Market Update 8/22/22 - Surprise Market Sell-off on August Options Expiration Continues Into Monday

 I'm not sure what to make of Friday's sell-off, but it looks like fear in Europe again, and this time over Italy, which the corporate owned fake financials news didn't report until late Friday, and now they've already buried the story. Instead reporting that the market is worried about this weeks Jackson Hole meeting? 

I recently placed Italy on Death Watch, although this has been the case since the covid bailouts 

I'm surprised the market didn't react to this. #Italy is in deep trouble, and taking Germany down with it pic.twitter.com/w4WlK39sVB

— Veteran Market Timer (@3Xtraders) July 14, 2022

 

We saw this coming. #Italy placed on financial death watch August 8TH. #hedgefunds https://t.co/sAsCMTGd59

— Veteran Market Timer (@3Xtraders) August 19, 2022

ECB faces Italian debt test as politics intervenes Reuters 

The Italy Crisis Explained seekingalpha.com

This might also help explain why the Euro is retesting new lows. What happens to the EU, if Italy causes a debt default cascade, that spreads to Germany and beyond?  

Also in focus is European inflation, which is off the hook, thanks to super-high Natural Gas prices. 

As far as the charts, and the market action, it remains quite dull (slow), but trading is expected to pick up in a few more weeks, after Labor Day. 

The selling continues to be very orderly, while the $VIX remains trapped below the 21 level, and ended the day only up 5.32%. 

If you've been following along, you should already know where the $VIX break out point lies.

If you missed it, you can track down that level in my July 20, update, but I wouldn't expect that again, until after we get back to normal trading, after Labor Day. 

$SPX SPY looks like it may pause around the 415 level, but the market remains way over-bought, as I've been saying for over a week. 

SPY 60 min chart

We're finally seeing metals pull back, and I took profits in my miner short, on Friday, but it seems to take a week, for a market to top out, and it was a long wait, to collect 10% profits in $JDST

  

One of the only bright spots in this lousy market has been Energy, so of course we see investors pile into that already crowded trade, as the hedge funds manipulate it higher. 

$IYE Energy  - see where the opening bid on Energy was jacked above resistance at Thursdays open. 

The funny thing is, Oil continues to trade near the recent lows. Energy trades to new recent highs, Oil at recent lows. This sets up for a re-balancing, and I think Oil wants to go higher, even though Oil is no doubt being sold, in order to try to bring inflation down, and we saw this coming a mile away. Most the inflation in the economy has been due to higher commodities prices. This explains why the only inflation you're seeing now, is on Fox News 

$DBC Commodities with Oil - Consolidating, as the banksters continue to hold Oil down.

 

The way the market is acting, I can't really make a short term prediction, but risk remains to the downside, until the Jackson Hole speech, at least. 

Take Care, AA 

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