5/14/20 MARKET CLOSE Update - Consolidated Analysis

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

QUICK SUMMARY:


Drive By Shooting:


  • Volatility was looking like a healthy correction and then the 2:50PM EST drive by shooting occurred. Closed w/ VIX -5.12% and VXX -7.57%

  • UUP finished up same story but no breakout +0.11%

  • TLT up solidly again today and putting in strong base for rally +1.23%

  • SPY opened firmly lower and then pinned the tail on 285 level around close. Up +1.18%

  • QQQ took back the MSL today but not as strong as Semis. Closed up +1.13%

  • IWM was down really hard again out early and rallied hard all day and closed up +0.33%

  • SOXX was story of the day rallying almost 7% low to high and closed +2.69%

  • FAANGs were all up today but look meh here.

  • HYG -0.34% down on the day and looking range bound

  • XLF +3.00% up today and bounced really hard off must hold support. Near term rally attempt?


I have left my comments from yesterday and then added to them today as the big picture makes them all still applicable:

  1. Everything that has happened the last 2 days has happened IN REGULAR TRADING HOURS. That means that institutions (not pajama ES traders) made their sell side decisions in the days session which helps paint a real picture of price discovery and real dealer level positioning (finally). This applies to the selling that has taken place in FAANGs, tech, and the buying that has taken place in VIX/VX/VXX space. NO FVGs here...this is all clean action. That is noteworthy and the 2950 level is now distribution zone until it isn't. 5/14 - Same thing today. Big up and down moves in RTH today both ways which is BOOOOLLLISSSH broad market and realized volatilty. Strap in as the ranges (5% intraday swings both ways) are about to come back with a vengeance!

  2. The dollar $USD looks very dangerous here. This is on top of VIX. This is not something that will go away...and there has been targeted $USD selling in FX that I have noticed to try to stymie the buying. Nope. Bounces immediately and more blocks on our tracking in $UUP. Who knows what we don't here? 5/14 - nothing changed here still very dangerous.

  3. VIX/VXX put in serious moves with follow through last two days. That doesn't mean they won't retrace, but if the $USD is hot and we have selling watch this for intra-day spikes that are pulsing forcing shorts to really cover - which has not happened yet (they are still short thinking this was a corrective move). 5/14 - they retraced exactly as expected. The short vol drive by shooting from 250PM to close was a little much though. C'mon guys give us a break here lol.

  4. Absolute Breadth put in a big giant bullish candle today on our chart. This is not confirmed yet, but if this turns up momentum too, along with the above listed in the next few days, we could see dangerous situation. 5/14 - Big green bar follow through today and pressing the upper end of the wedge. Doubt it goes tomorrow with the need to 'control' things for OPEX completion. I could be wrong here...but doubt it.

  5. We have OPEX on Friday which means we could see some window dressing between here and there so we have to account for that. 5/14 - WE GOT THIS today - JFC. The pin the tail bet of $285 SPY earned me a gift card to a steak house here locally that I cannot go to b/c it is still closed...sh#t - maybe next year. I digress, but OPEX worked exactly like it does usually - totally murking up the short term picture so dealers can close out the month.

  6. The action yesterday and today was clean. No overnight gaps that left anything to sort through. This is a first in almost 2 months. This is a good thing as it allows free flowing price discovery at a pivotal time. 5/14 - clean again today which is fantastic for free flow vol in both direction. This pattern settling in will make 'investors' and swing traders vomit.

  7. Banks look bad on the charts, but worst on the books. They are already nearing retest lower. Will BTFD crowd step in once more on these? I am not sure, but that is out there as well. 5/14 - Who would have known...the BTFD crowd of Value Investors jumped in hard to buy banks and decades low value opps this morning. Or was it just algo buying at FVG levels? hmmmm...GEX says latter.


Expected OPEX shenangians but damn that was serious shenanigans between 250PM and 4PM. How about almost 4% move in Semiconductors and 2% move in several indexes in 70 minutes? Totally normal and totally free flowing natural efficient market stuff there...GTFO here.


So that leaves us with a little muddy short term picture. If this proceeds into tomorrow and continues to squeeze again, this makes this very confusing and ugly short term mess. Long term no changes as long as 2960 remains a ceiling. Above that we have to reassess. Short term depends on the action RTH tomorrow and then tomorrow's close and the weekly close.


VIX retracing is sensible and normal here. The bullish bounces in the indexes were normal and within ranges and bears that 'shorted in the whole' (what we say after we already have dropped hard for a couple days) got their arms and legs blown off today. So my take is that today was gnalry short squeeze that could have a little side effects (but prob minimal) overnight to open green tomorrow (close out SPX options) and crap intraday. That is my preference, I don't always get what I want though.


The $USD problem is a problem. Broad Vol looking to break the wedge is a problem. There are lots of unknowns at the moment (like California announcing no openings until ... well no date given) which have long lasting economic and market impacts. So there is still something lurking that is ugly out there and whoever knows about it is hoarding $USDs. That remains a real risk.


"Forest for the trees" probably for the next 1-2 days I suspect. Don't lose sight of the bigger fish because of the OPEX gyrations today/tomorrow. The biggest fish to me that is back in the water now is realized volatilty is rising and once this fully manifests we get back to our mega range days of moving 100 ES points in RTH and I cannot wait for that.

SECTORS:

Sector Takeways: Nothing really red today with the OPEX squeeze session.

VOLATILITY:


VIX: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: N/A

Block Volume: N/A


VXX: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Neutral

Block Volume: Positive

GEX: Negative


VIX/VXX Summary: Got the high water mark in the AM and then corrective action the rest of the day before the driveby shooting that took place at 250PM EST. The suspects are still at large and there is no leads at this time. However it looks like the victims will survive the shooting and the gunshots did not hit any vital organs.


VIX/VXX can both head a little lower and be well within pull back range on those serious upside impulses that we had this week. See what happens with OPEX tomorrow but I suspect participants placed this within the ranges today and rolled positions or closed out to avoid having to make too much noise tomorrow.

INTERNALS


TRIN:

Takeaway: All bulls into the close but predominantly short squeeze stuff. This did help us catch the morning squeeze and take some short profits timely.


ADVANCERS/DECLINERS:

Takeaway: All bullish pacman patterns gobbling up bears. We are equal opportunity with the pacman stuff here.


NYSE ADVANCERS/DECLINERS:

Takeaway: Cut through the first support hard this AM and bounced hard. Took back that support. Momentum still down and well below the pivots and resistance. Have to see how this plays out.


CUMULATIVE VOLUME:

Takeaway: Bounced right off the support level that it should have. Momentum is negative still - have to see how the week closes.


ABSOLUTE BREADTH:

Takeaway: MONITOR. Bullish bar again today but didn't get the momentu x-over. We will monitor this next 2 days because this could portend our range expansion intra-day that we want to see come back.


MCCLELLAN OSCILLATOR:

Takeaway: Hit the buy zone and the markets were bought hard in the PM session squeeze. Prefer to leave it there on this one.


INTERNALS Summary: Internals are neutral now with the exception of AB which is looking like there COULD be more broad market and realized volatility sooner than later. Have to see where this is probably Monday as tomorrow could be a big nothing burger (or it may not).

INDEXES:


SPY: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Neutral

Block Volume: Negative

GEX: Negative

Put/Call Ratio: Neutral/Bearish


SPY Summary: Hit the lower level support that had to hold today and it held. Buyers stepped in and moved index up 3% (almost 100 handles in ES) from the low. That is a good thing b/c it confirms that realized volatiltiy is making a comeback. We are messy until after OPEX with charts - so I will refrain from further comment until after tomorrow but the support and resistances are notated on the charts.

QQQ: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Positive

Put/Call Ratio: Bending towars Excessive Call Buying


QQQ Summary: FAANGs were all green today but it only came in the PM session. This took back the MSL but it is looking very, very suspect to me here. We are at the ultimate top end of the range of price for multi-decade run here and there is little downside risk being taken into account by participants...this is something that I am monitoring for a big intra-day cleanse (circuit breaker style) could be coming...not saying it is...just saying with this level of BTFD complacency it COULD very easily happen.

SOXX: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Neutral

Block Volume: Negative

GEX: Negative


SOXX Summary: This went low to high 7% today and the internals and blocks didn't move. Leads me to believe that this action was a short squeeze of epic proportion. TBD until tomorrow is closed out. I prefer to refrain from further comment until after that.

DIA: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Neutral

Internals: Negative

Block Volume: Negative

GEX: Negative

Put/Call Ratio: Excessive Call Buying (WtF?)


DIA Summary: Dow Jones got the support it needed at the absolute level that it needed to hold. Bounce is well within range before more downside. Calls were bought hand over fist for this in the PM today...OPEX tomorrow. So we wait to see where this bounce terminates for more clues.

IWM: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Neutral

Block Volume: Negative

GEX: Negative

Put/Call Ratio: Neutral (big scare early that didn't last)


IWM Summary: This hit the support at 117 and bounced. Need to see how this bounce materializes tomorrow and go from there. I am expecting more downside once this resolves and OPEX passes. Support and resistance notated on the chart.

BANKS & HIGH YIELD CREDIT:


XLF: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Negative

Block Volume: Negative

GEX: Negative


XLF Summary: This should bounce here based on this support level that held today but GEX looks awful still and has 22 as a ceiling. If this bounce doesn't take out 22 with volume then it will fail there. Banks and HY have no faith right now from dealers. Wonder why......

HYG: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Negative

Block Volume: Negative

GEX: HEAVY Negative


HYG Summary: All bearish. 77.07 is FVG that will fill. Bulls want that to hold. Below that is a little support at 75.50 and then next real magnet that will get hit at 73.57. We will see how it goes on the way there. Still range bound for now.

TREASURIES, $USD, and PRECIOUS METALS


TLT: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Neutral

Block Volume: Negative

GEX: Positive


TLT Summary: More structured moves to take the downside out of play today. This is looking like a new up move could be in place here. If we can get Money Flow and Velocity over the zero line and block buying in place, we will have some upside moves that are frothy. Will keep monitoring.

UUP: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Bullish

Block Volume: Heavy Positive

GEX: Positive


UUP Summary: Nothing has changed. OPEX is in the way of the bigger event that has yet to play out in the market. What is the $USD hoarding for? IDK. Still waiting to find out.

GLD: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Bullish

Block Volume: Positive

GEX: Positive


GLD Summary: Very close to a serious breakout here...not much else to say.

SLV: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bullish

Internals: Positive

Block Volume: Positive

GEX: Positive


SLV Summary: This is rallying. I am not saying anything as to not jinx it. Will wait to see what this looks like over the weekend.

GDX: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish X-over

Internals: Positive

Block Volume: Positive

GEX: Positive


GDX Summary: Price turned up HARD at the open. It is really trying to break that $35 level and get to the $40 level for the moment of truth. Will that happen sooner or later? Big question I guess.

THE END.


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