Hedge_Of_The_World

The Finish Line Is In Sight

Short
AMEX:SPY   SPDR S&P 500 ETF TRUST
Good morning, folks! For those of you in Canada, I hope everyone had a great holiday to start the week. Let's get right into today's analysis. After rolling sell programs yesterday to kick-off the month of August, US Futures are drifting higher on Tuesday with the Dow up 0.25% to 34,808, the S&P up 0.22% to 4,389.50, the Russell up 0.46% to 2,221.10, and the Nasdaq up 0.14% to 14,973.50 as of 8:30AM. SPY saw yet another rejection at wedge resistance, but the 21EMA (w) around 419.33 has been successfully defended since it was recaptured in May 2020, and as long as this support holds, we're going to continue to melt higher. Having said that, we just saw 6 months straight of gains on the SPY , and imo we're unlikely to see a 7th given the macros, low liquidity, heavy geo-political risks, and policy risks that are looming this month. I believe the finish line is (finally) in sight.

The US10Y yield continues to slip after the 200DMA rejection at 1.41%. We've now lost weekly MA supports as well, including the 100MA (w) at 1.1988%, and the, 50MA (w) at 1.1961%, and absent a recapture by EOW, we could to be on the verge of a massive puke toward the August 2020 lows around .50%. The last time this happened, of course, was February 2020 just before the 35% market crash. Let's see if history rhymes.

After a solid rejection at wedge resistance, the dollar ( DXY ) saw notable support at the 50MA (w) around 91.70, and is hovering just above around 92 as we approach the open. If sentiment is in fact about to shift negative, the dollar may be in the midst of a technical retest of the 50MA (w), before setting up for a retest of the wedge once again. Let's see if the bulls can defend the 50MA (w) into the weekend.

In volatility , the Vix has been making higher lows for 6 weeks in a row, and is sitting at a 19 handle ahead of the cash open. The descending trendline is still holding as resistance for now, but judging by the stochastic RSI on the weekly time frame, and the PA off recent multi-year ascending trendline support, we're likely at the onset of another major spike in the Vix . First, we'll need to see the 25 level captured on the weekly candle, which would set us up for a second leg higher toward the upper band of the ascending channel around 50.

Have a great day of trade, my friends, and let's see how the cookie crumbles this week. Cheers! Michael.

* I am/we are currently long UVXY , HUV .

Comments

Getting closer. And I love the drops on earnings showing that bearish market sentiment. Should be a good repeat of history coming up. 👊
+3 Reply
@CJS04, Ya buddy, I've got the popcorn and whiskey ready. Vix looks like a rattlesnake right now. Check the stochastic RSI on the weekly vs the previous (notable) spikes.
+2 Reply
Good Morning Michael, hope this finds you blessed.

Failed breakouts at highs to close on Lows...

Yeah, Naw, it isn't' bullish.
+3 Reply
@HK_L61, Always appreciate the insights, my friend. Hope you're having a great start to the week. Crazy rally today around 11:15PM across the majors. European close was wild. What are your thoughts?
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HK_L61 Hedge_Of_The_World
@Hedge_Of_The_World, They are desperately trying to hold this mess together.

Heading lower imho. Booked solid gains across the board in CL VX ES NQ RTY.

4408 capping ES at the moment the UTL. Added back VIX, nothing else yet.

Taking the rest of the day off, you be well Michael.
+1 Reply
@HK_L61, I like where your head's at, and nice work on the gains, my friend. Enjoy the day!
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SPY: Finish line? HMB
+2 Reply
@andrande101, I'll holla at you in 2 weeks.
+1 Reply
andrande101 Hedge_Of_The_World
@Hedge_Of_The_World, More than 4 weeks now and someone is still holding my beer :D Let's play a game. Pick the EOY targets! I'll go first. SPY = $666. QQQ = $999.
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good to know and follow you !! Fellow Canadian. cheers.
+1 Reply