SPX500 / ES - An Ill-timed Bear is a Dead Bear
This past week's trading was a good refresher course on what bear markets actually trade like. As opposed to dips during bull runs that suck to short and aren't so scary to go long on because price action continually rips back and makes highs, bear markets will take out a consecutive series of downside lows while terminating virtually each and every rally.
At some point during a good bear market, however, you get that kind of manipulation that comes fast and strong to the upside, bringing in buyers and stopping out and liquidating late bears and greedy bears.
An easy example of this was formed in a miniature on the 1 minute charts of FedEx FDX on Thursday:
It's a risk that all bear market short sellers and put buyers should keep in mind.
When it comes to Nasdaq and SPX, it's important to keep an eye on the clock. We just had an entirely bearish week. And a heavily bearish week prior. With a peculiar form of meltdown on FOMC day after the Fed did what everyone and their dog knew for at least a month they would do: hike 75 bps.
And in response, everything quickly took a run at the June low, and yet for SPX and Nasdaq and the SPY and QQQ ETFs they did not take the June low and even rallied off the June low.
It's like support was found and a double bottom has been made.
But note that Dow did take the June low and also spent some time purging under the pre-COVID highs as well:
SPX and Nasdaq, like last week, finished the week with a fairly strong bounce. The question now, is, do they turn around and take the June lows before the end of the month?
I'd estimate the chances at 65-35 No-Yes, personally.
Consider that this is the final week of trading, a full five days, to form the monthly candle. Consider also that Friday Sept. 30 is also quarterly options expiry. Consider also that timing is more important than price.
A situation we could easily be set up for is a run back towards 4,000 to close month end, forming a monthly pinbar.
Don't think it can happen? It happened in May after making new lows:
On the weekly, it's more painful:
Broken down into the daily, you see that you had a 400 point bounce over the course of 6 trading days:
And on the 4H, there wasn't a whole lot of chance to escape for bears:
And then it turned around and made the June lows, which still stand as the low of the year, if you aren't the Dow.
In my opinion, the truth is that we are going to see SPX 3,400 and NASDAQ 9,xxx in October, and probably a rather ugly month, but rather than a market wipeout, things will likely turn around again after the November Midterm elections are over.
But before we get to that bloody month, you have a week of trading left to paint some hard-to-trade candles, and at least October 3 and 4 where it can still be bullish as the high of the month gets painted before we descend into the near-COVID high abyss under 3,600.
So, what to do? If you decide to go long, it's a scalp, not a hold into a reversal. If you want to keep going short, you need to keep your risk down, or prepare to hold a major move in the opposite direction.
Unless you're patient/liquid enough to keep shorting on the way up.
Of course, just like last week's call, it may just turn around and die, die, die.
SPX500 / ES - It's Still a Bull. Now, Good Luck Riding It
In trading, it's not so hard to predict the future, but it is hard to figure it out down to the day and the hour, so you have to have some expectations about what can unfold in both directions and a plan for what to do when things unfold contrary to your expectations.
Don't get drug into the chaos on social media about recession this and inflation that and Europe this and terminal Fed fund rates that. The U.S. equities market absolutely won't collapse until one, or all, of four conditions are achieved:
1. Everything breaks
2. War
3. Natural disaster
4. Chinese Communist Party falls
The U.S. equities market remaining strong is critical for the Western Communist Party to maintain social stability until technocracy can be installed in the form of Central Bank Digital Currencies and Social Credit under the pretext of a conflict-backed energy and economic crisis.
They need to create a crisis they can save you from, but the window of opportunity to do that is still a ways away. In the meantime, they need to maintain their stability until the opportunity is ripe.
Your western governments have spent years training Marxist-Leninism in Shanghai and Beijing with the Chinese Communist Party. They love the evil Party's ways, because they and the Party have a similar nature. Don't think your governments want to help you and save you.
They believe in Marxism, and Marxism believes in redistribution of wealth, which is a polite way of saying that they'll ruin your life and take your stuff.
If you want a bright future, get rid of this communist and socialist stuff from your minds and hearts and start walking an upright path.
It's the only hope.
At some point during a good bear market, however, you get that kind of manipulation that comes fast and strong to the upside, bringing in buyers and stopping out and liquidating late bears and greedy bears.
An easy example of this was formed in a miniature on the 1 minute charts of FedEx FDX on Thursday:
It's a risk that all bear market short sellers and put buyers should keep in mind.
When it comes to Nasdaq and SPX, it's important to keep an eye on the clock. We just had an entirely bearish week. And a heavily bearish week prior. With a peculiar form of meltdown on FOMC day after the Fed did what everyone and their dog knew for at least a month they would do: hike 75 bps.
And in response, everything quickly took a run at the June low, and yet for SPX and Nasdaq and the SPY and QQQ ETFs they did not take the June low and even rallied off the June low.
It's like support was found and a double bottom has been made.
But note that Dow did take the June low and also spent some time purging under the pre-COVID highs as well:
SPX and Nasdaq, like last week, finished the week with a fairly strong bounce. The question now, is, do they turn around and take the June lows before the end of the month?
I'd estimate the chances at 65-35 No-Yes, personally.
Consider that this is the final week of trading, a full five days, to form the monthly candle. Consider also that Friday Sept. 30 is also quarterly options expiry. Consider also that timing is more important than price.
A situation we could easily be set up for is a run back towards 4,000 to close month end, forming a monthly pinbar.
Don't think it can happen? It happened in May after making new lows:
On the weekly, it's more painful:
Broken down into the daily, you see that you had a 400 point bounce over the course of 6 trading days:
And on the 4H, there wasn't a whole lot of chance to escape for bears:
And then it turned around and made the June lows, which still stand as the low of the year, if you aren't the Dow.
In my opinion, the truth is that we are going to see SPX 3,400 and NASDAQ 9,xxx in October, and probably a rather ugly month, but rather than a market wipeout, things will likely turn around again after the November Midterm elections are over.
But before we get to that bloody month, you have a week of trading left to paint some hard-to-trade candles, and at least October 3 and 4 where it can still be bullish as the high of the month gets painted before we descend into the near-COVID high abyss under 3,600.
So, what to do? If you decide to go long, it's a scalp, not a hold into a reversal. If you want to keep going short, you need to keep your risk down, or prepare to hold a major move in the opposite direction.
Unless you're patient/liquid enough to keep shorting on the way up.
Of course, just like last week's call, it may just turn around and die, die, die.
SPX500 / ES - It's Still a Bull. Now, Good Luck Riding It
In trading, it's not so hard to predict the future, but it is hard to figure it out down to the day and the hour, so you have to have some expectations about what can unfold in both directions and a plan for what to do when things unfold contrary to your expectations.
Don't get drug into the chaos on social media about recession this and inflation that and Europe this and terminal Fed fund rates that. The U.S. equities market absolutely won't collapse until one, or all, of four conditions are achieved:
1. Everything breaks
2. War
3. Natural disaster
4. Chinese Communist Party falls
The U.S. equities market remaining strong is critical for the Western Communist Party to maintain social stability until technocracy can be installed in the form of Central Bank Digital Currencies and Social Credit under the pretext of a conflict-backed energy and economic crisis.
They need to create a crisis they can save you from, but the window of opportunity to do that is still a ways away. In the meantime, they need to maintain their stability until the opportunity is ripe.
Your western governments have spent years training Marxist-Leninism in Shanghai and Beijing with the Chinese Communist Party. They love the evil Party's ways, because they and the Party have a similar nature. Don't think your governments want to help you and save you.
They believe in Marxism, and Marxism believes in redistribution of wealth, which is a polite way of saying that they'll ruin your life and take your stuff.
If you want a bright future, get rid of this communist and socialist stuff from your minds and hearts and start walking an upright path.
It's the only hope.
Comment:
Regarding all the chaos regarding the GBP and the EUR hitting new lows.
Remember the Russian Ruble when the Ukraine War started? Remember Joe Biden barking on television about how the Ruble was worth less than a penny?
Late bears are dead bears.
Remember the Russian Ruble when the Ukraine War started? Remember Joe Biden barking on television about how the Ruble was worth less than a penny?
Late bears are dead bears.
Comment:
To be honest, if by Tuesday, instead of rallying away from the June lows, yet another 37xx rally was killed and the lows were swept:
The chances of a bear killing bounce into early October are really not very high.
It seems to me the most likely scenario is that the rest of the month plays out not that bearish and also not particularly bullish, with early October being dead cat.
It's sort of like the inverse of how the stock market used to just not dip and would run away on short sellers.
The chances of a bear killing bounce into early October are really not very high.
It seems to me the most likely scenario is that the rest of the month plays out not that bearish and also not particularly bullish, with early October being dead cat.
It's sort of like the inverse of how the stock market used to just not dip and would run away on short sellers.
Comment:
Another notable point:
Dow and SPX have taken the June lows, but Nasdaq is still a ways away, mostly bolstered by Apple and Tesla remaining remarkably strong
In a call a few weeks ago I said (with rather way too early of timing) that the Nasdaq June lows would remain a fortress.
Whether this is or isn't true, based on SPX's June lows falling today, we don't have a reversal in the cards until Nasdaq at least pukes up another 150 points, in my opinion.
Dow and SPX have taken the June lows, but Nasdaq is still a ways away, mostly bolstered by Apple and Tesla remaining remarkably strong
In a call a few weeks ago I said (with rather way too early of timing) that the Nasdaq June lows would remain a fortress.
Whether this is or isn't true, based on SPX's June lows falling today, we don't have a reversal in the cards until Nasdaq at least pukes up another 150 points, in my opinion.
Comment:
This one set of candles that happened at 6:00 AM EST on the indexes and crypto, in addition to today's NYSE session trading, indicates a clear reversal with intention to head to the upside:
But what I don't like is that Nasdaq did not really try to even double bottom and the QQQ ETF did actually double bottom.
One scenario that may emerge is that October could actually be bullish, and that might be indicated by an early-in-month run below the lows.
But the case against this is that VIX already cratered today and should be heading back towards 21.
In any event, I don't believe these markets have genuinely bottomed yet. It's just a question of whether or not one can enjoy a 20%+ run on some stocks or even the indexes themselves in the meantime.
But what I don't like is that Nasdaq did not really try to even double bottom and the QQQ ETF did actually double bottom.
One scenario that may emerge is that October could actually be bullish, and that might be indicated by an early-in-month run below the lows.
But the case against this is that VIX already cratered today and should be heading back towards 21.
In any event, I don't believe these markets have genuinely bottomed yet. It's just a question of whether or not one can enjoy a 20%+ run on some stocks or even the indexes themselves in the meantime.
Comment:
Right now, what I think lies ahead for Thursday is that we get a big sell off in the NASDAQ/Tech as you either get a proper double bottom to June lows or a sweep:
While for SPX and Dow I believe it'll just be a more shallow retrace.
And then VIX Crush Friday into Monthly OpEx and a bullish open to October as set up for the real panic selling catalysts.
This is what _I think_ is _most likely_ to unfold.
While for SPX and Dow I believe it'll just be a more shallow retrace.
And then VIX Crush Friday into Monthly OpEx and a bullish open to October as set up for the real panic selling catalysts.
This is what _I think_ is _most likely_ to unfold.
Comment:
Well, the thesis was correct that it would dump, Nasdaq would double bottom, QQQ would take out its lows, and Dow and SPX would not make a new bottom.
Very annoying that at New York session open it just turned around and dumped with no chance to open a trade, though.
Everything ought to be set up for at least a short term reversal for real now.
Bears have to be very careful. There's not another rate hike until November. October absolutely does not have to drive lower.
Very annoying that at New York session open it just turned around and dumped with no chance to open a trade, though.
Everything ought to be set up for at least a short term reversal for real now.
Bears have to be very careful. There's not another rate hike until November. October absolutely does not have to drive lower.
Comment:
US Dollar Index down 2.5c in 3 days and not looking as if it intends to run 115 until at least next month:
Stocks dumped under this condition yesterday, but one can argue that may actually have been bullish as Nasdaq was due to catch up to its Dow and SPX peers in price action.
But if they keep dumping under the condition of a weakening Dollar, I guess October is just going to look like KMX Carmax does after yesterday's earnings?
Stocks dumped under this condition yesterday, but one can argue that may actually have been bullish as Nasdaq was due to catch up to its Dow and SPX peers in price action.
But if they keep dumping under the condition of a weakening Dollar, I guess October is just going to look like KMX Carmax does after yesterday's earnings?
Comment:
Nasdaq finally swept the June lows, and we didn't see a bounce into NYSE close.
Despite all that VIX failed to set a new high as well.
If we keep saying one of the weeks will break bears' necks, we're bound to be right eventually!
Despite all that VIX failed to set a new high as well.
If we keep saying one of the weeks will break bears' necks, we're bound to be right eventually!
Comment:
Announced on Thursday, the Federal Reserve is holding a Closed Meeting on Monday at 9:30 EST "held under expedited procedures" for "Review and determination by the Board of Governors of the advance and discount rates to be charged by the Federal Reserve Banks."
www.federalreserve.g...s/20221003closed.htm
I hadn't heard about this _anywhere_ until I stumbled across a comment from an anon in an obscure Twitter thread.
www.federalreserve.g...s/20221003closed.htm
I hadn't heard about this _anywhere_ until I stumbled across a comment from an anon in an obscure Twitter thread.
Comment:
No call this week because I really didn't have a strong opinion on what was likely to happen. But, it is worth noting there are some problems with this rally.
1. Best 2 day rally since April of 2020, yet it comes on the first and second trading day of October
2. Two days before OPEC+ is set to cut oil production huge.
3. On the back of 9 consecutive 4H candles up
4. Tesla looks like it's going to $230 and Spotify shouldn't be up 20%.
I believe if OPEC cuts oil then equities will dump under the narrative that it will drive energy prices up, which will keep inflation numbers up, which will stop the Fed from printing money and bringing moon chasers their moon.
This is what I'm looking to see, personally:
1. OPEC cuts, oil up, stocks dump
2. Stock dumpery isn't very scary and VIX is subdued. Possibly no new lows.
3. Oil can't keep its rally going and starts to fall
If all of the above happens I think going long on equities into November will work.
1. Best 2 day rally since April of 2020, yet it comes on the first and second trading day of October
2. Two days before OPEC+ is set to cut oil production huge.
3. On the back of 9 consecutive 4H candles up
4. Tesla looks like it's going to $230 and Spotify shouldn't be up 20%.
I believe if OPEC cuts oil then equities will dump under the narrative that it will drive energy prices up, which will keep inflation numbers up, which will stop the Fed from printing money and bringing moon chasers their moon.
This is what I'm looking to see, personally:
1. OPEC cuts, oil up, stocks dump
2. Stock dumpery isn't very scary and VIX is subdued. Possibly no new lows.
3. Oil can't keep its rally going and starts to fall
If all of the above happens I think going long on equities into November will work.
Unfortunately, today's pattern is far, far more bearish...