Video summary
Basil Chapman opens the September 15th market recap by highlighting the Dow Jones Industrial Average's decline of 368 points to close at 52,056, noting that the drop has been a steady drip rather than a rapid acceleration seen in previous sell-offs. He emphasizes the importance of time in this correction, pointing out that while the index quickly rallied from around 51,600 to nearly 54,744 back in August, the subsequent decline has been more measured. Chapman identifies the support level at 51,542 as a critical benchmark, tracing it back to levels seen around July 21st, and uses weekly chart analysis to show that key moving averages remain positive or only slightly turning down, suggesting there is no immediate sell signal despite the recent losses.
The discussion then shifts to energy markets, where crude oil remains at a recovery high near 4.14, supported by strong technical indicators like relative strength and a stochastic oscillator at 88%, although on-balance volume suggests some overextension. Chapman explains the jump wave methodology, noting that while the market has reached peak D, it is still in a buy mode with potential to move toward peak E, and any pullback could serve as a base for further gains rather than a sign of failure. In contrast, the S&P 500 is facing more pressure, having formed a lower low after a significant red candle, with negative readings across moving averages, MACD, relative strength, and stochastic indicators, indicating a period of digestive consolidation even though it has not yet broken down structurally.
A particularly concerning pattern emerges in the analysis of the QQQ and Goldman Sachs, where Chapman identifies an "arch formation" that resembles a cup-and-handle structure but with sharp rallies followed by failures at new highs. He explains his technique for recognizing when such patterns turn bearish: if the price takes out the low on the left side of the arch, it signals a potential one-to-one downside move to the next support level. This exact scenario has played out in both the QQQ and Goldman Sachs charts, where the lower high became a lower low after failing at a peak, prompting caution as prices approach key moving average targets like the 200-period average on the Goldman Sachs chart.
Finally, Chapman briefly touches on the yield curve, observing that the ultra-short to 20-year T-bond spread has moved one-to-one to the upside, adding another layer of complexity to the current market environment. He concludes the segment by acknowledging that while the technical setups in stocks like the Dow and S&P suggest a need for vigilance, particularly regarding support levels and arch formations, the overall picture remains nuanced with no definitive crash signal yet. The recap ends with a promise to discuss tomorrow's outlook upon returning, leaving viewers with a clear understanding of the current market dynamics, the specific risks associated with breaking key lows in major indices, and the resilient but cautious stance required for navigating this phase of the market cycle.
Read the full video transcript
Brian
>> Hi everyone, Basil Chapman here. I do
the 10:00 to 11:00 o'clock ticket this
is our every market day here at TFN and
also have the news that I call the
opening call and then the news that is
very comprehensive. Let's just go to the
market right now. The Dow is down 368 at
52,056.
I'm sitting in for Tommy O'Brien in the
Tommy O'Brien show.
You can see how quickly we went from the
51,600
right up to the 54,744
level on the 5th of August.
Um and look how long we've taken to come
down. So using time is really important
because it means that the
the kind of acceleration you sometimes
get in a sell-off where the Dow is down
a thousand or 1200 points every day and
it just keeps going down. We haven't
seen that at all. It's just been a
steady drip drip drip to the downside
and that support that at 51,542
that goes back to around about the 21st
or so
of July
that's going to be key. So I'll talk
about what we can and we might
anticipate tomorrow but in the meantime,
let me show you the weekly chart. That
green nine period moving average way
over the 14 says to go negative and look
how nice this is when it goes positive
it flips to green like it did right
there. Uh that was April the week of the
24th. Stayed green and now it's still
green but you've got the the um nine
period exponential moving average
turning down and the 14 period moving
average was flatting and now it's just
slightly turning down. So it's not
negative yet. So there's no real sell
signal in the weekly chart of the Dow.
The monthly chart is still looking great
in leg B. It's hard to believe under
these conditions. I just need you to
flip uh two different things while I'm
speaking about this cuz everything is
related. Look.
You've got crude oil
at a recovery high. It's at 4.14. This
is a continuous contract at 105.53.
We're looking at this and saying this is
really quite something. I I don't want
to go through this is for technical
Friday where I do jump wave technicals.
Every day I do talk about some of them,
but I'll go through this later on. This
is a jump wave overlapping wave goes to
D and pulls back to the left side of But
look what happened there's an instant
restart and it's continued right up
through leg E. The 940 fabulous. The
MACD fabulous. Relative strength strong
but it has to pull back a little bit
from the two days of slight weakness
that we had right at the at the recent
highs. Stochastic flat at 88%. That's
what you want to see when something is
looking very positive. And the on
balance volume says up getting a little
bit overboard, but that's just a a
signal to say I'm not giving you time.
I'm just saying we're getting overboard.
Look at the weekly chart.
>> [clears throat]
>> It's done a whole bunch. It went to a
peak D in the jump wave methodology
we're always looking at fourth highest
peak. Peak A is the first, B is the
second, three C is the third and fourth
is D. It can go higher to E, F, and G,
but D is objective going from a buy
signal to a buy mode upgraded says you
should go to at least to D. Well, under
that you've got
these A's that keep where they keep
failing the A stays but it becomes
really an A minus if it takes out the
low. Well, look at this. This is peak A,
another A, and now it's gone to a leg B
under the previous high.
So, that just says that if there was to
be another high right there and that
would be the high of the week of the
13th of March which is at 108.82.
If it goes to 108.83 is the continuous
contract. So, I'm talking about the
current price.
That becomes E {slash} B.
And then you see an E in the uh chart.
So, what I'm is that I don't see
anything technically here, even the
stochastic in the weekly is finally got
to 80%. I don't see anything that says,
"Uh-oh, crude oil is coming back to uh
92 or 88." Just at this particular
moment, it looks like it's still holding
very well. If it pulls back, it could be
just a sideways move that goes to maybe
the 97, even 95 area, but that could be
another base to move higher. I'm just
saying these are the possibilities. Now,
I need to go through this real quickly.
S&P right now, the S&P, this is the
cash.
A big red candle made a lower low than 4
days ago, so it's in a leg after the
downside at minus 35 and 75.84.
Look, the 9-period moving average is
negative. The MACD moving average
convergence, the red and green lines,
negative. Uh the relative strength, this
little gray line right here, negative.
Stochastic, 21%, very negative. Uh on
balance volume, look at that. There is
no volume, even though it keeps coming
down. Now, I know some people use
volume, I use on balance volume. I do
have volume inside here, you can see it,
but these these vertical lines, but I
really use the on balance volume because
all the years it's really been a
wonderful bellwether for certain trends
in the market. But look at this peak C
in the weekly chart, 5 weeks sideways
action to down, high lower highs, lower
lows, but it hasn't broken down. And the
monthly chart is in leg D. These were
other things that happened, but so far
it's holding well.
So, all I can say is this has been a
a high-level digestive consolidation.
Look at the QQQ.
Makes an all-time high. Now, this is
fast. In June the 3rd, look there we go,
just scroll across. June the 3rd, it
goes to 748.65,
and since then, this Jeff Macke inside
track repellent zone has just
constantly repelled the the price. Now,
I need to just show you something here.
You see this
Uh
let me show it to you. You see this
weekly chart? You see this arch and then
another arch? So, I have a technique
that I call there's three patterns we
look at. Straight line up, straight line
down, that's one. Cup formation, that's
two. Arch formation, that's three or a
mix of one and two or one and three.
This is one and three. Where it rallies,
it comes down sharply, then it rallies
and it fails at a peak A or B, and then
comes down. If it doesn't take out the
left side low, it could have a bounce
and then that lower H becomes a lower
case M. And at that point, if it takes
out the left side low, you've got to be
careful. Well, we've just done the H.
Okay, now let me get back to the chart
right here. Let me just draw this in.
I've got to get this all done very
quickly. One.
So, here's one H.
It's a big larger arch formation. Here's
another one.
And what do we see? Look, it's the same
pattern that we saw in the Dow.
The lower case H became a lower case M
and then it took it out and the rule of
thumb is if it closes sharply below the
left side base, you can get a one to one
to the downside. That's kind of what
we've got.
So, you've got to be careful. Wait, what
other chart did I look at today? Was it
Goldman Sachs?
Yeah, Goldman Sachs just did the same
thing. Left side arch, this is the H
pattern, right? Left side arch, makes a
second arch, and now it's taken out the
left side low. It looks like the five 40
949 200-period moving average target is
right there. So, we're watching this one
closely. Oh, we ran out of time. That
was a very quick segment, wasn't it? So,
I do want to just show you this as we go
to the break. [crying]
Look at the
um
yield. This is the ultra-short limit
20-year T-bond. Look at that. We did a
one to one to the upside.
What's going to happen tomorrow? We'll
talk about that when we return. Castle
Chapel, sitting here to tell me a rhyme.
This isn't time for rhymes. Sit down,
sit down.
Uh
we have