency is the name of the game.'


Below is the full transcript for your perusal:


'Dear Clients

.

Apologies for the delay, just got back from a family holiday and I'm extremely happy to see how Mr Market(s) has obliged my bullish script detailed from months back, again!

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Let's dive straight into it: . 1. Bitcoin (aka BTC):

On 5 Apr 2023, I said: The Inverse Head & Shoulders formation as shown is a typical bullish bottoming pattern. Once price action breaks out of its neckline at ~25,000, the pattern implied target is at 34,566+/-. A backtest (or pullback to the neckline) is still possible.

Reference to my memo https://tinyurl.com/showmethechart .

The Bitcoin pullback in Jun 2023 stops exactly at the said neckline before kicking off the current 27% rally. See Chart 1 below dated 25 Jun 2023.


Chart 1 - Bitcoin (BTC) Daily, 2-yr

Beautiful textbook re-test back to breakout level before the new rally kickstarts

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2. Nasdaq 100 Index (or QQQ ETF):

On 12 May 2023, I said:

In conclusion, from my SPX Chart, I'm sticking with my original technical view that the 61.8% - 78.6% retracement level remains a strong price magnet for both SPX & Nasdaq in the short to medium term.

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See Chart 2 below dated 25 Jun 2023 - QQQ ETF hit an intra-day high right smack at the 78.6% retracement level at 372 on 16 Jun 2023 before doing the current pullback. I rest my case.


Chart 2 - QQQ ETF Daily, 1-yr

Note how price action gets turn down first at every pattern-implied targets (horizontal black arrows corresponding to each pattern-implied target), before resuming its uptrend

.

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3. S&P500 Index (aka SPX):

On 5 Feb 2023, I said:

If we see a sustained breakout roughly above the 4105 level, then we should look forward to a bullish (purple) Cup & Handle Pattern implied target of 4440+/-.

Reference to my memo https://tinyurl.com/riskison

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See Chart 3 below dated 25 Jun 2023 - SPX hit an intra-day high at 4448 on 16 Jun 2023, 8 points away from my 4440 target, before doing the current pullback. Well then, I rest my case, twice!


Chart 3 - S&P500 Index (SPX) Daily, 2-yr

As mentioned before, the above green retracement zone is a natural price magnet

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Some of those friends & clients who follow my work closely over the years have often asked me how I was able to decipher many of the major targets or turning points in asset prices.

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My answer is pretty simple. You see, Mr Market actually does not give a hoot about what you & i think and he will do what he wants to do. In other words, I can get it totally wrong.

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However many a times, some of the movements or patterns (well, not all of them) in major indices can be pretty textbook stuff. For that matter, even deviation from textbook price action is often a strong signal by itself.

Ultimately, it is a probability game and the beauty of it is that as a trader or investor you already see from the Chart the differing potentials that may play out and be ready to act as each potential unfolds for you or against you.

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Consistency in choosing the right side of that potential is thus key to the game.

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Further, I've said before that price action is only on a 2D chart and chart patterns keep repeating itself throughout history simply because price action has always been governed by two basic human capitalistic traits - greed & fear. Til the day price action becomes multi-dimensional, life for me as a 'Chart Whisperer' may then truly get more complicated!

. .

So what's next?

Given the current major move off the March lows (SPX up ~17%), I'm hesitant to continue to chase it. . In conjunction with the Stock Market Negative Seasonality (Sep & Oct being the worst performing calendar months for SPX) and traditional chart indicators are again showing negative divergence, we should be on the lookout for a more sizable pullback. . For Clients who wish to have an idea where the next high probability pullback zone may be, pls drop me a line to pick my brain. . Now, while I've said above that the risk reward at this point in time in the market is no longer sweet, I do have to bring to your notice that there is indeed another bullish Cup & Handle pattern nested between early Feb to mid May 2023 (see orange box in Chart 4 below dated 25 Jun 2023).

The pattern-implied target from this 2nd Cup & Handle breakout is at 4533 which coincides exactly at the 78.6% retracement level.

Interesting confluence of the same target level, wouldn't you agree?

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Thus if I could truly have it my way, I would like to see the current rally continuing or whipsawing into the late Aug - Sep months towards the said 78.6% retracement target level (ie SPX 4533) before seeing that sizable pullback we so often see in Sep and/or Oct of every year!

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Let's watch this space!


Chart 4 - S&P500 Index (SPX) Daily, 2-yr

Will Mr Market tease us with one more high (OMH) before a more sizeable pullback?

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Live Long & Trade Well.

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Thank you & regards

Thomas Ng, CMT

Principal Trading Representative 首席股票经纪 www.thom-ng.com

#befluid #wytant #livelongandtradewell Chart source: tradingview

Image source: www.actioncoach.com/blog/what-does-consistency-mean-in-the-workplace'

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