SPY / SPX / ES - $USD Smacked / 6E breaks Par - the LIFT
The USD pulled back overnight on the ECB's 75 BPS Hike, until the October 21st FOMC Rate decision
is announced the DXY can easily see downside pressure.
Traders began to move against the Dollar as Major Asian Markets opened and again - ahead of the
EU Session open @ 3 AM EST, by 3:30 AM EST.
The Inversion lift was provided to the ES NQ YM RTY GC & SI @ 3 AM ET - straight up 20 Handles
for the ES. Boom went the Stimulus in FX.
Even Crude managed to lift over the 85.02 Pivot.
Financials - XLF / NQBANK / KRE etc. are going to have a Stick Save day ahead.
1 & 2Yr Bills will see some much-needed consolidation after the short end has gone parabolic over
since Wyoming Powell.
__________________________________________________________________________________________
Yesterday's increase in Put activity provided the required Globex Squeeze and extension as upon the
NYSE open there will be continued closing of Trades which have gone sideways.
Sentiment and Positioning had swung to a sell-side weighting.
Lael Brainard provided a pivotal comment - "The FED is aware of over-tightening." - this was all the
Bid required to infer further "Pivot" chatter with respect to the Policy Cushion of overdoing tightening.
2.53% Fed Funds - 8.5% Inflation... overtightening?
You do the Math. - it was all the Bulls needed to gain confidence in the Build Back Better Rally.
__________________________________________________________________________________________
SPY Pivots are as follows for Friday:
Trendline Support - 391.88
Baseline Supports - 395.22 / 396.44 / 397.61
Pivot for Higher - 401.56 provides a Throw over to 405.04 to 407.11 OR the .382 Fib of the recent High to
Lows - it should remain overhead Resistance for today.
400.25 is the over / under into the open.
Will late chasers see a hammer... not until the Puts are run off.
Friday's Gap Fills come in at 77.22% - having been surpassed by Thursday @ 80.13%. Today may be quite
different, the Gap does not need to fill today until after 11 AM EST, IF at all.
Bots adore Gaps.
__________________________________________________________________________________________
Are Institutions bidding Markets?
No, they are not - Large Traders are, however.
Above 400 on Friday and holding into the Close will provide "continuation thinking."
There is just enough Liquidity returning to provide interest and Organic Buying.
The Next Gen Squeeze awaits at 407.22 to 407.41.
__________________________________________________________________________________________
This can run further as expectations have been set for a weaker CPI next Tuesday.
Bullhorns have been blaring into the Bears Camp - they hear confirmation bias only to be
dropped into the Dunk Tank time and again - a pattern that frankly repeats itself over and over.
Bloomberg begins chortling on about "New Lows, 3400, Breaking 3600, Hawkish this/that" and it
gains mindshare traction... quickly.
Many traders are swing for the Triple when they would be far safer loading the bases with Singles,
Balks, Walks, and chalk.
Low Volume - let's leave it as Volumes are building.
On Balance, Market Internals were improving off very low levels in the OSC's reaching Sub 300 with
388 and 475 being the Crash outliers from prior events. Summations held the Zero Line and turned
in a clear Divergence.
It remains a Bear Market IMHO until we see the 50 retake the 200. And speaking of EMA's/SMA's...
they are very potent attractors - in particular defending 50/100 crosses.
__________________________________________________________________________________________
Trade Safe through early September - it's not as many believed, 11/19 has been Higher over the last
20 years - will this be 12 or 9... we'll see - Magic 8 Balls aside, expect Higher VX @ 1.5 to 3% on either side
of the Tape.
Never discount the Effects of VOX ROLL?SETTLE timing.
Good Luck to you.
HK
