The Beginning of The End

Expect a final leg down into 3200 area before the FED starts to talk about pivoting. Next thing that happens is market rally into a brick wall, after which the grand finale begins.

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Potential double top forming. If confirmed, 1st take profit will be 3760, 2nd take profit 3400.

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APPL, GOOG, AMZN are tanking after hours on bad earnings.

Very soon VIX will wake up and dollar will finally break out of its bullish wedge, which will give us another massive leg down.

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Ahahah, oh that makes me laugh. I was reading some of the "popular" ideas on where SPY is headed and apparently we are headed for the ATH lol. All it took was a break above the major trendline, that's it. Concepts like fake outs throw them out the window lol. Who cares about the lower lows? Who cares about inflation? Who cares about biggest companies missing earnings? Who cares about the FED tightening and keeping the rates elevated for the whole year at minimum? Who cares about the lay offs? the answer is - nobody!! lol

Anyway, this is just cracking me up so I had to share it. The stage we're in now is called euphoria/greed. BBBY missed their earnings and announced they are filing for bankruptcy & guess what? The retail money bought the dip LOL. You think this is what the bull run looks like? You are so blind you have no idea. Let me repeat something to all of you again, the FED will not print more money this year at minimum. In fact it is the opposite that is happening, the money is taken out of the system. So what exactly will support this bull run? The retail? Never did. The yield curve is severely inverted, which means we're going to go through worse times than 2008 when the unemployment numbers start rising above 6%. What is happening in the market now is games, this is not even the start of the real crash.

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Okay so today the Non Farm Payrolls number came out and it was almost 3 times higher than what is expected. This must be a good sign that the economy is in good condition with so many number of workers. So why did the stock market dumped? Well, if you've read my post above you now understand that the only thing the stock market cares about, is whether the FED eases or tightens. Higher number of jobs, means the FED needs to tighten to reduce inflation. The stock market will not rally until the FED gives it the boost, the easy money with low rates kind of boost. Now, with so many number of jobs created the FED will continue on its course.

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The stock market doesn't care about earnings, doesn't care which companies go bust, doesn't care how many people get laid off. Ask yourself how could the companies 1000X it's stock price when the earnings were negative through the whole 2021? It's a bubble sure, but who allowed it to happen? The answer is the FED. And now the FED does the apposite so brace yourself.

I think by the mid/end of 2023 we will have a massive flush down (grand finale). But for now it will be a slow and controlled sell off with bear market rallies in between, up until we hit the 3200 area.

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Smart money is selling this rally at rates never seen even last year. Combine that with extreme bullishness from dumb money retail, greed level at 80, negative earnings, very hot jobs report, higher rates for longer and we ladies and gentlemen have a perfect moment for a rug pull :)

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We have formed something called "a bearish bat" pattern. It is more clearly visible on the daily chart. According to the data, the average drop from the top of this pattern is about -20.2% in bear markets specifically. So.. let's ride the wave shall we.

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VIX broke out of the bullish wedge
DXY showing signs of life
Yields about to break out of the bullish wedge

-- All of these are very bearish for indices.

We ended things right at the support level. We broke out of the channel though, so I assume we come back up to retest it at 4130. before continuing with the downtrend.

I think the CPI will be pivotal. The FED is really behind and markets begin to realize it now. If the CPI comes in hot we are certainly going to make a new low.

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Bonds tanked, SPY did not. Foreshadowing you already know what. 10 Year moving higher and Dollar finally broke out. VIX in the demand zone & options expiration this Friday... lol

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So the bulls are having selective hearing recently. That's okay. The outcome is still the same. I do feel bad though for everyone who's bullish and buying into this narrative. People forget that wall street's job is to take your money and they are pro's at it.

2 rules:
1) If you buy for a reason, and that reason is no longer valid, then sell.
2) If the values don't make sense, then don't participate.

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Now that we have signs of a clear reversal I would wait for a pull back to about 4020 region to enter into more shorts. Might be somewhat of a head and shoulders pattern forming.

Congratz to all who didn't go with the delusional narrative. This upcoming leg down could be big.. bigger than the other ones we've seen so far.

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4050 - resistance
4100 - supply

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Well, the market is slowly pricing in 50 bps rate hike. I wonder how that will go...

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This bear rally started under the pretense of inflation peaking and 25 bps rate hike. Now we realized that the inflation has not peaked by being revised higher for the past months and we're going to most likely get a 50 bps hike.

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3800 is key support where we will see some demand. Either way I would wait for a rebound to short.

My target is 3940 - the neckline of daily H&S. We retest that most likely and fail. But if not, we face supply at 4050.

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Since we started the rally on March 13th, high yield bonds pretty much stayed in the same place, while SPY rallied higher. That is a divergence.

I expect to see a continuation to the downside after the FED meeting.