Of Course I Talk to Myself
Updated
Hey guys, I hope everyone's having a great week! Let's get right into it today. So the majors saw new all-time high's overnight (again), but appear to be experiencing some weakness as we approach the afternoon session. At the moment, SPY is trading comfortably above the megpahone pattern (and longterm resistance trendline) on the monthly, for the first time in over 9 years. We'll soon find out whether or not this is an outside reversal candle. If it is, I'll be praying for the bulls, because the correction will be epic. But, if it's not, and we continue to melt higher (on persistent dollar debasement), then we'll need to either work our position by hedgeing on the long side with minimal leverage and tight stops, or seek out value through a deep analysis of emerging markets. I would also consider holding off risk all together, and parking some cash in gold and crypto. Personally, crypto carries a bit to much beta for my palate, but I'm always comfortable holding gold or silver. First we would need confirmation that the top of the megaphone has been defeated, and is now acting as support on the monthly. Only then would we adjust our strategy.
When you take a look at the SPY on the 3 month timeframe, you'll notice the rsi is in a well defined descending channel, and we're sitting right at the top, where we could see a notable rejection. SPY is at, or nearing overbought levels across every timeframe, which could translate into lower returns in the near term. Mean while, the CAPE ratio is also at all-time high's, confirming limited returns over the next 10 years. Therefore, the justification for taking the risk would need to fall back on the shoulders of the "hope and optimism/recovery," narrative, with the real underlying mechanism driving prices higher, being dollar debasement (inflation).
Jobless claims are out tomorrow, so it's going to be very interesting to see how markets react, considering we rallied last week after a colossal miss, and an ugly print. We all know markets rally on bad news, good news, and no news. Trade accordingly.
Stay tuned for live updates throughout the day, and thanks for your time today guys! If you enjoyed our 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. Cheers, Michael.
When you take a look at the SPY on the 3 month timeframe, you'll notice the rsi is in a well defined descending channel, and we're sitting right at the top, where we could see a notable rejection. SPY is at, or nearing overbought levels across every timeframe, which could translate into lower returns in the near term. Mean while, the CAPE ratio is also at all-time high's, confirming limited returns over the next 10 years. Therefore, the justification for taking the risk would need to fall back on the shoulders of the "hope and optimism/recovery," narrative, with the real underlying mechanism driving prices higher, being dollar debasement (inflation).
Jobless claims are out tomorrow, so it's going to be very interesting to see how markets react, considering we rallied last week after a colossal miss, and an ugly print. We all know markets rally on bad news, good news, and no news. Trade accordingly.
Stay tuned for live updates throughout the day, and thanks for your time today guys! If you enjoyed our 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. Cheers, Michael.
Comment
Good look at the RSI channel on the 3 month timeframe... Comment
Put/Call ratio still looks extremely skewed... Comment
Vix catching some support here at the August low's, around 21.50... Comment
Looks like the bulls are about to lose the ascending channel support... Comment
Brief test of the 50 period MA on the hourly (367.59). Let's see if the bears try to break us below... Comment
Vix is looking strong today, back at a 22 handle. Good to see you old friend... Comment
10Y yield is working it's way through the 50 period MA on the weekly (.885). Looks ripe for a breakout... Comment
Bears testing the 50 period MA on the hourly again. Third time's a charm? Comment
Bears successfully captured the 50 period MA on the hourly, and now eyeing the 100 period at 363.65. Let's see if we see a retest of the 50 as resistance, before another leg lower...Comment
Comment
Vix at the high's of the day (22.50), as SPY see's it's lowest level since Dec 3rd... Comment
Put/Call ratio is getting awfully close to a break-out. This could get ugly very fast... Comment
Vix testing the 21 Day EMA (22.90)), losses are accelerating here as we approach power hour. Nasdaq is now down over 2%, with the SPY down aroun 1%, and the Dow down about .70%. Global markets are rolling over as well. Uh oh...Comment
Amid today's notable weakness, the dollar is catching a rare bid. We're now up around half a percent on the week... Comment
Maybe polarity principle still exists? SPY got a clear rejection off the 50 period MA on the hourly (367.59). Let's see if we see another leg lower before the close. The 100 day MA is calling... Comment
Hourly view of the Put/Call ratio. I do wonder what the financial media will say to explain the shift in sentiment we're about to see. Let's see what narrative they come up with this time... Comment
SPY back at the low's of the day. What do the bears have planned for the close? Hmm....Comment
Stuck in a tight range here with 5 minutes to the close. Where you at bears? Or do the bulls intend on recapturing the ascending trendline? Comment
Wow. Interesting day of trade. Massive sell program into the close. Bears showed up to take us back to a 366 handle, which is the lowest level since Dec 3rd. The majors were battered all day, with Vix spiking (for a change). Jobless claims out tomorrow so stay tuned as we witness an almost immediate shift in sentiment, as a breakout in the Put/Call ratio would imply.Thanks for your time today guys, and have a great night! Cheers, Michael.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.