Something is wrong in the market. I'm not sure what it is, and i can't put my finger on it but the day to day behavior is the past week or so has been strange to me. We've had little to no institutional participation outside of algos who have been aggressively buying every dip anytime there has been one intraday. But it's almost as if these algos are running out of steam at technical levels. But also filling the gap with volume when theres a lack of sellers to pump price intermittently. This is giving the perception to the retail trader that they should keep buying, keep chasing. Take today for instance. We were rejected from $313 again today after sellers failed to show up to follow through on the gap down. The way back down to $310 was actually tradeable but as soon as we touched $310 the first time we immediately traded away from it on meh volume. That got faded and the only meaningful volume we had was on the way back down to $310. Broke it, and then we had a pump back to over $311. "Buy the dip" can't go wrong right? Wrong.
Watch for the rug pull.
Today was strange. It was almost spooky to me for some reason. /ZN was down another notable amount, VIX was down about 5% but we were slightly lower to flat. This is strange. It's a divergence or disconnect/dislocation to me. The only thing it could be is the VIX and the 10 yr frontrunning (????????) an upward move. I have no other way to explain it unless there's something happening underneath the hood i don't have visibility into. There was no clear coherence to price action today in the indices either. Every index was essentially up and or down the same amount (algos). The best way i can explain it is walking into a room that's supposed to be full of people but it's completely empty, with no activity. It was spooky. That end of day pump looks like it was just a smoke screen on the charts in price action before the rug finally gets pulled. Have retail fill your shorts and then drop the hammer. This morning we have a sell bias but that evaporated once we got to the cash open. Also weird.
We're at another key level and the usual market indicators are telling everyone to go right, but without the supporting nuances. Like, especially right now, the 10 yr was down without a corresponding move in equities. That's odd. It looks like bait.
I know we had new ECB stimulus (hooray for forever QE) and i'm not sure how that's affecting the plumbing of the financial market so i'm not sure if this weird market feeling is based off of that. One theory is that we're seeing liquidity finally start to dry up, and retail is now running out of gasoline for the tank.
The dollar has also been falling for like 8 straight days and we're most likely due for a counter trend rally. Which i'm pretty sure would be bearish for stocks.
DXY. Notice this is the 6th daily close outside of the BBand. So unless something relatively drastic is happening in the global financial market that i don't know about we should see a bounce.
5m SPY chart with breakdowns
Daily doji candle. Not volume and price
SPX weekly
ES showing average volume. But keep in mind we were down 20 handles in pre market
IWM with a stall under resistance for the second day
VIX tagged it's 200 period daily MA almost perfectly before it retraced. But that retrace didn't come until the last few hours of the cash session. We did break RSI trend though
At around 6 A.M EST we saw almost a -5% move downwards in the VIX while ES was at the lows of the day
NDX actually leading to the downside. Daily will need one more down day for it to be a confimed reversal
Bonds with the biggest move since April, also confirming a risk on rally, but stocks were down to flat?
I said a couple days ago that i got spooked out of my longs and today i got the same feeling. There's something happening underground that i can't see or am not experienced enough to see but institutions are sitting out for some reason.
Tomorrow we have the jobs report, again. The last what, 5-6 weeks, the market has rallied on these numbers for no real reason. This may be a news catalyst for MM's and institutions use to move the market. Which way i have no idea, but the market hates being predictable. Keep that in mind.
Keep your head on a swivel and happy trading. Let me know if you have any ideas as to what we're seeing.
This is not trading advice. This is my own personal opinion based on own personal TA.
risk on. no sellers. fomo. sector rotation. all roads point higher for the moment. not ready to correct just yet. SPY 315? 320? 340? we don't know in a liquidity world. no correlation to Mainstreet and hot money chasing ROI. Don't get in front of the train just yet. We dropped and filled the gap so heading North.
merkd1904
⋅
@Tannersville65 didn’t look like the gap got filled from where i was sitting. $320 would be my next target.
sumaia_khan
⋅
Good Job,Go ahead bro
svansi1
⋅
The reason the markets make zero sense right now is because of retail investors that have been treating the US markets like the crypto currency markets of late 2017. They will be the first to sell when key resistance is hit, it will result in a massive sell off. The economy will get significantly worse due to this and will likely result in a deflationary spiral. What we are witnessing right now is self destruction due to idiocracy. Institutionals aren’t selling off until they have to (at huge key points like a full v-recovery) because they know it will cause a collapse.
jalvarez782
⋅
@svansi1, Retail flows just don't have the power to move the S&P as far as it has. What we're seeing here in my opinion is an increase in leverage by institutions and hedge funds thanks to lower borrowing rates. The increased leverage may be on the shoulders of the quants playing the largest mean reversion in the history of the markets, but it will end. Unfortunately with zero rates, there is no reason not to pile on the leverage and go along for the ride.
buddumz
⋅
@jalvarez782, do you feel we can see it continue to climb into next week
jalvarez782
⋅
@buddumz, I would be very shocked if we didn't see some profit taking after a week like this.
One-World
⋅
@jalvarez782, some retailers are definitely taking profit, then another reverse occurs. But quoting the origin post "the market hates being predictable", big players can always surprise people when nobody is aware of the atmosphere.
merkd1904
⋅
@jalvarez782, Yea i don't think retail go us here. But it's putting wind in the sales and thowing us further momentum wise than otherwise would be normal. All the funds had to do was set running lights and retail is doing the heavy lifting in my opinion. I think most funds have been cycling out, rebalancing, or profit taking the past couple weeks just based on volume. It was like follow the leader with the algos. Today was obviously different though.
adrojas2003
⋅
@merkd1904 Truly technical analysis. I ask myself the same question. What is going on that nobody is seeing? We should have had a retrace long time ago on various sectors including XLF and XLK but instead they have rallied and my June downtrend analysis has been proven wrong. Ever since the big drop back in February, where a correction was inevitable (Covid or no) markets should have been standing at lower levels. There are so many OVERVALUED stocks out there and it is scary, nothing makes sense. It feels like you said, a fake reality, a well designed magic trick but the trick has not been revealed. And like you also mentioned, the rug is gotta to be pulled at any moment. Watch your cash!!!!