5/22/20 MARKET CLOSE & WEEKEND Update - Consolidated Analysis

This is my singular thread that encompasses all areas of review for the day/week in the Hunger Markets.

QUICK SUMMARY:


Those call buyers are eatin' that FED 'Cake Cake Cake Cake Cake'...


  • Volatility finished the week looking like a tired mule w/ VIX -4.64% and VXX -0.95%

  • UUP strong day and closed +0.30%

  • TLT continues to set a solid base - closed +0.60%

  • SPY finished +0.19% and pinned the $295 level up about 10 on the week

  • QQQ looking mixed +0.35%

  • IWM was the strongest of the indexes and closed +0.48%

  • SMH was meh and finished with a close +0.21%

  • FAANGs mixed with AMZN and NLFX both red on the day

  • HYG +0.25% on the day and still range bound

  • XLF -0.36% on the day and looking like it needs act of god


BREAKING NEWS: There was a hacker that caught The Manuch and J-Rome at the Eccles Bldg on a Zoom at RTH close ('cause those Zooms right now are not secure ya know) as their jobs were 'funding secured' with a green close before Memorial Weekend....

Last week was a 60 minutes gap up and camp week. Powell's speech last Sunday set the upside for the entire week. Nothing was given back all week and there is some slight upside left above. A few things of note specifically that still stand out:


  1. VIX is still above 25 and the longer term VIX readings are much higher and actually NEVER came back down so short term and long term are bifurcated

  2. Absolute Breadth broke out of the wedge from the last 2 months to the upside

  3. Advance Decline and Cumulative Volume are setup to cap out with negative divergence last seen before ever major equity nirvana/doop loop cycle flip since 2018

  4. Equity P/C ratios for SPY/IWM/QQQ all made it to drooler level this week (supremely excessive call buying that is found only in bubbles)

  5. The $USD looks to have bottomed short term again and is heading higher

  6. TLT looks to have bottomed intermediate term and is heading higher

  7. Equity Indexes are so far to the upside ranges that the skews are limited without all becoming completely parabolic style advances

  8. Banks cannot sustain more than a 24 hour bounce. There are no new buyers there.

  9. Times up on mortgage and loan forbearance where counterparties have to start exercising their rights within the law (begin foreclosure proceedings) starting June 1 (and many are already starting).

  10. Risk-off behavior in BTC and PMs is already beggining to show tremors.

  11. FAANGMs are/have been simply parabolic and untouchable. Is this sustainable?

  12. HYG and XLRE (high yield and commercial real estate) have a lot left to prove in the next 90 days as to SOLVENCY as that is different than LIQUIDITY.

There is a lot included here this week as I had the weekend to gestate on everything. Look at the levels that are notated for the indexes and check out the readings. The GEX on some of the indexes spiked into the close on Friday...was fishy to me as we last saw this back at the short term top that showed up in April. I bet those reset on Monday just like they did then so don't read to much into them until Tuesday night...that is my recommendation. This week, my primary concern in the currency markets and the banks. FAANGs are droolers right now so they can get dumber and dumber until they blow up. So don't judge the big picture by a handful of highly concentrated positions. The currency markets and the bond market are going to tell us everything we need to know in the next 2 weeks.


I said this on twitter and I believe it fully. Wave 2 of this mess is not COVID ... it is bankruptcies and what I think we are about to see will be mind boggling and eye watering ... and the $USD is going to be a part of that equation too.


We are rolling out lots of new stuff this week from the app so stay tuned to twitter and the blog as we are getting closer to the beta launch here in June for everyone that has signed up and I will be sharing more components that have been built.


All the usual details and more are below!

SECTORS/BONDS/COUNTRIES/CURRENCY:

SECTORS Takeways: Predominantly green close for sectors - just enough to have 348 million pending breakout charts drawn on FinTwit this holiday weekend.

BONDS Takeways: All green (High Yield, Corporate, Muni, Government) across the board

THOSE OTHER PARTS OF THE WORLD takeaways: Not so pretty in the rest of the world - US the cleanese dirty shirt at the moment.

A FEW MORE OTHER COUNTRIES & CURRENCY takeways: US Dollar is strongest and remains strong which adversely impacts those other primary FXs.

VOLATILITY:


How anyone feels when they buy the VIX (or any related derivative/options products) lately:


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/Positive

Block Volume: Positive

GEX: Negative


VIX/VXX Summary: Just range bound here at the very moment. The action this week will be pretty important. I will tell you that options pricing for VIX is skewing towards heightened implied volatility. This is due to the fact that the longer term VIX forwards are looking much more heightened (volatile readings) than near term or 30 day VIX. We will roll out our VIX module this week and show you what I mean. The implication here is that VIX long term is mispriced...or...VIX short term is mispriced. One of them is wrong...


Truly a choose your own adventure here situation developing...index call buyers think the long term VIX is wrong (in essence with their relentless call buying) and that VOLs will drop. Absolute breadth and longer duration VIX think these people are about to become road kill...


Return of massive volatility again? I think that is highly possible as an unintended consequence of the FED actions ($7 TRILLION balance sheet increase) has really goosed up our equity nirvana cycle at the moment and could imply and even nastier doom loop cycle when the cycles flip. We shall see.

INTERNALS


Internals on the close watching those readings track to those exact confirmation bias spots:

TRIN:

Takeaway: Closed the day quite bearish (3/4).


ADVANCERS/DECLINERS:

Takeaway: 50/50 coin flip here.


NYSE ADVANCERS/DECLINERS:

Takeaway: Heading right into the moment of truth early this week.


CUMULATIVE VOLUME:

Takeaway: Same story as NYSE AD - heading right into the moment of truth here on Tues/Wed.


ABSOLUTE BREADTH:


Takeaway: MONITOR. This is pretty serious Weekly candle. This is looking for a weekly momentum x-over next week. If we get that, this will usher in a whole new period of broad market vol. Bulls would have to send this back into the wedge (not just let it back test it)...we shall see what happens.


200-DAY MOVING AVERAGES:

Takeaway: Reading is burnt out to max on momentum and we are just hitting the major resistance areas. This could still climb up into that resistance, but will need something more to push it up and throught the resistance.


MCCLELLAN OSCILLATOR:

Takeaway: Range bound now between buy and sell is the story. Momentum is on the higher end of the range but can continue to extend.


INTERNALS Summary:


The setups in AB and NYSE AD/Cumulative Volume are quite pronounced. This is a pretty substantive inflection point. This week is pretty important. Let's see how it goes.

INDEXES:


SPY: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bullish

Internals: Neutral

Block Volume: Negative

GEX: Positive

Put/Call Ratio: EXCESSIVE IS AN UNDERSTATEMENT

MR. GREEDY making an appearance above in P/C ratio...

SPY Summary: We had our first appearance by Mr. Greedy this week in the SPY P/C ratio. Total call orgy is taking place in SPY and QQQ and there has, thus far, been zero consequence. I shared several Options (OI and Executed charts) on my twitter thread on Friday. They are interesting. There is no OI or executed puts past 306 really...this could be interpreted as 'green shoots' meaning there is no resistance ahead OR this could be interpreted as the 'end of the road' for this counter trend rally we have been experiencing...which one? Time will tell. Inversely call buying and open interest is skewed all the way up to the 400 level now with deep OTM calls being bought (that is Mr. Greedy for you buying deep OTM options...shaking my head).


The 300 level is definitely going to be tested this week as maybe 306. I will update my twitter feed during the week with the views of the 300/306 level as they are important and the action of what happens at those levels will be fluid as it unfolds.

QQQ: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Bullish

Internals: Positive

Block Volume: Negative

GEX: Neutral

Put/Call Ratio: Excessive Call Buying Range

QQQ/FAANG Buyers last 45+ days be feelin' like this:


QQQ Summary: The QQQ is printing money for novice traders and creating some very dangerous situations yet to play out. For instance, there was an rookie QQQ options trader ripping Helene Miesler this weekend on twitter. The thread is too much to post but he basically was telling her that she is an idiot and should stop posting her hand drawn charts b/c she is all wrong and doesn't understand 'the new market' as he coined it. The backstory is that he was let go from his job in March (COVID related) and is new to trading and his accounts are up 40+% since and he is now a 'tech-stock' focused trend trader. Her views as 'bearish/cautious' are stupid and she should stop writing because bears are dead because he understands the Fed and liquidity. True story... and what is interesting is that I would not even calssify Helene as a 'bear'..


Helene is a legend and due some basic courtesy and respect. Her hand drawn charts are awesome (albeit we do our own thing here with quant stuff so I am not always in line with her thoughts). I bookmarked the thread and will revisit it in the future. For now - he is that dude in the giphy. I have a special saved giphy for him we will use in the future.


Any type of analysis for the QQQ when this type of behavior is taking place can be skewed as dumb money can become dumb and dumber (pun intended). I will take the under on the % left to the upside from here and the over on the % that will open up to the downside from here...

SMH: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Bullish

Internals: Neutral/Negative

Block Volume: Negative

GEX: Negative


SMH Summary: Swapped SOXX for SMH as there is a better options volume to it and deeper readings (should have thought about that before - sorry!) but you can see that this paints a much clearer picture. This is struggling mightily to get through the orange trend line - as of right now it keeps failing. The internals are not pretty and the blocks are heavy sell side. This looks pretty tapped out, but there is the one FVG left above so maybe a little more upside this week before all the internals and selling catches up with it? Definitely a short candidate shaping up here.

DIA: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bullish

Internals: Negative

Block Volume: Neutral

GEX: Neutral

Put/Call Ratio: Neutral


DIA Summary: Dow Jones should take a stab at that bull bear pivot tomorrow/Wednesday. That is about all that is left unknown here very short term. What happens after that? MSL test would come into play. There is so much volume above the MSL it is going to be hard for this to chew through that and if it does chew through it, then it will take months.

IWM: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bullish

Internals: Neutral

Block Volume: Negative

GEX: Positive

Put/Call Ratio: Neutral/Bearish


IWM Summary: The only question here to me is does that big gap above (4% gap) get filled or not? That is all that matters in the short term. When I roll out our charts (tomorrow or Wednesday) you will see that the volume weight of the market is sitting above that gap and IWM will have a terrible time chewing through that (low probably of succeeding) so this gap fill to me is the only question left at this point. Lots of greed exhibited in this index the last few weeks. Could be painful summer/fall for this...

BANKS & HIGH YIELD CREDIT:


XLF: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bullish

Internals: Negative

Block Volume: Positive

GEX: Negative


XLF Summary: Banks are just oscillating and cannot hold strong price action more than one day. It continues to appear that no one wants them right now for any reason. Hertz filed BK over the weekend and there are just hundreds of stories of BKs in CMBS land and other dead to rights industries. Short term price action is capped (see chart) so this is a must monitor for the next month into June. What happens here is meaningful with the divergence between banks and big tech. Wide jaws on that now that is very substantive...which way does that resolve itself?

HYG: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bullish

Internals: Positive

Block Volume: Neutral

GEX: Negative

HYG Summary: This is just range bound for the time being at the top end of the range. Bankruptcites are going to start flying around this summer starting in June (saw Hertz over the weekend) and we wil find out whether this range will hold or not. But for now, just sitting in the range.

TREASURIES, $USD, and PRECIOUS METALS


TLT: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Neutral

Block Volume: Neutral

GEX: Positive

TLT Summary: Keeps confirming some upside price trend desires. GEX flipped back to positive and momentum turned up but still negative internal readings. Will monitor this week to see if they turn up.

UUP: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Neutral

Internals: Bullish

Block Volume: Heavy Positive

GEX: Positive

UUP Summary: Strong moves on Friday off the lows. Held consolidation over the weekend. This is our #1 active monitor for the week and next month. Very close to a major breakout that could have ramifications across many asset classes. I won't be a broken record on this and save you the time so you can keep reading. We are bullish $USD.

GLD: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Positive

GLD Summary: Could keep moving higher in gorpy action here or it may be done now. I will show you why I think $140 is in the cards tomorrow as we roll out of charting platform and introduce the volume profiles and VPOC.

SLV: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Bearish

Internals: Positive

Block Volume: Positive

GEX: Positive

SLV Summary: Could still make one more attempt at the 17.31 level because of the amount of buy side blocks in play. Worth monitoring this week in more detail as this 17.31 level is quite important to the bigger picture in PMs.

GDX: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Negative

Block Volume: Neutral

GEX: Positive

GDX Summary: Make or break week here coming up for miners. GEX has come off the strong levels and could flip this week. If it does, then you will start to see FVGs left behind getting filled. I am looking at this for our prop long term allocations IF we see the lower end FVGs getting hit this summer (or new lows). We will not chase this higher.

FB: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Positive

Block Volume: Positive

GEX: Positive

FB Summary: Parabola. Can go even higher. Not giving any targets, but this is replaying the NFLX and AMZN price action. Almost like greater fools are just rotating the weightings between the current and just recent momo trades within the top 10 nasdaq holdings now...somewhat surreal what is going on with FAANGMs here.

AAPL: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Neutral

AAPL Summary: New ATH coming? Maybe. But this is looking pretty full of shit up here at these prices. Blocks are all sell side and momentum is tapped out. Any buying up here is greater fool imo. $250 level seems like Fair Value to these eyes.

AMZN: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Neutral

AMZN Summary: This hit the upside T1 target (the magic 2500 level) and then backed off. GEX is looking pretty negative and momentum is turned down. The upside is minimal and the downside is substantive. But as I have said before...don't fade Bezos unles Bezos fades Bezos...

NFLX: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Positive

Block Volume: Neutral

GEX: Negative

NFLX Summary: Price failed at the T1 target. Was that a meaningful target completion or will it get retested. Hard to know until after the fact. New is the GEX is negative (slightly) and the momentum is markedly negative. Would monitor this during the week to determine if this is a trend change or this gets bought.

GOOGL: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Positive

Block Volume: Neutral

GEX: Neutral

GOOGL Summary: Could continue to the upside this week. The purple upside FVG is lingering out there. Nothing substantively bearish about this at the moment and bullish story has already played out. Net neutral in my opinion until it breaks up or down.

The End.


Until next week may the odds forever be in your favor...in the Hunger Markets.


BUT until then...a note to keep in your back pocket from the ABSOLUTE best comedy show of all time (The Chappelle Show) the infamous and largely misunderstood Rick James tell us what time it is in the markets (just replace "Cocaine" w/ "Call Buying" which really=Dopamine Release [@EpsilonTheory thanks for that btw]):





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