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Friday, December 16, 2022

Weekly Wrap-up - Stocks Pull Back 1 Day Ahead of Options Expiration

 Looks like we finally got our pullback, and although every lame stream media outlet will try to make it sound like it's the end, for this rally, it's only 1 day. 

Just looks like a re-balancing, so that all those bullish bets, won't have to be paid, on this Friday OPEX. That would also explain the pop we saw in the $VIX this week (ahead of the selling), as well as the relatively low $VIX numbers we saw yesterday, not to mention the lack of fear in the bond market.

In other words, since this sell-off is only a re-balancing, around this OPEX date, that explains the lack of any panic selling. 

I was looking for at least a gap fill on the $VIX, but like I said, there's "no fear".... 

The Lame Stream Media tries to make this sell-off sound worse than it is, because they have a story to sell. 

Even the clowns on CNBC Fast Money were bearish, and they brought on Carter Worth, yet again, to show the same bearish chart he's been peddling for the past several weeks, and I've been waiting for this opportunity, to debunk that chart out of hand.

Debunking The "Chart Master"  

It was back in Sept., when I first saw this chart, before it had been posted to twitter. 

$SPX index chart - according to CNBC's "Chart Master", Carter Worth.

Note the red down-arrow. Wishful thinking, I guess.  

What's wrong with the above chart? 

As I explained back in Sept. 

I don't claim to be the "chart master", or the "gate keeper", but see my $SPX Chart below. 

Consolidating near the bottom of the range 

Here's where I think Carter worth got it wrong:
1. He drew his lower channel line first, then he drew the upper parallel channel. 

The 2 points that connect on his lower channel, are the capitulation points from the 08 crash, and the covid crash. This never was the lower end of a range, and to try to make it that now, is foolish.    

When I try to re-create the Carter Worth view, this is the chart I come up with. 

As you can see -the upper channel line doesn't match up very well, as far as a parallel channel goes, and if you look at the Carter Worth Chart, nothing on the top trend line, lines up, and that's because you don't draw a lower channel line, by connecting 2 capitulation points. 

This is what I refer to - in my chart legend - as the "black trend line", which is not to be confused with my blue channel lines.  

I'm going to call that chart totally debunked

A lot comes down to identifying a channel, and drawing the channel correctly (parallel), but maybe it's a broadening, ascending channel. 

Even so, there's no reason the market can't retest the highs, before taking out a lower low, next year, 

$SPX - possible broadening channel. Possible retest of the highs, or even a higher high... 

Short Term 

I believe the market is going higher, and that's based on nothing more than the idea that the shorts are going to be squeezed out, going into the end of the year. 

BUT there are also bullish indicators... 

$INDU - Golden Cross 

The opening bell just rang, so I gotta run. 

Take Care, AA 

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