I hate leaning to one side or the other too heavily because i'm not a prophet and i can't see the future. But there are also some times where you see the proverbial red lights flashing.
Exactly a month ago i posted an idea aptly named "BuY tHe DiP" where i in so many words laid out my case for that being the top, at least if not in the interim. And it was. Everything i was seeing a month ago. I'm seeing now. But this time around there's some nuances that are just as concerning if not more.
Last time around it had to do with retail making too much money, getting too cocky, and definitely getting too comfortable with the market on easy mode. Hearkens back to the everyone on one side of the boat. But this time around not only is everyone on one side of the boat. But things like bonds are signalling something bad is on the horizon. And you have to listen to the bond market, because they're the closest thing to being clairvoyant you're going to get.
Today was in my opinion a shot across the bow. And the cognitive dissonance and the automation (maybe literally) of that condition is almost reflexive. Any time we had a pullback people are buying into it. Now, a lot of that is the literal wall of liquidity we have down below. But also a lot of this is rampant speculation based on greed. And again i'm going to point to NDX and the mega cap's. It's incessant over there. Literally any small pullback is being snatch up with ferociousness.
When should you start to worry about trading a specific asset, stock or strategy? When you're winning too much. You're not Nostradamus, nor are you clairvoyant. When you have a trade or strategy that has an insane win rate it's time to start being vigilant and keeping your head on a swivel because you know for fact, you're going to get clapped. And it's always when you have size on the trade, and it's always when you're not looking. That, is NDX right now. It can't lose. People are putting on stupid amounts of risk in order to get in and out of those names because their win rate is out of control. Everything else is dead or dying. The only thing that is winning right now are those big mega cap names or ETF's that include them. I guess i can throw in the chipmakers as well, but as least they correct every so often. Everyone is looking for alpha and alpha is only in one place, meaning everyone is... on the same side of the boat.
With that being said we're incredibly bullish. The buy the dip crowd is out there having a field day. Can't lose, right? Besides the daily today printing a bearish engulfing that's an incredibly bullish candle when you look at it. We dipped down into the range and almost completely retraced at one point. But not quite.
First off i'm going to show you the 10 yr. This chart should scare the shit out of you. In general bonds are used as a safe haven. That's where people park money because it's "safe". The yield on the 10 yr dipped back down to .6% again today. The lower bound on yields, the higher bound on notes. We're incredibly bullish on the SPY chart right? Why in the world would money be piling into bonds at a .6% yield? Because they see something we don't. And if it breaks this range to the upside shit is either already hitting the fan, or about to hit the fan. This is a divergence in the market. Usually when the market is high, the 10 yr falls and bond yields rise. The exact opposite has been happening. Flashing red light. If it breaks and closes above 139'16 run for cover. There is no reason for bonds to be this high, near the top of the range while we're so high on the SPY chart.
Now. We've been here before, but never when price has been this high. And it's completely possible we trade away from this level and crisis averted. But this is the writing on the wall.
Today we gapped up slightly on a beat for the initial jobless claims but i was actually surprised the market didn't take it and run with it like they have in the past. The beat was slight, but it still did beat.
We gapped up at the top of the range and after a minute or two spent short covering and trying to head for the breakout they got whacked in the head and that sent us back down to fill the same day gap within the first 15 mins. They originally defended the breakout area (again) at $312.52 pretty successfully but in the middle of their bounce we got an algo pop on ol Donny's tax returns not being off limits to the NY AG. The street didn't like this. Damning whatever in Donny's taxes = higher likelihood of Biden 2020 = Higher chances of higher taxes = lower profits. In a nutshell. But, moving on, we broke the key levels and after a small bull counter attack to try and regain them and finally just gave up the ghost and we knifed through everything else i had as important until we got to $312.10 (weird seeing you again). They attempted to go for the gap at $310.20 but came up short and after retaking $312.10 we essentially low volume algo pumped with the assist of the buy the dip crew traded all the way back to our key levels of $315.14 and $315.52. We ended up getting rejected from that level and after the bulls trying to pad the daily close we still closed below the key levels, but above this megaphone trendline that is turning out to be more and more important the more time we spend up here. Look at how many reactions we had with it just today. BuY tHe DiP.
The hourly looks like they're fighting a losing battle with the bears from this level. Slowly but surely. But objectively you can try and call this a bullflag as well
The daily printing a bearish engulfing but at one point was actually engulfing every candle since Monday. That wick is impressive. This looks like we came into a demand zone and retraced. Bullish, even tho the close was technically bearish
SPX knifing through all three of it's key levels, and then regaining all three it literally closed exactly on the key level that is the breakout area. Coincidence?
Technically a bearish close though on the daily
ES is below the megaphone pattern, but still above the downsloping trendline from the supply zone
ES coiling for a move somewhere. Did NOT print a bearish engulfing today. Still holding the bullflag thesis
IWM trading OUT of it's symettrical triangle. Knifed right through it this morning. Retested, a couple times and ultimately was rejected. Red flag
Nice tag of the 50 period MA but failing to get back inside the triangle. Also check volume, picking up
VIX with a 20% range today. This is technically a bullish candle but was also up over 10% at one point today. A nice tag, again, of the 200 period MA this morning and a rejection from the .618 fib and a couple MA's. Still not comfortable calling this a reversal
BuY tHe DiP
Fifth close outide of the daily Bbands. Time is ticking
DJI just exuding weakness
Only a matter of time
Transports taking the lead
Silver with another close ABOVE 18.67. If it holds tomorrow i think it'd be safe to call it a breakout
Gold saw some profit taking as well as silver. Now, this can be worrisome because the past 3-4 months metals and equities have been correlated, but over the past week it looks like they were trying to break that. Now, if these start selling off with equities that's a bad sign as well
We eased off on the Put Call Composite but still the third most bullish print since the pandemic. Highest being the day or two before the last rug pull, second highest being yesterday
SPX still bearish on the market..
Now i fully accept that i could be wrong. But my spidey senses are tingling just like they were a month or so ago. The writing is on the wall and the market is signalling it's not healthy.
Now, with that being said and just like they did on Monday if they want to get us above this level they'll most likely try and gap us over. That could absolutely happen tomorrow or Monday and the 10 yr can come off it's danger zone level and all is fine in the world. But right now i think this ends badly. When you shove 10 pounds of shit in a 5 pound bag what happens? But again, i've been wrong plenty before and i hate going out on a limb like this.
Keep your eyes open for shenanigans and head of a swivel for those 5 guys in a room. I'm starting to feel the rug pull coming. But then again being a bear in this market is expensive. I still have not touched my positions as neither my stops nor my profit targets have been hit. Remember the market doesn't HAVE to do anything. Sorry to be doom and gloom but i got that guttural "oh shit" feeling.
Thanks for reading and as always happy trading.
This is not trading advice. This is my own personal opinion based on my own personal TA. You are responsible for your own trades.
Exactly a month ago i posted an idea aptly named "BuY tHe DiP" where i in so many words laid out my case for that being the top, at least if not in the interim. And it was. Everything i was seeing a month ago. I'm seeing now. But this time around there's some nuances that are just as concerning if not more.
Last time around it had to do with retail making too much money, getting too cocky, and definitely getting too comfortable with the market on easy mode. Hearkens back to the everyone on one side of the boat. But this time around not only is everyone on one side of the boat. But things like bonds are signalling something bad is on the horizon. And you have to listen to the bond market, because they're the closest thing to being clairvoyant you're going to get.
Today was in my opinion a shot across the bow. And the cognitive dissonance and the automation (maybe literally) of that condition is almost reflexive. Any time we had a pullback people are buying into it. Now, a lot of that is the literal wall of liquidity we have down below. But also a lot of this is rampant speculation based on greed. And again i'm going to point to NDX and the mega cap's. It's incessant over there. Literally any small pullback is being snatch up with ferociousness.
When should you start to worry about trading a specific asset, stock or strategy? When you're winning too much. You're not Nostradamus, nor are you clairvoyant. When you have a trade or strategy that has an insane win rate it's time to start being vigilant and keeping your head on a swivel because you know for fact, you're going to get clapped. And it's always when you have size on the trade, and it's always when you're not looking. That, is NDX right now. It can't lose. People are putting on stupid amounts of risk in order to get in and out of those names because their win rate is out of control. Everything else is dead or dying. The only thing that is winning right now are those big mega cap names or ETF's that include them. I guess i can throw in the chipmakers as well, but as least they correct every so often. Everyone is looking for alpha and alpha is only in one place, meaning everyone is... on the same side of the boat.
With that being said we're incredibly bullish. The buy the dip crowd is out there having a field day. Can't lose, right? Besides the daily today printing a bearish engulfing that's an incredibly bullish candle when you look at it. We dipped down into the range and almost completely retraced at one point. But not quite.
First off i'm going to show you the 10 yr. This chart should scare the shit out of you. In general bonds are used as a safe haven. That's where people park money because it's "safe". The yield on the 10 yr dipped back down to .6% again today. The lower bound on yields, the higher bound on notes. We're incredibly bullish on the SPY chart right? Why in the world would money be piling into bonds at a .6% yield? Because they see something we don't. And if it breaks this range to the upside shit is either already hitting the fan, or about to hit the fan. This is a divergence in the market. Usually when the market is high, the 10 yr falls and bond yields rise. The exact opposite has been happening. Flashing red light. If it breaks and closes above 139'16 run for cover. There is no reason for bonds to be this high, near the top of the range while we're so high on the SPY chart.
Now. We've been here before, but never when price has been this high. And it's completely possible we trade away from this level and crisis averted. But this is the writing on the wall.
Today we gapped up slightly on a beat for the initial jobless claims but i was actually surprised the market didn't take it and run with it like they have in the past. The beat was slight, but it still did beat.
We gapped up at the top of the range and after a minute or two spent short covering and trying to head for the breakout they got whacked in the head and that sent us back down to fill the same day gap within the first 15 mins. They originally defended the breakout area (again) at $312.52 pretty successfully but in the middle of their bounce we got an algo pop on ol Donny's tax returns not being off limits to the NY AG. The street didn't like this. Damning whatever in Donny's taxes = higher likelihood of Biden 2020 = Higher chances of higher taxes = lower profits. In a nutshell. But, moving on, we broke the key levels and after a small bull counter attack to try and regain them and finally just gave up the ghost and we knifed through everything else i had as important until we got to $312.10 (weird seeing you again). They attempted to go for the gap at $310.20 but came up short and after retaking $312.10 we essentially low volume algo pumped with the assist of the buy the dip crew traded all the way back to our key levels of $315.14 and $315.52. We ended up getting rejected from that level and after the bulls trying to pad the daily close we still closed below the key levels, but above this megaphone trendline that is turning out to be more and more important the more time we spend up here. Look at how many reactions we had with it just today. BuY tHe DiP.
The hourly looks like they're fighting a losing battle with the bears from this level. Slowly but surely. But objectively you can try and call this a bullflag as well
The daily printing a bearish engulfing but at one point was actually engulfing every candle since Monday. That wick is impressive. This looks like we came into a demand zone and retraced. Bullish, even tho the close was technically bearish
SPX knifing through all three of it's key levels, and then regaining all three it literally closed exactly on the key level that is the breakout area. Coincidence?
Technically a bearish close though on the daily
ES is below the megaphone pattern, but still above the downsloping trendline from the supply zone
ES coiling for a move somewhere. Did NOT print a bearish engulfing today. Still holding the bullflag thesis
IWM trading OUT of it's symettrical triangle. Knifed right through it this morning. Retested, a couple times and ultimately was rejected. Red flag
Nice tag of the 50 period MA but failing to get back inside the triangle. Also check volume, picking up
VIX with a 20% range today. This is technically a bullish candle but was also up over 10% at one point today. A nice tag, again, of the 200 period MA this morning and a rejection from the .618 fib and a couple MA's. Still not comfortable calling this a reversal
BuY tHe DiP
Fifth close outide of the daily Bbands. Time is ticking
DJI just exuding weakness
Only a matter of time
Transports taking the lead
Silver with another close ABOVE 18.67. If it holds tomorrow i think it'd be safe to call it a breakout
Gold saw some profit taking as well as silver. Now, this can be worrisome because the past 3-4 months metals and equities have been correlated, but over the past week it looks like they were trying to break that. Now, if these start selling off with equities that's a bad sign as well
We eased off on the Put Call Composite but still the third most bullish print since the pandemic. Highest being the day or two before the last rug pull, second highest being yesterday
SPX still bearish on the market..
Now i fully accept that i could be wrong. But my spidey senses are tingling just like they were a month or so ago. The writing is on the wall and the market is signalling it's not healthy.
Now, with that being said and just like they did on Monday if they want to get us above this level they'll most likely try and gap us over. That could absolutely happen tomorrow or Monday and the 10 yr can come off it's danger zone level and all is fine in the world. But right now i think this ends badly. When you shove 10 pounds of shit in a 5 pound bag what happens? But again, i've been wrong plenty before and i hate going out on a limb like this.
Keep your eyes open for shenanigans and head of a swivel for those 5 guys in a room. I'm starting to feel the rug pull coming. But then again being a bear in this market is expensive. I still have not touched my positions as neither my stops nor my profit targets have been hit. Remember the market doesn't HAVE to do anything. Sorry to be doom and gloom but i got that guttural "oh shit" feeling.
Thanks for reading and as always happy trading.
This is not trading advice. This is my own personal opinion based on my own personal TA. You are responsible for your own trades.
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CPI numbers here in less than 15 mins. They're looking for inflation and the bars set super low.
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-.02% vs .04% expected. Deflation's a bad word around these parts.
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Gilead literally dropped positive news on they're virus therapy the same minute as the bad CPI numbers. Market only sees what it wants. Again, this ends badly.
Weirdly enough gold is still up on the CPI numbers and the dollar's down as well.
Weirdly enough gold is still up on the CPI numbers and the dollar's down as well.
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We were at $312 an hour ago.
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This may have been another false alarm after all. We'll start to find out here in 5 mins.
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Off the bat. Flag on the bulls if we break that megaphone trend line
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Alright, opposite day? NDX red, IWM leading to the upside. Transports up 1.4%
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I guess one could view this as well on the 15m?
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QQQ leading........
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5m close below... Volume could be better.
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The market's churning. No clear direction. No clear trade besides XLF and transports and they're both trading up. Different character to everything today. Participation sucks.
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Banging on that triangle right now.
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Decent breakout of the triangle. That could have been the retest.
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Only 440k shares traded the last 10 mins.
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Fifth touch of $315.52..
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Just took a look at the weekly. We've traded in a 2.25% range the entire week.. Also, the close isn't looking the most healthy right now. Keep that in mind.
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Interesting how we had that last minute push below $315.52 for the hourly close. Not reading too much into it though. Everything's dead today.
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XLF is having a huge day with it being up 2% already. Bank earnings next week. Transports are also up almost 2%.
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I don't really even have words. Earnings show be intersting. 07/16.
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Not sure what that was.
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XLF on a tear and it's taking everyone else with it. This is the complete opposite of what we've been seeing the past two weeks. Bearish divergences on the 5m though and at this point it's overbought. This looks like QQQ yesterday, but it's XLF.
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There's been anywhere between 1500-10k shares in the book chasing this higher the past 10-15 mins. That's all it's needing.
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I'd wager they're going for the positive weekly close.
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We're at 36m shares traded with 1.25 hours to go..
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I wouldn't put it past them to actually go for the gap this last hour.
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45 mins left..
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Remember all they have to do is keep hitting stops and this goes to fill the gap.
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They just missed the gap on SPX by 5 points
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Highest volume candle of the day right there.
