Week of August 4- NQ/YM//VIX/CL/10yrWhat a great fresh week of selling we just had!
Last week I was looking for a slight bounce in NQ before running to our 18.5k target area - but they wanted to run is down there faster. We have been writing about this 18.5k area for MONTHS - I'm just glad we finally got the entry we wanted.
To be clear - I think the next move higher in markets will cement highs that we won't see again for decades, or possibly our lifetimes. But there is a LOT of upside between here and there
Nasdaq - I am so bullish on the NDX here that it basically hurts. this 18.5k area has been a long held liquidity pool I wanted to see get visited so I could load the boat on longs.
The weekly charts looks great - this was a textbook measured pullback, and I love the wall of worry that has been re-erected on the market.
We got a garden-variety 12% pullback - and now we have bears on parade - and everyone is selling out of their tech stocks to go bid recession stocks like Utilities and Consumer Staples - at the EXACT wrong time.
Investor psychology is truly a thing of beauty, and it's all playing out in the charts - exactly how we have been expecting.
FROM HERE - I am expecting nATH on NDX. I am looking for ~ 22k on the NDX which is 18% higher from where we are now.
The Dow I am much more bearish on. I think we need to see some cleanup work done to the downside on the DJI , and then it can really get going. I believe that tech will lead out of this correction into the final parabolic move higher - but when the DJI bottoms and starts to move higher - the entire market will broaden out.
The current Draw on Liquidity for DJI is coming from the quarterly chart - we need to revisit the quarterly IRL while sweeping the equal lows down ~ 38k. Once that is complete, I am expecting nATH on the DJI as well.
One thing we have noticed is that DJI and NDX tend to move inversely of each other - but when you average the 2 indexes together - you get the SPX. You could see NDX +3% - and the DJI -2%, and SPX would be flat - which is why we tend to focus on NDX/DJI as they offer cleaner directional plays.
I think moving over the next 2 months or so, you will see DJI sell off, which will help power the NDX rally - and then once the DJI bottoms - everything everywhere will rally into the top .
The main driver to this market melt-up is going to be based on 3 things - but its all technicals. VIX, Oil, and the 10yr.
The VIX did a very VERY interesting move on Friday.
The VIX was +60% on the day mid-Friday, but after we swept that weekly level the VIX started to retreat.
I expect the VIX to possibly make one more sweep higher to run the stops ~ 31 - but that would be a HUGE buying oppty.
WTI Crude Oil is on the verge of REALLY cracking to the downside. This is yet another indication of the weakening global economy - and affirmation that inflation is actually rolling over.
The 10yr is always ahead of the game - the bond market is the smartest dudes at the table. We have been long bonds since the April highs and we are just now getting back into an area where we could see a sweep & bounce of the 10yr relatively soon.
I want to see the 10yr REALLY smash the December Lows , and then I will be looking for a backtest.
To be clear - I am looking for higher stocks, bonds, Precious Metals, and lower oil as we head into the Election. I believe that whatever highs we print (for stocks) wont be seen again for decades. I'm looking for the largest bear market in history to begin in Q1 of 2025 - and its all driven by global debt.
So here is the setup I am watching for this week;
I want to see NQ start the next and final leg up for the final top of 20-30%. I want to see the low of the week put in by lunch on Tuesday, and expansion higher starts soon.
I Want to see The DJI continue to sell off towards 38k.
I want to see the 10yr and oil continue to march lower and take out the December Lows
I also want to see Oil continue to march lower due to weakening global macro.
Until next week - We'll be watching.
