Sharing a textbook example — TPMART Index
Mostly, sh*t or life happens, but sometimes, we do get setups that are almost a perfect example of what we actually observe from textbooks.
Here, ATEC refers to the Topix Marine Transportation (TPMART) index, which essentially consists of Japanese container shippers. We make the following observations/points:
- That the index has finished five minor waves up to complete an Intermediate Up-wave of higher degree.
2. That we are not sure what the count of the intermediate wave is, but it does not really matter, since we are focused on the imminent likely path, which is….
3. That we are looking for three corrective waves (which Ellioticians typically label as A, B, C).
Importantly, this corrective move down can, and typically does re-trace anything between 38% to 61.8% Fibonacci measure of the entire move since Mar 2020.
4. That the peak yesterday was also confirmed by a bearish-engulfing reversal pattern on the candlestick chart, coupled with a significant increase in volume. This essentially means this market opened higher than the previous day but closed lower than it (hence the term ‘engulfing’). This implies great selling pressure.
We can argue about the fundamentals, though the main message our framework is suggesting to us is that Container Shipping stocks will likely face a period (weeks?Months?) of pressure even from today.
If ATEC were not short by now, we will then wait for a Wave B bounce to assess where momentum stalls, assess where we can set a risk level, before committing to the trade. Happy to hear your thoughts.
Good luck out there.
