I like to use the 20 DEMA to match Gann angles and to me it looks like SPY has been moving upwards along the 1/2 (blue arrows) on every rally. A Gann Box drawn along this line is forecasting a top in the next several days.
1) Check out the retrace from the narrow range of 328.5 - 328.8... Lines up w/ pivots from this year pretty well. 2) Daily MFI (light blue line) is diverging and falling fast 3) Daily RSI shows bearish divergence 4) Current round of Fed repo expires Jan 14, China signs trade deal Jan 15, all the ingredients for selling the news are there... 5) Minor elliott waves show that we're probably about to finish wave (v) of 3. Given 2 looks like a flat, 4 will likely be a steep correction. 6) Gann box I drew for SPX (not shown here) forecasted a low around the 1st - 2nd week of February. 7) First target is the .236 retrace around 315. Ultimate target the .382 retrace around 307. Will scalp calls at these levels.
My guess is Fed panics and brings back repo when the market starts collapsing when their balance sheet starts shrinking.
May or may not try to snipe the sell target, always better to wait for confirmation on a break below the 1/2 or 20 DEMA. Even better if it looks to be correlated w/ news that the Fed intends to trim their balance sheet.
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Approaching target here... Weird day, tech very weak as SPY goes parabolic.
I thought the Fed's whole excuse for ballooning the balance sheet by 1/2 a trillion was due to "year end tax considerations"? This wk liquidity demands have been GREATER than prior to the end of 2019. Now news has it that Fed is considering lending to hedge funds to stave off the repo issues.... What could go wrong?
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BOOM
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Might be a fake spike given the signing tomorrow... let's see. No idea what caused that.
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We're a day away from the Gann top. Waiting for them to release the actual deal... my guess is it's gonna be extremely underwhelming. Yesterday's report of tariffs staying in place until November shoulda sent the index down more, but surprise surprise it actually went higher than went the news dropped yesterday.
Pretty irrational move considering earnings are right around the corner and now all cyclicals will have to basically factor existing tariffs into guidance for at least 2 more quarters. Sorry, but I thought the whole point of the trade deal was to alleviate tariffs? Instead the market creamed their pants because tariffs that were never implemented... didn't get implemented. I guess 1+0=2?
If this rally keeps stocks elevated I'm gonna short the piss outta some cyclicals when it comes time for earnings.
Still hovering around my target, let's see what tomorrow holds when the deal actually gets released.
Yea IMO ur on tar here Wildman... I figured 13 days on top now on day 10, should start to rollover next week, and yes might get pretty steep in 4... ride the rail!
TheKitchenTrader
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Great chart and you might have nailed it. Let's see what tomorrow brings.
DaddySawbucks
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Going parabolic vertical exhaustion gap over 3300 IMO. Feb 2020 might look a lot like Feb 2018. Might just ride the channel though. GLTA
KNUTWILLIE2U
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@chinawildman --> Current round of Fed repo expires Jan 14
(*) Meaningless I just found out as they are rolling shorter duration treasuries so it mutes the reduced participation in REPO
chinawildman
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@KNUTWILLIE2U, Understood but they should be issuing a statement soon about repo going forward in Q1... Let's see how much more easy $ they can create.
hungry_hippo
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You should stop using SPY to analyze MFI, SPY volume is not the same as SPX volume.
Also ES1! is more important than either SPY or SPX, this is all futures pump and dump.
chinawildman
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@hungry_hippo, I typically use SPX500USD... my SPY chart was cleaner and didn't feel like erasing my lines. Regardless of the ticker, daily MFI on the S&P has been rolling over pretty hard.