There Will Be Blood

Global markets continued to march higher overnight, with US futures up around 1%. The Vix got hammered back to a 35 handle as the current risk premium soars to all-time highs. S&P Futures broke above the 100 day MA (3312.25), after persistently testing this resistance level over the past 3 trading days. We kissed the 9 day MA at 3349.40 around 4AM this morning, but saw a clear rejection. The 9 day MA also happens to be right around the 200 period MA on the hourly (3351.91), which sets us up for bearish price action following a rejection at these key resistance levels. Depending on the angle of the former downward channel sitting just above the current price, it's also possible we saw a rejection off the bottom of the channel around 3349, strengthening today's bearish thesis.

Notes:
- It's election day! Headlines of "violence in the streets," are circling the MSM today (possibly to deter voters), as if the possibility of catching COVID-19 wasn't scaring people enough.
- Morgan Stanley says rates are about to rise 100bp. When I said this a month ago, and discussed the 10Y yield rising (now up 65%) since August, it sounded crazy to most ears. Especially, when the FED had all but guaranteed "low" rates into 2023. Here's the article on ZeroHedge, www.zerohedge.com/ma...-100bps-surge-yields
- The Dollar appears to be on the verge of a breakout, which could pressure risk assets further heading into year end. (We just tested the 100 day MA for the first time since May).
- According to Christian Stocker, UniCredit Lead Equity Strategist, the market is currently betting on a Biden win, and the polls all seem to agree. But, will we see another 2016 surprise?

Stay tuned for live updates throughout the day, and best of luck out there guys!

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Gap up on the open to 333.70 which is right at the bottom of the Green downward channel. I think we're seeing the high's of the day and after this rejection, it's all downhill from here...

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Sitting at the top of the BB on the hourly (334.84). hourly RSI is at 60. We were at 20 just 3 days ago...

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Vix down around 5% on the day. Still at a 35 handle, but barely holding on as a tidal wave of buying floods global markets...

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Massive short squeeze here in the first 30 minutes of trade. The message is clear, and it's addressed to the bears:

Dear Bears,

Risk doesn't exist. Gravity doesn't exist. You'll never need to pay tax again, and you'll never need work again, because the economy is now just a MMT driven printing machine.

Yours faithfully,

The FED

Comment:

Stocks are blowing through key resistance levels like they don't exist. Vix is down to a 34 handle now (34.60), as the bears continue to endure max pain. SPY is now at the HOD around 337.10 and gaining momentum. Majors are now up over 2%. Dollar is getting hammered back to 93.44. Bonds continue their sell-off, and the 10Y yield is now at .88, and up over 4% on the day. The June daily closing high was .90, so a break above this could see yields skyrocket...

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SPY just tested the 21 Day EMA at 337.56. Let's see if holds up as resistance...

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Minor rejection here at the 21 day EMA. Interesting...

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10Y yield is up over 6% on the day. Watch the breakout:

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The Bulls are celebrating today as they calmly walk through resistance levels like they're non-existent. We're nearing the 200 period MA on the hourly (338.94), but getting some pressure at the 21 day EMA (337.58). Right above 338.94 is the 100 period MA at 339.64, along with the top band of the descending channel. Let's see what happens next...

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Majors all rolling over here as we begin the afternoon session. SPY back at 337. I thought the bears were extinct? Maybe they're all rallying over the hill, and about to show up like Spartan's to defend the laws of physics...

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Vix is notably off the lows, but struggling here at the 100 period MA on the hourly (35.40).

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SPY back to a 335 handle and looking a bit weak in the knees. Vix catching a bid and now sitting at 35.50. Are the bulls getting tired after that morning run?

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A lazer-like, 30 degree sell-off is occurring on the majors right now, and it's one of the most controlled sell-off's I've seen in a while. This isn't even stairs down, it's escalator down...

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Losses accelerating here as we approach 2PM. SPY sitting at 335.21, as the bears make their first big move of the day. Let's see what the bulls have to say about that...

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Looks like the bulls are shaking the tree and trying to force the bears to let go. Will we see yet another short squeeze tomorrow, or has time run out for the bulls? Check this out:

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No bears in sight as we approach the close. But, as much as the bulls have achieved today with the break back above the 100 day MA, and getting us back into the channel, they got a clear rejection at the 21 day EMA, and failed to break above the 50 day MA as well. A break above the 50 day would put the top of the channel back in play, which imo is the final line in the sand for the bears. That line is sitting around 341...

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Vix is getting absolutely obliterated into the close, and was down a whopping 10% on the day moments ago. I expect to see a sharp rebound in volatility as results roll in later this evening.

I hope you guys enjoyed today's analysis, and thank you so much for your time. I appreciate all the positive feedback, and look forward to seeing you all again tomorrow for another exciting day of madness. Cheers, Michael.