SPX / ES - Get Ready for a Head Fake, and an Opportunity
In my recent calls, I have made predictions for Apple to set new all time highs, Tesla to print at least $250 again, and Nasdaq to 14,000.
However, whenever price action fails to follow suit with expectations, one must revise, revise, and revise again the situation at hand.
With this week's price action topping on Tuesday after what should have been a significant bull catalyst in the lower CPI print, causing SPX and Nasdaq to go as wild as the Dow has, it can only be ascertained that the makers not only do not want to go higher, but are likely to head lower, and they'll be in a hurry.
I have been simultaneously conflicted by the fact that I do expect SPX and Nasdaq to run to their COVID lows with the fact that there isn't any news primed until December and timing is awkward with the next FOMC being a month away and US Thanksgiving being late next week.
There's a significant fractal from June daily bars that's very similar to where we're at now, where we ultimately made the Low of the Year, which held until September, and then October.
The problem is that everyone is expecting a dump, because although there really isn't any fear and nobody is actually positioned bearishly, the sentiment is still bearish.
I said on Twitter the other day after hearing that Michael J. Burry from Big Short 2008 GFC fame said "You have no idea how short I am," that these types of guys are allowed to tell you what is going to happen, but not when it is going to happen or where it is going to happen.
They're allowed to speak the truth insofar as it makes retail offside.
If they were to really reveal the truth that they know, they would disrupt the markets and their access to credit facilities and swap lines would be revoked.
What I mean by the above is that for retail, you're going to be baited into going hard on puts and shorts, but this isn't yet the moment of impact everyone who believes interest rates and recessions mean SPX 2,000 straight line no bounce have been waiting for.
Meanwhile, although the VIX isn't showing much in the way of signs of life, the put to call ratio is as high as it's been since 2008 quietly starting around Wednesday. The US Dollar Index has also started to show poppyness after running a key low.
Signals are great, but price action has to confirm, and as of now, it indicates that the indexes and stocks do not want to trade higher.
Thus, what I believe and am expecting to happen is that indeed we do dump, and violently, and fast. It is imminent. Perhaps as early as Sunday futures open.
It will be scary. However, what I think is that the dump will really be a bear trap. It won't go as low and it won't stay as dipped as everyone is expecting. When it starts to bounce, it will bounce a lot, and hard, and catch people off guard.
This time, there won't be a retrace.
Thus, what I am anticipating is for the SPX to print at least a low 3,600s tape. More likely, I believe SPX will actually trade back toward 3,500, but not take the low out.
What I want to tell everyone is this: You need to stop listening to the Stocktwits and the Twitter and the Discord and the WhatsApp feeds. You need to unfollow these guys that are filling your head with notions about interest rates and yield curves.
The more you fill yourself with those concepts, the more you will be manipulated into trapping yourself offside and the more you will be unable to take advantage of the real move.
The more you will blow your accounts.
The reason is, there is a logic behind why bear markets rally so hard. A bearish market rallies, simply put, because smart money doesn't sell low like you do. They sell high.
So they sell high, buy back low, sell high, buy back low, and the market has to be engineered around this, or they won't participate, because losing money means death.
The next bear market rally is going to be like 40%, and it's going to be rather impressive. Bears will be so angry, not realizing that the rally's climax is the "Big Short" they've long been awaiting.
Allow me to issue my own "Cassandra": Be warned, for when all the stocks and the indexes are high again, the day the Chinese Communist Party will be thrown out from this world is during Beijing time, not New York time. It will happen in the middle of the North American's night.
It will catch very literally almost everyone off guard. The limit down when the NYSE opens that day will be 15% on indexes and it won't be the bottom, it won't bounce.
That day is very close. Nobody expected the USSR to fall, and yet Gorbachev and friends threw it away anyways.
China's traditional 5,000 year dynasty culture is mankind's only hope for a future, and it will absolutely be not only preserved, but resurrected.
However, whenever price action fails to follow suit with expectations, one must revise, revise, and revise again the situation at hand.
With this week's price action topping on Tuesday after what should have been a significant bull catalyst in the lower CPI print, causing SPX and Nasdaq to go as wild as the Dow has, it can only be ascertained that the makers not only do not want to go higher, but are likely to head lower, and they'll be in a hurry.
I have been simultaneously conflicted by the fact that I do expect SPX and Nasdaq to run to their COVID lows with the fact that there isn't any news primed until December and timing is awkward with the next FOMC being a month away and US Thanksgiving being late next week.
There's a significant fractal from June daily bars that's very similar to where we're at now, where we ultimately made the Low of the Year, which held until September, and then October.
The problem is that everyone is expecting a dump, because although there really isn't any fear and nobody is actually positioned bearishly, the sentiment is still bearish.
I said on Twitter the other day after hearing that Michael J. Burry from Big Short 2008 GFC fame said "You have no idea how short I am," that these types of guys are allowed to tell you what is going to happen, but not when it is going to happen or where it is going to happen.
They're allowed to speak the truth insofar as it makes retail offside.
If they were to really reveal the truth that they know, they would disrupt the markets and their access to credit facilities and swap lines would be revoked.
What I mean by the above is that for retail, you're going to be baited into going hard on puts and shorts, but this isn't yet the moment of impact everyone who believes interest rates and recessions mean SPX 2,000 straight line no bounce have been waiting for.
Meanwhile, although the VIX isn't showing much in the way of signs of life, the put to call ratio is as high as it's been since 2008 quietly starting around Wednesday. The US Dollar Index has also started to show poppyness after running a key low.
Signals are great, but price action has to confirm, and as of now, it indicates that the indexes and stocks do not want to trade higher.
Thus, what I believe and am expecting to happen is that indeed we do dump, and violently, and fast. It is imminent. Perhaps as early as Sunday futures open.
It will be scary. However, what I think is that the dump will really be a bear trap. It won't go as low and it won't stay as dipped as everyone is expecting. When it starts to bounce, it will bounce a lot, and hard, and catch people off guard.
This time, there won't be a retrace.
Thus, what I am anticipating is for the SPX to print at least a low 3,600s tape. More likely, I believe SPX will actually trade back toward 3,500, but not take the low out.
What I want to tell everyone is this: You need to stop listening to the Stocktwits and the Twitter and the Discord and the WhatsApp feeds. You need to unfollow these guys that are filling your head with notions about interest rates and yield curves.
The more you fill yourself with those concepts, the more you will be manipulated into trapping yourself offside and the more you will be unable to take advantage of the real move.
The more you will blow your accounts.
The reason is, there is a logic behind why bear markets rally so hard. A bearish market rallies, simply put, because smart money doesn't sell low like you do. They sell high.
So they sell high, buy back low, sell high, buy back low, and the market has to be engineered around this, or they won't participate, because losing money means death.
The next bear market rally is going to be like 40%, and it's going to be rather impressive. Bears will be so angry, not realizing that the rally's climax is the "Big Short" they've long been awaiting.
Allow me to issue my own "Cassandra": Be warned, for when all the stocks and the indexes are high again, the day the Chinese Communist Party will be thrown out from this world is during Beijing time, not New York time. It will happen in the middle of the North American's night.
It will catch very literally almost everyone off guard. The limit down when the NYSE opens that day will be 15% on indexes and it won't be the bottom, it won't bounce.
That day is very close. Nobody expected the USSR to fall, and yet Gorbachev and friends threw it away anyways.
China's traditional 5,000 year dynasty culture is mankind's only hope for a future, and it will absolutely be not only preserved, but resurrected.
Ultimately, it took out a lot of longs and almost took out a low before immediately rocket shipping for five months.
Jerome Powell is set to speak on Nov. 30, something which was announced on the quiet just a day ago. Two weeks after, you get FOMC.