This is Madness!
Updated
There's a fine line between genius and insanity, and it appears that line is gone.
Another day, another pump in risk assets based on nothing more than "Trump Tweets", "Vaccine hopes", and "Stimulus Optimism." The US saw another 840k jobs lost since last week, putting the total now at just under 11MM still unemployed. In my opinion ladies and gentlemen, this is not what a real economic recovery looks like, and each time I witness this sort of price action of the back of what I think is garbage "news", it further solidifies my view that we're becoming more and more disconnected from economic reality.
If it weren't for the trillions in bailouts, we wouldn't have an economy, and based on my fundamental analysis, we were losing steam, and in desperate need of stimulus, long before COVID-19 showed up. Now it seems the market is entirely dependent on buy-backs, government assistance, cheap money, and perpetually optimistic headlines. "How long can this continue?" is the real question on my mind. But, I digress..
On to SPY Analysis:
We opened up around half a percent at 342.85, just above the Green line resistance, and notably above the 50 day MA (for the second day), and 21 day EMA. This is very bullish price action, but again, it's on low volume, and off the back of optimistic media narratives, and not based on fundamentals. If the bulls can hold the Green line today, I'd be shocked. But, at the very least they need to hold the 50 day MA. Remember, polarity principle would apply here and see the 50 day MA go from resistance to support. If the bears can get us back below the Green line resistance, and 50 day MA before end of trade on Friday, we may sell off heavily into earnings next week, down to the 100 day MA/previous low from Sep 24th, between 320 and 324.
Stay tuned for live updates throughout the day, and as always, I appreciate your time guys. Thanks, Michael.
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The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research.
Another day, another pump in risk assets based on nothing more than "Trump Tweets", "Vaccine hopes", and "Stimulus Optimism." The US saw another 840k jobs lost since last week, putting the total now at just under 11MM still unemployed. In my opinion ladies and gentlemen, this is not what a real economic recovery looks like, and each time I witness this sort of price action of the back of what I think is garbage "news", it further solidifies my view that we're becoming more and more disconnected from economic reality.
If it weren't for the trillions in bailouts, we wouldn't have an economy, and based on my fundamental analysis, we were losing steam, and in desperate need of stimulus, long before COVID-19 showed up. Now it seems the market is entirely dependent on buy-backs, government assistance, cheap money, and perpetually optimistic headlines. "How long can this continue?" is the real question on my mind. But, I digress..
On to SPY Analysis:
We opened up around half a percent at 342.85, just above the Green line resistance, and notably above the 50 day MA (for the second day), and 21 day EMA. This is very bullish price action, but again, it's on low volume, and off the back of optimistic media narratives, and not based on fundamentals. If the bulls can hold the Green line today, I'd be shocked. But, at the very least they need to hold the 50 day MA. Remember, polarity principle would apply here and see the 50 day MA go from resistance to support. If the bears can get us back below the Green line resistance, and 50 day MA before end of trade on Friday, we may sell off heavily into earnings next week, down to the 100 day MA/previous low from Sep 24th, between 320 and 324.
Stay tuned for live updates throughout the day, and as always, I appreciate your time guys. Thanks, Michael.
If you like our analysis, please hit the Like button and subscribe to our profile so you don't miss our new analysis and updates.
The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research.
Note
Price action appears similar to yesterday's slow and steady melt-up in the afternoon session. Bulls are sitting comfortably above the Green line, for now, at 343. At the moment the Vix story is "Death By a Thousand Cuts," as it continues to get persistently hammered lower on these intraday pumps. Bears are in round 12 of the fight, and have seemingly lost every round, but they're still standing. Majors all up just under 1%, USD flat around 93.72, Crude up 2%, Gold flat, Bitcoin up 2.5% on Square news (Square bought 50MM in bitcoin, about 1% of the companies total assets as of Q2, 2020.)Note
We just kissed the Green line, and the majors appear to have given up about half of today's gains. Some light selling here across the board. Let's see how things shake up into the European close. Stay tuned...Note
I'm seeing headlines about Nancy Pelosi apparently shutting down any hopes for a "skinny" deal. Markets noticed. Let's see if we have a revisit of Tuesday's low from Trumps negotiations tweet, now that hopes for a stand alone Airline bill is less likely. Power hour should be very interesting to say the least.Note
Airlines are getting hammered on the news, confirming the current downward price action is related to Pelosi's remarks.Note
Vix continuing to get clobbered, now down 3% and sitting below it's 100 day MA at 27.30. SPY sitting just below the .618 Fib on the sell off from Sep 2nd - 24th. On the hourly, SPY is currently glued to the upper Bollinger Band, with the bullish hourly trend intact, as we continue to trade above the 50 period MA since we broke through on Sep 25th.Note
Picking up steam here as we approach power hour, because everything is awesome! Vix down about 4%. Will we see a whiplash move to the downside into the close, or will the bulls hold the important Green line? We'll see...Note
Okay guys, so we broke through the Green line resistance today with conviction. Well done to the bulls. This was the tightest range we've traded in since the beginning of this downtrend on Sep 3rd, so it wasn't an easy fight today for the bulls. We're also sitting comfortably above the 21 day EMA, and 50 day MA and found solid support off these levels on Tuesday, which is quite bullish. We're right at the .618 Fib around 343.85.Remember, earnings start next week, so be prepared for increased volatility across the board. Personally, I'm expecting earnings to be a complete shit show. But, that's never stopped the plunge protection team from swooping in with miracle bids.
I appreciate your time today guys, have a great evening. Cheers, Michael.
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