Week of May 5 - DXY/Oil/DJI/NDX/VIX/10yrWhat a WILD week we had!
Last week was insanely noisy between the FOMC on Wed, NASDAQ:AAPL earnings on Thursday, and NFP on Friday. This coming week of May 5th offers very little in the way of news catalysts, so it will be great for us TA based traders.
So far, all of our weekly objectives have been playing out - and nothing has really changed from my perch here. I am still looking for new lows to come on indexes, but we will get into that later in this thread.
The Powell pump candle was reversed completely by the cash close last Wednesday.
Thursday night, NASDAQ:AAPL admitted they have slowing sales in China, but its (not as ad as feared) - so they gapped it up 4%.
And on Friday - the market rallied on weak job numbers as the job market is softer than expected.
Seems legit.
CBOT_MINI:YM1! - The Dow behaved REALLY clean this week. You'll notice that all we did, was sweep LAST weeks lows, and return back to the IRL/FVG to reload more shorts. From HERE, I am looking for a weekly IRL to ERL move - with a final objective of LOY. From there we can wait and see where the next ERL to IRL move is.
May started last week, so we had a fresh monthly candle that initially had a FVG forming. This index pop over the past 2 days has now filled the monthly chart.
Everything on CBOT_MINI:YM1! is really clean here and aligned. We have the monthly that has filled it's monthly FVG, the weekly ran last weeks lows and has returned to IRL (in PREMIUM) to reload for shorts, and the h4 is running up into its 200sma.
Looking over at the scammy CME_MINI:NQ1! - its the same setup on the weekly. The Monthly candle filled a FVG that was forming, the weekly returned to a IRL in Premium, and the h4 is running into a 200sma.
If you average NQ and YM together- you get SPX. The difference is that they will hold YM steady while the sell NQ - and then rotate. It's really interesting to watch but the net effect of it is that the damage and move done to SPX is minimized this way.
When you get a setup like we are seeing here - where both NQ and YM are aligned for sell programs - headed into a quiet week with no news - danger!
This just Smells like a strong smell setup to me.
Lets talk NASDAQ:AAPL for a minute.
ALL they did - was run this thing up into the LAST open gap from Feb. The MegaCap tech stocks are SO large that they tend to behave pretty cleanly with respect to gap fills and the like.
To ME - this is a massive bull trap - I have 0% interest in chasing this thing
VIX - Now that we have talked about how the indexes are primed for a sell program IMO - lets look at the VIX for any clues we can glean.
I will cover the weekly VIX in the next section, but VIX is now filling it's gap it created from a month ago.
This is supportive of markets - until it isn't. I am looking for Monday to have a slight pop in markets as the VIX fills its gap - and then they start selling indexes things with vigor Tue-Thur.
DXY/10yr/VIX - DXY Pulled back last week - but I still am looking for higher prices on the weekly objective to ~ 107
I am looking for rates to start to ease here as the economy weakens. I have an oversized bond long position on as I think this is the most asymmetric trade in the market currently. Bonds are starting to smell the weakening economy and are moving towards lower rates - the last missing piece is the 2s/10s inversion.
This has been the largest and deepest yield inversion - in the history of markets - and it is NOT bullish. If history is any guide, once the 2/10s spread de-inverts - we typically see market crashes (note the dates in red)
Oil - WTI got its head kicked in last week, and we are a pivotal level here.
If Oil keeps crashing - it is just ANOTHER indicator of the weak economy. I honestly dont have any weekly context on oil at the moment - but the h4 chart shows us running right into the 200sma.
The scary part about the weekly chart is how we have displaced lower. Next week will be a big deal to see how we backtest and confirm the breaker lower. Oil could head down to the lower 70s before we can see any appreciable bounce.
So here is the setup I am watching for this week;
We saw YM pop into our weekly IRL level - from here I will be looking for 4hr charts to displace lower and start the march towards nLOY.
Looking for interest rates to continue to march lower - this will be bullish for indexes (at first) as indexes tend to ignore WHY rates are dropping for a little while.
Oil MUST make a stand here - and soon. Otherwise I see us trading back into the 70s for monthly levels.
Until next week - We'll be watching.
