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Thursday, July 8, 2021

Market Update 7/8/2021 - Market sells off 1 day after I sound the warning...

 Being right is nothing new to me, but you also have to be consistent, and diligent, or more like vigilant...  Not always easy, even for me, and even more difficult when I'm short on sleep. I've been having a little bit of a hard time with insomnia the past few days, so excuse the typos, and try to bear with me. No pun intended ("bear")     

First things first: To get you up to speed for this week, you can review the blogs, and tweets, but in short I called NatGas a sell, Oil bullish, even after the sell-off we saw earlier in the week. Yesterday, we saw more weakness in Oil, but nothing that points to a reversal. Oil markets gave back the gains from the day before, yet only ended slightly lower than the previous low. We also saw China retest the recent low, but not any panic really, despite the financial news networks constant wringing of hands over Chinese regulation. See:  China tightens rules for global stock offerings, crimping the steady flow of companies seeking to raise funds in worldwide markets

 And speaking of panic, you should review the $VIX levels I pointed to in an earlier blog, and you'll see that the breakout of the $VIX above the 18 level, is the only catalyst needed to cause the panic selling we've seen in markets this morning. Even global markets are selling off; EEM, Hong Kong, Germany, everything!  

Let's get to the charts, and see if we can't get ahead of next weeks trade: 

$VIX broke out above the 15.90 level, for a 3rd time. in several weeks.  This morning the $VIX broke out above the $VIX 18 level, and traders ignoring $VIX 20, and rushing in to buy the $SPX at the 4300 level - as we saw at today's open - do so at their own financial peril. The psychological 4300 level only matters to the market engineers, and the manipulators, and that may even include the US Treasury. 

$SPX - I sounded the warning - to get out - yesterday.  Look for support around the 4270 level? I question that, because calling a bottom, ahead of a Friday, and in the middle of a sell-off, seems a little premature. calling reversals must be done in real time. That's just the way it is. 

$DOW - comparing the DOW to the $SPX, you can see the Dow was bought at the 20 and 50 day moving averages. I can't see this selling off next week, after crawling back above support (above my pink line). The chart has already been repaired, by the powers that be. 

$UNG (Natural Gas fund) reverses precisely at my target. I have to trust the DCS (daily candlestick) chart on this one. 

$UCO (Bloomberg Oil) 60 min chart. Trend remains up, so I can't really confirm a reversal here, and I'm looking forward to a short squeeze in the leveraged oil bull.  

Of course, if you think Oil is bearish here, you should buy the leveraged bear $SCO. Good luck with that LOL 

I'm also bullish China, now that the bearish story has reached a fever pitch.

$FXI - looks like perfect entry, and when you see this chart, you know the news is being used in order to take out predetermined targets. I see no other explanation.  Drive stocks up on fake news, drive stocks down, on fake news. 

And speaking of News. I called the top of the range on $IBM - on my linked in page - and the very next day the stock was taken down on news that the CEO is resigning. Of course that news was already set to be released, and it was sold right on schedule, the very next day. Uncanny  

So to wrap things up. I nailed yesterday's bearish call, and hopefully saved you some grief. I could see the $SPX pulling back a little more, and you have to be cautious until the $VIX comes back down. This high volatility is nothing to play with. But I remain bullish going into Mid July.

Take care, AA  

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