AMEX:SPY   SPDR S&P 500 ETF TRUST
The money's gotta go somewhere.

And the growth trade/big tech was so last week.

As i said last week the big tech/growth trade was at critical mass. I said that it was going to end badly. And it looks like everyone else was seeing the same thing i was seeing as well. Moves like that aren't sustainable and no one wanted to overstay their welcome.

What we're seeing today is the market attempting to balance itself out. All three major indexes are now over their 200 period MA's. Meaning, technically, they're all bullish . The only one lagging is still IWM /RUT. And that's not unusal.

If you were paying attention percentage gain wise we've flipped from the tech heavy NDX as the leader to the more economical sensitive and frankly more boring DJI leading. With DJI being up 2.13%, SPX up 1.34%, and NDX being up .82%. A lot of this is a natural and mainly a technical move for any rally to be sustainable. But, what's curious about it is it's happening right when we're entering Q2 earnings .

The DJI has companies that reflect the bellweathers of corporate America. AMEX, BA, AAPl , and companies like CAT (which was up something like 4.5% today). In general these stocks are boring. They're mainly stocks used as dividend farms and are, in reality, economically sensitive. But not as much as the small caps. People call them the "dividend aristocrats" because they're like watching paint dry normally. These are the stocks in your or your parents 401k.

Money needs a place to be. A large amount of investable money is from the likes of you or your parents 401k, mutual funds, and boring shit like that. And by law some of this isn't allowed to be in cash. (i'm not a financial advisor and i don't know the inner workings. So spare me the flak if i've misspoken and let me know in the comments.) That means a lot of the big money always has to be at work. Normally, this would be something like a 60/40 portfolio, 60% bonds, 40% equities (stocks). But, with 0 real yield coming out of the bond market people have been looking for "safe" places to park money. And for the past.. well basically since the pandemic that has been NDX with the "stay at home" stocks and businesses that were seemingly not impacted from the stay at home orders and weren't exposed or even benefited from them ( NFLX , FSLY ). But, as i've touched on before. These trades get more than crowded and, everyone gets on one side of the boat and it looks like it's going to roll over.

So, what am i getting at? NDX being at critical mass made it an unsafe harbor for money. So, were does it go? To the relatively inexpensive places like banks, cyclicals, industrials . The rest of the broader stock market.

I said it yesterday and i'll say it again. Big money can do this almost infinitely. They can hide in one place, propping up the broader market. And once they've overstayed their welcome they just go to the paths less traveled and clear some brush. Wash, rinse, repeat.

It reminds me of a cup game. Which cup is the money going to be under next?

Through in my opinon a pretty fucking smart/tactical/strategic mode of operation they've gotten us this far. We were positive for the year on SPX for a split second. I mean, if i were "them" i'd be slinging high fives and good games office wide. But, there's a caveat.

With big money cycling into these big names like AMEX, CAT, WMT , BA they have to perform. If not, it's going to end in tears. Sound familiar? Now this could be a tactical move by big money or investment money into stocks that offer a safe dividend. Or even just getting the hell out of big tech for earnings , and once or if the all clear is sounded we'll see the churn back into growth once again. Wash, rinse, repeat.

The fact of the matter is the economy is not rebounding like the broader market is implying. We've reached the top of that bounce in my uneducated opinon. And all bets are off if we have to shut back down again. We saw that with bank earnings today. JPM is setting aside 8.4b or something along the lines for loan losses. Wells got fucking smoked on their earnings . And if the banks aren't healthy, or are under their breath telling us that they're not healthy. The economy isn't healthy.

So technically:

If you were to look at these daily charts in a vacuum we're bullish . Now more than last week with DJI clearing it's 200 period MA. We're above all the major moving averages. In terms of SPX we opened in the demand zone and it did not disappoint.

But, we're seeing this jeckyl and hyde thing playing out. It's like the significant other who wants to be in a relationship but also keep talking to all their old booty calls. We're uncertain. You can tell by this consolidation above $300 and below $320. But, it's just like climbing stairs. We consolidated in the $274-$294 area for a couple months. And then broke out. Ran up to $320, corrected. And consolidated loosely in the $294-$312 area, and broke out. And now we've been consolidating in the $312-$320 area.

The problem is there's mixed signals everywhere. And as someone who watches charts these whipsaws are like a fucking minefield. There's no clear trend. Sure, we're above all the moving averages. But sideways. This is like a swing traders purgatory. Every signal you get is being invalidated the next. Chop shop.

We did double top yesterday. That's still in play. And today very well could be a counter trend rally but we rallied into the close past the .618 fib. This looks similar to last Friday. Normally you'd expect to see a futher rejection back down into the range you came from. But instead we're pinned inbetween this $312/$320 area. We have to start printing above $320 and eventually close above it for us to continue the bull thesis. The bears need to get us to close below $312 to beak this zone we're currently trapped in. Normally i'd expect a restest back down into the $308/$306 range after a double top but there's been no follow through. On either side. It's just this constant uncertainty.

I mean this was basically the day. It was essentially just one huge bear flag there until the last ten minutes. Had some technical movement off of the fibs but ultimately the bulls protected the ball and are now running back towards their end zone.

Look without the fibs - We basically opened directly on that megaphone trendline which has become a major support and below all the key levels up here just to slowly grind back above them. And it wasn't necessarily an algo pump either. There was volume today, and buy volume . Bulls were giving stiff arms left and right.

But - there is this. I see these everywhere tho, so don't hold your breath, majority of the time they end up just fully retracing. This is bull market behavior. But, if it does break. That's an incredinly bearish signal as it's in this case an intraday topping pattern

The fact that what once was resistance has turned into support is notable to say the least. The bears have to break through this area if they want to have their thesis for the double top intact

You can see it on the daily as well be more outlined by the daily top trendline from the megaphone pattern. They've chosen that to be their goal line. And as far as that pattern we've printed the last 8 days is i have absolutely no clue. Some sort of consolidation. Just looks like a blob, but note volume today. Not shabby and not our usual low volume algo movements

A little more clear on SPX with a more defined support zone , and also note that we finished back outside the triangle

IWM originally showing an inability to get back above it's support/resistance area until the last 15 mins, before that it was also printing a clear bearflag as well. Curious to me how DJI is rallying but it's not taking it's little brother. Only up 1.66% today

I adjusted the triangle to get another couple validations in but regardless this has to go somewhere soon. It's about to get evicted

Half of me sees a big ass bear flag /consolidation for another move down, the other a bull flag . Regardless it needs to break it's .382 fib at $138.31 for it to continue on the downside. .236 fib at $143.86 to continue to the upside

Can't really read much from the VIX , inside day. It's basically just the SPX upside down with the 200 period MA serving as resistance for the SPX and support for VIX

Bull market behavior - XLF 5m

Daily above it's range it printed post COVID, in general a bullish chart with it starting to get some life to it. It's riddled with gaps EVERYWHERE tho, both directions

"Oh yea, the economies fine. No, earnings will be absolutely fine. Don't worry" - Guys buying DJI today. Still having an issue with that trendline though. I guess it's not cool enough yet

Super strong daily finish. Started going for it's island top gap... And i just realized, DJI is the last index to not have filled it's gap.. But, the news today is it FINALLY got a solid close above it's 200 period MA

Even with DJI signalling the all clear for cyclicals NDX can still drag the market down until the mega caps correct further and spread the wealth a little more

This screams "GET THE FUCK OUT AS FAST AS YOU CAN" to me. But that might just be me

Pretty critical point for silver here. It only closed .02 below it's last resistance level after a pretty serious gap down but pair that with the daily RSI bearish divergence and you have room to retrace below

Gold wicking it's 13 period EMA and retracing

Got another "oh shit" or "defcon 4" alert today before bonds backed off. Washing machine goes wash

Oh yea, transports look awake again today as well. Breaking above their range. Riddled with gaps as well

@KCURCIO had his head on a swivel enough to let me know about a Trump press conference today at 5 regarding the virus, which is odd because he hasn't been giving any press conferences lately. Surely enough. Vaccine news. Moderna up 11%. We could have just seen frontrunning today.

But, with that out of the way we're seeing that churn subside and the money walk the plank from growth back over to the rest of the broader market. Will it last? Who's to tell. The key levels are the key levels, and until then we're pinned in this traders purgatory here in SPY land.

And, as always, and now more so than ever keep your head on a swivel. If this rebalancing is successful we're headed to much higher prices, but, if for whatever reason these technicals play out and big money gets spooked either by earnings or news i'll see you all back down towards $300.

Have a good night!!

This is not trading advice. This is my own personal opinion based on my own personal TA. You are responsible for your own trades.






Comment: Alright bears got hit with a Mike Tyson combo from last night into today. Vaccine news, which seems legitimate. Goldman absolutely smoking down their earnings. And Apple getting something like a 13b tax discount from the EU.

That's the jist of it.

ES still has not made a new high though, which is trivial to me. This will most likely resolve itself at open but also notable.

Comment: We haven't even made a new high in SPY pre market. Bulls gotta get their shit together.

Comment: SPY targets to the upside at $324.61 which was the bottom of gap from Feb, and $333.48 which is the top of gap.
Comment: Ok ES finally just made a new marginal high by 2 points

Comment: Got within two pennies on SPY. This is the bulls being on fourth and inches on the goal line.

Comment: QQQ going for the gap already

Comment: IWM and QQQ pulling SPY in different directions

Comment: XLF wanting to fill the gap as well. IWM has seemingly turned around.

Comment: QQQ leading? IWM in second place?

Comment: DJI in a really interesting position.

Comment: Oof. XLF

Comment: IWM leading the pack. SPX has still yet to print a new high.

Comment: There it is. SPX just tagged a new high. Let's see if they can close it above for the hourly.

Comment: IWM on a tear so far today. Up almost 4%, but way outside of the hourly BBands.

Comment: Remember what i said about rebalancing and letting other markets catch up? IWM is currently above it's daily 200 period MA.. This shit is not a coincidence. Daily also outside of the BBand.

Comment: And just got a push notification from Marketwatch: "Wednesday's stock market rally erases S&P 500's year-to-date losses. This is the third time i've heard this the past month or so. We'll see if they jinxed it yet again.
Comment: Alright this is interesting. Printing a panic candle on the 5m so far. Means no buyers. Volume doesn't confirm it though.

Comment: There's selling across the board right now. No news and i didn't see the algos pop.

Comment: Protecting today's lows on SPX and SPY.

Comment: Back the rodeo boys and girls. DJI leading us on the way down.

Comment: Failed on the hourly close. Plenty of trading left to do tho.

Comment: Bulls hoping this is a bullflag. Bears looking to take the gap.

Comment: IWM still hasn't broken it's lows of the day..

Comment: Here come the algos to try and save the day... Watch for head fakes either way. Volume is going to be the name of the game into the close. They're going to want to close above the highs from earlier this week, and last month. So far we don't even have an hourly close above.

Comment: Bears need to make their move here pretty quick or else the bulls are in the red zone and within striking distance. That little pop we had was actually a 200k share 1 second candle. Interestingly enough.

Comment: You know, you'd think that after all that good news and how the futures traders were treating this we'd have a little bit more participation.

Comment: Gametime. I was in the bathroom so not sure if this is an algo pop or not. Regardless. Volume is there.

Comment: I mean could they tee it up any more perfectly?

Comment: IWM still up 3.67% when QQQ is only up .18% and DJI only up .78%

Comment: Bot DJI, and QQQ look like they're printing bear flags on the hourly. Meanwhile IWM is up 4%. Yeehaw.

Comment: Volume's not spectacular but that's a pretty bearish candle for them to print right before we get to the last hour.

Comment: Is it starting?

Comment: Oof bear sneak attack real quick, let's see if they can recover.. Grab the popcorn

Comment: Jobless claims basically were in line but there's bad news that's starting to stack up including some stealth pessimism embedded in bank earnings. We'll see where we open.

Comment: WEBSITE UPDATE: So i plan on having the website live by this weekend at least for beta testing. I guarantee there will be some kinks and bugs to work out be we do plan on having it live.

If you do not already know i am planning on taking these posts private. The daily updates/newsletter will be the same as they are here, but paywalled. The membership will be $1 a day, or $20 a month. If you pre sign up for the website you will receive the first month for $10 or half off.

We will also have resources including how to chart, market nuances, and basically everything i know downloaded all into one place.

The website is M1904trading.com and if you enjoy this either pre register or check out the website come Monday.

Thanks again!
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Comments

Always appreciate your play by play. In an era of no sports, your feed is refreshing. Thank you! :)
+5 Reply
merkd1904 rmajoran
@rmajoran haha i do what i can.
+2 Reply
You have a lot of bearish bias in your posts. Is there an avenue for bulls to finally push through to the end zone?
+2 Reply
merkd1904 LibertysMaven
@LibertysMaven, Yup, it's unfortunate but true. And there's always the avenue, they just have to go down it. They were given an open door this morning and didn't take it. Hopefully they will by close today.
Reply
Something interesting...take a look at the daily candle they printed. I’ve been studying a bit on candle representation. That’s an interesting one right there
+1 Reply
Push it as close as they can then gap over it overnight..maybe?
+1 Reply