5/29/20 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:


Bulls into the Close on Friday and overall in May just killing it after reading that entire blackjack manual in March/April while in quaratine:

Every Bear into the Close on Friday and overall in April/May trying to figure out what the f&%$ just happened...every day for a 2 months:


OTF programs for month end buying were triggered at 245PM and just ripped shorts faces off once again. Truly a sight to see the programs run with such disregard. Vols were crushed into the close and the tape was painted with a fresh coat of Sherwin Williams high gloss f&%$ you:


  • Volatility took the wrong turn in the Hunger games for the day and got smoked in to the close w/ VIX -3.78% and VXX -3.92%

  • UUP was blasted out the gate again on the run program sell but almost closed green -0.15%

  • TLT continues to set a solid base - closed +0.71%

  • SPY finished +0.45% and pinned the $306 level for the monthly close

  • QQQ looking relentless and invincible closing +1.47%

  • IWM was the weakest of the indexes and closed -0.57%

  • SMH was bull dozing everything into the close +2.00%

  • FAANGs mixed with FB and AAPL both red on the day

  • HYG +0.40% on the day and still range bound

  • XLF -1.14% on the day and looking weak again


At this point I am pretty sure that the FED doesn't give a f&%$ at all and that means we are near some sort of end game because in game theory when you start to make irrational, swift, and all-in moves, you are generally losing your position and acting emotionally/desperately. Powell did another interview on Friday on live TV in the AM to try to provide yet another floor for the market and basically said he knows they crossed the line this time and are breaking their own established rules but the moral hazard is basically a 'juice worth the squeeze' situation and they will figure it all out later because the 'American Economy' needs them to do what they are doing. John P. Hussman (really good economist and follow if you don't) had this to say later in the day:


This is being written here on Saturday night. There are mass protests in over 50+ major US cities and they are burning them to the ground and looting everything at the highest end stores. The violence in front of the White House was something I think is a big deal as well. I am reminded of a book that sits on my shelf 'Things Fall Apart'. I keep it there to remind me that exactly.


The problem is the real burning and looting has already been done. See the image above - the FED buying ETFs full of absolute bankrupt trash to bail out their friends/associates may have been the point of no return and to us was the real looting. We have been saying that internally for past 30 days that FED buying high yield so their friends portfolios would rebound was egregious and completely over the line. I say that b/c most in the 60/40 environment were in deep shit 75 days ago. But shouldn't they have been been responsible for the exposure that they had and had to pay the consequences like everyone else in life? The FED disagreed and broke the laws, rules, and regs they set in place themselves to try to save their friends/associates rather than letting consequences run their course. This isn't even new as it has been happening since 2018 XIV implosion.


I would argue that one shouldn't continue to think that this will just keep shaking out the way it has for the last 60 days because of the FED. Can the market go higher - yes, sure it can as it always can for any reason. Is the market now on thin ice? Wrong question imo. I think the entire economic ecosystem is on thin ice now. I don't say that lightly or to draw attention. That is a fact in my opinion. You are seeing two generations (Millennial and Z and really even some Xs) that have NO HOPE for the future - they are rioting. This isn't simply about race (was the trigger and albeit very important) this is about financial and prospects of the future that are hopeless. You cannot underestimate hopelessness and the gravity of this situation now. If you remain long, watch the levels with stops to make sure that you capture your gains if it breaks down (well traded lately if you did so don't give it back) and be cognizant of the regime shift to a doom loop. If you are short, be cognizant of the irrationality of what we are dealing with in the sample from Hussman above - they don't give a shit now so expect ANYTHING and EVERYTHING from them as we go forward. The next 2 months will be make or break for the country for a long time. Know your risk ranges and watch the levels. Here are some bullet points for the week:


  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 and carried forward this week and momentum has turned up on the weekly

  3. Advance Decline and Cumulative Volume both failed this week to breach their respective market structure levels, but don't have a confirmation of breakdown quite yet

  4. Equity P/C ratios for SPY/IWM/QQQ all made it to even more absurd drooler level this week (supremely excessive call buying that is found only in bubbles) and then started to roll back

  5. The $USD looks to be trying to form a significant bottom

  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 - so either they become parabolic here or they are going to fail.

  8. Banks cannot sustain more than a squeeze induced bounce. There are no new buyers there and this week proved it. Nor can banks breach the $24 level.


Will we go higher or regime flip and start a fresh new doom loop? The FED will do what they can to make sure the markets only go up 'cough...function normally' as Powell has stated. Will it work? Time will tell. All the usual details and more are below in each section including the FAANGs which appear in the weekend edition.


Update on our new Prototype App beta launch in June:


We are rolling out lots of new stuff this next 10 days so stay tuned to twitter and the blog as we are getting closer to the beta launch. If you have not signed up already, go to the bottom of the blog and put in your email. We are going to perform 3 rounds of beta testing. The first 2 rounds are already full and there is still a little bit of room for round 3. Round 1 beta will start in the second week of June so watch your emails for instructions to get your logins etc. as those folks were early sign ups. The other rounds will be last two weeks of June, so I will announce that as we get closer. We are really ecstatic to share the app with everyone and look forward to your feedback. I actually snuck in a preview of our charting app below in a couple spots and there will be lots more rolled out through the blog in the next 10 days.


SECTORS/BONDS/COUNTRIES/CURRENCY:

SECTORS Takeways: Predominantly green close for sectors but a little bit of mixed red.

BONDS AND SOME COUNTRIES takeaways: All green (High Yield, Corporate, Muni, Government) across the board and some countries red.

THOSE OTHER PARTS OF THE WORLD takeaways: Mixed for the most part.

VOLATILITY:


Bulls just giving it to the anyone that bought the VIX (or any related derivative/options products) in May as that theta has just burned baby burn:

VIX: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Neutral

Internals: N/A

Block Volume: N/A


VXX: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Neutral

Internals: Neutral/Positive

Block Volume: Positive

GEX: Negative


VIX/VXX Summary: Total short vol targeting raid into the close on Friday. VOLs were up as much as 3% intra-day and looked ready to explode and then the moment that Trump announced that he wasn't going to do anything to China (and he didn't really...just some blustery words) the vol targeting shaved it down -7.5% in 75 min to close deep red. Truly a site to see these moments happen at the most exact timing. This vol takedown on Friday was also instrumental in the +2% in ES futures move during the same period. This is why you have a pretty mixed sectors board at close because everything else was not bought like the VIX/SPX relationship inversion was. All that being said, VIX closed the week pretty much where it started and is still +10% over 25. So all this and we are still at a historically elevated VIX level and the term structure is still elevated. Something will have to give in this environment at some point here shortly.

INTERNALS


TRIN:

Takeaway: 2 bulls 2 bears.


ADVANCERS/DECLINERS:

Takeaway: Deteriorating from the higher readings early in the week.


NYSE ADVANCERS/DECLINERS:

Takeaway: Did not bounce back today even on the green price action.


CUMULATIVE VOLUME:

Takeaway: Also did not bounce back today on continued green price action.


ABSOLUTE BREADTH:


Takeaway: MONITOR. Weekly follow through turned momentum up. This is now out of the bag. By rule, equity volatility should be ushered in here. Having said that, nothing is working by 'rule' at this point as we are seeing massive interventions into the markets. Will the interventions continue to stifle the real market action (which is a reading like this implies serious volatility) or will it let go? $7 trillion question right?


200-DAY MOVING AVERAGES:

Takeaway: Failed at the gap fill and the momentum has crossed over to bearish. This is bearish making a substantial lower high here. In fact, I view this as mega-bearish - put this in lower lows coming reading.


MCCLELLAN OSCILLATOR:

Takeaway: Another reading that did not buy today's green readings and momentum is turned back over and is now bearish.


INTERNALS Summary:


Internals are in disagreement with the positive price action on Friday. The price action actually reeks of a stop run on shorts one more time combined with month end markups for statements and OTF mandatory allocations for Pensions/ETFs/Mutual Funds. Readings such as the ABI and 200DMA are extremely volatile and bearish where the Advance Decline and Cumulative Volume could be really bearish but we would need to see this week's action to confirm/decline that. Should all become very bearish - we will get at the minimum a pull back and a maximum of a regime flip to the doom loop cycle. Watch these intently during the week.

INDEXES:


SPY: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Bullish

Internals: Neutral

Block Volume: Negative

GEX: Positive

Put/Call Ratio: Neutral

We are officially past Mr. Greedy now...Bulls channeling their inner Neo and just stopping bullets and shit in thin air and jumping over buildings:


SPY Summary: We are at the 306 level. The only other level on the board before new highs is 312. The index was looking very heavy on Friday and then 245PM Trump dropped the nothing burger on China and we had a serious episode of short vol targeting and ES mini futures buying that triggered a bunch of OTF purchasing right into the window of month end markups. All gambit buy side intervention. This is why the internal readings are inverted to the price action and don't confirm it. I am not sure that we get to 312. But their is nothing that says we can't but the entire system feels extremely volatile at the moment so eyes up for return of volatility and regime flip.

Bull case, if we don't flip regimes somewhere up here, and we get to and make new ATH this can go a lot higher even in the midst of the chaos b/c the equity nirvana cycles continue until they don't. Just keep that in mind as well.

QQQ: Chart with Detailed Levels

Sample of our new Charting Module in the App (still in devs this week with lots more to add):

Market Structure: Neutral

Momentum: Bullish

Internals: Positive

Block Volume: Neutral

GEX: Positive

Put/Call Ratio: Neutral

QQQ/FAANG Buyers last 50+ days now be feelin' like Heisenberg and saying to Gus (bears):

QQQ Summary: The FAANGs were mixed Friday but there was just massive end of day buying in QQQ/SPY/SMH on the China press conference pants-wetting. This really appears to be month end OTF oriented, but were are at pretty significant inflection level. No edge here from me. Short side seems like 215, then 204, then ultimately 183 is the major level I see coming up IF a correction/pull back materializes. Upside for the bulls is new ATH and then a much large push higher.


Pretty key pivot here now.

SMH: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Neutral

Internals: Neutral/Negative

Block Volume: Negative

GEX: Negative

SMH Summary: Again did not take the orange line out and we are heading to where the orange line resistance would negate a gap fill. This looks pretty heavy to me still and we shorted Friday at close with a stop at the ATH.

DIA: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bullish

Internals: Neutral

Block Volume: Neutral

GEX: Positive

Put/Call Ratio: Neutral


DIA Summary: Dow Jones flying high on those COVID's over grand re-opening narrative so now we are relaunching flights...COVID pilots be like:

Dow Jones is materially over the trend line after back-testing the trend line. There is a bullish case here, especially if the trend line below holds this coming week and we take out the MSL. There is also a highly bearish case that this was all reflexive and will fail here in this area and start heading lower. Know your parameters if you are longing this (stop at the trend line underneath) and if you are short watch the MSL.

IWM: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bullish

Internals: Neutral

Block Volume: Negative

GEX: Positive

Put/Call Ratio: Neutral/Bearish


IWM Summary: Small Caps starting to look a little tired:

Looking tired after the squeeze from the last two weeks. There is massive overhead volume point of control on IWM at 145-150. This will be very hard to chew through at this point. Bulls would want to consolidate here and pull back constructively and hold. Bearish case is renewed doom loop. Pretty binary...

BANKS & HIGH YIELD CREDIT:


XLF: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bullish

Internals: Negative

Block Volume: Positive

GEX: Negative


XLF Summary: Bank CEOs yelling at each other trying to get the banks up and over $24...

Banks did not follow through on Friday after dropping the ball on Thursday. Now the deck is stacking up against them. Momentum burnt out, internals collapsing, and the GEX can easily slide negative again under $23. Watch this early in the week for clues.

HYG: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bullish

Internals: Positive

Block Volume: Neutral

GEX: Negative

HYG Summary: Failed at the bull bear pivot and the GEX green trees window it was migrating inside but still just sitting in the box for now. RE my note from Hussman above, this is a total embarrasing joke now for our country - total FED farce of a security. I am not sure we will even track it any further here as I also don't trade it. We will decide this week.

TREASURIES, $USD, and PRECIOUS METALS


TLT: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Neutral (trying to turn up)

Internals: Neutral (trying to turn up)

Block Volume: Positive

GEX: Negative

TLT Summary: They got some sneaky bids today...

Price bouncing off of the 161-162 level a total of 5 times here in the last 2 weeks. This looks very bullish to me here. We just need the GEX to flip but I suspect the weekend's events may produce just that.

UUP: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Neutral

Internals: Bullish

Block Volume: Heavy Positive

GEX: Positive

This is what happened the last two days in $USD land. The shorts trying to take out any longs positions said:

UUP Summary: Price bounced right off the lower FVG level and put in a hammer candle. This has been interesting last 2 days in $USD as there was a constant sell side program running in DX futures to run out all stops. I could see it in motion on our platforms. You can see in UUP that this manifested in a reset momentum (fully), an increase in velocity and money flow (bullish) and blocks ended up on the buy side - all in spite of the sell program short targeting the DX futures which is astonishing actually.


I was wondering why such a heavy assault in such a short time frame - as if someone had to act now as it was not masked in any way shape or form which is usually not what you would do here (you would typically try to mask this). The weekend's events across the country gave me my answer (as I think 'someones' knew shit was about to get out of hand). We will see what happens this week if we have seen the bottom or not.

GLD: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Neutral

Internals: Positive

Block Volume: Negative

GEX: Positive

GLD Summary: Trying to turn back up again. If it does, 169 is back in play. If it fails, then look for 155.

SLV: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Positive

Block Volume: Positive

GEX: Positive

SLV Summary: MSL flip this week. Long term bullish. Only question now is whether this is ultra-bullish i.e. rips through 17.32 now or whether it fails around there and heads lower first before much higher. Through 17.40 then 19.61 is in play and I suspect it gets there quick. Lower levels are all on the charts. There are lots of FVGs to fill below so don't get too hyped here with me flipping the MSL. Let the reaction at 17.32 guide your next moves.

GDX: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Neutral

Block Volume: Positive

GEX: Positive

GDX Summary: This makes me think that the moves in SLV and GLD could fail here to go for the real higher levels. This already is weakening. Having said that, if this turns up to and gets momentum under it yet again, that makes the bullish cash for SLV taking out 17.32. Big week ahead in PMs.

FB: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Collapsing

Block Volume: Negative

GEX: Negative

FB Summary: All of the suddent after it broke the parabola the wheels are coming off the bus. Big question is ... will there be any follow through? Levels are listed above if it does fall apart but I have my eyes on $195 level as the moment of truth.

AAPL: Chart with Detailed Levels


Market Structure: Bullish

Momentum: Bearish

Internals: Collapsing

Block Volume: Negative

GEX: Positive

AAPL Summary: Cannot get through that 320 area. Having said that here are 2 scenarios. Failure up here somewhere will open up the gap fills for the FVGs .

AMZN: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Negative

Block Volume: Neutral

GEX: Neutral

AMZN Summary: Internals are collapsing. Blocks have vanished. Momentum trying to turn back up. If it is up that price wants then 2531 is ceiling but will go much higher through that if it happens. If it is distributing here (that is what internals imply) then price will fail on the bounce and head to 2166.

NFLX: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Mixed

Block Volume: Positive

GEX: Positive

NFLX Summary: Price landed at the first level of support and is holding there. Seems to be desired level. Should that hold, back to T1 (or attempt at it). Should it fail heading to 370.

GOOGL: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Positive

Block Volume: Positive

GEX: Neutral

GOOGL Summary: The purple FVG is the last gap above and everything is pretty maxed out so if this does get sold off, watch the green FVGs for support.

The End.


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


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