Bears get an L on the week. Big day for the Bulls Monday.
So halfway through the week the Bears had the ball and tried unsuccessfully in breaking the support at around $280 and historical trend line from 08-09. Bears defended Thursdays close after gapping down yet again in the A.M, ultimately failing. Sellers seem to have started evaporating Thursday into Friday's close. It's not that there was aggressive buyers in the market, it was just a lack of sellers. The market apparently thinks this market is valued relatively just right around this $280/2800-$295/2950 level. But keep in mind we spent the better part of a year in this zone 2018-2019. A large move is coming though. We're starting to have compression on all MA's up to the 4H and also the BBands on the daily. And we're seemingly stuck between this historical trend line and resistance around this $294 level. Volume has been steadily declining with a pop on the downside and another decline today as we retraced some of the losses. This shows the path of resistance has been up after we tested that trend line for third or fourth time.
The market is undecided. And obviously it could go either up and down. I'll lay out both scenarios.
Bull case for starters:
We double topped at the $294 level over the past couple weeks with a rejection sending us back into the historical trend line and also support around the $280 level. With the evacuation of sellers once we started for the gap fill to $273.50 that tells me that people think this $280 level is a fair price. And without sellers, buyers fill the void. We could have just come down to grab some liquidity and have the longs reload as we prepare to take another shot at the resistance at $294. And if we get back up there i honestly suspect we'll go for the gap around $304. That stuff is like magnets to markets. If that's the case than this sideways action was just one large bullflag/consolidation. The trick is going to be taking that gap, and holding it. The bull case is that we tested this support area around $280 twice in two days with a rather crappy news flow and it failed to break. We could have just seen a rounded bottom and pivot/reversal off the trend line. If we open Monday and we still have a lack of sellers expect us to melt up higher towards that level. The evidence i have to support this thesis besides the failed break of $280 is Jpow, and the overall irrationality of the markets in general. But in all fairness the daily does look like a reversal for at least the SPX and NDX daily. We also did have RSI bounce off the resistance trend line as well. Targets would be $288.50 - $294. Be aware - If we get back up to $294 and fail to break above it will create a confirmed ascending triangle and look out below.
Bear case:
With what i see as a lack of institutional participation in the attempted break of $280, and also the bounce thereafter i feel like big money is in a wait and see mode right now. We most likely have a lot of stops/liquidity underneath that $273.50 market wide and for the money that cylced out of their longs around $294 this area is too expensive to buy back in. Which tells me This is just a counter trend rally judging by lack of volume. We've printed a pretty serious bear pennant, and unless we can get past the .618 fib that's exactly what it is. Pair that with what i see as a broken H&S on ES i think retail money just got sucked in for a suckers rally. This bear flag or pennant is also prominent through out the broader market. MACD is undecided after crossing bearish for a day. And honestly all you have to do is look outside. Things are not normal, and are not going to be normal for a very long time. The market has been holding on to this delusional optimism that we're still going to bounce right back after everything opens up. And frankly we may rally on ANY bit of good news, even up to $400/4000 with the amount of liquidity and fed support before blowing off top once we realize hopes and dreams don't set stock prices. The bankruptcy parade is just getting started even with fed and government support. Not the mention the horrific jobs numbers we've had coming out. The market loves to play the "I'M NOT LISTENING I'M NOT LISTENING" card when it's convenient. But also keep in mind this is people's retirement, 401k's, literally their hopes and dreams. They don't give a shit about jobs numbers, they just want the market to go up. But reality always wins. Targets to the downside: $273.50 - (260ish) - $244 - and ultimately the gap near the lows at $222-225.
I'm still skewed bearish. i give a 60/40 case to the bears. BUT, that is completely dependent on how this next week or two plays out. If we meander around in this zone for much longer the market is bound to see a $40-$50 - 400-500 point move in either direction. Remember volume is going to be the one that gives up the ghost. A clean break of $294 on high volume expect a move up to $304 and possibly much much higher. If we end up breaking this historical trendline with high volume expect a move lower to the numbers above.
Daily showing the possible reversal (but with low volume)
SPY 2H running into MA resistance and also flagging pretty hard
Little cleaner on SPX
ES with a H&S neckline break with what looks like a retest. It'll be critical to see how Sun night and Monday premarket play out to see if this is validated
SPY ascending triangle forming
IWM flagging on the hourly
IWM daily bouncing from the .382 fib, but hitting daily 20 period MA
RUT with a little cleaner look at the small caps. Break of an ascending channel/flag and resest
Even cleaner on RTY
VIX supporting the bull case with a break below the 100 period MA and a confirmed pivot candle after getting whacked at 40
NDX looking like its flaggin as well. But if it hits and breaks its breakdown candle high it's off to the races for the gap and ultimately new highs.
Same with NQ
But could be bull flagging on the daily
DJI bear flagging
YM also printing what could be a H&S break with a retest
Silver getting a bid
10 yr failing at whatever this ceiling is again
The Market is looking for a direction right now and the first two days of this week will be pivotal, literally.
Keep your head on a swivel and happy trading.
This is not trading advice. This is my own personal opinion based on my own personal TA.
The market is undecided. And obviously it could go either up and down. I'll lay out both scenarios.
Bull case for starters:
We double topped at the $294 level over the past couple weeks with a rejection sending us back into the historical trend line and also support around the $280 level. With the evacuation of sellers once we started for the gap fill to $273.50 that tells me that people think this $280 level is a fair price. And without sellers, buyers fill the void. We could have just come down to grab some liquidity and have the longs reload as we prepare to take another shot at the resistance at $294. And if we get back up there i honestly suspect we'll go for the gap around $304. That stuff is like magnets to markets. If that's the case than this sideways action was just one large bullflag/consolidation. The trick is going to be taking that gap, and holding it. The bull case is that we tested this support area around $280 twice in two days with a rather crappy news flow and it failed to break. We could have just seen a rounded bottom and pivot/reversal off the trend line. If we open Monday and we still have a lack of sellers expect us to melt up higher towards that level. The evidence i have to support this thesis besides the failed break of $280 is Jpow, and the overall irrationality of the markets in general. But in all fairness the daily does look like a reversal for at least the SPX and NDX daily. We also did have RSI bounce off the resistance trend line as well. Targets would be $288.50 - $294. Be aware - If we get back up to $294 and fail to break above it will create a confirmed ascending triangle and look out below.
Bear case:
With what i see as a lack of institutional participation in the attempted break of $280, and also the bounce thereafter i feel like big money is in a wait and see mode right now. We most likely have a lot of stops/liquidity underneath that $273.50 market wide and for the money that cylced out of their longs around $294 this area is too expensive to buy back in. Which tells me This is just a counter trend rally judging by lack of volume. We've printed a pretty serious bear pennant, and unless we can get past the .618 fib that's exactly what it is. Pair that with what i see as a broken H&S on ES i think retail money just got sucked in for a suckers rally. This bear flag or pennant is also prominent through out the broader market. MACD is undecided after crossing bearish for a day. And honestly all you have to do is look outside. Things are not normal, and are not going to be normal for a very long time. The market has been holding on to this delusional optimism that we're still going to bounce right back after everything opens up. And frankly we may rally on ANY bit of good news, even up to $400/4000 with the amount of liquidity and fed support before blowing off top once we realize hopes and dreams don't set stock prices. The bankruptcy parade is just getting started even with fed and government support. Not the mention the horrific jobs numbers we've had coming out. The market loves to play the "I'M NOT LISTENING I'M NOT LISTENING" card when it's convenient. But also keep in mind this is people's retirement, 401k's, literally their hopes and dreams. They don't give a shit about jobs numbers, they just want the market to go up. But reality always wins. Targets to the downside: $273.50 - (260ish) - $244 - and ultimately the gap near the lows at $222-225.
I'm still skewed bearish. i give a 60/40 case to the bears. BUT, that is completely dependent on how this next week or two plays out. If we meander around in this zone for much longer the market is bound to see a $40-$50 - 400-500 point move in either direction. Remember volume is going to be the one that gives up the ghost. A clean break of $294 on high volume expect a move up to $304 and possibly much much higher. If we end up breaking this historical trendline with high volume expect a move lower to the numbers above.
Daily showing the possible reversal (but with low volume)
SPY 2H running into MA resistance and also flagging pretty hard
Little cleaner on SPX
ES with a H&S neckline break with what looks like a retest. It'll be critical to see how Sun night and Monday premarket play out to see if this is validated
SPY ascending triangle forming
IWM flagging on the hourly
IWM daily bouncing from the .382 fib, but hitting daily 20 period MA
RUT with a little cleaner look at the small caps. Break of an ascending channel/flag and resest
Even cleaner on RTY
VIX supporting the bull case with a break below the 100 period MA and a confirmed pivot candle after getting whacked at 40
NDX looking like its flaggin as well. But if it hits and breaks its breakdown candle high it's off to the races for the gap and ultimately new highs.
Same with NQ
But could be bull flagging on the daily
DJI bear flagging
YM also printing what could be a H&S break with a retest
Silver getting a bid
10 yr failing at whatever this ceiling is again
The Market is looking for a direction right now and the first two days of this week will be pivotal, literally.
Keep your head on a swivel and happy trading.
This is not trading advice. This is my own personal opinion based on my own personal TA.
