Hedge_Of_The_World

But, This Ship Can't Sink?

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AMEX:SPY   SPDR S&P 500 ETF TRUST
In a move that's shocking both Wall Street and Main Street, Treasury secretary Steve Mnuchin has officially put the FED on notice in a bid to end the FED's Emergency Lending Programs by year end. Headlines from popular economists are circling the MSM , and some are saying this is the equivalent of removing the lifeboats from the Titanic. First of all, that's hilarious, considering there were never enough lifeboats to begin with, (because the ship was seen as unsinkable), at least not for the poor passengers. But, the point here is this; the Trump administration is signaling they're not going to hand the Biden administration a basket of goods as a farewell gift. Unfortunately, what this translates to, inter alia, is the FED won't be able to buy their favorite Mega-Tech bonds, essentially putting a direct stop to the billions flowing into the heavy weight side of the stock market through this particular program, and through low interest rate debt funded buy-backs. In addition, ending this program also put's credit markets at risk of a crash for a number of reasons. Most importantly, we've never had such a high percentage of BBB- (lowest level of investment grade) rated bonds in history. If any of these bonds drop even a single rating level, many, many, trillions of dollars sitting in pension funds, would be breaking their mandates, which is to stick to investment grade paper. So in other words, extremely large funds may start dumping BBB- bonds in the near term. Yields would spike alongside inflation , leading the FED toward a single conclusion, which is to raise rates, and discourage borrowing. As ZeroHedge so elequently put it, "Let's hope America's Zombie companies have learned how to swim after all those years of treading water." Finally, as the legendary MC Hammer would put it, "Uh oh."

SPY Analysis:

After breaking through key supports earlier in the week, the bulls have a difficult job on their hands today. Although we're sitting right below the megaphone and ascending channel trendlines (converging around 357), sentiment is turned notably negative today, with Giuliani and Sidney powell's update on the Trump administration's lawsuits last night, along with the news from the Treasury. We're seeing an unusual risk-off mood heading into the weekend. Lastly, each time we've approached the megaphone trendline (357) on the weekly, absent a break above, we've gotten a strong rejection. On the monthly, if the bulls are unable to keep us above 357, we could revisit 320 again very soon. My exit is 300...

As always guys, stay tuned for live updates throughout the day, and thank you for your time, I appreciate all the support. 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.
Comment: Here's my view from the hourly:
Comment:
Comment: Black Friday discounts at the nearest Gap...

Comments

Thank you buddy for a good running commentary. I have similar thoughts and cannot comprehend how the market is running up on bad news and good news equally. Just surreal. It might take a week or 2 to sync in but things will get bad really ugly really quick. Jan PUTs are safe. Yes, 300 is a very reasonable target. If you go all the way to March, I am looking at this pig below $200 easy.
+5 Reply
@rameshmb, Thanks for the comment, my friend, I appreciate the support. I agree, things are about to get very ugly. Let's see how the media tries to shift the narrative like they always do. They're gonna need another Vaccine headline stat! Lol.
+4 Reply
horacejunior Hedge_Of_The_World
@Hedge_Of_The_World, but stonks go up
Reply
wild finish there
+2 Reply
@WDERUVE, Super wild bro. I think the final 10 minutes speaks for itself. Lol.
Reply
What short position are you doing currently? seems like its not going to end above 357 today.
looking to enter soon
+2 Reply
@Rose_Edge, Hey, thanks for the comment. I'm currently short nasdaq with QID, and also long Vix with UVXY, and HUV. My SPY target is 300 to exit depending on whether or not we see a relief rally/technical bounce at 320. If we see a bounce, I may work my position to suit. What are you thinking about shorting? S&P?
Reply
Rose_Edge Hedge_Of_The_World
@Hedge_Of_The_World, Hi, thanks for the reply!

Yes i'm looking to short $SPY itself. Not too comfortable of using SPXS nor SQQQ.
Looking at 12/18 330p.
+1 Reply
@Rose_Edge, Nice, that could work out very well if we see a notable correction next week. I'm thinking we may see a gap down on Sunday night/Monday's open.
Reply
ITS TAKING SIDE WAY
+2 Reply
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