We saw a sharp reversal at the open, as soon as the bulls tried to spike the ball higher, but through manipulation of the $VIX the manipulators managed to keep the $SPX from closing below the magic number. These are not amateurs manipulating the options market. I suspect several hedge funds are behind it, and perhaps even the big banks.
Also notice how Japan, and even Germany, managed to hold on to their gains. Even the Australian market was driven above the 50 day moving average, in a highly coordinated effort... and no sooner than the lame stream media began reporting this as a "global AI boom".
The next few weeks are expected to be slow, as traders go on holiday, and short covering concludes - as one would expect - ahead of the summer.
Of course the lame stream media doesn't report the fact that short covering is responsible for much of the buying we've seen over the past several months. Instead they report all sorts of things, designed to trigger animal instincts. This is the whole purpose of having several corporate financial new networks.
Looking at the NASDAQ
I decided to draw up a new Nasdaq chart this morning, and label some of the events which have helped move this rally along. Of course only a handful of tech names are responsible for most of the gains we've seen, over the past few months, so it only makes sense to watch the only index that matters.
$COMPQ (Nasdaq Composite) As I mentioned in my latest newsletter, we're seeing this market getting ready to test a key Fibonacci retracement level, and I think this can continue to retest the highs over the next several weeks.
Summer trading is typically slow, and we already see lower volatility being priced into the $VIX.
I'm planning to take a few weeks off, and then see where we're at.
I'm short on time again, so I'll have to try to make this short.
Yesterday we saw big tech continue to be pumped, on the heels of what looked like a continuing relief rally. I think that caught many people by surprise, but remember this is OPEX (June Options Expiration), and this one comes early (on the 16th), and before another long holiday weekend, where nobody wants to get short.
The Market manipulators want the $SPX 4400 strike to pay, and that doesn't look like it's going to be a problem.
Tech continues to lead this rally, but not much else...
Options Action
For example this morning we're seeing Adobe break above the $500 Call strike in premarket, and this after 21 days of AI boom (story). Of course the banksters knew what earnings were going to be, and probably wrote the script for all the networks, and I'm sure there are several elected officials who have also been tipped off. The whole system is corrupt.
1. AI boom
2. Bull market
3. Fed Pivot
Not to mention the talking heads spent much of the week celebrating the indictment of Donald Trump.
I can hardly wait to see what stories will be spun in order take the market down, but probably something about "investors weigh the next move by the Federal reserve", and several are already lining up to give hawkish speeches.
I slept in, so I don't have much time this morning, but a couple points....
The FOMC paused as expected - yet tried to sound hawkish; threatening to continue raising rates later in the year.
This just looks like another engineered pullback in the making, and the lame stream media didn't waste any time setting the stage, as they had already booked a special guest for the show - Morgan Stanley's very own resident bear Mike Wilson.
Doesn't matter so much what was said in yesterday's FOMC announcement, because I trade on technical indicators, and the indicators have not changed since we saw capitulation in tech stocks nearly 3 weeks ago.
Speaking of Technical Indicators
$SPX futures ended on a perfect doji reversal candle, and that was followed by a bearish engulfing candle.
I watched this taking shape yesterday evening, and took this screenshot:
If I were trading futures, I'd already be up nicely!
Twitter Alerts
Here's my alert to the $VIX finally filling the gap that was left behind 2-3 days ago:
Remember when we were looking at all the retail investors on twitter who thought $VIX 20 would be a good place to short the market? Yeah, well, Wall Street is good at teaching newbie traders valuable lessons, and those inexperienced traders have been officially taken out behind the woodshed.
Speaking of being take out behind the woodshed
Mullen
Remember when EV manufacturer Mullen ($MULN) was being called the next meme stock, and I covered the story...
Looks like I was wrong on $MULN - being the next meme stock - and I doubt very much it will ever see $3 again. They can hardly even finance a truck build
$MULN - Selling volume points to capitulation, as the price action washes out below the lower channel line. I think we could certainly see more pain in the near term, but this is exactly what you want to see, before a bullish reversal!
I don't think Mullen is the next Tesla, or even the next meme stock, but it could easily triple or even test the 50 day moving average. Again, I don't care about the fundamentals, only the technical indicators.
Seems to me the market has priced in a Fed pause, and since the market usually gets what it wants, I think we can expect that today. That should be good for a relief rally, at least.
June OPEX is in 2 day's, so we could see volatility return shortly. In fact we've already seen some buying of the $VIX.
Most traders think the $VIX is broken, but it's just easily manipulated. When the powers that be decide to take the market down, they know what to do... believe me!
I think the market is less concerned with today's FOMC announcement, as it is about driving stocks higher, in order to take profits; just as we saw at the end of 2021.
In the meantime I've been busy updating some long term charts.
To give you some idea of the work I got cut out for me; I have at least 19 long term views of the $SPX in my long term folder. This doesn't even include the LT views in my trend folder.
The charts have changed somewhat, over the past several months.
Many of these charts have names that no longer apply - for instance "broadening top" - and need to be renamed. It's an arduous process.
$SPX - here's one I haven't looked at in years - since the market overshot the top of the range in 2021.
Of course the only reason the market was driven to those extremes was greed, and greed continues to drive the market in 2023. Only when we see fear, panic, and despair, can we look forward to a true, "bull market".
Tech - I've updated the tech chart in the public charts area - find a link in the side menu
The Russell 2000 retested the highs yesterday, and I thought, "did I sell too soon, or is greed driving the breakout above my blue pattern line? I think the latter.
$IWX (Russell Top Value) - breakout into a right shoulder, at my red line.
The sentiment indicators agree
In early 2021 we saw the number of stock trading at new highs, outnumbered those trading at new lows, in what can only be described as a historic level. In fact I believe we will never see buying like that in our lifetime.
After an extreme reading like that, one would expect bearish sentiment to return, and reach extreme levels, but today - more than 2 years later - we continue to see bullish sentiment remain at high levels.
It could be that daily manipulation of the $VIX, and 0DOE, has blinded the market to longer term risk, and that's a dangerous thing.
Getting back to the charts:
It looks like speculators are driving the $SPX higher, using a 15 min. chart view.
Yesterday was an interesting session, as we saw the $INDU (Dow Jones Industrial Average) run back up to precisely the 34k level/target (close to the top of the range...). I didn't notice that until after the closing bell, because I was busy struggling with my monitor setting, after recently upgrading windows to version 10 - but in hindsight that Dow target helped lift big tech even higher. I say, "even higher", because - as you probably know - big tech has been on a tear since early May.
Small Caps
Recently I blogged about what this fake "bull market" rally could mean for your 401k, and yesterday I decided to put my money where my mouth is, and pull the wife's 401k out of small caps. A fund called the Franklin Small Cap Value Fund USMF
$IWM (The Russell 2000 ETF). This isn't the small cap fund I've been hiding in... although the one I was in has also has traded into a bearish H&S pattern - the same one I pointed to in last week's newsletter.
But there's another thing I don't like about these small caps and that's the Fibonacci (retracement) target we're seeing on the chart.
For comparison
$FRCSX Franklin Small Cap Value Fund USMF - Same Golden Mean Fibonacci target
Of course it could be that I got out too soon, or that we see the highs retested several more times over the next few months, but I'd rather take profits, and brace for the worst.
Speaking of bracing for things.
Fake News insinuates that Trump supporters may become violent again, as they (the lame stream media) continues to try to influence another election.
Notice (always proud) Bloomberg, at the top of the list...
Even number targets; we've seen this before, and it usually doesn't work out too well. Reminds me of the Dow topping out at precisely 37k, at the end of 2021.
Speaking of the Dow
As I revealed on a Dow chart, after yesterday's close:
We are trading near the top of the pattern we've been trading in for the past several months, in what I believe is a wave "D". Wave D can be hard to predict, and can even overshoot the target. The pattern could even turn out to be a broadening (expanding higher) triangle pattern. But one thing is for certain, only a fool would mistake this for a powerful wave "3". Compare the charts in the above Tweet, and decide for yourself.
Looking back at the October rally
The October rally was led by the Dow, in a very powerful impulse wave (labeled Primary Wave (A), and ever since then all we've done is consolidate in a range which I've labeled as a wave (B) triangle pattern on the chart below.
$INDU - 1. The Dow rally's precisely 6000 points off the Oct low (another round number target). 2. continues to trade into a downturned megaphone (aka triangle) pattern. Also see the declining buying volume on the chart.
China
The Dow chart is very similar to what we've seen in Chinese markets, which also lead the rally at the end of 2022, and now you see it leading the way down.
Tech:
China actually leads tech, but today tech has diverged just as it did in March 2022
I'm planning to take some time off - from trading - this summer, but if we could see a violent correction into the lower end of the pattern, before the 4th of July holiday, I would then be looking forward to a low volume summer rally.
Of course I could b e wrong, and the market could simply continue to be held up on low summer volume, and then I would be looking for an August swoon (crash), but something like that is way less predictable.
First off: Friday the $SPX was pumped above the 4300 level, and allowed to back test that breakout point, so it's no surprise to see futures higher this Monday morning.
If nothing else, it's awesome to see markets still trading on technicals, even on a 5 min chart.
The Fake News
Ahead of Friday's opening bell, It was actually being widely reported that the $SPX had broken out above the 4300 level - even before it happened - so that was obviously the goal of the kleptocrats (the criminal cartel that runs this market).
I was watching CNBC at Friday's open, and they were reporting that Oil was "edging higher", when it really wasn't. I was watching oil at the time. They must think investors are stupid!
Speaking of Oil.
Goldman Sachs lowers it's Brent Crude Forecast; an equally meaningless news report, as Oil trades into a bullish inverted H&S pattern.
Of course they (the rats in the financial lame stream media) are also reporting a new bull market, which - as I explained last week - is only a fancy sounding term for a 20% rally. Again, how dumb must they think the average investor is?
What's funny is the market had already rallied 20% back in January (when the $SPX rallied to 4195), yet they didn't get much of a chance to report on that "bull market".
I'm not sure if all this (smoke & mirrors reporting ) is supposed to help the democrats in the next election, or what the real purpose is... possibly just to keep the population in the dark for as long as possible, before the final collapse.... and the end of the $US Dollar - something else they love reporting. I suppose it's just a matter of time.... since they talk about it so much, and since the globalists are pushing for a cashless society.
Could just be a cyclical rally as we head into the summer. Let's hope so.
According to Ryan Detrick, chief market strategist at Carson Group, who's been pounding the table on the upside for equities since 2023 began, this is very good news for stocks.
This won't make the perma🐻, M2, and yield curve inversion crowds very happy, but oh well.
Once stocks are >20% off bear lows (currently 19.7% above Oct '22 lows) did you know a yr later stocks have never been lower?
Up 28.2% on avg and 6 mo returns are solid as well.
Sure the $SPX has broken out, and with the 4th of July only a couple more weeks away, we can expect more short covering...
Even though the $SPX is constantly manipulated, the broader market itself is not overbought.
$NYSE (New York Stock Exchange) breaks out
One thing I found disturbing when I went to pull up some charts this morning, is that I can no longer chart the Wilshire 5000.
All those charts are missing
The $VIX touched 13.50 on Friday, before bouncing out of the hole.
I would expect the $VIX to continue to be hammered down below the 20 level for the foreseeable future, BUT just as the bulls get complacent the $VIX will start working again, just as it always does.
It was a pretty dreadful week as far as trading goes, unless you knew where the next sector rotation was going to be. The latest one was in small caps, and REITs, and I think REITs may still have further to run, and I'll be tweeting out any movement I see in that sector, at today's open.
As I tweeted out on Wed., I've been piling (401k money) into small caps for the past month and a half, so I'm happy to finally see some action there. I'm just uncertain as to how much longer this can last?
$RUT Russell 2000 (small caps) Trades into a right shoulder, on a mature head and shoulders pattern.
Does this look like a "bull market" to you? More in a minute.
I'm thinking about where I may find a safe place to hide, when the market pulls back?
I'm thinking treasuries:
Bonds are looking very attractive now that gloomberg is reporting on high yields again vs #stocks
One of things they factor into the fear/greed index, is the cost of Treasuries, compared to Stocks.
They also look at Put/ Call Options, and based on where the $VIX is trading I'd venture to guess, the powers that be have been building a massive short position, ahead of the summer break.
Perhaps sell orders are being stacked?
I'm not sure how much longer the broader market can continue to test the top of this range, but the Fed is due to report next week, and then we get into the summer doldrums, and I would expect to see some profit taking ahead of any future uncertainty.
Black Monday surprise perhaps?
Take care, and I suggest you take a defensive position ASAP
Apple just unveiled its first new product in 10 years yahoo.com
Wall Street did not seem too impressed by yesterday's Apple presentation. In fact the entire market rolled over on it's unveiling, in what can only be described as an obvious, "sell the news" event. I'm only left asking myself if this was a sell the good news, or sell the bad news moment?
This product makes the entire tech rally look like the build up, to the big let down.
I’m sorry, but Mac Pro is $6999 so this things is going to cost around $5999
Of course nobody in the investment community will go on any of the networks and point out the obvious fact that Investors have piled all their eggs into one basket (AI), based on a product that doesn't even have a consumer base.
Apple Vision Pro marks the peak in tech bubble 2.0. It's a ridiculously overpriced gadget nobody needs.#Nasdaq#technology#Stocks
As far as I'm concerned the tech companies, and their financial backers are completely out of touch with reality, just as they were in 1999. In fact they're even more out of touch as they continue to promote a (woke) political agenda, rather than any sort of real innovation.
I don't own an Apple product, and don't own the stock.
They're pushing the same old technology, in order to try to trigger animal spirits.
To give you some idea of what I think of this technology:
I have a VR headset - that I received as a FREE gift years ago - sitting on a shelf somewhere, and my thought at the time was, "well that was good for about 30 seconds of fun, but I have no use for it".
Not only has Apple priced this toy beyond the reach of most consumers, but they failed to sell it.
Seems to me it could have a niche market in the gaming, an adult entertainment market, but who is going to want to wear this junk on their face for any length of time?
Perhaps I'm out of touch, but nowadays I find it difficult to justify the cost of upgrading to a new phone, or justifying the cost of upgrading my computer hardware; let alone $6000 for the latest tech gadget!
The Charts
Tech Bubble 2.0 has been going strong now, for the past 20 years
$DJUSTC (Dow Tech) -
Tech Bubble 2.0 remains intact, but for how long?
Predicting the top on a bubble is a fool's errand, but I do know how to draw a bullish parallel channel.
When the bubble pops you'll see the charts begin to break, and the trend reverse, and then all this talk about bull market, or bear market percentages will be meaningless.
Shorter term I suppose the market makers will continue to pile into tech, for the remainder of 2023, because it's become painfully obvious over the past several months that they are finding it hard to justify investing in anything else.
$KLX (Technology) Goes parabolic in May, on a break out of the continuation pattern I blogged just before the breakout. Trades in a, "Bullish Parallel Channel".
Adding this ridiculously bullish looking tech chart to the public charts area
Add to that the bullish channel on the $NYSE I moved to the public charts area last week.
Will these bullish looking charts break just as the recent bullish trend in gold did? Time will tell.
As far as the $SPX is concerned, watch for a little suckers rally this morning.
We'll get to the topic at hand in a moment, but first - wrapping up last week:
Friday - It was good to see the Dow rally for a change, especially after calling that trade, first thing out of the gate. The Dow actually out-performed the Nasdaq.
Small-caps also joined the party, and a little engineered short squeeze in financials, helped lift the market to new recent highs.
$KRX - Ended up 6.25% on Friday after buying programs were triggered.
Whoever engineered that short squeeze did pretty well for themselves, and if they were leveraged they did even better.... More on leveraged positions in a minute.
To Recap
Dow ended up 2% on Friday, while the Nasdaq only ended up around 1%.
Both ended up around 2% for the week.
Of course, the Nasdaq has been leading a stealth rally over the past several weeks.
$COMPQ - Is up about 30% since Oct. 2022. 20% since March 2023.
That's enough to trigger headlines about a "new bull market", which always seems to be the goal.
The same can be said about a bear market, being telegraphed during a decline, like the pullback we just saw in China. No sooner than a bear market is announced, the $HSI gaps up and finishes the week up 4%. You know what I call that?
No sooner than the #fakenews calls a bear market in China, Chinese #stocks are being panic bought. More #WallStreet fuckery
It seems that appearances and headlines are far more important than fundamentals, and I suppose that's why we have so many financial networks continuously reporting the same nonsense. It's all for show.
It's time to call another market top, and expose the financial fake news.
Subscribers to the weekly newsletter already have the target on the SPX, because we've been waiting for it for several weeks now, and here I am trying to pin it down, early this morning.
I'm up around 3:00 AM, most mornings, which is what is required to perform my analysis. West coast traders are at a real disadvantage, just because they're all sound asleep when European markets open.
This is where the front-running of global markets takes place, in Europe.
This capitulation top looks well choreographed, as I tweeted early this morning.
4250 is a good psychological target, but more importantly, it looks perfect on the chart
Of course it could throw over the top of that line, and especially if investors believe the fake news narrative, but I think you can't fool Wall Street.
The AI story lives on, even if the rally only lasted 2.5 days, but this is exactly the false narrative we've come to expect over a long Memorial Day holiday.
Pro short sellers took the week off, and Monday is the first Monday of the month, so maybe they take their time building short positions, as retail money is put to work.
This morning's Payrolls number could be the catalyst for a reversal, but it all depends if the weekly options are going to pay.
Watch the $VIX... this still drives the options market. If they pull the rug out on the $VIX then the bears can expect to remain trapped....
The bulls, many of whom are retail investors, bought into a holiday rally, and there's a chance they could have the rug pulled right here. That would set up for a buy the dip scenario on Monday.
The Fed reports in less than 2 weeks so I'm expecting a massive reversal before we see another sector rotation, and I'm hoping to have a better handle on the charts by then; however if the market continues to hold up on light summer volume, we may not see much of a sell off until August, yet it's hard to imagine anyone would leave money on the table...
Continuing with the same topic we've been covering over the past few days: the so called AI/tech/chip boom; which has really been the only exciting thing driving animal spirits over the past several months, although it's also beginning to look a lot like the annual "dash for trash" - in heavily shorted names.
Getting back to something I mentioned in the first update in this series: The options market.
I like to think of the Options market as an underlying sub-market that more and more explains the real time market action we see every day. This market is where the hidden hand operates. This is where the big fish are lurking, and once you understand that, then you'll have an easier time understanding why the market moves according to certain timelines.
Think back to the market action of the past several months. Pretty dull right? Basically trading in a sideways range, and shaking out the weak hands on both sides of the trade.
Well, while most traders have been waiting for the broader market to resolve itself, the smart money has been driving a sub market, and this time it was the tech sector.
Before the tech sector; it was the casinos,the home builders, and even Silver... and why is that? It's because these are thinly traded markets, and thinly traded markets are easily manipulated.
Notice how you no longer hear about the home builders? There's a reason for that, and it's called, "sector rotation", and what I often refer to as, "whack-a-mole markets".
When Jim Cramer says, "there's always a bull market somewhere", he isn't necessarily referring to the options market, but he recognizes that there are engineered stealth market rallies within the broader market, if you only know where to look, or personally know who is engineering it.
Inverse Cramer
I'm sure you've all seen the inverse Cramer accounts, which constantly pit the retail investor against whatever trade Cramer happens to be pushing.
Yes Cramer is often wrong, and very wrong, and he's targeted, because retail money is going wherever he points, and that makes him a handy target of the hedge funds, but....
These inverse Cramer accounts are obviously fake, and used to set up the retail investor for the fall, and all you have to do is a twitter search for "inverse cramer" to find 100's of trolls/bots pushing those accounts to the top (visibility). Just yesterday, I blocked like 20 of these fake accounts, and this isn't the first time I've discredited these scam artists.
Who do you think got squeezed in this tech rally? Retail investors, of course!
Luckily this time I saw this rally in tech continuing into last week's Memorial Day holiday, and I didn't find myself on the wrong side of that trade, but I can assure you that many retail short sellers are utterly wiped out.
To give you some idea: I finished covering my positions in $SOXS (the leveraged $SOX bear ETF) on 5/24, just ahead of what can only be described as a historic $NVDA earnings release.
It was the perfect swing trade!
Getting back to the topic at hand - the Options Market
In the first update in this series; I specifically mentioned the Najarian bros.; not because I think they're rigging markets, or doing anything else illegal, but because I know Jon Najarian has his hand on the pulse of the Options market.
I found this interview from 3 months ago, and he offers some really intelligent perspective, and insight, on 0 days to expiration Options, as well as the recent $VIX action, and why that doesn't seem to work like it used to...
Must Watch! He doesn't try to sell you anything, and I can assure you, I get nothing out of this.
I think I have a newfound respect for Jon Najarian, and a new way of looking at the market. Followed
This tweet explains a lot:
$NVDA SHORT SELLERS DOWN $4.1B IN MARK-TO-MARKET LOSSES SINCE MAY 24
Fast money thinks the retail investor was not buying NVIDIA... They seem to think that retail investors only have enough money to buy (meme) penny stocks, as usual they are completely out of touch.
If I saw this trade coming from a mile away, and even alerted to it, then many retail investors were on board.
Trading really is analogous to a game of poker, and the trick is to not be the sucker who is left holding the bag, and if you don't know who the sucker is, then that may be you!
As far as the trade is concerned.
I continue to see money flow from one chip stock to the next.
For instance yesterday $AI was dumped, while Intel was bought, and this game of cat and mouse could easily continue into weekly Options Expiration.
