Deal or No Deal?

Hey guys, so yesterday was a rollercoaster ride, with another notable sell-off into the close. After some light selling in the evening, futures regained some ground, and in pre-market trading, SPY is back at yesterday's close at 342.67. Markets in Europe and most of Asia are also seeing some selling pressure.

On the daily, bears succeeded in defending the Green line resistance, and we closed in the red for the 4th day in a row. The 21 day EMA is holding up nicely as support since we broke above on Oct 2nd. The 100 day MA was tested on Sep 24th, and we had a solid bounce back to the all-time weekly closing high. I see the 100 day continuing to act as major support, and if breached, things could get messy.

On the hourly, we got rejected at the 100 period MA, and .618 fib (344.57), and saw a bearish close at 342.67. The bottom of the recent downtrend channel formed on Oct 12th is sitting right at the .5 fib around 340.22. I'll be watching this level closely today for a possible retest/break below.

Jobless claims are out shortly, and shockingly, in the midst of the greatest "recovery" in history, we're expecting another 860K job losses. Something just isn't right here guys, and heading into the fall/winter season, I suspect things are only going to get worse, particularly for brick and mortar retail. Continuing claims are sitting around 10MM still, and absent a notable decrease in today's print, I'm expecting bad news to act as bad news (for a change).

Super Pelosi and Bat Mnuchin continue to hash out details of a "deal," and it appears their best strategy here is to kick the can down the road, as long as they can, until the election. I won't be surprise if we see more "hope" and "optimism" narratives circling the news today.

I appreciate your time today guys! It should be an exciting day, and best of luck out there. Stay tuned for updates! Cheers, Michael.

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Comment:

Claims came in at 787k - the lowest since early March, before the lockdowns began. Continuing claims also fell notably to 8.4MM. While this is a marginally better print than last week imo, we're seeing an increase in Pandemic Emergency Claims, which have been steadily rising. In the last two weeks alone, we've seen a parabolic increase in claims in this group, with over 1MM new claims. Stay tuned for the open as I expect to see some fireworks off the back of this weeks data...

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10Y yield hit it's highest since June yesterday at .836, and we've been in a strong uptrend since the beginning of August. In August alone, we saw a near 30% increase in the yield, and as of yesterday, we're now up 60% since the beginning of August.

US Dollar is gaining strength today after bouncing near long-term support yesterday around 92.46. I expect more strength as we approach the election, which is now less than two weeks away.

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Vix getting hammered here at the open, back down to it's 50 period MA on the hourly (28.80). This has held up nicely as short-term support, since we broke above on the 16th. Let's see if it can hold...

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Futures (with the exception of small caps) just turned red, with the Nasdaq leading the way. Existing home sale crushed expectations with the highest print since 2006. I guess you don't need a job to buy a house?

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SPY back at the 21 Day EMA (341.82), and looking like it wants to break through. A break below Monday's low (341.05) would prove very difficult for bulls to recapture the Green line resistance by close of trade tomorrow.

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Broke the 21 Day EMA, and also broke below Monday's low. Let's see if the bulls show up to buy the dip...

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Nasdaq getting hammered, small caps now in the red.

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Pelosi just said in a press conference, "progress has been made this week." Apparently, "we are just about there" on a deal. And, just like that, stocks are erasing the day's losses, small caps are back in the green, and Spy is back above it's 21 day EMA.

Let's see how long this "optimism" lasts, and if stocks go from 'hope' to 'nope' once again. Wash, Rinse, Repeat...

Comment:

Light bounce here considering the sentiment behind Pelosi's statements. Seeing some weakness as we approach the afternoon session.

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The 10Y yield is on a tear. We broke yesterday's high and we're currently sitting around .844. Will we see a retest of the high's from June? My guess is yes.

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Vix seeing increased weakness as we enter the afternoon session. Looks like it's making a run for the 50 period MA on the hourly (27.90). This also happens to be an important daily resistance trendline, which became support when we broke through on Monday. Let's see if this support will hold today.

Comment:

SPY back to it's mean on the hourly BB, with bullish intent. We might see a retest here of the 21 period EMA (344.19), and possibly the 100 period MA at 344.63. These levels are currently sandwiching a downward channel resistance, so imo it's unlikely, unless we get some more 'Pump Up The Jam' hope narratives this afternoon. Can the bulls break through, or will they get rejected? Let's see what happens next...

Comment:

Vix now at the lowest level since Monday and sitting right at daily support around 27.90. Let's see if we get a bounce here, or if we see a clear break below.

On the hourly, SPY got rejected at channel resistance and the 21 period EMA as expected. Let's see if the bulls show up, or if this is a potential bull trap...

Comment:

Bulls making another attempt for the 100 period MA on the hourly (344.72), and it appears they just successfully broke through. We've been in a melt-up all day since the low of 340.65 around 10:30AM. Long-term Green line resistance is now sitting at 348.20, and we're now sitting at 345.

50 period MA on the hourly is at 346.20, and is well within range, based on the day's momentum. Bulls are not going anywhere, and that's the clear message at the moment.

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We just saw a second rejection of the 100 period MA on the hourly. The bulls are knocking, but can they break through? 21 period EMA on the hourly may act as support here, and if we break below, I expect a revisit of 340.65, the low of the day.

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3rd test here of the 100 period MA which is now sitting at 344.91. We just broke through again and are sitting at 345.17. Not a bear in sight as we head toward the close. Risk who?

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That's all folks!

We saw some heavy selling in the morning session, which was quickly reversed after Pelosi's optimistic and very hopeful statement about a deal, and then a steady melt-up the rest of the day. The bulls made a valiant effort to recapture the 100 period MA on the hourly, but failed to do so after 3 clear rejections. We did, however, break above the 21 period EMA on the hourly, which is something to note going into the final trading day of the week tomorrow. Imo the bulls need to break the long-term Green line resistance (348.50) with conviction by tomorrow to maintain the bullish continuation thesis. Can they do it? Let's see...

Thanks for your time today guys, have a great night, and if you decide to watch it, enjoy the Presidential debate! I'll see you all tomorrow. Cheers, Michael.