Hey guys, so let's get right into it.
Interesting price action this week with the SPY gapping down over night, and bouncing back off the Greenline support this morning (now sitting around 344), after a few days of light selling. Headlines starting to turn negative here, with "stimulus pessimism" being blamed for much of the sell-off. Market up = stimulus optimism, market down = stimulus pessimism. If only it were that simple.
Jobless claims came in hot today around 900K, and over 10MM people still unemployed. This says it all. As we head into the fall/winter season, businesses could face significant reduction in foot traffic, and revenue, and this may lead to another surge in lay-offs as soon as this month. This is notwithstanding the fact that a reversion to "lockdown nation" could exacerbate the situation immensely.
The bulls are going to fight to keep us above the Greenline support on the weekly, as it would mark the first weekly candle above the Greenline since we broke through the week of Sep 21st. This is key for the bulls to maintain the bullish continuation theory. But, with markets sitting near all-time highs, the 50 day MA at 339, and the 100 day MA at 327, the risk is clearly to the downside, particularly when volume/market depth is this weak.
SPY is looking more and more like a double top each day, but I'm still not ruling out the possibility of a head and shoulders, either. Price action has been consistently distorted by overly optimistic sentiment, and an addiction to "liquidity," so when we see a notable correction, I have no doubt we'll be looking at the 300 level as major support.
Vix continues to trade above it's 50 day MA, which is now trending up. We gapped back up to the 100 day MA over night, and tested a key resistance channel around 28.80. If we break above this level today, tomorrow could be a shit show in risk assets. We all know risk happens fast, and although the elevator has been out of service for a while, never underestimate the markets ability to surprise you, just when you get comfortable. Stairs up, elevator down.
Thanks for your time today guys, and as usual, I'll be posting updates throughout the day - so stay tuned! Cheers, Michael.
If you like our analysis, please hit the Like button and subscribe to our profile so you don't miss our new analysis and updates. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research.
Interesting price action this week with the SPY gapping down over night, and bouncing back off the Greenline support this morning (now sitting around 344), after a few days of light selling. Headlines starting to turn negative here, with "stimulus pessimism" being blamed for much of the sell-off. Market up = stimulus optimism, market down = stimulus pessimism. If only it were that simple.
Jobless claims came in hot today around 900K, and over 10MM people still unemployed. This says it all. As we head into the fall/winter season, businesses could face significant reduction in foot traffic, and revenue, and this may lead to another surge in lay-offs as soon as this month. This is notwithstanding the fact that a reversion to "lockdown nation" could exacerbate the situation immensely.
The bulls are going to fight to keep us above the Greenline support on the weekly, as it would mark the first weekly candle above the Greenline since we broke through the week of Sep 21st. This is key for the bulls to maintain the bullish continuation theory. But, with markets sitting near all-time highs, the 50 day MA at 339, and the 100 day MA at 327, the risk is clearly to the downside, particularly when volume/market depth is this weak.
SPY is looking more and more like a double top each day, but I'm still not ruling out the possibility of a head and shoulders, either. Price action has been consistently distorted by overly optimistic sentiment, and an addiction to "liquidity," so when we see a notable correction, I have no doubt we'll be looking at the 300 level as major support.
Vix continues to trade above it's 50 day MA, which is now trending up. We gapped back up to the 100 day MA over night, and tested a key resistance channel around 28.80. If we break above this level today, tomorrow could be a shit show in risk assets. We all know risk happens fast, and although the elevator has been out of service for a while, never underestimate the markets ability to surprise you, just when you get comfortable. Stairs up, elevator down.
Thanks for your time today guys, and as usual, I'll be posting updates throughout the day - so stay tuned! Cheers, Michael.
If you like our analysis, please hit the Like button and subscribe to our profile so you don't miss our new analysis and updates. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research.
Comment:
Small bounce here back up to the 200 period MA on the 15 minute (345.46). This has acted as solid intraday support since we broke above on Sep 25th. 50 period MA on the hourly (345.89) looking like a nice short-term target, before a continuation of the intraday downtrend. Sitting at the bottom of the BB on the hourly, though, showing a potential reversion to the mean around 350 is also possible. Volume is anemic. Let's see what happens next...
Comment:
Seeing some headlines that the Senate Judiciary is issuing a Subpoena to Jack Dorsey after Twitter moved to suspend Trump Campaign, and House GOP accounts over the Biden bombshell. After the dems "leak" about breaking up big tech recently, and now this, it's not looking too good for the Nasdaq. Mega-Tech has led this entire melt-up, and is domino number 1 in a crash. Volume picking up here on the majors, PPT miracle bids, perhaps? With mega-tech options expiry tomorrow, we could be in for some serious volatility soon. Stay tuned...
Comment:
Fourth test of the 50 period MA on the hourly since the open. Bulls knocking on the door and trying to get in, but this MA has now become resistance according to polarity principle. There's a "No Entry" sign on the door, while the bulls attempt to fill the over night gap at the 347.14 level. Let's see if they can break through...
Comment:
45 degree laser pump into power hour on a 1% over night sell-off. Anyone seen this show before? Cough cough (Buy-backs) cough... Mega-Tech making good use of those tax-payer funded, FED loans. I still see this as a technical bounce, though, preceding another leg lower. Remember, once we stay below 350 on the weekly close, the momentum shifts to the downside. This is a key level to watch heading into the weekend.
Comment:
Successfully filled the over night gap. Clearance sale?
Comment:
Majors fighting their way back to even on the day. Nasdaq struggling as can be expected. Small caps and the dow, back in the green. SPY blew through the gap, as if it wasn't there, and we're now trading just above the 21 period EMA on the hourly. We're also now trading outside channel resistance formed from the recent peak on Oct 12th. Will the bears show up in the next 10 minutes to share an opinion about price discovery?
Comment:
Convincing bullish price action into the close today. We closed above the Green trendline support, and above all major daily supports. On the hourly, the RSI has rolled over hard since it's high of 84+ on Oct 12th. We filled the over night gap at 347.14, and closed above the hourly 50 period MA (346.62).We got rejected at the hourly 21 period EMA showing a lack of conviction outside the downward channel formed on Oct 12th. With Mega-Tech Op-Ex tomorrow, I suspect we'll see some fireworks. Keep an eye out for earnings, as they roll in, because this will reveal individual stock weakness as an indication of broader market weakness. Tomorrow should be interesting to say the very least, so I hope to see you guys at the show. Thanks for your time today guys. Cheers, Michael.
Related Ideas
Fired Up
Hedge_Of_The_World
about SPY