We just spent an essentially an entire week consolidating and trying to get past what has turned out to be a brick wall of resistance. And not because of selling per se, but because of lack of conviction in my opinion. Not because of selling because we haven't been rejected from here. A lack of conviction because as soon as we get to these levels we turn right back around. Like trying to get into a club that's "at capacity" and you're waiting in line and the bouncer just won't let you in because you don't have enough women with you, so you just wait outside waiting for them to let you in.
We're in a really weird place as a market whole. Especially on SPY and SPX we're in this weird trader purgatory where there's literally no trend (on the short term) and now at this point we're nearing two months of trading inbetween a 200 point range. Yes, you can trade a 200 point range but this week we only traded in a 3.5% range, which was better than last week's ~2.3% range but still equally as oppressive in my opinion. Today was SPX's fourth touch of the highs from June. And we haven't been rejected, and still haven't broke throough. Now two weeks in a row the Sunday traders (5 guys in a room in their opinion doing gods work) have tried to gap us over resistance areas and succeeded. And it looks like they may need a three-peat in order to get us over this hump. Finding another way around. Like sneaking in the back door to the club while the bouncer's not looking.
The one notable part about this week is we did print a new weekly high, but it looks like it's been a struggle. And, albeit small, we're still printing divergences. And, it's also notable that all major indexes only have one major gap to fill up above, and that's from the kick off of the feb thunderdome special. All gaps get filled eventually, but we have multitudes more down below than we do up above. I find it suspicious that all the indexes filled their island gaps this week but then we just stalled out, and didn't reverse. This is weird. And the pattern we've been printing the past two months could be construed as either , or . Just depends on your bias. But i will say that the last three days just staying up here is kind of like an animal stalking it's prey. But on the other side of the coin it doesn't look like there's a lot of gusto to actually break out. Like i said earlier this week it's like we've been climbing these weekly stairs but majority of that movement has been on a Sunday night. It's suspect (as is a lot of things in the market right now) but it's the reality. I mean i heard someone on Bloomberg today say that everything in 2020 is already priced in, and now investors are looking to 2022, and even 2023. In short he's essentially saying the world could start ending in 2020 and investors would still be buying. Because even if we were in thermonuclear war the lone server in the basement of the fed would probably still be bidding up all the major indexes.
So, again. Two competing theories. The one being this week and the last were rebalancing/cylcing out of the ridiculous tech stocks that got us back up here, and into a more healthy breadth in the market. I likened it to everyone getting into position on a frontline before an attack. DJI filled it's gap, over it's 200 period MA. DJT even did, and missed it's June island gap by something like 10 points today. And now that everything is caught up, and relatively balanced back out we can officially kick off this new bull market with the broader market.
The one is simple. Resistance. We can't break it. There's no follow through (on the bear side too though) and underneath $312-$314 market structure is pretty rotten. All it takes is a match. And on top of that we now have six different gaps to fill. On our way up to the highs we left in Feb it was much the same story. But the machines kept bidding us up and all was well in the world. Until it wasn't and that house of cards fell so fast it was literally breathtaking. Trading that was literally unbelievable. This time around the market structure isn't AS bad, but still bad. And let's be real. Reality isn't indicative of a new bull market, and everyone knows it. But, in the market reality doesn't matter until it does. Just like that clown who said 2020's priced in. But the sad fact is he very well could be right. But, also judging by the commitment of traders reports the positioning outside of things like mutual funds is relatively neutral.
Another thing that is honestly the most important thing to happen all week was the VIX closing convincingly below it's support and daily 200 day MA. That's huge. And if you run a hedge fund that the computers tell you how to size your positions based off of you just got a huge green light to start piling on leverage. Especially if we get some follow through. But that would mean we'd have to break out. One affects the other. It's like levers. But today, the VIX got whacked and that significantly deteriorates the bear thesis in my opinion. But, it's just a tea leave to be read and nothing more. It very well could have been a manipulated move to signal the all clear and then they drop a rock on the market Sunday/Monday leaving everyone holding the bag, again. 5 guys in a room don't just try and rob the poor all the time, sometimes they rob the rich as well. We still haven't made a new low, but we're one trading day away from a complete retrace from the June move.
5m showing us gapping up modestly and hitting decent sell pressure throughout the most hour, filling the gap. But as soon as we got near the lows from yesterday's range the selling literally just stopped and they staged a nice little rescue op to close us literally exactly on support. It's honestly admirable sometimes. We didn't make it anywhere near there the rest of the day as the algos took over and got back to their comfort zonee. There was one odd 5m candle that looked like an algo pop, but there was no news. It turned out to be a o one second candle that had over 208k shares traded in it. This is abnormal. Normally something like that is followed up by a headline, but not this time. So, something to ponder over. Well, moving on that candle was retraced and then some by half the amount of and it was back to regularly scheduled programming until about the last hour of trading where finally picked up, and they started to try and go for that new high. SPY pierced it's downtrend line from the June high but was push back down by decent selling. At one point in the last 10-15 mins i saw like 30k shares on the sell side. Got noped, again.
Hourly looks the same. But it does jump out to me how we've tested this area so many times and still haven't broken through or traded away from it. That defies the 80/20 rule, and it curious. It's also prime for them to gap over come Monday morning. And if that were to happen the real question is if they trade higher, or we kick noped back down into the range where we came from.
Daily without drawings. I mean doesn't that just look weird to you. Almost as if they want us here. Above the moving averages, but not much higher. Also notice is absolutely terrible compared to the 100 period MA
I think it may be this, the fact that we have all this open space below an entire two weeks of daily candles. This is odd and it looks like there's nothing there to support price if we break through
Weekly showing the new closing weekly high
But even on the weekly We're starting to print divergences, not to mention how if we got back to ATH's we'd most likely just like NDX with it's huge divergences as well. That's weakness. But the market gives no fucks until it does
SPX obviously showing the same as SPY but we literally touched the resistance line and it was like it touched an electric fence and traded away from it
What the bouncer's saying to SPX everytime it asks if it could get in yet
Things looking even more peculiar on the daily, with it printing some sort of emoji the past three days. I've honestly never really seen a pattern like that before
I mean in a vacuum that looks like it wants to break out on the weekly
But with the same divergences
ES technically could be printing a as well
If you really use your imagination that could be just a really long bearflag that's gotten out of control. ES has been an absolute mess since last month
I mean that's ten days in a 3.6% range
Also with the huge divergences if we get above June's high
Still haven't defeated that from yesterday either
New weekly high for ES as well. Notice on all these weekly candles the was actually better than the past couple weeks, which is interesting since we didn't go anywhere
IWM seemingly stuck between a rock and a hard place. With hard support below and the downtrend line from Feb above it. It took a second stab at breaking out today only to fail, again. That is less than a 2% range for the past two days
Ok i apologize, IWM still has yet to fill it's gap from the island reversal, but it looks staged to try and break out. Most likely a gap over the trendline
Third consecutive close above the daily 200 period MA
The weekly has it's work cut out for it though. Has both the weekly 200 and 50 period MA's to get through. Still could argue that's a as well
This is not what you want to see if you're short this market. And the worst part was this is an outsized move for the move we had today. But again, it could be a headfake. I've seen crazier stuff
XLF opening directly on it's trendline only to trade away from it and not recover the rest of the day
Not a good look on the hourly
Daily almost printing a
Also not a good look on the weekly
Ok, couple things on DJI. First being that's like a textbook . But what do i say about the technicals being too perfect? On DJI there's slightly less fuckery but it still is about. Also, the high from Monday opened right on the downtrend from the Feb top and traded away from it
This uptrend line from the March lows has been DJI's bane. But it did do some work this week with that island reversal gap fill. Could go either way
Obviously haven't made a new weekly high on DJI yet
What's look like on QQQ 5m? But we did see some life out of QQQ yesterday and today
Even more prevalent on the hourly
That's the largest daily candle we've had this entire run. There's a lot of space down below. When this thing pops it's going to be epic
Just park this right here
Silver showing some resiliency, getting back above support
Gold with a nice headfake again. That's impressive
Now count, 7 wicks into defcon area. I honestly think someone is protecting that level knowing that if it breaks people like me will be screeching from the rooftops. But at this point it's a little odd. Again, it's strange for there to be such a high demand for bonds with us so high in price
Probably takes the cake for weirdest weekly chart this year
The suspense is building. At least today wasn't making my eyes bleed watching price do nothing. There was another concerted effort to get to new highs today and the invisible hand of nope came through and stopped it. That's basically it. Stuck in the mud. I do know that once we find a direction though it'll be worth the wait, hopefully.
That's basically all i got. I didn't take anymore positive delta positions this week. I'm still around -7 delta and am waiting to get some resolution on what the hell is happening. I didn't really trade at all this week other than getting stopped out.
Keep your head on a swivel for shenanigans Sunday night into Monday morning with the usual suspects such as CNBC vaccine news, stimulus packages, COVID deaths , and all the other headlines we're all so accustomed to.
Have a good weekend everyone. Thanks for reading.
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