Wednesday, March 18, 2020

Market Update 3/18/2020 - Bullish Signals

Investors continue to freak out over coronavirus expectations, and that's going to continue, as long as the negative news cycle continues, but all my sentiment indicators have turned bullish, and market is extremely oversold. As some point the market overshoots to the downside, or you reach the point of selling exhaustion, and it looks like we're there.

I tried to warn folks over the past several months that, "something bad was about to happen", and that the entire rally, since the Plunge Protection Team was called in, at the end of 2018, was a head fake rally, and dumb (Fast) money chasing a dream.


A rare "Running flat", or common Expending Flat corrective pattern:




This is where you want to put money to work, after a nasty pullback, at maximum fear

I had a major chart malfunction in the middle of this pullback, but getting caught back up to speed.

The bullish long term trend remains intact, and there's a good possibility that this is a very bullish pull back in wave 2, as seen on the $NYSE chart, which I pinned to my twitter page yesterday afternoon.

$NYSE: Likely pullback in to a bullish primary wave (2)


Big Tech: $NDX


The only index that really matters is the NASDAQ, because that's where the bubble is forming.
Trend remains up.

I was actually expecting a real crash, to 4400 on the NASDAQ, societal meltdown, civil war, or even a nuclear war with Russia, and that's still on the table, some time in the future, but is looks like the US zombie companies, will continue to be bailed out.

$SPX Also trending up in a bull market. As high as the $VIX is, you would think it was trading below 1500. lol Bottom of the range looks like 2300 - 2350? Not a big deal.


Energy is ridiculously oversold at this point. I think it's the longest 1 month candle I've ever seen.
 Is wind and solar replacing fossil fuels? I suppose we could see the combustion engine banned; I can't imaging what else markets are pricing in.

Airlines also oversold below the bottom of a very bearish down-turned channel.



It's like the tale of 2 markets: 1. A continuing rally lead mostly by big tech, and biotech, and a few other names. 2. A continuing bear market in Energy, and the rest of the world - PIIGS & JAPAN, etc. This is why Germany is getting hit so hard.

$INDU: Could maybe hit 19,000, but 1000 points on the DOW is nothing at these $VIX levels.
As long as Tech doesn't crash, then no worries.

Stocks Rise in the Spring.

Good luck, Traders
AA








Friday, March 13, 2020

Market Update 3/13/2020 - Friday The 13th - Charts FUBAR

I haven't had time to do and update, for a while, for obvious reasons. Global markets have been crashing for several weeks   several support levels were taken out over the past 2-3 weeks. This destroyed the upturned bullish channel we've been relying on for the past 12 years, and I continue to delete hundreds of broken charts. To make things even more difficult, I accidentally changed the timeline settings on more than 1 of my long term chart folders, and this left many charts FUBAR!

This morning we're seeing a sentiment change. It could be that the, "powers that be", figure they better dress the windows ahead of the end of the first quarter, to avoid massive redemption's in April, and what better time for a short squeeze than a week before options expiration. There's all the catalyst - for a rally - you need. Don't try to ague with yourself that markets can't rally, on bad news, they do this all the time.

Reminder: Money, and sentiment, moves markets, not bearish tweets. It's time to put the negativity out of your mind.

Now that everyone is bearish, and a massive number of retail investors/ traders are short this market, it's time for a short squeeze, that I think could easily carry us into July.

This is the fastest downside velocity - in a 3 week period - coming off an all time high, in market history. This isn't normal. It may have been planned for a very long time, and the pandemic is being used as an excuse to take down global markets, which were already weak, but for every over-reaction, is an equal and opposite reaction. 

The Economic collapse is being priced into US equities:  

The US the consumer was supposed to carry the economy. Well, now the consumer is cancelling everything, and wondering if they'll have a job next month, and one top of all that, Russia is trying to destroy the US Fracking industry, by continuing their so called "oil war". That story is old; but the coronavirus story was just one more reason for the market to over-react.

Oil:

See where this "Oil Price War", story originated: Moscow


In case you think I'm taking the coronavirus lightly: 

I predicted only a few months ago, that a black swan would emerge, which may cancel the elections, and lead to massive civil unrest.

See: Coronavirus much much worse than Ebola 




It's not that Ebola is that deadly, but it spreads rapidly, and that means that it will overload the healthcare system. 20% of infected people end up in the hospital, and there just aren't enough hospital beds.

As we've already seeing in China, and Italy, we will probably, see several large cities in the US, including my home town, Chicago, locked down. This will lead to a panic, and empty store shelves, as we've already seen some hoarding.

I refuse to fight crowds at the grocery store during a panic, and if need be, I can last several months, on what I already have. I've been preparing for this moment for a long time, but once the news cycle changes, and store shelves are replenished, I'd like to make some final preparations.

Imagine being locked in your house for several months, without work. are you well prepared?

Coronavirus is going to be with us for a while, but as long as markets remain open, and the volatility remains high it should offer some excellent trading opportunities.

$SPX

I'm seeing a megaphone pattern, with a 3100 target on the $SPX, by July. This a pattern 99% of technicians aren't familiar with. Most are still looking for a bullish channel, which is utterly ridiculous. 




Another possibility is a much bigger crash around the Summer break.



If these charts break, then I'll be back to square one.

I'll be updating the charts in the public charts area shortly, and because volatility is so high, only daily candlestick charts, or longer time-frame.

Follow my twitter page for real time market alerts, and watch me block the fools who dare pester me in the morning, talk up their own book, and otherwise troll me. I don't mind questions, but I'm not on twitter to hold new traders hands, and teach common sense. Read the Twitter warning in the chart legend (tab).   

Thanks for your support
AA





Saturday, March 7, 2020

Market Update Weekly Wrap Up 3/7/2020 - This Is What A Bear Market Looks Like

Weakness continues, but the selling momentum has slowed, and that points to a bottom coming in, but as long as the $VIX remains at these levels, we're probably not off to the races. Bottoming is a process, which takes time.

Financials made a fresh low, on Friday, and European stocks as well... The $DAX continues to be one of my best indicators, for US markets, and I'm willing to provide you with regular updates on the DAX for only $99 per month. I'll even throw in $VIX targets, so you know where the next short squeeze is going to occur. Don't trust your emotions, trust the $VIX! 

No matter what you think about coronavirus, there can be no doubt that the fear in global markets is real, but the fear of missing the next big run is going to return at some point, or the fear of remaining short into another 5% rally, as we saw ahead of the The Federal Reserve's emergency rate cut this week. It's pretty obvious the that news wasn't leaked, 2 days ahead of time. The financial networks were even reporting that markets were expecting it. Goldman Sachs warned just ahead of this mini-crash, who do you think was covering their short position, ahead of the news? See:

26 Goldman Sachs Alumni Who Run the World (GS) Investopedia 


Most Important Headline of the week - from a trading perspective - was that there was a massive short-squeeze in the $VIX Friday afternoon. This resulted in a $VIX high we haven't seen in the financial crisis of  '07-08. See:
"Someone Big Was Utterly Blown The F**k Out": Here's The Reason Behind Today's Unprecedented VIX Move"  zerohedge.com  

This little false breakout on the $VIX was unexpected, and the only thing that kept me from panicking, was the lack of selling pressure. I'm using thinkorswim religiously now, and running the program on a 30" ultra-widescreen, so I see everything. The $SPX held it's own, as the $VIX continued to breakout, and this proves the market is a little more resilient than many people may think.

Here's my new setup:


There's been some talk about the lack of liquidity in futures markets, but at least the market can catch a bid, even on a Friday. See:

Thin Liquidity in Stock Futures Raises Risk of More Wild Market Moves wsj


Of course once the $VIX shorts got blown out of the water, the $VIX plummeted some 15 points in the final 1/2 hour of trading, and this resulted in massive (retail) short covering, going into the weekend. This is what a bear market looks like, and it's reminiscent of trading during the crash of 08.

I think this was the defining capitulation moment, and I'm very bullish, and especially when I see the amount mass hysteria exhibited on Twitter.

It was just a couple weeks ago, when I warned the bulls:

The original tweet has since been removed, but I can tell you it was a great contrarian indicator.

Now I see the bears mocking the bulls, in the same way, and that's a very bullish contrarian indicator.
"Don't follow the herd", unfollow the herd.


The selling of the past 2 weeks, as fast as it was, was also well organized, and if you've been following my charts closely on twitter, I've shown you where the bids were lowered in order to take out support, and with liquidity low, it makes it even easier for the powers that to manipulate markets. On Friday we saw the market gap down, just below support. Looked like an engineered shakeout.

We haven't seen the baby being thrown out with the bathwater. We haven't seen the high-fliers sell off, and several sectors have been spared, including casino stocks. Most the fear seems to me in bond markets, airlines, and oil. 

 It's way too soon to call this a correction, let alone a crash. Don't fall into the bear trap!

I'm bullish for the next week or 2, and looking for alternative trades in Energy. I want to be short treasuries, cryptos, gold, miners, and anything else that looks like a safe place. Money also has to come out of utilities, and healthcare We need to see more of a real risk on environment. Not just speculation, but a nice Boeing rally, and I'm thinking it's time for energy to join the party. Energy is the most hated sector, and it was down more than any other sector on this route. I suppose we will see money rush back into tech stocks, and I like Biotech, but the real fear is in Energy names. 

Chart of the week: XOP S&P Oil & Gas Exploration & Production. Sound pretty diversified, but I haven't checked the components. What I'm interested in is the way everything lines up perfectly, and if this was a 30 year chart of the $SPX, it would look like the 400 level. For disclosure I don't own this fund.

 


Here's the 20 year $SPX pattern, mentioned above, and I think there's a good chance this plays out in another year, at the rate we're going. 



Yes the coronavirus pandemic is serious, but that's not going to keep money from being put to work, and in a wave 1, bearishness sentiment peaks out rather quickly. Dip buyers always come in in wave 2, so in the short term, it doesn't matter to me if this is a continuing bull market, or a bear market. 

1000 point moves on the DOW are the new normal - above $VIX 30 - so be careful out there!
When you see the buyers return, it should be obvious to everyone.

As bearish as the above long term chart looks, compare that to the very bullish LT NASDAQ chart below.


That's all the time I have on this Saturday.

Follow my on Twitter page in the morning for the mini-blog, and real time updates throughout the day, and follow the public charts area, for some of the best charts on the internet, and watch me chart the opening bell in real time. You're continued support is appreciated.
AA




Thursday, February 27, 2020

Market Update - 2/27/2020

I started writing this blog about the time the top came in, so let's review that first.

$VIX bottomed, and never retested the 13.50 level, I has called out the week before, as several markets whipsawed into triangle tops.
 
$DAX continues to be one of the best indicators of the global economy.
On the chart below, you can see how $DAX futures had continued to whipsaw into a topping pattern, before violently reversing. 


Low volatility $SPX - I covered this one in previous blogs, and alerted to this very bearish ending diagonal triangle in my twitter feed.

You've probably heard it said, "nothing moves in a straight line"? It actually can... but not in the first wave down, and we're bound to get a massive reversal as soon as this morning, or as late as Monday morning. I kinda see us closing off the lows today, building a base, and squeezing the short sellers into the weekend. 

Watch for the $VIX to top out around 33 - 36, and the $TVIX to reverse @ 92. You don't even need a $SPX chart to know what's about to happen here.



I like the washout in oil, and Energy, with an OPEC meeting coming next week. Tech can continue to lead. I think there's a good chance Gold get's crushed, based on the Dow, priced in gold. Maybe not today, but withing a few weeks. I like US treasuries, and you can find that chart in the public charts area.

Energy:



$DOW priced in Gold:


I'm almost out of time, and should be updating charts, not blogging.

Watch for this target on the DOW: 26435

After the reversal is confirmed, I would expect the market to snap back for several weeks. Don't under-estimate the power of the snap-back rally.

This market is a lot to wrap your head around, and if you don't absolutely trust the charts, forget about it!

I followed a bunch of new traders on twitter, which turned out to be far more distraction, than it was worth. For instance one trader I was following was seen pumping $DAX every morning, while perpetually bearish followers continue to hyperventilate over the COVID-19. It can become difficult to keep your emotions at bay.... but I've since un-followed most the people I started following 2 weeks ago, and that has helped me regain my focus. Tune out the emotion, those who talk up their own book, and the lying main stream media.

More later,
AA