Largest Crash of our Lifetimes is here!
For Starters - Go Watch this guy as he is 100% spot on. twitter.com/CNB...796390506938368?s=20&t...
Lets start with a Chart of the VIX From October 12th (the bottom of the last market rally).
Using the 1hr $VIX Chart, you can see we have 5 open gaps. We filled the last gap TODAY:
And in fact - we now have a gap overhead!
And the VIX bottomed directly into its 100month SMA.
If you watch the SPX and the $VIX side by side, this rally has been mechanical and algo driven, filling both SPX and VIX gaps during the entire rally.
Onto the SPX.
SPX I think set a very sneaky bull trap at the 200dma this week. We are back into an upper trendline which is where the 50w sits as well.
SPX has a small open gap at 4200 - but that is going to be REALLY tough to fill from here. What SPX does have is open gaps all the way down to 910 from 2008
Here is where the real pressure come from - Bond yields are about to
Each Selloff in the SPX from this upper trendline area has been around a 20% drop. This would take us down to ~ 3200 on SPX and fill lots of downside gaps.
The REAL Driver - Bonds.
The bond market has largely priced in all of the Fed Rates Hikes and has moved on. What it is starting to look for now is "what is next". What comes next is the slaughter of earnings in Q1 of 2023.
Here I show the 2yr Bond (which is basically the shadow Fed Funds Rate) in candles, the actual Fed Funds Rate in Orange, and $TLT in Blue.
What you can see is that basically EVERY TIME that the 2yr (candles) crosses BELOW the Fed Funds rate (Orange Line) - the long bond (blue line) starts a massive rally as the next Fed rate cut cycle is coming into play.
What Bulls don't understand is that when the Fed is cutting rates in a global recession - that isn't bullish. It's VERY bearish because the underlying economy is deteriorating and the companies earnings are crashing. If you aren't long Bonds already, start building a position. TLT could easily double in the next year.
The 2s/10s Yield Curve is the most inverted it has been in HISTORY
You want to buy bonds when the curve start to UN-INVERT as this means the front end of the curve is going to 0, and you will get massive capital appreciation of long bond holdings like TLT
Energy has already caught on
Energy stocks are WAY overdone - and Oil is starting its next big leg down. Oil is extremely sensitive and has already caught on to the coming massive global recession in 2023.
How to Play This
1) Buy Long bonds like $TLT or $ZROZ
2) Short indexes/banks/Semi Conductors / Energy
Lets start with a Chart of the VIX From October 12th (the bottom of the last market rally).
Using the 1hr $VIX Chart, you can see we have 5 open gaps. We filled the last gap TODAY:
And in fact - we now have a gap overhead!
And the VIX bottomed directly into its 100month SMA.
If you watch the SPX and the $VIX side by side, this rally has been mechanical and algo driven, filling both SPX and VIX gaps during the entire rally.
Onto the SPX.
SPX I think set a very sneaky bull trap at the 200dma this week. We are back into an upper trendline which is where the 50w sits as well.
SPX has a small open gap at 4200 - but that is going to be REALLY tough to fill from here. What SPX does have is open gaps all the way down to 910 from 2008
Here is where the real pressure come from - Bond yields are about to
Each Selloff in the SPX from this upper trendline area has been around a 20% drop. This would take us down to ~ 3200 on SPX and fill lots of downside gaps.
The REAL Driver - Bonds.
The bond market has largely priced in all of the Fed Rates Hikes and has moved on. What it is starting to look for now is "what is next". What comes next is the slaughter of earnings in Q1 of 2023.
Here I show the 2yr Bond (which is basically the shadow Fed Funds Rate) in candles, the actual Fed Funds Rate in Orange, and $TLT in Blue.
What you can see is that basically EVERY TIME that the 2yr (candles) crosses BELOW the Fed Funds rate (Orange Line) - the long bond (blue line) starts a massive rally as the next Fed rate cut cycle is coming into play.
What Bulls don't understand is that when the Fed is cutting rates in a global recession - that isn't bullish. It's VERY bearish because the underlying economy is deteriorating and the companies earnings are crashing. If you aren't long Bonds already, start building a position. TLT could easily double in the next year.
The 2s/10s Yield Curve is the most inverted it has been in HISTORY
You want to buy bonds when the curve start to UN-INVERT as this means the front end of the curve is going to 0, and you will get massive capital appreciation of long bond holdings like TLT
Energy has already caught on
Energy stocks are WAY overdone - and Oil is starting its next big leg down. Oil is extremely sensitive and has already caught on to the coming massive global recession in 2023.
How to Play This
1) Buy Long bonds like $TLT or $ZROZ
2) Short indexes/banks/Semi Conductors / Energy
Comment:
The Bond Market is right - again.
Bonds are rallying because they know how bad things are about to get. When Bonds and Stocks rally - someone is lying (and its usually not the bond market).
Watch the 2yr yield against the Fed Funds Rate - when these cross the bond market is sniffing out the big recession/market crash event.
It's here.
Bonds are rallying because they know how bad things are about to get. When Bonds and Stocks rally - someone is lying (and its usually not the bond market).
Watch the 2yr yield against the Fed Funds Rate - when these cross the bond market is sniffing out the big recession/market crash event.
It's here.
Trade closed: stop reached:
Might have to wait on this one.
The regional banking crisis caused the Fed to erase 3 months of QT in a WEEK.
Markets like liquidity - I'm looking for at LEAST a 20% upside from here, wouldn't be surprised for nATH - I outlined this in my other post.
The regional banking crisis caused the Fed to erase 3 months of QT in a WEEK.
Markets like liquidity - I'm looking for at LEAST a 20% upside from here, wouldn't be surprised for nATH - I outlined this in my other post.
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Yearly SPY chart - gotta love that candle lol
SPY still falling back into the wedge -
We have gaps everywhere on cash SPX - but the initial measured move is down to 3600 for the 50mo - fib bounce there then we go to 3200
We lose that, then its back to the bottom of this wedge ~2k
You can see the megaphone cleaner here - notice the 20 month SMA is rolling over
Bigger picture - were going back to 2008 lows in basically every asset class - markets have done nothing but been running on free fed money since 2008 - its all a bubble and bubblers dont half deflate.
As for the Nasdaq....
This is the first yearly bearish engulfing candle NDX has gotten since 2008
Closing <50month SMA isn't bullish