merkd1904

Markets: "This is fine, everything is fine"

AMEX:SPY   SPDR S&P 500 ETF TRUST
But the writing on the walls says otherwise. With the rescue operation and blind optimism in full swing sellers have been sucked out of the market. Just for the simple fact that everyone has been conditioned to buy the dip and you're usually rewarded. But i honestly feel like there's been a lot of wind taken out of the sails of this short term bull run (Oct till now) with all the underlying issues starting to churn underneath the hood, and it's showing in the indicators in this last leg up.

I'm going to try and keep this one short. There is still an acute bearish divergence on the RSI , and MFI for all TF's from the 2hour to the daily, weekly, and monthly. Pair that with an ascending triangle , or wedge depending on where you draw it from technically we should see this break down out of the triangle. A measured target would send us down 3% back into the support of $324, but would also complete the head portion of a possible head and shoulders printing on all TF's. Money flow has diverged from RSI , Cash in Cash out has been on a perfect downtrend, and we're still at new ATH's even today. They fought to keep price above the gap and inside the trend line . Volume has been light but the path of least resistance has been upwards with a lack of sellers, as the futures traders have been habitually burning anyone going home short overnight. These divergences are prevalent in all the major indices and now the Nasdaq has started participating in weakness with the DJI showing the worst of the bunch. The markets have been quiet, but when selling picks up volume does. There's been a notable change in price action and it shows cautiousness with the "they" trying to keep prices buoyant so headlines will keep printing "New ATH's". -1% days are bad for business.

I'm looking for a trendline break of both the hourly trendline and also the hourly RSI . As this would confirm at least intraday weakness. I'd be looking for this to crash back into support around $324.50 but would expect to get frontrun around $325-$326. The problem is that over the past 4-5 months none of these have really played out, or played out completely. They've been completely washed out by the amount of liquidity being plowed into the market and it's creating false signals and it breaks to the upside.

But at this point i have seen almost a loss of confidence and also a willful ignorance of what's transpiring in China affecting global supply chains (I think). Just from the people i know who work in supply chain management the news has been anything but optimistic. With AT LEAST 2-4 weeks worth of interruption which is, when you think about it, hundreds of millions if not billions of dollars of trade/production lost. And that's not even concerning all the multinationals who have had to close stores/businesses, creating a loss of revenue in China's massive consumer market. Pair that with what i'm seeing as artificial downward pressure on safe havens including gold , silver , and the Yen. The bond market is still signaling danger with T-bills hovering near their intermediate/short term highs. Also the VIX is still above $15, which is weird (to say the least) as we're hitting new highs. The manipulation is never more obvious than when people are starting to get scared.

With what i'm seeing as buyers exhaustion i am still short. VIX is still unbuyable in either direction in my opinion (not trading advice) but if the lid is taken off metals gold could easily top $1600 and silver most likely to $18.50.

As we've seen before this could all just be worthless conjecture and the band plays on, and we truly are operating in a bubble where all news is good news and like i've said, corrections and pullbacks are illegal. But this is just my analysis of what's currently playing out in the markets today.


IWM got smoked dead in its' tracks as it went for the daily breakdown candle high @ $168, but was also up substantially higher percentage wise compared to the majors.


As always, this is not trading advice, this is for entertainment purposes only based on my own personal TA.
Feb 12
Comment: Still valid until tomorrow's open when the choice will be made just by time itself.

Comments

Very well said. All indicators are pointing to at least a pullback, and I think we should be well hedged. I am not chasing this market because I do not feel comfortable longing anything, at ATH and overbought conditions. Will roll in some PUTs on Friday at maybe another ATH?
+1 Reply
Well done.
+1 Reply
Great post.
+1 Reply
merkd1904 V3ntur3_86
@V3ntur3_86, Thank you!
Reply
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