I'm going to keep this one relatively short just because i feel like the writing is on the wall for what i've been feeling around the market the past week.
I'll provide three pieces of evidence and then get into the charts.
One: "Rpbinhood traders cash in on the market comeback that billionaire investors missed"
www.cnbc.com/2020/06...nvestors-missed.html
Two: "Warren Buffett is ‘an idiot,’ says investor who claims daytrading is ‘the easiest game I’ve ever played"
www.marketwatch...ayed-2020-06-09?mod=home-p...
Three, and by far the most telling: Copy and pasting due to paywall.
"Speculative excess has surged to the highest in at least 20 years among U.S. options traders -- and that’s a negative for stocks over the medium term, according to Sundial Capital Research Inc.
Traders established fresh bullish positions last week by buying 35.6 million new call options on equities, according to Sundial founder Jason Goepfert. That’s up from a peak of 28.7 million in February, when speculative activity was rampant, he wrote in a note Monday.
“Options traders make stunning bets on rising prices,” Goepfert wrote. “This kind of activity has a strong tendency to lead to negative returns in the S&P 500 and other indexes over a multi-week to multi-month time frame.”
...
"At the heart of the speculative activity are smaller investors, according to Sundial. Small trader call buying made up more than 50% of total volume last week, the highest since 2000, it said.
Past instances when bullish small trader positions made up 45% or more of volume preceded a median loss for U.S. stocks of about 3% in two months time and 15% in a year, according to the note.
“Small traders are pushing their luck in a major way,” said Goepfert. “It seems increasingly risky to try to chase this rally along with traders who have traditionally been extremely reliable contrary indicators.”"
www.bloomberg.com/ne...s-to-stunning-levels
I'm calling a top. If not here than somewhere very close to here and i'm positioned as such. Once you have chuckleheads like the ex CEO of a gambling website calling Buffet and idiot an calling day trading the easiest game he's ever played... The top is in. You couple that with the incredibly irrational moves some of these stocks have made in a mania type environment and all the normies making money hand over fist the market has a tendency to want that money back.
Here's how it'll happen, just like it does every time: New traders most likely bought the top yesterday after being trained to buy at the close every day, and ride overnight. They've also been trained to buy every dip, because it works ("easiest game i've ever played"). Most probably bought the dip today. Why wouldn't you? IF we continue to decline, let's say we have another 1% or greater down day tomorrow they'll average down. Why wouldn't they? It's worked every time before. Until the next day we have an even deeper sell off. They start panicking - they average down even more if they have any more money. This is wash rinse and repeat until these new traders sell their calls or stocks for a deep loss, and only then will we bottom. Once we shake out and capitulate the ones who were on easy mode that's when we'll reverse. This happens on a micro scale in individual stocks all the time. But since we're SO bullish in the entire market that's when they'll drop the hammer.
They blamed our "down day" on the FOMC meeting today and tomorrow. Which is half true. We normally see a void in volume as money is in "wait and see" mode before the press release and conference. I don't see the fed saying anything astounding to the point it will shake the market, or so dovish that it'll send us to new highs. BUT, the market uses these news events to justify a move either way. They'll attach whatever headline to whichever way the market moves. My point is they can use it as a catalyst to move price either way. Don't jump the gun on this. Usually we have an EKG type price movement during the press release, and to a lesser degree the press conference unless Jpow steps on his man parts. Which he used to do all the time btw.
Technically we're above $320 on SPY. That's bullish. IWM, DJT, XLF, and the entire DJI was in a little bit of corrective mode but CLF, DJT, and IWM showing signs of a possible reversal if not a continued pullback. They tried buying the dip on IWM but ended up below support. These are my leading indicators. Also note that we saw a move back out of cyclicals, and small caps and back into havens like AAPl and AMZN. Smart money sees the writing on the wall. Also note that we had anemic volume again today. If you liked yesterday's post i noted that the break of $320 this morning was a bear trap unless volume picked back up. Which is exactly what happened. It also looked like to me some algos or someone was selling into strength but not enough to cause the rest of the market to get spooked and head the other direction. I'd also like to note that this could be the extent of the "pullback" and everyone with money on the side is left in the dust. It's 50/50.
5m showing an ascending wedge that could also be seen as a bear pennant. But with the help of the algos the buy the dip crowd was to make sure we finished above $320. StOnKs OnLy Go Up
Also look at the Cash In Cash Out indicator - BuY tHe DiP
But the hourly looks like we could just be eating time off the clock to let it cool down. bullflagging and consolidating for a move higher
Can't really derive too much from the daily but this could be viewed as a rejection from the Aug-Sept trendline
I will be watching this tonight into the morning. Last night Asia as relartively flat but the EU had a pretty deep sell off. We'll see if it bleeds into tonight as well
BuY tHe DiP. Barring the end of the day that is bull market behavior. When a bear flag breaks to the upside. All it did was create an ascending wedge with a break downwards under supoprt
Intraday view - targets: gaps, $145, $141, $134, and $125. Keep an eye if we do have a risk off event. IWM has a tendency to move FAST
Not looking too healthy, but nothing confirmed yet
VIX - speaking for itself. Back above what should have been resistance. Need one more day to confirm a reversal
DJT looking a lot like IWM but finding support on the 200
But we might be seeing a rejection from XLF's 200. XLF was super overheated. This doesn't mean it has to crash or correct, it could just hover here to cool off a bit
New ATH's. Same divergenes
DJI still above support but was really overbought on the daily. All it needs to do is tread water to let the indicators cool down
DXY - We're continuing to see a pretty serious downdraft in the U.S dollar. Can't put my finger on exactly why. Inflation expectations? It tried to bounce today with the EU getting whacked but ended up down another .3%. The past two trading days were just a pause for the BBands to catch up.
Silver was down. Gold was up. Divergence.
Silver needs to bounce here or else it may be consolidating for a break down out of it's wedge
Gold retracing a good amount if it's little pullback with a small rejection off the .618 fib. We'll see which way it retraces further. This might be a reflection of the inflation fears as well
As expected i was early on my bonds trade and should have listened to my own analysis. Retested what was support and is now resistance. We'll see if it retraces more as well
The market will use the fed meeting as a catalyst to move the market whichever way it wants and we'll hopefully see some volume. I honestly think we're either at a top, or very very close to a top just by how the market has been behaving and once you have the thought process of "easiest game i've ever played" you know it's time to start getting a little defensive. I may be wrong, i may get a pie to the face tomorrow but as i said the writing is on the wall.
Goodluck everyone. Keep your head on a swivel and happy trading.
This is not trading advice. This is my own personal opinion based on my own personal TA.
I'll provide three pieces of evidence and then get into the charts.
One: "Rpbinhood traders cash in on the market comeback that billionaire investors missed"
www.cnbc.com/2020/06...nvestors-missed.html
Two: "Warren Buffett is ‘an idiot,’ says investor who claims daytrading is ‘the easiest game I’ve ever played"
www.marketwatch...ayed-2020-06-09?mod=home-p...
Three, and by far the most telling: Copy and pasting due to paywall.
"Speculative excess has surged to the highest in at least 20 years among U.S. options traders -- and that’s a negative for stocks over the medium term, according to Sundial Capital Research Inc.
Traders established fresh bullish positions last week by buying 35.6 million new call options on equities, according to Sundial founder Jason Goepfert. That’s up from a peak of 28.7 million in February, when speculative activity was rampant, he wrote in a note Monday.
“Options traders make stunning bets on rising prices,” Goepfert wrote. “This kind of activity has a strong tendency to lead to negative returns in the S&P 500 and other indexes over a multi-week to multi-month time frame.”
...
"At the heart of the speculative activity are smaller investors, according to Sundial. Small trader call buying made up more than 50% of total volume last week, the highest since 2000, it said.
Past instances when bullish small trader positions made up 45% or more of volume preceded a median loss for U.S. stocks of about 3% in two months time and 15% in a year, according to the note.
“Small traders are pushing their luck in a major way,” said Goepfert. “It seems increasingly risky to try to chase this rally along with traders who have traditionally been extremely reliable contrary indicators.”"
www.bloomberg.com/ne...s-to-stunning-levels
I'm calling a top. If not here than somewhere very close to here and i'm positioned as such. Once you have chuckleheads like the ex CEO of a gambling website calling Buffet and idiot an calling day trading the easiest game he's ever played... The top is in. You couple that with the incredibly irrational moves some of these stocks have made in a mania type environment and all the normies making money hand over fist the market has a tendency to want that money back.
Here's how it'll happen, just like it does every time: New traders most likely bought the top yesterday after being trained to buy at the close every day, and ride overnight. They've also been trained to buy every dip, because it works ("easiest game i've ever played"). Most probably bought the dip today. Why wouldn't you? IF we continue to decline, let's say we have another 1% or greater down day tomorrow they'll average down. Why wouldn't they? It's worked every time before. Until the next day we have an even deeper sell off. They start panicking - they average down even more if they have any more money. This is wash rinse and repeat until these new traders sell their calls or stocks for a deep loss, and only then will we bottom. Once we shake out and capitulate the ones who were on easy mode that's when we'll reverse. This happens on a micro scale in individual stocks all the time. But since we're SO bullish in the entire market that's when they'll drop the hammer.
They blamed our "down day" on the FOMC meeting today and tomorrow. Which is half true. We normally see a void in volume as money is in "wait and see" mode before the press release and conference. I don't see the fed saying anything astounding to the point it will shake the market, or so dovish that it'll send us to new highs. BUT, the market uses these news events to justify a move either way. They'll attach whatever headline to whichever way the market moves. My point is they can use it as a catalyst to move price either way. Don't jump the gun on this. Usually we have an EKG type price movement during the press release, and to a lesser degree the press conference unless Jpow steps on his man parts. Which he used to do all the time btw.
Technically we're above $320 on SPY. That's bullish. IWM, DJT, XLF, and the entire DJI was in a little bit of corrective mode but CLF, DJT, and IWM showing signs of a possible reversal if not a continued pullback. They tried buying the dip on IWM but ended up below support. These are my leading indicators. Also note that we saw a move back out of cyclicals, and small caps and back into havens like AAPl and AMZN. Smart money sees the writing on the wall. Also note that we had anemic volume again today. If you liked yesterday's post i noted that the break of $320 this morning was a bear trap unless volume picked back up. Which is exactly what happened. It also looked like to me some algos or someone was selling into strength but not enough to cause the rest of the market to get spooked and head the other direction. I'd also like to note that this could be the extent of the "pullback" and everyone with money on the side is left in the dust. It's 50/50.
5m showing an ascending wedge that could also be seen as a bear pennant. But with the help of the algos the buy the dip crowd was to make sure we finished above $320. StOnKs OnLy Go Up
Also look at the Cash In Cash Out indicator - BuY tHe DiP
But the hourly looks like we could just be eating time off the clock to let it cool down. bullflagging and consolidating for a move higher
Can't really derive too much from the daily but this could be viewed as a rejection from the Aug-Sept trendline
I will be watching this tonight into the morning. Last night Asia as relartively flat but the EU had a pretty deep sell off. We'll see if it bleeds into tonight as well
BuY tHe DiP. Barring the end of the day that is bull market behavior. When a bear flag breaks to the upside. All it did was create an ascending wedge with a break downwards under supoprt
Intraday view - targets: gaps, $145, $141, $134, and $125. Keep an eye if we do have a risk off event. IWM has a tendency to move FAST
Not looking too healthy, but nothing confirmed yet
VIX - speaking for itself. Back above what should have been resistance. Need one more day to confirm a reversal
DJT looking a lot like IWM but finding support on the 200
But we might be seeing a rejection from XLF's 200. XLF was super overheated. This doesn't mean it has to crash or correct, it could just hover here to cool off a bit
New ATH's. Same divergenes
DJI still above support but was really overbought on the daily. All it needs to do is tread water to let the indicators cool down
DXY - We're continuing to see a pretty serious downdraft in the U.S dollar. Can't put my finger on exactly why. Inflation expectations? It tried to bounce today with the EU getting whacked but ended up down another .3%. The past two trading days were just a pause for the BBands to catch up.
Silver was down. Gold was up. Divergence.
Silver needs to bounce here or else it may be consolidating for a break down out of it's wedge
Gold retracing a good amount if it's little pullback with a small rejection off the .618 fib. We'll see which way it retraces further. This might be a reflection of the inflation fears as well
As expected i was early on my bonds trade and should have listened to my own analysis. Retested what was support and is now resistance. We'll see if it retraces more as well
The market will use the fed meeting as a catalyst to move the market whichever way it wants and we'll hopefully see some volume. I honestly think we're either at a top, or very very close to a top just by how the market has been behaving and once you have the thought process of "easiest game i've ever played" you know it's time to start getting a little defensive. I may be wrong, i may get a pie to the face tomorrow but as i said the writing is on the wall.
Goodluck everyone. Keep your head on a swivel and happy trading.
This is not trading advice. This is my own personal opinion based on my own personal TA.
Comment:
Tested but didn't break.
Comment:
Bbands tightening on the intraday. Strap in for a move somewhere.
Comment:
Currently retesting the broken neck line/320, if the next hourly closes below we're in for lower prices
