The Marathon Continues

US Futures traded marginally higher this morning, off the back of more media narratives of a "95% effective COVID-19 Vaccine". Prior to this most recent, and in all honesty, comedic narrative, it was "stimulus optimism" that drove (global) markets higher. But, I guess investors are not worried about that anymore. What happened to China Trade Deal optimism? I guess that doesn't matter anymore, either. It seems the FED and the government clearly take the public for fools, and maybe for good reason. The real economy is dead my friends, and for years it's been propped up by ZIRP, NIRP, bedtime stories of optimism, never-ending dollar debasement in the form of QE/"Liquidity", and exponential fiscal debt. Stock buy-back's continue to portray earnings growth, when all these companies are doing is perpetually lowering the number of shares outstanding to show earnings growth. Actual revenue growth has averaged just 4% over the past business cycle, vs earnings, which have grown somewhere in the realm of 30%. This is a magic trick, like every other aspect of the stock market. The stock market, as we see it now, has next to nothing to do with stocks, which is quite sad. But, let's see how long this lasts before everyone realizes that bedtime stories, and magic tricks, can't elevate stocks forever...

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After a fairly boring morning session hovering around 361, SPY is losing traction as we approach power hour. The bears have successfully recaptured the ascending channel, and they have us just below the 21 period EMA on the hourly as well. The megaphone trendline is around 357, and I suspect the bears will use this (rare) downward momentum, to take us back below. The 50 period MA on the hourly is sitting right around 357.45, and if the bears can take us below these two key supports, 350 is a stones throw away, where both the top of the triangle, and the 21 day EMA are sitting...

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Vix is now back at a 23 handle, one again, after hitting an intraday low of 21.70, and is sitting at the 50 period MA on the hourly...

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Seeing a few headlines that Cuomo just shut down schools again in NYC. Clearly Mr. Market is not happy about that...

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Momentum is looking quite negative, we're gonna need another vaccine headline asap...

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Bulls showed up and there appears a battle at hand at the ascending channel support heading into power hour. I'm waiting on the pensions who made billions on their overweight equity allocations this month, to rebalance those 60/40 portfolio's before month end. According to Goldman, there's $36BN in pension selling due before month end...

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We almost kissed the 50 period MA on the hourly (357.44), about to break below the megaphone trendline...

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Losses accelerating here as we approach the close. No real support above 350. All the majors, barring the Nasdaq, are now down over 1%...

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That's a wrap guys! Very bearish close to say the least. The bears successfully recaptured both key trendlines (ascending channel resistance, and megaphone resistance), and it was a quasi panic-selling event into the close (potentially driven by pension rebalancing).

Tomorrow we have fresh jobless claims numbers out, so I expect increased volatility, particularly if we see a higher print than last week. Sentiment can shift in an instant, so be prepared for some larger moves heading into the weekend, especially after the massive short squeeze we saw over the last couple of weeks.

Thanks for your time today guys, and have a great evening. Cheers, Michael.