4/24/20 MARKET CLOSE + WEEKEND Update - Consolidated Analysis

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

QUICK SUMMARY:


It appeared Thursday that we had a clear near term direction. That was nixed on Friday's low volume, 3 hour 2% equity ramp combined with a 13% VIX crush into the exact 415PM close. Therefor we finished the week exactly where started - range bound and no direction:


  • VOLs got crushed on Friday VIX -13.17% and VXX -5.86%.

  • UUP bullish setup had zero change and finished the week with very bullish structural underpinnings. Price is at inflection point of major significance.

  • Indexes were lower AH on Thursday and then crushed overnight but 6AM EST on Friday were bid and never really gave much back...then they ramped from 1PM-415PM from 1.5%-4% low to high across the board. It was another short squeeze that seemed VIX related based on our assessments. Week finished unch.

  • Oil is still in no man's land..

  • Semiconductors were down hard early and up heavy late. Week finished unch.

  • Tech was weak early, strong late. Finished the week unch.

  • HYG was really ugly Friday - 1.26% including AH. Starting to bifurcate from the equities. Defaults lingering? Week finished red.

  • DIA was up late in the day on no volume. Week finished unch.

  • IWM was down early and up late...same story w/ no volume. Week finished up by a nose.

  • FAANGs were mostly up with many reporting earnings this coming week. Notable that NFLX has struggled greatly since earnings. Precursor for the team or fixed this week?

  • Internals for certain readings turned back up slightly but there was something in the individual indexes that was notable across the board: that Money Flow and Volume Velocity dropped very hard in every security into the price rises on Friday PM session. This is quite notable - more below on that.

  • Absolute Breadth was down again and stopped right at neutral and bounced. Finished the week resetting - have to see what next week brings.


You could tell from my tone on Thursday that it appeared the bears were taking control from the data. They did not sell Friday to seal the deal. Instead they stepped aside Friday and let the bulls squeeze everything in the PM session. VIX was crushed and VXX headed back for the accumulation box as I noted on twitter during the session. We finished the week unch which puts us back where we were last Sunday...waiting to pick a direction intermediate term. Nothing at this point from all the analysis you will comb through here will give you a markedly bullish picture, but bears have to take action at these levels this week or we could easily see higher levels by about 5-10% across the board in the coming week(s) all things being equal.


Having said that there was a notable takeaway that I noticed when reviewing all the different securities for the weekend update. Look at the third frame on all my charts as you go through and read through the write ups. You will see that 'Money Flow' and 'Volume Velocity' are now dropping like rocks across the board. This is new and this means velocity of purchasing is decreasing rapidly and money is flowing OUT of the security. This was built to front run price action (in most situations). So although price finished the week unch across the board - these readings were markedly worse than where the week started and are a typical front run on price declines. This coincides with low volume distributive rallies completing (or close to it). This is something to watch for this week. Bulls would want to break key levels and get new money flowing in. Bears just need to do what they do and overwhelm buyers. By no means do these readings guarantee price action will instantly drop, but do monitor it throughout the week...


We will have to see how it goes and take it level by level and day by day. Lots of earnings this week and FED and other items to chew through. We are again at the major inflection point across the board so we need to be alert for major changes and as I see these changes, I will post them (IF they occur) on my twitter feed.

SECTORS:

Sector Takeways: Bulls squeezed everything equity in the PM session. All things commodity were crushed. Junk Bonds are ugly and the outlier from Friday...

VOLATILITY:


VIX: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: N/A

Block Volume: N/A


VXX: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Neutral

Internals: Neutral (very close to the zero line after Friday - which may seem counter intuitive but it isn't from my experience)

Block Volume: Positive (and rising)

GEX: Negative


VIX/VXX Summary: VIX was crushed. VXX was pushed back to the top of the accumulation zone. VIX would have to drop 30% more to lose the MSL and VXX is just back to the top of that accumulation zone so still no major damage here. Money Flow and Volume Velocity are very close to crossing over the zero line in VXX (front runs price as mentioned above). Volume block buying increased on VXX into Friday's weakness which was surprising. Momentum did not break down and x-over but could Monday/Tuesday with continued weakness.


I don't see anything structurally broken with the continued VXX accumulation that has been taking place past two weeks. VIX is still > 35 and really is quite bullish over 25. Bulls will want to destroy VIX this week to end all doubt about a new bull market. The tell for me at this point is that VXX is being accumulated more than it was earlier in the week on Friday into the strongest weakness of the week. Sure, those people can be wrong...but we will see - pretty bold thing to do to buy VXX into VIX -13% day. Monday and Tuesday are pretty key for intermediate term for VOLs.

INTERNALS


TRIN:

Takeaway: Neutral across the board. DIA is weak and so is SPY...nothing bullish at all about these readings...alludes to short squeeze rather than healthy and realized price advancement.


ADVANCERS/DECLINERS:

Takeaway: Bullish in all primary indexes. Small caps the least bullish but still bullish on Friday.


NYSE ADVANCERS/DECLINERS:

Takeaway: Strong rally from low of day to high of day. Now into the teeth of the resistance area. Bulls a lot to chew on next week. Really need advancing on heavy volume to cut this open to the upside and take the MSL.


200DMA:

Takeaway: Added this for review and perspective. Pretty cooked and the 200 day moving average for most stocks is considered a major pivot. This shows you how ugly this picture is. This is why I have been saying that this is a thin volume, thin leadership, momentum only (tech, semis, bio-slime, and health care) only bounce. Bulls want this to dramatically improve the next two weeks.


CUMULATIVE VOLUME:

Takeaway: Not a strong reading into a large up day in the indexes. Short squeeze...again. Now at major resistance levels (2 above) to chew through next week.


ABSOLUTE BREADTH:

Takeaway: MONITOR. Landed right in the neutral area as expected and bounced a little into the close. Momentum is now fully reset and we can sit down there and go nowhere for a day or two, so watch for the move up to make next decisions on broad market volatility.


MCCLELLAN OSCILLATOR:

Takeaway: Manic action as usual. Now we are back in the sell zone region. Any price advancements on Monday would get this into and maybe through the sell zone again. Momentum turned up...


INTERNALS Summary: Internals are mixed but predominantly exhibited low volume participation in the squeeze on Friday and we finished the week unchanged. Internals overall (big picture) as are still not supporting price advancements from here of substance. What bulls want is to see volume come into the situation in mass and begin to leave no doubt. Volume buying, if seen, will leave no doubt and turn all these readings positive. Bears have the readings they want (thin ones) but they have to overwhelm buyers on price side or its moot.

INDEXES:


SPY: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Neutral

Internals: Positive (dropping now very clearly)

Block Volume: Positive

GEX: Negative

Put/Call Ratio: Neutral

SPY Summary: Short squeeze on Friday. Finished the week unch. Back in the distribution box. Negative GEX. Internals are the only notable this week that they finished the week much lower than start. That is bearish intermediate term. Monday/Tuesday is pretty important short term and price pivots are listed on the chart as there is still quite a bit of resistance overhead before the MSL.

QQQ: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Neutral

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

Block Volume: Neutral

GEX: Positive

Put/Call Ratio: Neutral/Bearish


QQQ Summary: With the bulk of the index hanging on the FAANGs (market cap weighting is so extreme) that this will be the determining week for QQQs. Internals are collapsing and so is volume. I will monitor this week to determine direction for this. If this does crack, it will drop like a brick. If bulls turn internals up with volume behind price (which is not there now and has not been there for a while), they can take control of market structure.

SOXX: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Bullish

Internals: Positive (but dropping even more today into the strength)

Block Volume: Negative

GEX: Negative

SOXX Summary: MONITOR. This is back to where we started the week. Unch. Major inflection point ahead. AMD and others earnings this week. Internals are dropping like a brick, block volume is negative, and Friday was a short squeeze. Bulls need to break this up and out of the area on heavy volume. Continued 'gorpy' back and forth but slightly positive action will be extremely negative medium term.

DIA: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Neutral

Internals: Positive (dropping VERY hard today)

Block Volume: Negative

GEX: Neutral

Put/Call Ratio: Neutral/Bearish

DIA Summary: Dow Jones had BA break down on Friday and it should accelerate next week. Internals dropped like a brick. Price rose back into the distribution box on the short squeeze and momentum is trying to turn back up. Without a momentum-like stock basket advance (no tech/no semis etc.) it is hard to see what carries this up and through resistance. Lots of resistance overhead to chew through for bulls and they need volume backed advance to get that done this week.

IWM: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bullish

Internals: Positive

Block Volume: Positive

GEX: Negative

Put/Call Ratio: Bearish (Getting a little excessive end of bullish area)

IWM Summary: This has been back and forth all week. Finished realistically unch (slightly up). If price gets up and out of the box can go higher but pretty substantive resistance above +5%. Seems like Friday was a squeeze day so no supplemental advancing. Monday/Tuesday are pretty important to the near term. Bulls want to push this higher on max volume and turn those internals up hard.

BANKS & HIGH YIELD CREDIT:


XLF: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Negative (new and bearish)

Block Volume: Positive

GEX: Negative

XLF Summary: Momentum trying to turn back up but still bearish. Internals crossed over the zero line and are now negative. Block volume continues to decline. This was the weakest of all tracked indexes this week. Advances without banks involved are not sustainable. Bulls really want this to turn up and finally break through the distribution box. They need to get some work done on this...have to see what happens.

HYG: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive (dropping)

Block Volume: Positive

GEX: HEAVY Negative

HYG Summary: The outlier on the week as it closed the day and the week negative. GEX is major negative value, internals are dropping hard and so is buy side volume. This is starting to bifurcate from the tech/semis momo rally...front running defaults? Have to monitor Monday/Tuesday.

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: Nothing new to see here. Price bounced again off support intra-day and had another green close. Real risk on for equities would not have 20 year bond appreciating and be constantly bid...capital would not need to be secure, it would chase price appreciation vs 20 year @ 2%+ in yield. Instead lots of volume keeps bidding 20 year which is return of capital focused vs. return on capital risk.

UUP: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Neutral (at the zero line)

Block Volume: HEAVY Positive YET AGAIN (now 5 straight days of accumulation)

GEX: Positive

UUP Summary: The internal structure of this could not get any more bullish. Price is stuck at the resistance level for the last two weeks. We will just have to wait and see how this shakes out this week. I continue to be long the $USD until this internal structure changes.

GLD: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish (flipped back)

Internals: Positive

Block Volume: Positive

GEX: Positive

GLD Summary: Gold is now back into the distribution box. Could keep going here for sure but seems like it is close to a local high of some kind. One more high would make sense but the distribution box is the key. Let's see what happens Monday/Tuesday. Silver is more important here to the next steps in Gold. If silver turns bullish here that would be very bullish gold.

SLV: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive

Block Volume: Positive

GEX: Positive

SLV Summary: To my analysis, this is the key ingredient moving forward. Miners and Gold itself have all recovered fully from the March sell off. Silver is not even close. A very bullish trend for the space would be for silver to be the laggard and move up now as Gold and the Miners consolidate. A more near term bearish outcome would be for silver to not take back the MSL. Silver has a major resistance at 14.50 and then 15.50. Through those levels is important. Let's see what happens this week. If silver does get up and over 15.50 with volume, I think that breakout would be dramatic...keep an eye on it and something we will be trading ourselves on confirmation.

GDX: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Positive

Block Volume: Positive

GEX: Positive

GDX Summary: Nothing bearish for this chart now. It is due a retrace and has so many FVGs left behind. Internals are pretty bullish still and so is GEX. I am very curious to see how this reacts next week/two. The MSL is now set at the March low. As long we remain above that, the longer term picture is bullish and BTD (interim perspective) will be systematic. Having said that, to buy here is solely a chasing higher/highs strategy which could be unprofitable. We are remaining patient and will look for lower level FVGs to enter.

THE END.

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