It's almost as if everyone saw the same thing i saw last night and acted accordingly.
Nah, i'm not that conceited nor am i under the illusion that i am the all seeing market see-er.
But alas, interesting trade today huh? I woke up to an alarm set on my /ZN (10 yr t-note) chart that we had broke up out of the range. Red alert. Shit is hitting the fan, right? Well i went back to bed and when i woke up again this morning and we were down almost 30 points in /ES. I thought, "holy shit, i was right". Hahaha.
Truth is last night China faded the small gain we had when futures reopened last night and for some reason /NQ was leading to the downside. It seems like China or Asia in general has been buying value and selling growth. But we did sell off further with the EU trying to buy the dip. But by the time the PPI numbers we're about to come out we were still down about 20 some odd points. And then we MISSED on the PPI numbers. But, we popped upwards? Hell yea we did.
And not only did we pop upwards the entire trade changed today. Literally in the time the PPI numbers came out to the time we opened the market had a complete different character to it. We had come off Defcon 1 with bonds and things like DJI, and IWM were leading. On a dime.
Now this can maybe be attributed to a couple different things. The first being what the financial media bit into. And that's that Gilead released preliminary data showing their COVID treatment works 67% of the time. Might i add they released this data at the EXACT same time as the PPI numbers. Cool. Secondly, and since i'm not an economist i didn't see this, is looking through the PPI data if you removed certain aspects the key metrics WERE inflationary. Either way. The market took one, or both of those and by the time we opened we were at least flat to slightly green with /YM, and /RTY (DJI, IWM) gapping up. Props to both @KCURCIO and @MichaelBilenkis for pointing these out to me this morning.
The real story here today is banks. There was no question today banks were leading. as a matter of fact, they were up 3.4%, by far the largest gainers on the day. This is the pivot in character i'm talking about. JPM and GS attributed to almost 100 points of DJI's 300+ gain today. Banks also make up a decent portion of the S&P as well. So. This is important. Big if true.
Now, when we parse this out why did the banks suddenly rally? Is it REALLY the fact that we may possibly have a medicine that works for COVID? Maybe, could be. Could it be the fact that just the XLF ETF has an over 10% short interest? Maybe. Could it be the rollback of the Volcker rule that freed up cash for the banks to do bank stuff? Well, yea could be. Or could it be the fact that the FED short term REPO facility has had zero participation the last 4 days? Well yea, also maybe.
It's all of the above. Plus, they start earnings next week. Which adds to the suspense.
Yesterday XLF looked like it was about to break support and this is truly a leading indicator (for me at least). I feel much better about the health of a rally when the financials are taking part. Same with small caps. But the banks are the bedrock of the economy. In capitalistic thinking (debatable) there can't be business without the banks. So, in general, and this is a generalization, when the banks are doing well the economy is doing well because people are taking out loans. Paying their credit card bills, paying their mortgages, etc. See where i'm getting at? I think this is an all of the above thing. You have a beaten down stock, some slightly good news on the virus front (market is forward looking) and the market goes to price in future profits or less shitty business for the banks. Here's where it gets interesting for the market and my bearish ways.
IF NDX/QQQ/techland can hold their ground and let stocks like banks, small caps, and any other beatdown stocks like anything in the transports catch up we're in for a truly explosive breakout from this area, to the upside. The questions is. Is this sustainable. We saw what just the banks did to SPX and SPY today, now imagine if everything else started participating. What powered us to our last local high (~320) was IWM, and XLF. And if you were part of that trade you. got. paid. That's also what shit the bed the hardest on the way down and still haven't gotten up from the concussion they sustained when they got smoked in the face. Today, they're showing signs of life. Now. IWM besides this morning didn't really have as spectacular as a day when you look at the chart but was still up 1.6% and transports were up 1.8%. But, those are signs of life.
Now, this all hinges on the true economy. These small cap businesses that rely on smaller non public businesses to function. And the banks that finance these companies actually getting repaid on their loans, and not having joe 6 pack default on all his 6 credit cards and car payment because he got laid off. Glass half full, or glass half empty?
Most importantly we came back from the breach on bonds, and on the tech stocks bursting at the seams. Hell, this could have just been a tactical move to prevent the "this ends badly" scenario i laid out yesterday. Removing 2 pounds of shit from the 5 pound bag with 10 pounds of shit in it. But, it worked. And not to mention we closed the week as bullish as they could. Gotta get those weekly green prints. But truth be told we're bullish on the charts. In a vacuum this is a healthy market when looking at just the chart.
Now the only gripe i have on the day today was actually printing a NEW low for shares traded. This takes a lot out of the bullish thesis for a breakout in my mind. But, again, literally the entire last leg up we had pre COVID was done on 40m shares a day. So don't take my position on that as gospel, just as an indicator. (actually by time of posting we're above our lowest volume by 2m AH's.)
Nice little fight this morning at open. It's rare we open straight flat so it was interesting to see how they played that out. We had that little liquidity hunt/bear trap breaking down below the megaphone trendline (another reaction) and it was literally just follow the XLF leader the rest of the day with a couple pit stops at key levels. Note they did close us above the range we traded in the entire week. And on that note. We only traded in a 2.25% range the entire week. Coiled spring.
I'm going to show some SPY charts that aren't as cluttered so you can see what i mean by bullish on the chart.
First is the hourly. Remember what i said about successive triangles? We broke another one today. Upwards. And we've yet to be completely rejected from this level. They tried yesterday but it got wicked pretty hard. Bullish. In a perfect world we would have traded back down to at least the $308 level to try and get a reaction on the bottom upward sloping trendline. But remember, volume confirms these moves. And that was lacking today.
A look at it with the fibs
I mean this looks like it wants to break to the upside. Especially with today being a bullish engulfing and breaking above the range
Note, from the bottom yesterday to the top today there were only two candles that had better than average volume. The entire uptrend looks like a melt up
Today's daily candle engulfs 4 out of the 5 daily candles. Kind of like yesterday's did, but going the other direction. Which brings up that i have no idea what the hell that pattern is besides a broadening top. But hey, i've seen crazier shit
Nice bullish hammer close on the weekly *rolls eyes*. This very well could be a bull flag starting to play out
With drawings
SPX same story but A LOT closer to it's downtrend line from the feb top. It was also about 4 points away from filling the gap today
Look at how well they supported price above the breakout area all week. That's talent. SPX looks more bullish or at least discernibly bullish
Where does this look like it wants to go?
ES with all gas no brakes. Haha look at how ridiculous that looks
At the breakdown candle high from 06/11 with a wick down into what is now becoming a supply zone. Resistance has now turned into support
Look where ES is in the triangle..
Weekly
That's a lotta damage. Bearish engulfing. Resting on support. Like i said earlier, on a dime.
Ok here's where it gets semi interesting. After IWM's initial pop this morning it didn't really have a lot of follow through. It squabbled over that trend line from it's triangle a little and BARELY closed above it's resistance. They weren't participating as much
Gotta give'em props yesterday on the head fake though. They got me. But again volume was higher yesterday but they did regain the triangle today. That .382 fib at $138.31 has turned out to be awesome support
It has it's work cut out for it on the weekly and that's not going to be easy
I'd almost be tempted to call that pattern a bear flag
I'm just going to leave this right here. This is a 60% gain from the March bottom..
Look at this fakeout on DJI. That close yesterday had "SELL!!" written all over. Almost a bullish engulfing. Still an incredibly bullish close even if it eased off at the end
I mean that's a bullish close
XLF. If you were short at this level you just got blown the fuck out
XLF hourly with gap targets
I mean that was an objective short with that bearflag printing. NOPE.
XLF weekly. A lot of work ahead of it
DJT with a complete retrace and more from yesterday. Bullish engulfing on an ugly candle yesterday
Look at the volume on the transports. Never have they been so hated and loved
Silver with a close, again, above it's key levels. My boy.
But a look under the hood.. It needs to break these divergences if it wants to hold this level
Nice pullback on gold. If this hits it's 13 period EMA at $1789 i'd look at taking a position if you're into that
Look at the save man. Almost like.. nevermind. At one point the 2 yr yield was .129%
Bottom line is there was a churn to the market today was at one point tech led to the downside and small caps and financials became the trade of the day. This is generally the type of cycle out of havens that we see when economic conditions are improving for whatever reason and people are wanting to put on a little bit of risk. That is all to be determined. But when it happens you can always tell because there's no clear disernible trend or trade. Everything is just churning.
Again on my posts like i made yesterday that's why i hate going out on a limb. It's like that allstate commercial with the old dude and dollar on a fishing rod. "so close". But, on that note i still haven't been stopped (was close today there at the end with the VIX taking a poop).
The question is if this cycling into cyclicals, small caps, and all the other beat down stocks is sustainable. If it is we're in for much, much higher prices. They used this trade to get us to $320. Think it'll take us again if they use it again. Now, you have to look at this from both sides. At VIX at these levels you can begrudgingly open a straddle or strangle on things like XLF or IWM considering they have the tendency to move the most either way. If these are the trades that take us to $350, you get paid. If these are the trades that take us $280, you get paid as they're off their lows.
Hope you enjoyed this. And hope you had a good day trading. If you follow daily i apologize i didn't have more engagement as i was on my heals with the sudden change in trade and had to regain my balance. I appreciate everyone who follows and furthermore anyone who does engage. It's cool to see everyone chatting and talking about what is, and could be.
And, as always, keep your head on a swivel. And i just want to take a moment and say days like today are exactly what i mean when i say keep your head on a swivel. When the ground you're standing on starts moving and you don't know why it's up to you to A. recognize it, and B. react if need be. Either to adjust trades you currently have one. Or to take an opportunity. Just like that, on a dime.
Have a good weekend everyone.
This is not trading advice. This is my own personal opinion based on my own personal TA. You are responsible for your own trades.
Nah, i'm not that conceited nor am i under the illusion that i am the all seeing market see-er.
But alas, interesting trade today huh? I woke up to an alarm set on my /ZN (10 yr t-note) chart that we had broke up out of the range. Red alert. Shit is hitting the fan, right? Well i went back to bed and when i woke up again this morning and we were down almost 30 points in /ES. I thought, "holy shit, i was right". Hahaha.
Truth is last night China faded the small gain we had when futures reopened last night and for some reason /NQ was leading to the downside. It seems like China or Asia in general has been buying value and selling growth. But we did sell off further with the EU trying to buy the dip. But by the time the PPI numbers we're about to come out we were still down about 20 some odd points. And then we MISSED on the PPI numbers. But, we popped upwards? Hell yea we did.
And not only did we pop upwards the entire trade changed today. Literally in the time the PPI numbers came out to the time we opened the market had a complete different character to it. We had come off Defcon 1 with bonds and things like DJI, and IWM were leading. On a dime.
Now this can maybe be attributed to a couple different things. The first being what the financial media bit into. And that's that Gilead released preliminary data showing their COVID treatment works 67% of the time. Might i add they released this data at the EXACT same time as the PPI numbers. Cool. Secondly, and since i'm not an economist i didn't see this, is looking through the PPI data if you removed certain aspects the key metrics WERE inflationary. Either way. The market took one, or both of those and by the time we opened we were at least flat to slightly green with /YM, and /RTY (DJI, IWM) gapping up. Props to both @KCURCIO and @MichaelBilenkis for pointing these out to me this morning.
The real story here today is banks. There was no question today banks were leading. as a matter of fact, they were up 3.4%, by far the largest gainers on the day. This is the pivot in character i'm talking about. JPM and GS attributed to almost 100 points of DJI's 300+ gain today. Banks also make up a decent portion of the S&P as well. So. This is important. Big if true.
Now, when we parse this out why did the banks suddenly rally? Is it REALLY the fact that we may possibly have a medicine that works for COVID? Maybe, could be. Could it be the fact that just the XLF ETF has an over 10% short interest? Maybe. Could it be the rollback of the Volcker rule that freed up cash for the banks to do bank stuff? Well, yea could be. Or could it be the fact that the FED short term REPO facility has had zero participation the last 4 days? Well yea, also maybe.
It's all of the above. Plus, they start earnings next week. Which adds to the suspense.
Yesterday XLF looked like it was about to break support and this is truly a leading indicator (for me at least). I feel much better about the health of a rally when the financials are taking part. Same with small caps. But the banks are the bedrock of the economy. In capitalistic thinking (debatable) there can't be business without the banks. So, in general, and this is a generalization, when the banks are doing well the economy is doing well because people are taking out loans. Paying their credit card bills, paying their mortgages, etc. See where i'm getting at? I think this is an all of the above thing. You have a beaten down stock, some slightly good news on the virus front (market is forward looking) and the market goes to price in future profits or less shitty business for the banks. Here's where it gets interesting for the market and my bearish ways.
IF NDX/QQQ/techland can hold their ground and let stocks like banks, small caps, and any other beatdown stocks like anything in the transports catch up we're in for a truly explosive breakout from this area, to the upside. The questions is. Is this sustainable. We saw what just the banks did to SPX and SPY today, now imagine if everything else started participating. What powered us to our last local high (~320) was IWM, and XLF. And if you were part of that trade you. got. paid. That's also what shit the bed the hardest on the way down and still haven't gotten up from the concussion they sustained when they got smoked in the face. Today, they're showing signs of life. Now. IWM besides this morning didn't really have as spectacular as a day when you look at the chart but was still up 1.6% and transports were up 1.8%. But, those are signs of life.
Now, this all hinges on the true economy. These small cap businesses that rely on smaller non public businesses to function. And the banks that finance these companies actually getting repaid on their loans, and not having joe 6 pack default on all his 6 credit cards and car payment because he got laid off. Glass half full, or glass half empty?
Most importantly we came back from the breach on bonds, and on the tech stocks bursting at the seams. Hell, this could have just been a tactical move to prevent the "this ends badly" scenario i laid out yesterday. Removing 2 pounds of shit from the 5 pound bag with 10 pounds of shit in it. But, it worked. And not to mention we closed the week as bullish as they could. Gotta get those weekly green prints. But truth be told we're bullish on the charts. In a vacuum this is a healthy market when looking at just the chart.
Now the only gripe i have on the day today was actually printing a NEW low for shares traded. This takes a lot out of the bullish thesis for a breakout in my mind. But, again, literally the entire last leg up we had pre COVID was done on 40m shares a day. So don't take my position on that as gospel, just as an indicator. (actually by time of posting we're above our lowest volume by 2m AH's.)
Nice little fight this morning at open. It's rare we open straight flat so it was interesting to see how they played that out. We had that little liquidity hunt/bear trap breaking down below the megaphone trendline (another reaction) and it was literally just follow the XLF leader the rest of the day with a couple pit stops at key levels. Note they did close us above the range we traded in the entire week. And on that note. We only traded in a 2.25% range the entire week. Coiled spring.
I'm going to show some SPY charts that aren't as cluttered so you can see what i mean by bullish on the chart.
First is the hourly. Remember what i said about successive triangles? We broke another one today. Upwards. And we've yet to be completely rejected from this level. They tried yesterday but it got wicked pretty hard. Bullish. In a perfect world we would have traded back down to at least the $308 level to try and get a reaction on the bottom upward sloping trendline. But remember, volume confirms these moves. And that was lacking today.
A look at it with the fibs
I mean this looks like it wants to break to the upside. Especially with today being a bullish engulfing and breaking above the range
Note, from the bottom yesterday to the top today there were only two candles that had better than average volume. The entire uptrend looks like a melt up
Today's daily candle engulfs 4 out of the 5 daily candles. Kind of like yesterday's did, but going the other direction. Which brings up that i have no idea what the hell that pattern is besides a broadening top. But hey, i've seen crazier shit
Nice bullish hammer close on the weekly *rolls eyes*. This very well could be a bull flag starting to play out
With drawings
SPX same story but A LOT closer to it's downtrend line from the feb top. It was also about 4 points away from filling the gap today
Look at how well they supported price above the breakout area all week. That's talent. SPX looks more bullish or at least discernibly bullish
Where does this look like it wants to go?
ES with all gas no brakes. Haha look at how ridiculous that looks
At the breakdown candle high from 06/11 with a wick down into what is now becoming a supply zone. Resistance has now turned into support
Look where ES is in the triangle..
Weekly
That's a lotta damage. Bearish engulfing. Resting on support. Like i said earlier, on a dime.
Ok here's where it gets semi interesting. After IWM's initial pop this morning it didn't really have a lot of follow through. It squabbled over that trend line from it's triangle a little and BARELY closed above it's resistance. They weren't participating as much
Gotta give'em props yesterday on the head fake though. They got me. But again volume was higher yesterday but they did regain the triangle today. That .382 fib at $138.31 has turned out to be awesome support
It has it's work cut out for it on the weekly and that's not going to be easy
I'd almost be tempted to call that pattern a bear flag
I'm just going to leave this right here. This is a 60% gain from the March bottom..
Look at this fakeout on DJI. That close yesterday had "SELL!!" written all over. Almost a bullish engulfing. Still an incredibly bullish close even if it eased off at the end
I mean that's a bullish close
XLF. If you were short at this level you just got blown the fuck out
XLF hourly with gap targets
I mean that was an objective short with that bearflag printing. NOPE.
XLF weekly. A lot of work ahead of it
DJT with a complete retrace and more from yesterday. Bullish engulfing on an ugly candle yesterday
Look at the volume on the transports. Never have they been so hated and loved
Silver with a close, again, above it's key levels. My boy.
But a look under the hood.. It needs to break these divergences if it wants to hold this level
Nice pullback on gold. If this hits it's 13 period EMA at $1789 i'd look at taking a position if you're into that
Look at the save man. Almost like.. nevermind. At one point the 2 yr yield was .129%
Bottom line is there was a churn to the market today was at one point tech led to the downside and small caps and financials became the trade of the day. This is generally the type of cycle out of havens that we see when economic conditions are improving for whatever reason and people are wanting to put on a little bit of risk. That is all to be determined. But when it happens you can always tell because there's no clear disernible trend or trade. Everything is just churning.
Again on my posts like i made yesterday that's why i hate going out on a limb. It's like that allstate commercial with the old dude and dollar on a fishing rod. "so close". But, on that note i still haven't been stopped (was close today there at the end with the VIX taking a poop).
The question is if this cycling into cyclicals, small caps, and all the other beat down stocks is sustainable. If it is we're in for much, much higher prices. They used this trade to get us to $320. Think it'll take us again if they use it again. Now, you have to look at this from both sides. At VIX at these levels you can begrudgingly open a straddle or strangle on things like XLF or IWM considering they have the tendency to move the most either way. If these are the trades that take us to $350, you get paid. If these are the trades that take us $280, you get paid as they're off their lows.
Hope you enjoyed this. And hope you had a good day trading. If you follow daily i apologize i didn't have more engagement as i was on my heals with the sudden change in trade and had to regain my balance. I appreciate everyone who follows and furthermore anyone who does engage. It's cool to see everyone chatting and talking about what is, and could be.
And, as always, keep your head on a swivel. And i just want to take a moment and say days like today are exactly what i mean when i say keep your head on a swivel. When the ground you're standing on starts moving and you don't know why it's up to you to A. recognize it, and B. react if need be. Either to adjust trades you currently have one. Or to take an opportunity. Just like that, on a dime.
Have a good weekend everyone.
This is not trading advice. This is my own personal opinion based on my own personal TA. You are responsible for your own trades.
Comment:
Interestingly enough VIX isn't playing along just yet.
Comment:
Opened right on my support/resistance line at $320.11. If the start heading for the gap they'll actually get a 2fer.
Comment:
XLF going for the gap. Other than that it's all systems go with everything green and buy side has some momentum.
Comment:
Guess where the strength is? Doesn't bode well. IWM and SPY wanting to go for the gap.
Comment:
Comment:
NDX 11000 inc.
Comment:
NDX 11000 hit.
Comment:
XLF came up .02 short of the gap. IWM still looking like it wants it.
Comment:
DJI is where the strength is seemingly this morning.
Comment:
SPY opened above, and haven't been able to retake $320.11, IWM and XLF both leading to the downside. XLF may be printing a continuation move. But again, a lot of those names are also names in things like DJI. Still seeing that churn today but people are picking winners and losers right now.
Comment:
Transports wearing it with a continuation move after gap fill.
Comment:
IWM gap filled. XLF looking for a continuation move.
Comment:
Alright first 5m close above $320.11.
Comment:
Everything besides DJT is showing a reversal on the 5m. Following DJI..
Comment:
Everything's recovered. Volume's good.All systems seem to be go for this breakout of the triangle.
Comment:
Looks like everyone went shopping and then went to lunch. VIX now up 4%.
Comment:
If this does roll over like it's looking like it wants to into close the bulls have to hold today's open. If not we're going back down for that gap fill on SPY and DJI.
Comment:
Bbands are as tight as they can be on the 5m. There should be a decision here soon.
Comment:
Just noticed IWM got a second wind. Wasn't showing in SPY price action.
Comment:
XLF and DJI too on a stealth move. NDX has been selling and DJI/IWM/XLF have been rallying keeping SPY completely flat. Stuck in the middle.
This is an important trend line for DJI to retake
Notice how SPY didn't pop until NDX did?
This is an important trend line for DJI to retake
Notice how SPY didn't pop until NDX did?
Comment:
IWM breaking up out of it's triangle on decent volume
Comment:
XLF with it's second gap fill today.
Comment:
The broader market doesn't trust this though. VIX up 5%.
Comment:
Look where SPX is... About to break to a new high...
Comment:
NDX about to go for the gap??
Comment:
We tagged a new high by 2 points on SPX. We'll see if we can get a close above it today. It'd be a big deal if we did.
Comment:
Little bit of a rodeo today. NDX going for the gap.
Comment:
Volume's good on this reversal. Still 2 hours till close.
Comment:
This is/was a really solid repricing and it looks organic. No algo pop. That last 5m candle was the highest volume of the day. IWM retagging it's trendline from the triangle.
Comment:
Unless i missed some news that looked like it was somebody big unloading a position/positions. VIX almost at 6% Call Put Composite had it's second highest print call skew since 2010 today as well.
Comment:
NDX gap filled. SPX and DJI still have yet to fill theirs.
Comment:
Looks like SPX and SPY are about to go for theirs, or at least want to.
Comment:
VIX at 8.5%..... Something's going on under the hood.
Comment:
They have the next hour to fight over this level. Let's see who wins...
Comment:
Almost everything i'm watching is at a critical level. IWM fighting to stay outside of the triangle. DJI fighting to close back inside it's. XLF fighting over a gap fill area.
Comment:
QQQ leading. SPY/SPX going for gap.
Comment:
Bullish RSI divergence on the 5 min. I wouldn't be fully surprised if that have one more 5m candle down for a liquidity hunt and spring us back upwards. Remember, 5m divergences need to be confirmed with higher TF divergences to be validated.
Comment:
Gap filled on SPY and SPX.
Comment:
NDX/QQQ is getting fucking smoked.
Comment:
DJI last one standing for a gap fill.
Comment:
IWM full circle out of, back inside, and back out of it's triangle in one day.
Comment:
SPY 4h. That's alotta damage
Comment:
DJI gap filled. Now it's a party.
Comment:
For some reason my post from today was set to private. Trying to work it out now.
We're going to open right over the gap at about $320 if we hold. If we open anywhere below the gap it'll be a lot harder for the bulls to get us back to this current level in my opinion. Target is the previous top at $323.41, Gap at $333.47, and the 1.618 fib at $339.42.