Sentiment Speaks: Amazon killed the market on Friday

Avi Gilburt profile picture

Florent Molinier

It really is entertaining people watching. If I’m sitting outside in a public area and “people watching” with my wife, if I watch how people react to the market in Seeking Alpha articles (and that includes the writers and commentators), or if I I watch how people react even within the virtual walls of my own services, people are very interesting and their emotional responses even more so.

We had a very interesting week last week. And, again it highlighted to me that people just can’t get over their emotions, especially when it comes to the stock market. Many of you are following the CPI, unemployment, GDP, etc. However, none of that has helped them in this rebound. If anything, it has made you miss out on this 12% rally in the last two weeks. And, when Amazon’s earnings came out, many of you were sure that the market was sure to fall.

However, as the market was developing a short-term top structure on Wednesday and Thursday, my main analysis for The Market Pinball Wizard members was to suggest the strong potential for a pullback before we continued higher to the 3900+, which was my next target for the SPX.

And, when the market fell in the after-hours session after Amazon’s earnings announcement on Thursday, many were sure we were starting another bigger leg down. Most were pretty sure that Amazon was going to bring the market down again.

However, in the analysis I provided to our members that night, I noticed the following:

Interesting scenario that we have in hand. ES and SPX have patterns that are a bit different. What is really interesting is how the market appears to fill both patterns at the same time even though they differ.

For example, tonight we went back to the ES pivot, which is lower than SPX, as ES had a second wave lower relative to SPX. We may very well complete this pattern tonight, if you haven’t already, on ES. There is a possibility that the peak that we saw earlier was wave iv of wave c, and the lower low was wave 5 of wave c. If this holds up, it is likely that we will not see any evidence of the drop in the SPX tomorrow.

While the technical jargon of the waves may seem a little strange to you, focus on what the structure of the waves told me about what to expect the next day: “If this holds up, it is likely that we will not see any evidence of the drop in the SPX tomorrow.

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Not only was I describing the specific support that futures needed to hold for us to continue higher towards the 3900+SPX target that I presented to you in my article last week, but I was specifically saying that if we hold that support overnight, neither not even see any evidence of that drop when the market opens the next day. And, as we now know, the market opened EXACTLY where we closed on Thursday and continued higher until our next target.

And the posts from these members summed up what many of my members had to say on Friday:

Completely blown away, I would never have called the market higher this morning after yesterday’s AH action on my own.

In the first year I had the service, I might have been foolish enough to ask if you were crazy. Those days are behind us…

While some of you may see me as simply being lucky or practicing some kind of “chart magic”, I will tell you that a market call like this simply comes from experience using our Elliott Wave Analysis Fibonacci Pinball method for obtain information on the action and structure of the market.

In fact, we had a similar scenario on the night of the 2016 presidential election. As the market fell precipitously during the overnight session, I explained to our members that we were hitting lows around midnight that night so they wouldn’t be surprised if the market opened where we closed the day before and then continued to rise strongly. And, if you recall, that is exactly what happened, with no evidence of an overnight drop being seen in the SPX cash market once we opened the next morning.

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While the election night market call was clearly more dramatic, the reasoning was similar to what allowed me to make the call I made on Thursday night last week. If you want the detailed reasoning for the Elliott Wave, I’ve provided it in the weekend analysis I published in The Market Pinball Wizard. But I can assure you that it is not based on “magic cards” or some kind of voodoo. Rather, there is actually a strong and quite reliable method for our madness.

Now, let’s move on to our next expectations, especially now that we have hit the target I gave you last week when the market was down 150 points. And I will tell you that the bulls are about to face a very strong test of their determination.

I hope we can get through next week. I have to leave the details of the structure I’m looking at to the members of The Market Pinball Wizard, so I apologize for the lack of details. Once we complete this bullish structure, I expect a pullback to start next week. Support for that recall is in the 3785-3830SPX region. And, as long as the market respects that support and starts another impulsive rally from that support, then my next higher target is the 3971-4015SPX region.

However, if the market is unable to hold that support, it opens the door for a much deeper pullback that can potentially target the 3650SPX region. And this can have a dramatic effect on how I view the market to a greater extent.

Again, while I can provide general guidance in my public articles, I must leave much of the detail of my analysis to members of my services. So let’s see how the market progresses in the coming week during its impending pullback.

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cleaning matters

If you want to receive notifications when my new articles are published, press the button at the bottom of the page to “Follow me”.

As for upcoming presentations, I will be making an in-person presentation at MoneyShow in Orlando on October 31 and then hosting a panel discussion on November 10 with Elliottwavetrader analysts Garrett Patten and Ryan Wilday regarding our views on the stock, gold, bond and crypto markets by 2023.

Lastly, I’ll be traveling for the next two days, so I’ve asked the editors to close the comments section as I won’t be available to respond.

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