SPY fell out of the wedge as expected. Probably the least surprising "drop".
I am expecting the market to open by filling the gap down to the $339 range before retesting the bottom of the wedge. This coincides with both the DXY and VIX retesting their recent breakouts. VIX pictured on top pane below RSI in orange, DXY pictured in green below.
This is where things get tricky, as there are multiple paths the SPX and SPY could take. If the VIX breakout turns out to be a bulltrap, I'd expect the green or yellow routes. This plays with the idea of a sideways, choppy market over the next few weeks until the elections draw nearer.
VIX idea supporting sideways until November:
If the DXY or the VIX decide to take off, I could see the red path happening, where the retest of the wedge is soundly rejected and the market unwinds. I find this unlikely at this point considering the monetary policies currently being enacted. I don't think the liquidity crunch comes just yet.
In my opinion, we retest the wedge, get rejected, but either trade sideways or consolidate before retaking the trend. In my opinion, the markets don't crash like everyone is expecting, it seems too crowded a trade, even though the longs:shorts spread doesn't indicate it as a crowded trade. The $ outflows and increase in savings do . Plus, that is too easy and this market loves to burn bears.
Instead I see this market trading sideways, chopping both bulls and bears, before either a rug pull or a massive melt-up once the election gets underway or vaccine progress is announced. Probably something between the yellow and gray drawings.
In my opinion, USD is the trade for the crash, bitcoin is the trade during the recovery.
One thing is for certain, this market is about to become a scalper's market.
I am expecting the market to open by filling the gap down to the $339 range before retesting the bottom of the wedge. This coincides with both the DXY and VIX retesting their recent breakouts. VIX pictured on top pane below RSI in orange, DXY pictured in green below.
This is where things get tricky, as there are multiple paths the SPX and SPY could take. If the VIX breakout turns out to be a bulltrap, I'd expect the green or yellow routes. This plays with the idea of a sideways, choppy market over the next few weeks until the elections draw nearer.
VIX idea supporting sideways until November:
If the DXY or the VIX decide to take off, I could see the red path happening, where the retest of the wedge is soundly rejected and the market unwinds. I find this unlikely at this point considering the monetary policies currently being enacted. I don't think the liquidity crunch comes just yet.
In my opinion, we retest the wedge, get rejected, but either trade sideways or consolidate before retaking the trend. In my opinion, the markets don't crash like everyone is expecting, it seems too crowded a trade, even though the longs:shorts spread doesn't indicate it as a crowded trade. The $ outflows and increase in savings do . Plus, that is too easy and this market loves to burn bears.
Instead I see this market trading sideways, chopping both bulls and bears, before either a rug pull or a massive melt-up once the election gets underway or vaccine progress is announced. Probably something between the yellow and gray drawings.
In my opinion, USD is the trade for the crash, bitcoin is the trade during the recovery.
One thing is for certain, this market is about to become a scalper's market.
