SPY - Are You Prepared If We Haven't Bottomed?
Updated
When I made my July 29 call on the ES SPX Futures here:
SPX - The Sound of a Shattering Iceberg
We had anticipated that a retrace to the highs or a raid on the highs was on deck.
And yet throughout August, price action has been extremely bearish across all commodities, indexes, equities, and bonds.
We very suddenly went from talk of a new bull market to a dip that doesn't rip.
In my August 5 call on QQQ, I note that the January of '22 fail pivots, which ended the bull market, that were taken out on all three indexes have not been raided on the ETFs.
Nasdaq NQ - Is It Time To Sell The Rip?
And although today's August 18 options expiry price action took out a key low, the bounce we got was also lethargic.
On the 25th, the Federal Reserve will hold the press conference for the Jackson Hole event, which will not involve a rate hike, but a forward-looking statement of economic policy by Jerome Powell.
Last year, this day hallmarked the nuke of the markets.
This year, it may very well do the same when the bond market has to accept that 6% Fed Funds Rates are on deck before '24 and 6.5% may be on deck before Q2.
The other bearish catalyst is the rapidly degenerating economic condition in Mainland China, which is still ruled by the Chinese Communist Party Xi Jinping has yet to throw away.
I've heard that Evergrande is defaulting and that's put something like 1/3rd of a trillion dollars of commercial real state into the fire. The Yuan isn't in good shape.
The whole country is in terrible shape because of the effects of the pandemic. The losses are a lot worse than what you see reported by the CCP to John Hopkins and presented on places like Our World In Data.
This is really the key cornerstone of everything going on in the world right now. I have been warning about this ad nauseum in everything I post, and I think people will begin to understand what I have meant, and why I have said it, as changes in this world unfold in the next six months.
China is a key market for Apple, and Apple is something of a pillar of the U.S. equities market, and yet, after the big earnings correction, it seems as if $198 was the ultimate top.
Apple - So, You've Been Taught To Buy That Dip...
And Tesla. with its Shanghai Gigafactory in Babylon and its reliance on the Chinese market, has just been an absolute disaster.
Tesla - What To Expect Until September?
Traders are often slow to react. "The trend is your friend, until the end," they say, and correctly.
When we look at SPY on the monthly, we see that it's taken a monthly low for the first time since February.
And when we look at it on the weekly, we get even greater clarity.
And although sub 4,400 really ought to have been a place that it bounces to retrace and retest the tops at 4,650, the fact is that price action is not showing a willingness to bounce and take out upside targets.
So far, what it has told us is that longers are trapped.
And if longers remain trapped even after we take out the July low, it's safe to posit that the next target to the downside would be the June low at ~$416.
"$416 what a fairy tale!" is what a lot of people say, and yet this is only 5% away from where we are now. Only 200 more points down before there's a chance of a possible reversal.
In other words, these targets are not that far away.
If they really are traded to, it becomes increasingly unlikely that there's going to be any kind of a retrace to the top, considering JP Morgan is some 15,800 contracts long on 4,225 SPX puts expiring Sept. 29 that have never been in the money.
And so I want to say to everyone that the sooner you can flip your bias from bull to bear, perhaps the better.
It may not be until Q4 that we see a bounce with how things are unfolding.
SPX - The Sound of a Shattering Iceberg
We had anticipated that a retrace to the highs or a raid on the highs was on deck.
And yet throughout August, price action has been extremely bearish across all commodities, indexes, equities, and bonds.
We very suddenly went from talk of a new bull market to a dip that doesn't rip.
In my August 5 call on QQQ, I note that the January of '22 fail pivots, which ended the bull market, that were taken out on all three indexes have not been raided on the ETFs.
Nasdaq NQ - Is It Time To Sell The Rip?
And although today's August 18 options expiry price action took out a key low, the bounce we got was also lethargic.
On the 25th, the Federal Reserve will hold the press conference for the Jackson Hole event, which will not involve a rate hike, but a forward-looking statement of economic policy by Jerome Powell.
Last year, this day hallmarked the nuke of the markets.
This year, it may very well do the same when the bond market has to accept that 6% Fed Funds Rates are on deck before '24 and 6.5% may be on deck before Q2.
The other bearish catalyst is the rapidly degenerating economic condition in Mainland China, which is still ruled by the Chinese Communist Party Xi Jinping has yet to throw away.
I've heard that Evergrande is defaulting and that's put something like 1/3rd of a trillion dollars of commercial real state into the fire. The Yuan isn't in good shape.
The whole country is in terrible shape because of the effects of the pandemic. The losses are a lot worse than what you see reported by the CCP to John Hopkins and presented on places like Our World In Data.
This is really the key cornerstone of everything going on in the world right now. I have been warning about this ad nauseum in everything I post, and I think people will begin to understand what I have meant, and why I have said it, as changes in this world unfold in the next six months.
China is a key market for Apple, and Apple is something of a pillar of the U.S. equities market, and yet, after the big earnings correction, it seems as if $198 was the ultimate top.
Apple - So, You've Been Taught To Buy That Dip...
And Tesla. with its Shanghai Gigafactory in Babylon and its reliance on the Chinese market, has just been an absolute disaster.
Tesla - What To Expect Until September?
Traders are often slow to react. "The trend is your friend, until the end," they say, and correctly.
When we look at SPY on the monthly, we see that it's taken a monthly low for the first time since February.
And when we look at it on the weekly, we get even greater clarity.
And although sub 4,400 really ought to have been a place that it bounces to retrace and retest the tops at 4,650, the fact is that price action is not showing a willingness to bounce and take out upside targets.
So far, what it has told us is that longers are trapped.
And if longers remain trapped even after we take out the July low, it's safe to posit that the next target to the downside would be the June low at ~$416.
"$416 what a fairy tale!" is what a lot of people say, and yet this is only 5% away from where we are now. Only 200 more points down before there's a chance of a possible reversal.
In other words, these targets are not that far away.
If they really are traded to, it becomes increasingly unlikely that there's going to be any kind of a retrace to the top, considering JP Morgan is some 15,800 contracts long on 4,225 SPX puts expiring Sept. 29 that have never been in the money.
And so I want to say to everyone that the sooner you can flip your bias from bull to bear, perhaps the better.
It may not be until Q4 that we see a bounce with how things are unfolding.
Note
Generally speaking, the immediate gap fill after open isn't bullish.If we were going to retrace to 4,500 with such ease I think the best signal would be that the gap is maintained and come back to only later.
Note
Long $438 and sell at $445 is the only conceivable trade we have pending on SPY at the moment with PMI tomorrow and Jackson Hole on Friday.
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.