Stocks Explode, Nasdaq Halted
Updated
The Nasdaq was halted overnight as the index surged up to 4% higher off the back of a stronger than expected performance by the Trump Camp. Apparently, the odds of a "Blue Wave" have all but collapsed, and this bodes well for Mega-Tech and growth stocks. Uncertainty around a contested election was also abated, off the back of a relatively orderly night of voting, which put clear pressure on hedges such as the Vix, which is down as much as 13% this morning. I think it goes without saying, that nothing material has changed since yesterday night when the voting numbers began to roll in, other than the price. Then off the price action, we get narratives to validate the move. This is not how it's supposed to work. Millions of votes are yet to be counted, and they're Biden weighted, so this election is still very much up in the air, and likely going to be contested imo. But, perception is everything, and when the price moves, it changes our perception of risk.
Technical trading is becoming increasingly difficult in a market that moves wildly off of immaterial headlines, and pure assumptions. We lost fundamentals a long time ago, but until recently, technicals held up well as an indicator of future price action. We will continue to use technical analysis (and fundamental analysis), among others, to assess the state of the market, and future price action. But, it's like drinking warm beer. I'll still drink it, but something's definitely off.
SPY Analysis:
SPY is poised to gap up to around 341 on the open amid the nuclear bullish sentiment we're witnessing across the globe. This level is key as it's right around the upper band of the descending channel. A break above this level would put us above all major short-term resistance levels, and could result in another squeeze to the 350 level, and the long-term Green line resistance we broke below on Oct 19th. If we get rejected at the top of the descending channel, we could revisit the lower band as early as this afternoon. Vix is looking very oversold right now. I can only speak for myself, but I'm still net short, and hedged for the worst case scenario. As far as I'm concerned, nothing material has changed, not even the losses in my portfolio over the past 3 days are material. I'll share these trades with you guys the moment I unwind them, and it might be as early as today, depending on whether or not something material actually changes. Let's see how the morning session plays out...
Stay tuned for live updates throughout the day, and best of luck out there guys!
If you enjoyed today's analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research.
Technical trading is becoming increasingly difficult in a market that moves wildly off of immaterial headlines, and pure assumptions. We lost fundamentals a long time ago, but until recently, technicals held up well as an indicator of future price action. We will continue to use technical analysis (and fundamental analysis), among others, to assess the state of the market, and future price action. But, it's like drinking warm beer. I'll still drink it, but something's definitely off.
SPY Analysis:
SPY is poised to gap up to around 341 on the open amid the nuclear bullish sentiment we're witnessing across the globe. This level is key as it's right around the upper band of the descending channel. A break above this level would put us above all major short-term resistance levels, and could result in another squeeze to the 350 level, and the long-term Green line resistance we broke below on Oct 19th. If we get rejected at the top of the descending channel, we could revisit the lower band as early as this afternoon. Vix is looking very oversold right now. I can only speak for myself, but I'm still net short, and hedged for the worst case scenario. As far as I'm concerned, nothing material has changed, not even the losses in my portfolio over the past 3 days are material. I'll share these trades with you guys the moment I unwind them, and it might be as early as today, depending on whether or not something material actually changes. Let's see how the morning session plays out...
Stay tuned for live updates throughout the day, and best of luck out there guys!
If you enjoyed today's analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research.
Note
Vix is back at the 200 day MA (31.70), which is also around the 21 day EMA (31.80). Let's see if we get some support here, or if the squeeze hammers us back below the 200 day for the first time since last week Monday...Note
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Mind the gaps:Note
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Hourly RSI is looking overbought. But, the bulls now have support outside of the descending channel after breaking back into it yesterday, along with all of the major moving averages now acting as support. It's pretty clear what this week's mission was, and so far, it looks like mission accomplished...Note
We just retested the top of the descending channel as support, around 339.59. Vix is getting smashed here in the first 30 minutes of trade, and is now back to 30, but the majors are starting to experience some weakness...Note
The 10Y yield is getting clobbered, and sold off from .93 yesterday to .76 handle today. That's the largest intraday move since June...Note
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Vix is now down a stunning 18% on the day, while Vix futures are down just 7.5%...Note
Vix appears to be making it's way down to the 50 day MA at 28.50, we're currently sitting at 29.10...Note
And the largest single day sell-off since June:Note
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Vix is now back at the 50 day MA at 28.50. The 50 day has held up as key support since Sep 1st. Let's see if we see the first close below this level in over 8 weeks. I strongly doubt it...Note
SPY getting a sharp bounce here after testing channel support around 340. We're now sitting at the HOD around 344. Monday's, Tuesday's, and now today's short squeeze are identical. It's almost as if the price action we're seeing has nothing to do with the headline narratives explaining the price action. Exactly...Note
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Squeeze intensifying here as the top of the triangle comes into play. We're sitting around 346 at the moment, and not a bear in sight...Note
Nasdaq is now up 4.6%, but Vix catching a bid at the 50 day MA.Note
Majors all rolling over as we approach the afternoon session. SPY got a rejection around the Oct 23rd highs (346), and we're now back to a 344 handle with the Vix back to a 29 handle...Note
Well, that didn't last long. The bulls found out the bears had us marginally off the highs, and they showed up to take us to new highs, almost immediately. On we march toward the upper band of the triangle. SPY sitting at 346.90:Note
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Vix catching a notable bounce off it's 50 day MA (28.50), and a key short-term ascending trendline (in Green):Note
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Great election update here from ZeroHedge. Link to the full article below:"This race will likely be decided in the upper Midwest, where relatively few votes have been counted so far and where the process could take a few days. Wisconsin may declare a winner today. Pennsylvania and Michigan will likely take longer. Vote counting in Georgia inches closer to a result, with the Biden-friendly Atlanta area responsible for many of the votes to be counted. After a frenetic evening of results that answered some questions but left the most important ones unanswered, both candidates still have a path to the White House."
zerohedge.com/political/trump-versus-biden-five-election-night-takeaways
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Hourly RSI on the Vix hit 16 this morning. That's the lowest hourly RSI print going back to April 2018...Note
I'd say the majors appear to be rolling over here once again, but I can't help but picture Jay Powell sitting at his desk about to hit Ctrl + P...Note
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SPY looking a bit weak as we approach power hour. We're back to a 344 handle, and Vix (on the hourly) is the most oversold in two and a half years. Let's what happens next...Note
Vix catching a bid here and now sitting back at a 30 handle, but still down over 15% on the day (Vix futures down 8.5%). SPY giving up some of the mornings gains and back to a 343 handle. Heavy support around the 340 level. I wonder if the bulls have any intention of taking profits here, or if the shorts who covered around 324, are jumping back in for another leg lower...Note
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The candles on the 5 minute today look like a line chart. This market is trading like it's on autopilot. Some weakness into the close took us to the 100 period MA on the 5 minute (343.32), but we remain miles above any of the nearest supports, and floating somewhere in orbit. We broke through all resistance levels overnight, (an interesting new trend), and the bears were unable to stop the tidal wave of bids that flooded the orderbook until about noon. I think longs are itching to take profit as we hover near the upper band of the triangle, and shorts who covered around 324, which initiated this squeeze from hell, are itching to re-enter their short positions. Further downside is likely as the Vix is also heavily oversold on the hourly, and the election is not even close to over.I hope you guys enjoyed today's analysis, and thanks for your time. I look forward to seeing you all again tomorrow for act 12 of the Circus. Cheers, Michael.
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