Markets have been on an absolute tear this week, and as we kick off the final day of trade for the week, it's important to reflect on what we just witnessed, especialy given last weeks (long awaited) bearish price action. We saw a massive rally this week fueled by stupidity, greed, and fraud, and I'm not convinced we're seeig natural price action off the back of "new investors," most of whom are entering the market with $2000 or less in their account. Yes, they can leverage this to the max, but as we've learned by the 90+% success in market makers books, most of those traders lose all their money in a very short space of time. Except for the past year. Also, volume is showing that next to no one is participating in these melt-ups, and gap-ups.
Doing research, fundamental and technical analysis, and other means of making sense of markets, gets you one result in today's market: losses. If you try to make sense of the market, you might want to look at things like individual company valuations, growth rates & market prospects, balance sheets, cash flows, market/ vertical constraints, labour/skill shortages, technical indicators, the strength of the economy, etc. But, all that gets you is on the wrong side of price action, almost guaranteed. It's as if the central banks and market makers have figured out exactly what the market should be doing, and are working morning, noon, and night, to do the polar opposite. Like many of you, this feels personal to me as a career trader.
When we see technicals breaking down, and markets showing weakness, we see the Vix spiking, as it should. But, last week we saw the Vix spike over 60%, on a mere 3% pull back. I've never seen that type of reaction from a 3% sell-off in my entire career. But, hey, as you guys know, I was long UVXY, HUV, and short Nasdaq through HQD, and QID. Needless to say it was a fantastic week for my portfolio. Then, suddenly, price action didn't just reverse, but reversed into hyperdrive. We're looking at a scenario this week that reminds me of November, when we saw the Titanic of short squeezes gap markets up almost every single night, without fail. It was a rocket ship, similar to what we're seeing now, and the entire global market "participated."
Is all this price action off the back of new investors entering the market? No way. Volume is abysmal. No one is participating in this Ponzi anymore. It's like market makers and central banks are purposely moving price action in the opposite direction to get any contrarians out of the market. Are we so desperate to compete with China, that now we're nationalizing our markets as well, and racing to debase our currency? We used to be hard on China for "currency manipulation." Now it's our favorite pass time? Soon the Fed will own half the indexes, and bond markets as well (like in Japan), and the free market dream will be dead. Imo it's already dead, and the minute the last few bears standing close out their shorts, and risk protection (myself included), markets will then crash, and the market makers will be the only ones short, having taken the opposite side of all (long) trades. If not, we're going to have to start researching life in Zimbabwe to prepare for whats to come over the next 25 years.
We can clearly see that rates are rising, with the 10Y yield up over 100% since August 2020, and the dollar is following suit, even though it's worth less than toilet paper in this new reality. When markets are melting up, rates are rising, and the dollar is rising, mean while, the labour market is seeing 800k jobless claims per week, and almost 5 million continuing claims, half of retail stores closed permanently, and businesses are paying their staff with government subsidies, and yet, markets are at all time highs? That's when you know we're in fucking outer space.
The fact that government, and market and policy makers seem to think they're doing good (maybe they're just that stupid), by persistently injecting Trillions in "liquidity" into markets, while simultaniously injecting Trillions in "stimulus" into the economy, while the dollar becomes worthless, and the real economy rots from the inside out, is straight up insane to me. The billionaire class has been repeaing all of the rewards from this type of policy, while the middle class takes on more, and more debt, and more, and more risk. The housing market is a massive ponzi, it's entirely made up of near zero interest speculative debt. The slew of Heloc's on top of those mortgages, that are crippling families from spending, really can't see a rate increase, because then half of households will likely go bankrupt, and the houses will become worthless, with next to no buyers qualifying for mortgages. Maybe the Fed will start buying our houses soon? Oh wait, they're already holding like 5 Trillion in mortgage debt through Fannie and Freddie, so what's another 10 or 20 Trillion? I digress...
Sorry for the rant today, my friends, but like many of you, I'm simply "Fed" up...
I won't be doing a live analysis today, I'm taking the day off to do some research, and will come back refreshed on Monday with a new solution to this direct attack on logic. I'm not taking this lying down anymore. Have a great weekend everyone! Cheers, Michael.
*The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research. I am/ we are currently holding positions in UVXY, HUV, HQD, QID.
amen dude. agree wholeheartedly with all of your points. I will be the last bear standing and will not capitulate. Ill just have to a strangle out a bit more lol.
or, just size up the commodity longs that are set to pop next week. there is no possibility that I will miss the profitable equity short, however many trillions more in USD thats going to be.
Hedge_Of_The_World
⋅
@Perma_Pig, Thanks buddy, I appreciate that. Crazy times, my friend!
Thanks for sharing, it shares the same sentiments that I have on the regular. You are not alone in feeling this way and it makes me scared for the future. Very scared as this type of market will cripple the middle class within a few years. I struggle most days to find an appropriately valued company to buy. That's right I normally strive for undervalued but these days I'd settle for fair value. What I cannot figure out is it cannot be more obvious as everyone stares at in plain sight day in and day out yet is somehow oblivious to it all at the same time. Great analysis, rest assured you are not alone.
Hedge_Of_The_World
⋅
@kretchfoop901, Anytime buddy. I appreciate you, can you tell my patience is running thin? Lol.
ssyxworld
⋅
Right on! This is so true. I have seen shit this week that made me rethink my charting skills as a trader. what should go down, pops. These Charts are absurd and point blank retarded. There is no resistance anywhere to be found on the SPY chart. Tuesday, the only sector I saw in the S & P that was up was fuel and consumer driven sectors. Wait, What? If jobless claims are consistently rising , who is using the goods and fuel? I understand the pipeline restrictions, but price action on these two sectors alone does not result in two 7 dollar day upswings back to back. Especially when you consider the amount of money that's being printed. Welcome to day 5 in a shocking increase of SPY.
Hedge_Of_The_World
⋅
@ssyxworld, Thank you, my friend! Up is down these days, but it appears to never end. Lol.
or, just size up the commodity longs that are set to pop next week. there is no possibility that I will miss the profitable equity short, however many trillions more in USD thats going to be.