5/6/20 MARKET CLOSE Update - Consolidated Analysis

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

QUICK SUMMARY:


Watch the USD:


  • Volatility down big early again (-4.25% at one point) intra-day but bounced hard late session again - VIX +1.52% and VXX +2.08%

  • UUP strength continued today and now all components of the readings we track show a potential explosive bullish setup here potentially forthcoming and it was +0.52% on the day

  • TLT was down as expected but bounced right off support...pull back seems to be getting a little more umph to it vs. just leaking lower and closed -1.59% but about 1% up off LOD.

  • IWM down -1.22% after opening flat and then just fading all day.

  • SPY was flat at the open and faded all day finishing -1.22% for the day - close was really ugly again.

  • Oil (USO) pulled back today - 3.11% on the close

  • Semiconductors up again but ran right into same area where resistance was found yesterday and dropped hard again (high to low over 1.25% drop) but closed positive +0.96%

  • Tech was strong again but yet again the MSL was resistance - finished up +0.47% on the day but was up much more before another ugly close.

  • HYG we back in the vomit position in the stall down at the close -0.57%.

  • XLF was the biggest loser today and is hanging onto the last support and closed down -2.29%.

  • DIA looked good early - looked bad late - same as day before but close was much worse today and finished the day -0.92%.

  • FAANGs all green again except for GOOG (traded places with NFLX today).

  • Internals were puking everywhere today.

  • Money Flow, Volume Velocity, and Blocks all went more negative today across the board.

  • Absolute Breadth spike again today - this has been a pre-cursor to broad market VOLs so we need to take notice.


USD is looking really froggy again but this time even more so than 2 weeks ago. The VIX bounced again. VXX bounced again. Both closed green but still not moving hard. Absolute Breadth (our broad market VOLs thermometer) spiked today and is approaching volatility reading again. Internals puked up everything today including Cum Vol, AD, NYSE AD, TRIN was bad, etc. etc. XLF look like they are about to fall off the cliff and so does DIA. Treasuries all duration and high yield all duration (look at sectors below) look sickly.


BUT


We have us some FAANGMs and Semiconductors so all is well in the indexes at the moment...or is it?


We now have one of the thinnest leadership readings in the indexes of all time. It is very evident and clear now based on the internals and is honestly really clear for anyone with a pulse and two eyes to see, yet it hasn't mattered to price the last two weeks. Just back and forth gap to gap to gap to gap to gap...you get the point. The reason is the cap weighting for the FAANGMs in the primary indexes of is up to 47%+ in QQQ. Just shy of HALF of one of the largest subscribed ETFs in the world is concentrated in just 6 stocks. What could possibly go wrong?


Now we have the following in place:


  1. A major portion of the market even further concentrated in SPY/QQQ than 2 months ago (hard to even believe that could happen after March but fuck it...YOLO!)

  2. Volatility basing

  3. Absolute Breadth basing (with a volatility bent)

  4. Internals puking

  5. Money Flow, Volume Velocity, and Blocks all pointing negative

  6. The USD setup to be very bullish

  7. TLT looks to be looking for an intermediate term bottom

  8. Banks on the edge of the cliff on the charts

  9. Industrials and Transports on the edge of the cliff on the charts


Quite a serious situation materializing that we MAY now have on our hands...one of those where an 'accident' or 'nobody saw this coming' CNBC specials comes up in the next couple weeks/month...


Not saying it WILL HAPPEN just saying it CAN/COULD HAPPEN with the setup that is brewing.


Round 1 was liquidity (think Bear Sterns) and the 'all is well comments' have followed in every way imaginable.


Round 2 will be the defaults (think AIG and Lehman moments) but this time we have already pumped close to $10 trillion into the system on the Round 1 problems...so what happens if we start another round of the doom loop (broad market volatility leads to concentrated vol explosion leads to negative gamma structures which leads to exacerbated volatility which leads more broad market vol...)?


Hard to know anything for sure so we will have to see if this materializes or not but don't get caught flat footed if we start the default cycle soon. At times like these it is important to remember that patience is a virtue and that ultimately Amat Victoria Curam...especially when it comes to trading what can be potentially major turning points in the market.


SECTORS:

Sector Takeways: This flipped today. Started off materially green and closed materially red. Really on three winners which are the three horsemen of the Fedpocalypse: Tech, Semis, and Bioslime.

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: Early in the day VIX and VXX looked like they were getting hunted again and they turned and bounced. Every time there was a spike down, there was accumulation and subsequent bounce. Last 30 minutes of the day - VOLs took off. Will this carry over into overnight or tomorrow? Who knows. But the accumulation into the dips was notable on every reading and worth monitoring. Still don't have a full setup for 3/3 reading internally (blocks, money flows and velocity, and momentum) so we have to remain patient and wait for now.

INTERNALS


TRIN:

Takeaway: 3 bulls (kind of) and 1 bear. Only positive was this reading at the close.


ADVANCERS/DECLINERS:

Takeaway: 3 bears and 1 bulls. Bears are really bearish and you can see that too on NYSE AD.


NYSE ADVANCERS/DECLINERS:

Takeaway: Ugly reading today for NYSE. Solidly under bull bear pivot and momentum in bearish trend firmly. Looks pretty drab here.


CUMULATIVE VOLUME:

Takeaway: Same as NYSE AD - momentum in bearish trend, solidly rejected and no support for a little bit. Sell side volume was everywhere today except in Mega-cap FAANGMs.


ABSOLUTE BREADTH:

Takeaway: MONITOR. Spiked reading today - up just shy of the volatility region again. Momentum still in the bearish reading from the x-over yesterday. We will have to see what tomorrow brings.


MCCLELLAN OSCILLATOR:

Takeaway: Up in the AM, puking in the PM. Momentum could bottom out here OR it could embed down. No way to know so we will have to review again tomorrow.


INTERNALS Summary: The internals look really bad for Cum Vol, NYSE AD, ETF AD, and then you have the spike in AB. Pros are an ok closing TRIN read and maybe a McOs bounce soon? Overall looking pretty nauseous.

INDEXES:


SPY: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Negative

Put/Call Ratio: Neutral/Bearish


SPY Summary: This was flat in the AM and just leaked lower all day. Looked like it was trying to so something in the PM session and was flushed into the close for second day in a row. The GEX is negative, P/C ratio is neutral, the momentum is still negative (tried to turn up today but close hurt that) and the money flow, velocity, and blocks all more negative than Tuesday. But with FAANGMs still up, these are not effected price yet.

QQQ: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Negative

Put/Call Ratio: Neutral


QQQ Summary: FAANGMs are just keeping this at a higher level. GEX flips right lower. Blocks are getting more negative but momentum looks neutral/bullish for the moment. MSL keeps acting like resistance. The longer this goes without at least a correction...the worse it is likely to be when it breaks down. But until then, who knows.

SOXX: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Negative


SOXX Summary: MONITOR. This was really strong early today and faded quite a bit into the close. Still in the higher end of the price range and carrying the market with QQQ and SPY. But MSL is bearish still, resistance overhead, momentum is bearish trend, block volume negative. But internals still above zero. We will keep monitoring daily.

DIA: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Negative

Put/Call Ratio: Neutral/Bullish (or about to bust)


DIA Summary: Dow Jones looks really week and hanging on a cliff. Momentum is bearish, GEX is negative, and internals about to cross the zero line. Blocks are steady negative sell side now, but P/C looks like it either will break here or maybe give a little buy side bounce attempt once more? No way to know ultra short term.

IWM: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Negative

Put/Call Ratio: Neutral/Bearish


IWM Summary: This is looking weaker than the others now. It doesn't have the tech leadership and it is pretty obvious in the price action...nothing to carry it past the weak bounces and make higher highs each day. Internals are dropping harder now, blocks are consistently sell side, momentum is still negative, and P/C is not showing a short term bounce possibility. But it is at support area for now so we will take it day to day.

BANKS & HIGH YIELD CREDIT:


XLF: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Negative

Block Volume: Positive

GEX: Negative


XLF Summary: Cliffhanger here for banks. 4% HOD to LOD move today (pretty solid selling there) and GEX negative imbalance hanging over it now like back in March. Internals about to cross down through the zero line but buyers still stepping in on the block side. We will have to keep monitoring this to see if it eventually breaks down hard at some point or if this is going to try to bounce again - not seeing that here and now but have to keep our mind open.

HYG: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: HEAVY Negative


HYG Summary: Nothing notable here in HYG other than it is now hugging the stone pony and looking like it could puke again. Will it? No way to know...but the setup is there with everything negative and velocity and money flow approaching the zero line. Paging J...

TREASURIES, $USD, and PRECIOUS METALS


TLT: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Negative

Block Volume: Negative

GEX: Negative


TLT Summary: Heavy sell volume today on TLT. Bounced back to close at the support line. Momentum getting towards the lower end of the range for maybe a local bottom formation in the coming days. First negative GEX in some time on this but there appears to be some support at the 158-160 level. We will take it level by level the next few days and see how it goes.

UUP: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Bullish

Block Volume: Heavy Positive

GEX: Positive


UUP Summary: Not much to say here. Approaching the resistance line for 3rd time and this time with more impressive internals than two other attempts to break out. Will it this time? No way to know...but it looks pretty angry and fueled up and there was massive accumulation in this the last two weeks...we are about to find out either way.

GLD: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Positive


GLD Summary: This was a very weak showing for GLD today. Now under the resistance area and momentum firmly bearish with first negative blocks in some time. Also showing some red gamma strikes below current price down to 149 level. Think it has a target with that sooner than later.

SLV: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Negative

Block Volume: Neutral

GEX: Positive


SLV Summary: Literally no real material change for the 22nd trading session in a row. 14.00 is SLV fair value for now until it isn't. This type of long term consolidation will break hard one way when it does. Your guess is good as mine here. Could go either way, but hard to see it rallying when the PM sector looks primed to pull back. Crazier things have happened though.

GDX: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Neutral

Internals: Positive

Block Volume: Negative

GEX: Positive


GDX Summary: This could be the beginning of a correction for the GDX. Having said that, you have to have multiple days follow through to the downside in order to have a correction which has not happened for couple months now. So we will have to see if Tuesday was the top over the next few days. We should know by the end of the week this week more than likely.

THE END.


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