Boy do I wish that were true. Instead I'm waking up to a freezing cold winter in the North Pole (Canada), and a world on lockdown. It is Friday, though, so I'm in a particularly good mood, and if I must say, watching global markets in the red (for a change), just puts a smile on my face. Yesterday we discussed the potential for further downside, off the back of overbought conditions across multiple timeframes. Overnight, the S&P tested the 100 period MA on the hourly (3644.30), after hitting a session low of 3628.38, just above the gap from Dec 1st. It feels unusual discussing a gap down, as it's been so long since the market has shown any real weakness. I almost forgot what it felt like to see red numbers on the screen on a Friday, but the majors are all down around half a percent, and Vix is up 6% to a 24 handle as we approach the open. According to the financial media, today's sell-off is brought to you by, "Stimulus doubts," and "Disruptive Brexit talks." Nothing to do with the historic valuations, debt, lockdowns, or the crumbling economy I guess.
Today we'll be watching the 21 day EMA around 361.80 for initial support, and if sentiment is actually shifting negative, the top of the megaphone at 358.50 is most definitely in play. We could see buy the dippers panic bid markets on the open, but I have a feeling the tank is beginning to run on fumes. The Vix, Rates, the Dollar, and the Put/Call ratio are all showing strength today, so let's see what happens next...
As always, I appreciate your time today guys. If you enjoyed today's analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research. Cheers, Michael.
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Good view of the gap from the 5 minute...
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Bulls appear to be going for the gap fill at 366.68. Buy the dippers are showing up right on schedule...
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Heading back to the lows of the day. Weak bounce on the open. Things could get ugly if the bulls lose the intraday support around 364.40...
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Enjoying the view from the hourly. Looking very weak right now as we approach the afternoon session...
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Put/Call ratio is getting smacked back to a 43 handle today, after a recent high around 55. Looks like a retest of the descending trendline before another leg higher. ..
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Vix is back to a 24 handle as the bulls lose control of the narrative...
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Bulls about to lose key intraday support...
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Support breached, and we're back at the lowest level since Dec 2nd. Time to see a revisit of the megaphone at 358.50 baby! Gap fill around 362 is the first stop...
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Vix just showed a 25 handle for the first time since Nov 19th...
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All the majors with the exception of the dow are now down over 1%. Vix up 10% on the day. SPY is nearing the gap fill at 362...
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Now reading headlines that Cuomo is locking down indoor dining as COVID cases climb. Where did you guys think this was heading?
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Small relief rally back to the 21 period EMA on the 5 minute (364.11). Let's see if the bulls make a run for the 364.40 level once again. If so, I expect a rejection before another leg lower. Polarity principle and all that jazz...
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Bulls taking a peek above the 100 period MA on the hourly again (364.81). Let's see if it holds...
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Retesting the high's of the day once again, right around the 100 period MA on the 5 minute (365.63). The bulls have some fight left in them...
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Logging off early today, my friends. I hope everyone has a fantastic weekend. I'm wrecked as usual. But, I have a date with the wifey, and it's Johnnie Walker time. See you all next week! Cheers, Michael.
Always great analysis. Enjoy reading your stuff. Thanks!
Hedge_Of_The_World
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@tul64672, Thanks so much! I appreciate the love. ;)
PreferredStonk
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Yeah, probably gonna grind that 3600 - 3700 channel for a bit.
Hedge_Of_The_World
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@presstrade, Hey buddy, ya I think even if we see a retest of the megaphone, we'll probably get a strong bounce, so more than likely that's the range for the next couple of weeks. If we break below the megaphone, the bulls are in real trouble, though...
Alwynjo
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do you expect a correction or it is just because of lack of stimulus hope
Hedge_Of_The_World
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@Alwynjo, Hey, thanks for the comment. I think we're way overdue for a correction. The top of the megaphone is definitely in play today. But, the fact is, if the FED wants markets up, they'll go up. They lose some fire power at the end of the year when some of the lending programs expire, so that's a possible catalyst for further downside.