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Tuesday, May 31, 2022

Market Update May 31st, 2022 - A look at the week ahead

 Hope you had a great weekend, and be sure to check out last weeks, weekly wrap-up - as I take a second look at "Last Weeks Monster Rally"

Volatility and volume should remain low this week, as many traders remain on vacation, but instead we see the $VIX bouncing out of the hole? Clues as to why that is, below.  

The market seems somewhat unpredictable here. Sell in May, and go away, might be the best strategy!  I've found over the past several months, that it's better to trade less often, and wait longer for golden opportunities to arise. 

1. The $VIX is bouncing off the 50 day ma this morning

2. The $VIX of the $VIX (the $VVIX) traded to a 2 year low last week. You don't hear the fake news, or the #FinTwit community talking about this!     

3. The $RVX (The Russell 2000 $VIX) found support at the 30 level. 

The $VXO  (Original Formula) no longer trades; Shame....! 

$VXO - I don't know why they decided to delist this (Original Formula) $VIX, when it was working so well!  

1. Knowing how the $VIX moves, and anticipating how the Options market is going to react is key to timing the rest of the market. 

2. Knowing what's really moving markets is also key to correctly and consistently timing markets. 

3. Never trust what the financial fake news is reporting. 

I wish I could give up on the fake news entirely, but it's a good contrarian indicator, and 10% of what is reported is still worth listening to. Maybe motley fool, or some other source, like the Street, would be worth subscribing too, but I'd still have to watch a few minutes of CNBC, every day, to get a good idea of what the false narrative of the day is. 

3. b. Don't trust anything you see on social networks. More people have lost money on Meme stocks, that those who have won, so who do you believe is really behind these pump and dump trades? 

Don't trust anyone on social media 

These bozos think you'll believe anything, if it's liked 80 times

The short term trend remains up. The long term trend remains up. The intermediate timeline what's really up in the air, and there's plenty of resistance below the 4500 level.  Even the 200 day moving average is trading at 4450! 

4. Charting techniques have changed.  If it were as easy as drawing a parallel channel, on the $SPX, then everyone would win, but you're better off watching moving averages, and not being so hyper-focused on one index. 

Here's a good example of what I'm talking about. 

$SOX - The recent action on the $SOX shows that the short sellers got squeeze -above the top of the channel - on Friday, but this index was only pumped to the 50 day moving average (target) and sold. You don't even need to draw a chart pattern to see that, and the same goes for Tech, and the QQQ's being driven above the 20 day moving average, ahead of a long holiday weekend. This was all you needed to know, to enjoy, yet another, "short squeeze Friday".   

Enjoy the rest of the week off, maybe the market will find some direction by next Monday, or next technical Tuesday.

Take care,  AA


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