5/12/20 MARKET CLOSE Update - Consolidated Analysis

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

QUICK SUMMARY:


Warm Up:


  • Volatility is getting warmed up today for the big game w/ VIX +19.84% and VXX +14.38%

  • UUP finished down slightly but internals were very strong again -0.33%

  • TLT recovered the pivot line today and looks to be trying to level off +1.35%

  • SPY finally gave us some direction INTRA-DAY finally with a drop closing down -2.85%

  • QQQ who would have thought...a red day? What is that? Closed down -2.69%

  • IWM was unloaded on in the 3 PM hour and finished down -4.68%

  • SOXX closed red after an intra-day reversal down -3.31%

  • FAANGs all red...after AMZN filled the FVG left behind they all dropped

  • HYG -0.30% on the day the FED officially starting buying it...

  • XLF -3.43% on the day and trying to hold onto last support

  • XBI/XLV/XRT/XLRE/XME/XHB all red


I have been warning that this could crack...said it over and over again last few weeks to the point think some people stopped listening to me and prefer to put me on mute. Finally it did something INTRA-DAY. I could care less if it moved bullish or bearish, just do it during the RTH so we can have some direction of market players. We got just that today. VIX low to high over +22% today. That is serious VOL move and it didn't even get the readings back to the zero line or start new momentum bullish trend. This has some serious legs IF it confirms next few days...and I mean SERIOUS LEGS if it confirms because I think there is about to be a huge dollar move at the same time..

We have collapsing internals now after today. We have had collapsing Money Flows and Velocity and sell side Blocks for days on end now. So this drop hard today is not surprising. The QQQ and NDX/NQ all filled their upside FVG this AM session and that was it. Are they done? No way to know. But if the market loses them and that is the trigger, then as we have seen for a period of time now there is nothing else holding this thing up. If they go it will be cascading selling as the rest of the market was already weak and this was all really thin (epic thin actually that set records).


I have also said it is hard to ever know exactly what could trigger the market shift to the doom loop again and that happens when the buyers are exhausted. Are we there? Not sure, but below 280 and then 272 creates a vacuum for SPY down to 250. That is probably the line in the sand for now - I could see a true war occurring at 250 and VIX 55-60. What has become a real negative situation for bulls here is that there has been even more egregious positions taken to short vol because of the premise that the Fed will just buy ETFs next and that the market will get negative interest rates so there is ZERO RISK now and vol is dead. So now short vol strategies are sitting in the same position that bears were six weeks ago. Except this time they are the VIX short squeeze fodder now - of which you saw only a warm up today. Their premise is totally wrong as I don't think that Fed buys ETFs until at a minimum 250 SPY or maybe even a retest of the lows (but ETF buying is coming along with negative interest rates at some point - we just don't know the inflection number for the Powell buy signal lol).

So was today re-positioning to the sell side by institutions now that their distribution is done before Jay Powell delivers the bad news tomorrow about the ETFs and Negative Interest rates? Maybe, maybe not. That is just conjecture. But re-positioning today was no joke and there is serious seller resistance lines in the sand after that INTRA-DAY beat down between 2-4PM.


Next few days will let us know if this is either a garden variety correction (favorite CNBC line) or if this a regime change to a new Doom Loop. More details below.

SECTORS:

Sector Takeways: All red today except for bonds.

VOLATILITY:


VIX: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Neutral

Internals: N/A

Block Volume: N/A


VXX: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Neutral

Internals: Neutral

Block Volume: Positive

GEX: Positive


VIX/VXX Summary: Low to high moves today for VIX and VXX +20% each. Serious moves. GEX flipped to positive. Block volume is positive. The last hold outs for a sustained move are velocity and money flow. If we get that and some larger buy side blocks, then you will see the short vol squeeze and it will get serious. Until then we are only seeing vol warm up. These things take a little time, so expect this to play out over the next couple of days.

INTERNALS


TRIN:

Takeaway: Bearish across the board but IWM had some buying into the weakness at the close. Won't matter - price damage was vicious to that index today and caused real structural change.


ADVANCERS/DECLINERS:

Takeaway: All bearish pacman pattern eating bulls.


NYSE ADVANCERS/DECLINERS:

Takeaway: Massive red market structure impacting candle last seen in March. Worth monitoring from here. That was serious selling today.


CUMULATIVE VOLUME:

Takeaway: Red cumulative vol reading and broke the local support. Heading lower.


ABSOLUTE BREADTH:

Takeaway: MONITOR. This is still looking for a local bottom.


MCCLELLAN OSCILLATOR:

Takeaway: Hard drop candle today. But could oscillate around the same price area tomorrow. Watch the momentum for more clues next few days.


INTERNALS Summary: Said yesterday leading to the downside at the worst. That is what we got. Don't see anything here that leads me to believe that there will be anything more than a bounce attempt tomorrow that will be sold into.

INDEXES:


SPY: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Neutral

Put/Call Ratio: Neutral/Bearish


SPY Summary: Pattern changed yesterday and GEX flipped today. Total intra-day blow out day to reset the short term market structure. Sellers in control after that PM smack down. Tomorrow should be a bounce attempt. Bulls want to get back over 290 but resistance at 287 will be solid. See how it shakes out.

QQQ: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Negative

Put/Call Ratio: Neutral


QQQ Summary: "There will not be a red day until the FAANGs and Biotech turns over". That is what I said yesterday. Today all the FAANGs and Biotechs were red. The QQQ filled the upper left behind FVG and dropped in the PM session hard. Was that it? Way too early to tell but now everything has flipped GEX wise, but the MSL is still neutral. If the MSL is lost next two days then watch out below.

SOXX: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Negative


SOXX Summary: MONITOR. Totally got blown out in the PM session today. Now has lost the MSL for the second time. This time the Bull Bear pivot is right below so this could get interesting in the next few days. This will have to fight hard to survive as the sellers pulled it back down hard today and took back that MSL. Serious stuff here.

DIA: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Neutral

Internals: Neutral

Block Volume: Negative

GEX: Negative

Put/Call Ratio: Excessive Call Buying


DIA Summary: Dow Jones range expansion happened today to the downside intra-day which makes it much more likely to be confirming signal. This needs another few days to get a clear picture of intermediate term direction but short term should be STR.

IWM: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Neutral

Block Volume: Negative

GEX: Negative

Put/Call Ratio: Neutral/Bearish


IWM Summary: Totally blasted today in the PM session and was weak to begin with. Call buyers are still buying calls here...WTFF? Still has so local support a little lower, but if that goes, this could get wild again as there is no tech or leading trend to purchase here. Just open air to FVGs below and lots and lots of debts that cannot/will not ever be repaid.

BANKS & HIGH YIELD CREDIT:


XLF: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Negative

Block Volume: Negative

GEX: Negative


XLF Summary: Lost the local support in the after hours. Banks are in trouble. So now the question is just how much trouble? We will find out over the next 6 weeks imo. There is very little between them and new lows now and negative interest rates will be a nail in the coffin for them...

HYG: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bullish

Internals: Neutral

Block Volume: Negative

GEX: HEAVY Negative


HYG Summary: Fed stepped in officially today and we closed red. Great job guys. We are still range bound so this will have to continue to be on monitor. Looking ugly though...

TREASURIES, $USD, and PRECIOUS METALS


TLT: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Neutral

Block Volume: Neutral

GEX: Positive


TLT Summary: Notable stick save today off the open and bullish the rest of the day. GEX flipped back positive as well and all internals were showed measured improvements here. Not out of the woods, but at an area of significant support, so we will see what happens next couple days to see if this is interim bottom or if this fails.

UUP: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Bullish

Block Volume: Heavy Positive

GEX: Positive


UUP Summary: As bullish as it gets here without a price move to confirm is all I can tell you. All this needs is a trigger to set it off and it could be epic. Just keep watching this as something is coming here. Buyers cannot get enough of it at these levels...what do they know that we don't?

GLD: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Negative

Block Volume: Negative

GEX: Positive


GLD Summary: The honey badger again. Price is still just holding that GEX flip level at 159. Have to keep monitoring. This seems to be well bid sans a margin call liquidation event cycle again...which is not out of the realm of possibility next couple weeks. Stay on your toes.

SLV: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bullish

Internals: Positive

Block Volume: Positive

GEX: Positive


SLV Summary: Failed again and momentum is almost burnt out again. So this looks like it is going to fail yet again at the 14.50-15.00 level. Have to wait and see but this is not a place that bulls want this to fail I can tell you that. If this fails here and the market gets into a Doom Loop (just an IF) then this could see new lows. This is a serious monitor for me b/c I think that it will be the tell if they are going to introduce negative rates and start buying ETFs. This has lagged and is the final feather that inflation crowd has to have...

GDX: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Positive

Block Volume: Neutral

GEX: Positive


GDX Summary: Breaking down again today after being up early...this looks like bullish chasing could come at a cost here soon. I have been saying that but I will keep saying that. I like this at lower levels, but this is not something I want to own up here. This and silver are major monitors in the coming months as I believe that they may forecast the negative interest rates flip and the ETF buying...because we will not be privy to what levels that will come in at on the VIX upside and the SPY downside.

THE END.


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