Market Update Wed. 2/8/23 - Reviewing Yesterday's Wild Roller Coaster Ride in Equities

 Firstly - If you missed yesterday's lengthy update, then be sure to check that out. I covered several topics, including the recent strength in the $USD, the $VIX, China, Oil, and more in Market Update 2/6/2023 - Chinese Weather Balloon Story Is Used To Take Down Chinese Equities. Is Oil Next?

 Reviewing Yesterday's Wild Roller Coaster Ride in Equities 

Yesterday started out rather boring, and I figured markets were probably waiting for Chairman Powell's speech... and sure enough that seems to be what set things off. 

1. Initially the broader market spiked on Powell's comments 

2. Market faded that move - giving back nearly 1% - or may have been short selling...? 

3. Market rallied all the way back to retest the highs of the day, going into the close. 

I welcome the volatility; it sure beats being bored, but what is this market trying to tell us?   

We could argue about what the Chairman powell said, or didn't say, all day long, but one thing is certain: The dow was bought at the 50 day moving average, and more and more I find myself pointing to moving averages, as algorithmic trading programs continue to hijack this market! 

 

Who trades the Dow Jones? Ignorant Foreign investors, and I suspect also foreign hedge funds, and algorithmic trading programs (off shore perhaps). 

These aren't smart investors buying the Dow. 

This wild move yesterday comes after last weeks FOMC announcement, and speech, by Chairman Powell, triggered record options bets. Is this "a contrarian indicator"? I believe CNBC fi   

Powell’s speech triggers record options bets, topping even the meme stock frenzy cnbc

“A contrary indicator?” 

This points to capitulation, as I've been shouting from the rooftops for over a week now! 

The Oil trade 

This was the obvious winner of the day, and once again the lame stream media is trying to give credit to Chairman Powell, and even Joe Biden! 

And once again, we see a blatantly obvious moving average being tested. 

Speaking of #Oil, up 3%. $USO closing in on the 50 day ma pic.twitter.com/87QgJPl9rd

— Veteran Market Timer (@3Xtraders) February 7, 2023

We also saw Energy stocks leading...

Markets continue to rise following Fed’s inflation comments, energy stocks lead sector gains finance.yahoo.com 

 

Energy 

Looks like energy is trading in the sideways range, I pointed to in Oil yesterday. 

$IYE (Energy) looks like it could continue to breakout above the 50 day ma...

The above chart is from my candlestick folder. I was going to upload a much better chart, but I already gave away, a killer trade in oil yesterday. If you're good at charting, you can find the pattern, yourself.   

The Trade 

So, now that we've identified where the biggest gains are being made, all we have to do is rush into the energy sector, right?  

You would think so, but this morning, we're seeing energy down 50 basis points. 

This goes along with what I was saying yesterday, about reducing risk, in an increasingly, unpredictable, and crazy market. 

Take Care, 

AA 

P.S. I continue to beat this market, like a rented Mule! If any Hedge Funds are watching; I'm available to work full time/ remote. If you're interested... you can PM me, or contact me on LinkedIn. 

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