Stocks Sharply Higher As Election Week Kicks-Off
Global markets are trading sharply higher at the start of a very busy week. Mainly, the US election is tomorrow, and also 128 companies in the S&P report earnings. October payrolls are due this week, which will help reveal how businesses are positioning for the winter season. The FED & ECB are both announcing their latest policy decisions, which could greatly affect the global macro outlook. I'm expecting to see a continuation of the sell-off from last week/month, and a spike in volatility off the back of increased economic and geo-political uncertainty. The Vix has persistently traded at elevated levels (weekly RSI is showing lots of room to the upside), and market sentiment is particularly fragile at the moment. With very few technical supports holding up asset prices, and a slew of negative catalysts circling global markets this week, things are about to get very interesting.
SPY Analysis:
After hitting it's lowest level in over a month on Friday (322.60), and then rebounding to close the week around 326.54, SPY is now back at it's 100 day MA (330.18) in pre-market trading. We saw a clear rejection of the 100 day MA on Thursday, and then again on Friday. Let's see if the bulls can get us above this important line in the sand, or if we see another rejection, which could result in a swift sell-off down to the 320 level (Sep 24 lows/June high's). If the bulls successfully break us above the 100 day MA, the next major resistance is at the bottom of the short-term Green downward channel around 333.40, which was a key support that we lost on Oct 28th. Stay tuned for live updates throughout the day, and best of luck out there guys!
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SPY Analysis:
After hitting it's lowest level in over a month on Friday (322.60), and then rebounding to close the week around 326.54, SPY is now back at it's 100 day MA (330.18) in pre-market trading. We saw a clear rejection of the 100 day MA on Thursday, and then again on Friday. Let's see if the bulls can get us above this important line in the sand, or if we see another rejection, which could result in a swift sell-off down to the 320 level (Sep 24 lows/June high's). If the bulls successfully break us above the 100 day MA, the next major resistance is at the bottom of the short-term Green downward channel around 333.40, which was a key support that we lost on Oct 28th. Stay tuned for live updates throughout the day, and best of luck out there guys!
If you enjoyed today's analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research.
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Here we go. We opened at 330.20, just below the 100 day MA which is now sitting at 330.45. I expect the bears to successfully defend this resistance level once again. Let's see what happens next...
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Global markets extending gains here. The 100 Day MA has now been successfully breached to the upside (for now). We're sitting at the new HOD around 331.54. Let's see if the bulls make a run for the short-term Green channel resistance now sitting at 333.85, or if the bears show up and hammer us back below the 100 day...
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New HOD at 332.35 and bulls are now within arms reach of the Green line resistance. Bulls are staging a convincing performance here in the first hour of trade as global markets are a sea of Green. Let's see if they can hold the line here...
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ISM Manufacturing Index came in hot at 59.3% vs expectations of 55.7%. This appears to be adding fuel to the bullish fire (for now)...
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Back below the 100 day MA again (330.45) and losing steam as we approach the afternoon session. The bulls really need to hold this level, or things could get ugly...
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Vix is fighting to break back above 37.70, a level which it's tested several times this morning without success...
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Vix just hit 37.90 and SPY has reversed most of the day's gains. Bears finally showed up with a rejection of the 100 day MA, but they really don't seem that hungry at the moment. Bulls are putting up a good fight around this key level...
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This is starting to look like a repeat of Thursday's pump and dump...
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Nasdaq just turned red on the day. It's been the laggard all day, and I suspect it may have something to do with the fact that JP Morgan just downgraded Tech from Overweight to Neutral.
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Vix just hit a new HOD at 38 as the majors continue to roll over. Can we bust through the Oct 29th high of 41.20? Here's my 2 cents:
This market is reminiscent of the story of the Titanic. Most passengers don't think they need a life jacket, far less a life boat. The ship is unsinkable as far as they're concerned. But, when the ship starts to sink, all the life jackets are taken, and all the life boats are full. Imo Vix is the life boat here, and is about to skyrocket as investors all attempt to hedge their portfolios at the exact same time, and at the 99th hour. Maybe I'm wrong, but let's see what happens next...
This market is reminiscent of the story of the Titanic. Most passengers don't think they need a life jacket, far less a life boat. The ship is unsinkable as far as they're concerned. But, when the ship starts to sink, all the life jackets are taken, and all the life boats are full. Imo Vix is the life boat here, and is about to skyrocket as investors all attempt to hedge their portfolios at the exact same time, and at the 99th hour. Maybe I'm wrong, but let's see what happens next...
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SPY just saw a new LOD at 327.65 as losses accelerate. Bears want to take us down to 320 and beyond. But, the bulls are doing a great job of keeping us as close as possible to the 100 day MA, so as to keep it within reach into the close. Vix made a new HOD at 38.80 moments ago, but so far this is a very orderly sell-off, and for the moment it's (unusually) stairs down. No panic to see here (yet)...
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Watching the US Dollar closely for a breakout at the 100 day MA (19.25). A close above the 100 day, would mark the first break back above since May 28th...
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SPY catching a bid here at 2:30PM off the new LOD (327.24), and Vix getting hammered back to a 37 handle (37.50). Are the bulls making another run for the 100 day MA? Let's see how much juice is left in the tank...
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Minor rejection at the 21 period EMA on the hourly (329.25). We were also rejected at this EMA last Thursday around this same time (3PM)...
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Clear break above the 21 period EMA on the hourly. Testing the 100 day MA (330.45) once again. Bulls are not giving up on capturing this key line in the sand. But, if we get rejected here again, I think we sell-off hard, and 320 is the next major support, so things will get ugly...
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Volume picking up here as we approach the close. The 5 minute is showing some weakness again. Vix is notably off the lows...
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Bulls are running out of time to get us above the 100 day. We're at 329.50 with less than 5 minutes to the close. Let's see if they make a last minute run for the 100 day at the bell...
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Volume is blowing up. SPY at 330. 1 minute to the close...
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That's all folks! We closed flat at 330.21 after opening the day at 330.20. It was the bulls show all day, fighting and clawing to get back above the 100 day MA, but the bears successfully defended the line in the sand for the 3rd day in a row (albeit, barely). The election is tomorrow so I expect a lot more volatility, which could mean a big move to the downside. Vix is still holding above a 37 handle, even though the risk premium right now is at one of the highest levels in history. I appreciate your time today, guys, I hope you enjoyed the analysis, and I look forward to seeing you tomorrow for election day. Cheers, Michael.
