4/23/20 MARKET CLOSE Update - Consolidated Analysis

This is my singular thread that encompasses all areas of review for the day in the market.

QUICK SUMMARY:


Today was a 'Market Structure Direction' day - participants picked a short term direction:


  • Volatility was down early in the session but held our exact support levels when the market was ripping early in the day. Then it got moving as the market broke down at 1240PM...closing VIX -1.43% and VXX +1.52% (after hours as I write this).

  • UUP bullish setup getting EVEN more ridiculously pronounced and is just waiting for a match to light it on fire and start breaking out...what is lurking out there that buyers are accumulating dollars? I am hearing rumors of MAJOR DEFAULTS coming.

  • Indexes were ripping this morning but at 1240PM EST got drop kicked down 3% in 10 minutes clearing every low volume buyer out for the last 1.5 days and breaking the structure. Buyers never recovered and are continuing to sell in after hours.

  • Oil bounced back today on reflexivity trade but nothing seems to be fixed here...

  • Semiconductors were up today and then they were not up today..."and...it was gone'

  • HYG, XLF, and DIA all up early and then whacked along side the rest of the market structure when the 1240PM sell side whale incinerator algo came in...

  • IWM Put/Call ratio dropped like a rock this AM with call buyers loading up into the guaranteed breakout strength...their calls then got sucked out in value by 4PM...

  • FAANGs mixed bag but mostly down. Whatever initiated the puke at 1240PM (supposedly GILD news of failure) it broke the market structure of the bull bounce short term and these were punished too in the selling vortex.

  • Internals didn't add anything productive to the bullish side of the fence as they remained negative.

  • Absolute Breadth stopped right at neutral and looks primed to usher in more volatility short term if it turns.


I mentioned yesterday that we had a couple options of how this would resolve. The market chose the intra-day market drop option. This came on 'news' that $GILD drug trials were a total bust. Shocker, they lied last week...nobody saw that coming. Having said that, $GILD news was just 'news'. It is clear now that sell side dealers were waiting on a reason to light up the algo switch board and this happened very fast. The sell side algos cleaned out almost 2 days of buyers in 10 minutes. This is prime example of what I have been mentioning about what happens to bull-shit buy side low volume gorpy action. Days and weeks get ripped out in minutes.


Something is definitely up. I don't think it is the $GILD thing. The $USD is absolutely at a stage of what could be a raging breakout and $VIX bounced exactly off the first support. I am hearing rumors of major defaults coming up that will be shock and awe type stuff. It would make sense...if we are entering a default cycle then you will want dollars as they will be worth a lot more when they are scarce (deflationary event). We will have to see how this plays out, but it would explain the $USD accumulation trade happening, $VIX bouncing off support and looking potentially bullish, $TLT buyers non-stop and indexes internals revealing a lot of selling/distribution at these levels in equities.


'Tea leaves' are looking risk-off to these eyes. Nitty gritty of the day is below and make sure to check out the bonus chart today: BIOSLIME! (XBI)...disclosure I shorted this pig in the session today...

SECTORS:

Sector Takeways: Oh man look at that price discovery! Some up, some down? That is price discovery not just a sell side massacre or a buy side short squeeze. But...tomorrow is another day. This is very good today because there was no distortion and price could naturally pick a direction with market participants duking it out. They did and it was sell side that took today's round.

VOLATILITY:


VIX: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish (solid bearish test today though)

Internals: N/A

Block Volume: N/A


VXX: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Positive

Internals: Neutral (still waiting on these to turn up over zero)

Block Volume: Positive

GEX: Positive


VIX/VXX Summary: Very interesting that this held exactly at the support notated in the post last night and I posted on my feed today the exact levels to watch if it did in fact fail. It was getting kind of bearish looking this morning based on the indexes solely but this held support (as did the $USD) while the equity rally exhausted and it launched back hard off support at 1240PM EST. That means it was accumulated on the pull back today. This means participants are fearful in the market and want to be long volatility...


We still don't have the 3/3 setup I have mentioned in the past two nights posts, but I think that we may see that within 2-3 days (at the latest) IF this market structure decision (bearish bent) that was made today during RTH sticks. Pay attention to my feed intra-day and I will try to keep a live update on this...

INTERNALS


TRIN:

Takeaway: Pretty much everything at the 1.0 level which is net neutral but the QQQ was really sold into today on volume. This is not surprising because the morning session was bullish and the afternoon session was bearish so they netted out.


ADVANCERS/DECLINERS:

Takeaway: You can see that 2/4 were net negative and the other 2 had a healthy set of participants that were declining. QQQ and DIA may lead down here IF this bearish trend picks up steam in the coming sessions.


NYSE ADVANCERS/DECLINERS:

Takeaway: Rejected hard at the Bull Bear Pivot area today. Momentum still in a bearish trend until it isn't. The lower supports come into play and bulls don't want to see this get way out in front of price...that would mean new lows. We will keep this on a monitor.


CUMULATIVE VOLUME:

Takeaway: This is interesting in that there was some pretty bullish bent to the day early with some volume. Whatever turned over at 1240PM EST lit this volume up by the close. That is SERIOUS SELLING. That is very NOTABLE. You should take note of this and not try to counter trend a player/players with a bent to sell into volume like this and break it...they will win and you will lose...roll with them instead.


ABSOLUTE BREADTH:

Takeaway: MONITOR. Absolute breadth landed right where we thought it would yesterday and held in the upper level of the neutral zone. Momentum is at 3.51 reading and is pretty much reset (close to 0.00 reading). This is a monitor the next few days to see if it turns up and brings broad market volatility with it...this would be on top of $VIX, $GEX, and $USD induced vol...eesh.


MCCLELLAN OSCILLATOR:

Takeaway: This is such a sensitive oscillator and really bounces around...kind of manic honestly. It hit right under the sell zone and dropped hard. This is still in a bearish momentum trend but it is not clearly useful at this point. I count this as a wash here...and not very useful until we get more information.


INTERNALS Summary: Internals are not helping the bullish hopes for continuation of the intermediate term trend. They have been failing for several days and getting in bearish trends but real price had been holding up. Price is now playing catch up it appears. The most important to watch will be Absolute Breadth and A/D...let's see how it plays out next few sessions.

INDEXES:


SPY: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive (flat)

Block Volume: Positive

GEX: Negative

Put/Call Ratio: Neutral

SPY Summary: This was charging hard and ran up to 280-285 zone today and was really trying to take that box back and even looked like it might break through it. 1240PM EST got whacked hard and never recovered. Lost the box after hours and the 280 level I noted on my feed. Bulls need to hold 275 level overnight and do all they can to put this back in the box tomorrow or selling will intensify. If bulls fail here it isn't because they didn't have enough shots, today was the 3rd attempt at breaking the box...all rejected. Notable.

QQQ: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive (x-over for velocity under money...bearish)

Block Volume: Positive

GEX: Negative

Put/Call Ratio: Neutral/Bearish


QQQ Summary: Same story as most today, during the AM session bulls had the ball and really were charging for the MSL. Afternoon session they got slammed and closed red. Fail. This is bearish everything at the moment from internals to P/C to GEX. Price still hasn't caught up. 202.88 level is major support. Below that 186.27 will happen fast. Bulls need to get this turned around ASAP and up and through 218 otherwise could get pretty painful.

SOXX: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive (but dropping even more today)

Block Volume: Negative

GEX: Negative

SOXX Summary: MONITOR. This actually played along with $VIX and $USD today in that it was weak when everything was charging forward this morning and as soon as 1240PM EST sell side algos ran this lead the way down this afternoon. It is the leader of everything it seems (both up and down) and is now at critical juncture. 221.28 is a must hold and then 215 area. Those both go this is headed to 196 level and potentially lower. Bulls want to get this turned back around and up and through 236.42.

DIA: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive (dropping harder today)

Block Volume: Neutral

GEX: Negative

Put/Call Ratio: Neutral/Bearish

DIA Summary: Dow Jones had a shot today at making a move for it and got kicked right out of the box again. That is the 4th time in the past 10 sessions. Notable. Bearish internals, GEX, and P/C ratio...not much promising in this...price starts dropping on this and you will see 213.09 in short order. Lower levels are realistic and even a new low not out of the question at all.

IWM: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive

Block Volume: Positive

GEX: Negative

Put/Call Ratio: Bearish

IWM Summary: This was literally a FinTwit superstar this AM (lighting up my feed about impending breakout) and makes sense because the P/C ratio dropped like a rock with everyone getting all bulled up. It does look better than most, but bulls really dropped the ball on this one. They were very close to busting this box to the upside. They still could, but it is looking more internally bearish today than yesterday even though price finished up. Definitely a monitor going forward...as it may not perform as bad as tech/semis as this was pretty beat down in the last bear raid in March. Value vs. Momentum right (sarc)?

BANKS & HIGH YIELD CREDIT:


XLF: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive (dropped today heading for zero)

Block Volume: Positive

GEX: Negative

XLF Summary: Another day and another failed attempt at the box (didn't even get past the first resistance line). Bearish trend in momentum, negative GEX, and collapsing internals. Don't even need to see the balance sheets of the holdings to know this is in trouble. 19.68 is first level and then 17.97 - 17.54 are probably going to get tested.

HYG: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive (dropping)

Block Volume: Positive

GEX: HEAVY Negative

HYG Summary: There was a FVG left behind on Tuesday that was filled today early in the session and was then sold off later in the day. I feel like this is kicking a dead horse, so I will refrain from personal commentary. Bearish internals, negative GEX, declining volume is happening now and nothing really positive macro. This should be repriced lower as we go for realized fair value of the holdings. What that number is, no one knows.

TREASURIES, $USD, and PRECIOUS METALS


TLT: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Positive

Internals: Positive (turned back up)

Block Volume: Neutral

GEX: Positive

TLT Summary: Price was pulling back early in the day and I noticed buyers stepping in early in the session at the first support level. This is something that made me look at the equity rally suspiciously early along with $VIX and $USD. This moved back up during the session and is looking to embed momentum if we get a risk-off session or two. Worth monitoring but continues to be a BTD.

UUP: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Neutral (at the zero line)

Block Volume: HEAVY Positive YET AGAIN (4 straight days of accumulation)

GEX: Positive

UUP Summary: Still in a MONITOR status. This has been accumulated for some time now and for the last 4 days it has been accumulated heavily. Price is sitting exactly at the inflection point of resistance with a minor resistance above. IF this gets through those resistances, there is not much above it. That is a little worrisome, because yes, a strong dollar is a tool for the Fed in currency swaps, but it also has substantive risk-off implications for domestic equities et al. This is a very important piece of the puzzle here...next few sessions definitely need to keep monitoring this.

GLD: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish (flipped back)

Internals: Positive

Block Volume: Positive

GEX: Positive

GLD Summary: Gold bulls out on parade today AGAIN - almost could hear the Rage Against the Machine song playing in the background. Price back into the distribution box. Short term bulls want this to get through the box. I am suspect on that here, but will not put too much on that if pressed. Have to see how this shakes out. If it doesn't get through the box this time around, then it will find support lower. Bullish BTFD trend on this until it isn't (which could be a very long time with the mess we are in).

SLV: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive

Block Volume: Positive (declining)

GEX: Positive

SLV Summary: This is just not getting it done along with Gold and the Miners. I traded this more heavily than anything else in my book last year so I am not picking on it. It is just not following them up and has lagged for a month now. I find this to be disconcerting as a true PM advancing bull has silver. So either SLV turns up here and catches to to GLD and GDX or they are going to catch down. Notes are on the charts. No edge here for me - I have no position at this time.

GDX: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Positive (but still dropping)

Block Volume: Positive

GEX: Positive

GDX Summary: GDX buyers chased this up today and couldn't close it strong. My guess is that is the near term top (or we are very close to it). Not really a negative thing though because this means that this is now bullish in my system and the pull back (although it may be deeper than expected) is a buy. I will be buying this on the pull back in the coming weeks when/if it materializes at the appropriate FVG level and will notate it here and on my feed.

BONUS: BIOTECH


XBI: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Bearish (x-over today)

Internals: Positive (declining)

Block Volume: Positive (declining)

GEX: Negative

Biotech Summary: I shared this because I shorted it at the top wick today because it was the second time that it tried to take out the MSL and R/R skew said short it (had to close my eyes though to press the mouse...). I did not know about the $GILD fiasco but was pleasantly surprised when news dropped that they lied about their trials and their first real trial was a major flop because everyone knew they lied and pumped their stock. XBI has $GILD as a primary holding and many other shenanigan laden bio-slime stocks in it and should (IF THIS MATERIALIZES to the downside) get a good beating here...I posted the FVG gaps that will be filled...not all at once obviously but over time...definitely some money to the short side on this index.

THE END.

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