ES SPX Futures - Welcome to FOMCmageddon
Updated
In reading the title of this post, I'm sure you can tell what I want to say.
Since the new habit is to guffaw and lmao at any thesis that isn't bullish, because "we" all "know" US equities "always go up" and a new all time high is "in store," I'd like to point out the Nasdaq already shows signs of having topped.
That July 20, 2023 candle was some 2%+ in range and on absolutely no news.
And yet the SPX has not yet taken its equivalent intermediate term high.
The significance of the intermediate term highs that the Nasdaq took and the SPX is probably about to take is that they represent the March of 2022 failure swing.
Why does it matter? Because that swing and its destruction was the trumpet-backed announcement that the Coronavirus Disease 2019 stimmie QE bull run had come to an end.
And so coming back to raid it at a time when Big Jerome Powell openly told reporters at the last FOMC meeting that no rate cuts were scheduled AND that inflation would take years, not months, to come back to levels they regard as apropos, is a very dangerous situation.
The thing about tops and bottoms is that whoever calls them is always wrong, because you can only see a top or a bottom on hindsight.
In the interim, as they unfold, you can only anticipate that at a certain key price level, over a certain high or a certain low, that reversal patterns might manifest.
The geopolitical situation is very sharp. I note in a new call that oil is likely headed for a literal 3 handle this year.
Oil - A New Long Leg Down Soon Begins
And I note that the US Dollar Index is due for a rally to at least 108.
DXY - The US Petrdollar And The "Prigozhin Coup" In Russia
The cornerstone of the international chessboard is now, and always has been, Mainland China and its 5,000 year old country and culture, which has been ruined by the Chinese Communist Party over the course of its century of insanity.
What's going on in the equities market is heavily wedded to the "War With Taiwan" narrative being espoused by the propaganda machine, which I discuss in my call on Taiwan Semiconductor TSM, a company that I believe is a significant long hedge during a potential upcoming downtrend.
TSM - Taiwan, Your Semiconductor Long Hedge
So as for this week's call, I would like to note that, unlike the Nasdaq, the SPX has not raided its March '22 intermediate high.
This high at 4,631 happens to coincide with the new "JP Morgan Chase Collar," where one of the SIB's big funds sold calls at 4,665.
I discuss this collar below:
SPX/ES - An Analysis Of The 'JPM Collar'
Something to understand about the big banks' business model is this:
The first thing is that when they sell calls at a certain level, there is a buyer, and that buyer might be their clients.
Their clients may have paid the bank the standard 10% fee in exchange for providing the liquidity.
The reason the client would buy calls that JPM sells at a 10% premium is because they understand that the market will be made, in exchange, for those calls to be made worth more than they paid.
Those calls were purchased at the end of June when the indexes traded circa 4,400.
Why would JPM sell the calls and get themselves underwater? Because by September 29, Q3 end, they won't be underwater anymore, for one.
For two, they're hedged long and are making money on the way up on the hedge.
So they get to make money on the hedge, the calls ultimately expire worthless, and the client is happy because they got a big bag of cheap options at 4,400 to dump on the head of retail and Cathie Wood-style funds at 4,660.
And all of this is to say that the 4,631 failure swing/pivot is very likely to be raided, and it is likely to be raided on Wednesday, FOMC day.
During Monday's trade session, we will find out a lot about the intentions of the MMs.
I believe they will only raid the 4,544 level on Monday market open, making it a buying opportunity to sell 100 points higher.
However, if ES/SPX is to dump significantly to under 4,500 again, it stands to reason that the real target is the 4,800 ATH somewhere early in August.
But I think, for a lot of reasons, this is just so less likely.
Thus, SPX is likely to raid 4,544, which is to say the 4,550 psychological level, and trade over the 4,650 psychological level before Jerome Powell starts yapping.
This FOMC is really significant because there isn't another rate hike until September, the end of Q3.
So the trade is to long 4,540, sell it allllll at 4,650, and the target is under where JPM went long on puts and has been under water all month under 4,200 heading into the end of August and middle of September.
Since the new habit is to guffaw and lmao at any thesis that isn't bullish, because "we" all "know" US equities "always go up" and a new all time high is "in store," I'd like to point out the Nasdaq already shows signs of having topped.
That July 20, 2023 candle was some 2%+ in range and on absolutely no news.
And yet the SPX has not yet taken its equivalent intermediate term high.
The significance of the intermediate term highs that the Nasdaq took and the SPX is probably about to take is that they represent the March of 2022 failure swing.
Why does it matter? Because that swing and its destruction was the trumpet-backed announcement that the Coronavirus Disease 2019 stimmie QE bull run had come to an end.
And so coming back to raid it at a time when Big Jerome Powell openly told reporters at the last FOMC meeting that no rate cuts were scheduled AND that inflation would take years, not months, to come back to levels they regard as apropos, is a very dangerous situation.
The thing about tops and bottoms is that whoever calls them is always wrong, because you can only see a top or a bottom on hindsight.
In the interim, as they unfold, you can only anticipate that at a certain key price level, over a certain high or a certain low, that reversal patterns might manifest.
The geopolitical situation is very sharp. I note in a new call that oil is likely headed for a literal 3 handle this year.
Oil - A New Long Leg Down Soon Begins
And I note that the US Dollar Index is due for a rally to at least 108.
DXY - The US Petrdollar And The "Prigozhin Coup" In Russia
The cornerstone of the international chessboard is now, and always has been, Mainland China and its 5,000 year old country and culture, which has been ruined by the Chinese Communist Party over the course of its century of insanity.
What's going on in the equities market is heavily wedded to the "War With Taiwan" narrative being espoused by the propaganda machine, which I discuss in my call on Taiwan Semiconductor TSM, a company that I believe is a significant long hedge during a potential upcoming downtrend.
TSM - Taiwan, Your Semiconductor Long Hedge
So as for this week's call, I would like to note that, unlike the Nasdaq, the SPX has not raided its March '22 intermediate high.
This high at 4,631 happens to coincide with the new "JP Morgan Chase Collar," where one of the SIB's big funds sold calls at 4,665.
I discuss this collar below:
SPX/ES - An Analysis Of The 'JPM Collar'
Something to understand about the big banks' business model is this:
The first thing is that when they sell calls at a certain level, there is a buyer, and that buyer might be their clients.
Their clients may have paid the bank the standard 10% fee in exchange for providing the liquidity.
The reason the client would buy calls that JPM sells at a 10% premium is because they understand that the market will be made, in exchange, for those calls to be made worth more than they paid.
Those calls were purchased at the end of June when the indexes traded circa 4,400.
Why would JPM sell the calls and get themselves underwater? Because by September 29, Q3 end, they won't be underwater anymore, for one.
For two, they're hedged long and are making money on the way up on the hedge.
So they get to make money on the hedge, the calls ultimately expire worthless, and the client is happy because they got a big bag of cheap options at 4,400 to dump on the head of retail and Cathie Wood-style funds at 4,660.
And all of this is to say that the 4,631 failure swing/pivot is very likely to be raided, and it is likely to be raided on Wednesday, FOMC day.
During Monday's trade session, we will find out a lot about the intentions of the MMs.
I believe they will only raid the 4,544 level on Monday market open, making it a buying opportunity to sell 100 points higher.
However, if ES/SPX is to dump significantly to under 4,500 again, it stands to reason that the real target is the 4,800 ATH somewhere early in August.
But I think, for a lot of reasons, this is just so less likely.
Thus, SPX is likely to raid 4,544, which is to say the 4,550 psychological level, and trade over the 4,650 psychological level before Jerome Powell starts yapping.
This FOMC is really significant because there isn't another rate hike until September, the end of Q3.
So the trade is to long 4,540, sell it allllll at 4,650, and the target is under where JPM went long on puts and has been under water all month under 4,200 heading into the end of August and middle of September.
Note
Personally, I want to see a flirtation with 4595 this morning that winds up rejected.And a rally through the afternoon is the expectation.
Note
I can only suspect that tomorrow morning's target is 4600, followed by something of a selloff on the basis that part of the gap up on SPY was left open during the morning retrace.Note
Everything is perfectly set up to take out the bottoms today.Which would give a monster long opportunity heading into FOMC.
Up today heading into FOMC would be strange though.
Sideways is possible.
Note
More highs but an impressive rejection.Notable is there's double bottoms at 4660 and we still haven't taken out the February wick:
Note
There never was a stop raid and the price action has even been peculiar.But the pivot has been taken out:
And price action now turns vomitous to the downside.
It's a short setup on a retrace.
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