All in all [it's] just another brick in the wall. -Pink Floyd After having spent the years 1976-1994 as a licensed attorney in two different jurisdictions (Massachusetts and Georgia) I still maintain a healthy respect for the law and especially since engaging in the publication of my own intellectual property since January 2010 (Allantrends a/k/a Blue Line Trading), I also respect and understand copyright law...or at least certain exceptions thereto. So it is without trepidation that I borrow, or what the law refers to as "appropriate for the common good" the chart directly below, under the universally recognized fair use doctrine, which working in concert with my own analysis is now generating a transformative, if not compelling, warning of an imminent, significant move lower in the equity markets. The indicator is peaking, just as it did in Jan, Mar and Aug, coincident with major market tops in each instance. This is no the same indicator as the CNN Fear and Greed Index described last weekend, but it is the same message. DSI Indicator -- VIX Thanks to Elliott Wave International, Trade-Futures.com and CQG for providing raw numbers and design set out in the above DSI Indicator chart which together with last weekend's update discussion of the CNN Fear & Greed Index as well as our own ongoing EW analysis, i.e., that the market is on the precipice of a third wave down at multiple degrees of trend, makes the case for an immediate 6-8 week stock market decline of at least 10-15% with the potential of significantly deeper decline into the 1st quarter of 2023. QQQ Daily Moving Forward Into next week we will be looking for signs of the next leg down is underway and as is our want we will be monitoring key levels across a half dozen indices and/or ETF's that if broken will eliminate any bullish interpretation of pattern recognition patterns. First, the PRO Service which updates shorter-term patterns with almost daily noon updates, and then the Premium Service which provides late afternoon updates on more of an "as needed" basis, we will be legging into new put positions and maybe more importantly, new call positions in one or more volatility indices. The details of symbols, strikes and expirations will be forthcoming depending on market action. However, if you just have to do something before hearing from me again, whether that be on Monday or Tuesday, the Jan 20th UVXY $8C looks about as attractive as a highly speculative bet on imminent market drama can be, currently trading at about $1.08-1.10. Look at it like this: If the implications of the DSI Indicator, the Fear & Greed Index, and the Big Picture Multiple Degrees of Third Waves Down, come to pass between now and Jan 20, 2023 (eight weeks) then UVXY will be up a minimum of 50%, i.e., $12, and maybe twice or three times that ($16-24) and that UVXY $8.00C @ $1.10 calls will then be trading between $4/16), or up about 4X to 14X. UVXY 30 Minute This is the UVXY 30 minute chart from the PRO Service and it will be the first trading signal that triggers in front of what is expected to be 50% minimum spike in UVXY-VXX-VIX. The drawback of using such a sensitive time frame is the number of false alarms generated by false breakouts. But that's not how we are thinking about the next signal. The next breakout, somewhere north of $8.50, will be the first breakout subsequent to market SELLS on both a DSI Indicator and Fear and Greed Index Indicators. From that perspective, the next breakout on this chart will be powerful trading signal. Finally, but just as important as all of the above, the market needs to prove itself by going down and if it is going to be a Wave 3 of (3) at multiple degrees of trend, going down big, leaving no doubt that this Wave 3 is, in the words of Elliotticians, "a wonder to behold." The clock is ticking.
