Market Update 9/20/2021 - Seeing Another Surprise Monday Morning Shakeout

 I'm calling negative futures a, "surprise shakeout", even though it should be no surprise the market can't seem to sell-off until after Monthly Options Expiration. What will really be a surprise, is if the market continues to sell-off, into the next FOMC meeting only day's away. I see close to 0% chance of that happening. 

So here's my forecast for the week, and be sure to check out my targets for the $QQQ, I laid out on Friday. 

$VIX to gap up, and hit resistance somewhere between 25.60 and 26.60. Of course the $VIX could overshoot, but I don't see it getting above 30 (the top of the range). 

The Dow

As I pointed out on Sept 10th, the $DOW lags the rest of the market, so that's where I want to continue to focus our attention. 

$INDU - DCS  chart - This mornings we're seeing the bullish channel break, but I'm also seeing a clear path to Dow 40k, once the price action crawls back into the channel.  Watch for support at 34k, at my pink line. Chart added to the public charts area. 

$INDU - weekly view - see the DOW trading above the top of the channel (34k precisely). 

China 

We're also seeing a continued shakeout in Chinese equities. Nothing new there, except the fake financial news - at Bloomberg - was seen pointing to the 3X China bear $YINN. Why today, and not last week? Why on the Monday, after Sept. OPEX, 3 days before the next fed meeting? 

Look, my China short worked out really well, even if I covered too soon, but at this point I'm bottom picking the $FXI (China again).

$FXI - DCS (Daily Candle Stick) chart: Looks like a normal pullback.  

What's awesome is, even though I covered one of my tech shorts on Friday, I left the other one one, and also short financials. I expect to be taking profits in $TECS, and $FAZ, well ahead of the next The Federal Reserve announcement, and as soon as today's open. Still have to look at some charts  

$NDX (big tech) - 30 min chart - Looking for 151 there. 

Financials are hardly even down - so much for the collapse of, "Evergrande spooking credit markets" - eye-roll 

Natural Gas 

Adding to my Nat Gas shorts last week, turned out to be one of the best decisions I could've made, and need to start looking for a good place to start taking some profits. 

If you were unlucky enough to get locked into 3 day (cash) trade in $UGAZ (3X long NatGas), you lost close to 30% in 3 days. 

This morning we've seen Natural Gas contracts snap back to resistance, but I wouldn't touch it here, with a 10 foot pole. 

NatGas - 15 min live chart

$UNG (NatGas fund) - Could maybe see it build a base, just below the 27.40 level 

The other trade I'm watching closely is Gold miners, metals, silver. 

I've been short Silver for a while, and see no reason to take that position off. You can find the $SLV charts in the public charts area, and the miner charts as well. Maybe Gold gains some traction, when The Fed reports very bearish again?   

$SPY (the $SPX ETF) - looks like we're going to see a little shakeout below the 50 day moving average, but I'd be watching for the $VIX to top out, and the price action on the $SPY to climb back into the bullish channel, and squeeze the shorts possibly all the way into the holidays. The catalyst for the reversal. could be an Evergrande bankruptcy announcement (buy the news event). Remember what happened after Lehman defaulted? 

That's about it for this Monday Morning.

Good luck this week, AA

 

Tweet