6/11/20 MARKET CLOSE Update - Consolidated Analysis

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

PRIMARY MARKET REGIME CURRENTLY IN PLACE:


DOOM LOOP

What this means: Institutions/Dealers are now buying the dip AND selling the rip until they aren't. Don't fight them until it breaks regime. This will create YUUGE intra-day swings and expanded/exacerbated volatility.


When could this flip regimes: $3195 SPX is the primary (larger GEX flip as of Thursday close at 415PM) and $3110 is the warning shot.


In honor of Portnoy (who was playing 'Highway to the Danger Zone' at his market open live feed this morning) here is the actual scene from the market opening this AM:


"This is VIX requesting permission for tower fly-by"...


"Negative VIX the liquidity is full"


...the coffee drinker is the call buying small lots guy and let's say that his day went downhill from there.


TODAY'S ACTION:


VIX and VXX throwing that Apocalypse vibe out today and smelling like Napalm in the morning... VIX +49.08% and VXX +33.63%

  • UUP has been bid since FOMC low yesterday...is low in? +1.00%

  • TLT seems to be in new trend (early though) closed +1.89%

  • SPY got mauled -5.74%

  • QQQ no new ATH today but better than the rest -4.95%

  • IWM let's just say that escalated quickly -7.55%

  • SMH immediate connection to the orange line -6.14%

  • FAANGs aallllll REDDDDDDD

  • HYG -2.57% hitting the big wall and getting clubbed

  • XLF got just housed and closed -8.18%


J-ROME AND THE MANUCH AT THE CLOSE ZOOM CAM: in the spirit of Portnoy and channeling our inner Top Gun J-Rome and Manuch asked me if they could take their end of day meeting to the skies and get in their L(iquidity)-16 to try to figure out how to shoot down those pesky VIX migs...they still are dodging missiles here after hours...its a real dog fight in the MMT skies today...

Ok so where are we today based on the weekend game plan:

  • COVID19 cases - INCREASING

  • US/China relations - NO NEWS TODAY

  • $USD - HIGHER

  • Bonds (TLT) - UP

  • VOLS (especially 60+ days out) - SCORCHED EARTH

  • GEX levels on a pull back/correction (IF one materializes) - FLIPPED NEGATIVE

Recipe for disaster has played out. I have said it over and over and over again that gorpy garbage small lot action goosed by futures overnight ramp and camp bull shit movements leads to large lot selling instances that BLOW OUT everything in a couple sessions. It's just physics.


Today we blew out 10 DAYS of price appreciation in 1 session in SPY. We took out more than that in XLF and IWM and DIA. Small lots are no match for large lots and the distribution and volatility was evident. We are now officially in a Doom Loop regime.


Took a singular 24 hour session to make the switch. Stable markets my ass. This is only going to get more nuts in both directions. Hopefully you all are believers now and starting to spot this stuff on your own. Having said that, being in a Doom Loop doesn't mean we just go straight down. It means that we should have the following traits:


  • Negative Gamma (GEX) which forces dealers to buy into strength and sell into weakness to hedge their positions (makes volatility worse)

  • Have heightened short and long term volatility

  • Have a strong long bond (20 yr)

  • Have a strong $USD

  • Experience extreme range action intra-day moving from down big to up big to down big and vice versa

  • Experience massive short squeezes and massive bouts of sell side panic

We can check most of these boxes at this point. So strap in. Having said that, I think the next move is probably up on a squeeze bounce...but today was abnormal in the sense that it felt realllly panicky. There was NO BOUNCE intra-day which is a little odd as there should be some bounce at some point. IF we don't get a bounce tomorrow then something even more f'd up is in motion.


Let's see what happens.

SECTORS BROAD MARKET:

Sector Takeways: Looks like a crime scene


SECTORS BONDS/GOV/SOME COUNTRIES:

Sector Takeways: Strong $USD coming as countries bleeding and bonds in favor?

SECTORS SOME MORE COUNTRIES & FEW CURRENCIES:

Sector Takeways: All countries are red...see comment above. Decent $USD action but nothing raging yet.

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: Bullish

Block Volume: Systematic Buying

GEX: Negative

Options Visualization: Max Pain


VIX/VXX Summary:


VXX with the Mega-Stunner

VIX going full on Apocalypse Now:

Welp, that escalate quickly. Indexes better rally overnight and/or tomorrow or VIX is going to get even for years of suppression this time around. I believe with Weekly/3D/2D/Daily resets in place and at much higher levels than in February that this can get gnarly if it gets outta control.


This is what happens when short vol strategies have to cover all in a single session is what you saw today...insane action to cover shorts and it just nukes vol higher and couple that with scared call buyers flipping to puts (they just read the reddit article on it at about 1030AM this morning btw) you have a recipe for:


Napalm.


There was an major break away gap left behind in VIX/VXX this AM. Will that get filled or not? That is one of my only real major questions now. I would like to see it get filled but we may not be so lucky.

INTERNALS


TRIN:

Takeaway: DIA is dead...IWM and QQQ could rally tomorrow but SPY looks terrible even at close...ouch


ADVANCERS/DECLINERS:

Takeaway: Buy side be like...

200 DMA:

Takeaway: This is BADDDDDDD here folks...that is 1 months worth of progress in 2 sessions ANNIHILATED. BEARISH.


NYSE ADVANCERS/DECLINERS:

Takeaway: Approaching the "oh shit please save me" area.


CUMULATIVE VOLUME:

Takeaway: If it looks like a blow off and smells like a blow off and quacks like a blow off...


THE DJT: Trump in the Oval turning the dial that Powell and Mnuchin gave him as a present (its a fake dial they bought at swap meet) to goose his 409k's..."

Takeaway: He is awful quiet all the sudden...


ABSOLUTE BREADTH:

Takeaway: Was I wrong the whole time and this has been right the whole time signaling EXTREME VOL? I am willing to admit that...


MCCLELLAN OSCILLATOR:

Takeaway: Bounce soon? Bulls hope.


INTERNALS Summary: Bears at the close today looking at the above internals:

Bulls at the edge of glory on Monday to be totally on the ropes by Thursday. Market's not functioning properly J-Rome...

INDEXES:


SPY: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Bearish

Internals: Bullish

Block Volume: Negative

GEX: Negative

Put/Call Ratio: Put Bias

Options Visualization: Max Pain

Volatility Metrics: SPY VOL Term Structure


SPY Summary: Bull bear pivot up next. GEX is flipped. I am looking for a bounce tomorrow and/or Monday as this was serious selling and should beget a bounce. Love to see a retest of the 315-318 level again but that is just me being selfish.

QQQ: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Negative

Put/Call Ratio: Neutral

Options Visualization: Max Pain

Volatility Metrics: QQQ Volatility Term Structure

QQQ Summary: QQQ volatility was not lying. Everything is elevated but this is still holding up stronger than others...can it make one more high or is that breakaway gap above going to be the actual moment of truth that ended this all? tbd...

SMH: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Bearish

Internals: Bullish

Block Volume: Neutral

GEX: Neutral

Options Visualization: Max Pain

SMH Summary: Looked soft and was soft and was a good short. I closed it at the orange line. Bounce should happen and we can take it from there...emphasis on SHOULD happen...doesn't have to.

DIA: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Negative

Put/Call Ratio: Put Bias

Options Visualization: Max Pain

Volatility Metrics: DIA Volatility Term Structure


DIA Summary: A message from Omaha was received at 11AM this morning:

Dow Jones looking DOA. Better get a stick save or this is in serious trouble. VOL term structure is heightened, B/B pivot blown out ... last hope is the trend line save. Bad news everywhere but Portnoy is not going to give up on the Airlines until they are at zero so they have that going for them but he did throw shade on Buffett early this week pretty hard so ya know how small lots and large lots work....

IWM: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Bearish

Internals: Bullish

Block Volume: Negative

GEX: Negative

Put/Call Ratio: Neutral

Options Visualization: Max Pain

Volatility Metrics: IWM Volatility Term Structure

IWM Summary:

Not much else to say here for IWM. Sitting on the ultimate support - it should hold but that dumpster is a cooking right now so it could get hotter.

BANKS & HIGH YIELD CREDIT:


XLF: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Positive

Options Visualization: Max Pain

XLF Summary: Insiders were done selling their shares at the tops of America's finest banking institutions as it is now apparent that the American Psychos were ready to dump to the muppets.

I closed this short again at the lows today...thanks Patrick. Please bounce it again so we can go to the ATM and short it again.

HYG: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Negative

Options Visualization: Max Pain

HYG Summary: Quick snapshot of all those 60/40 accounts today...I warned you that this is 10+ year resistance...

TREASURIES, $USD, and PRECIOUS METALS


TLT: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Neutral

Block Volume: Neutral

GEX: Positive

Options Visualization: Max Pain

TLT Summary: We are green here in an uptrend. I sold what I bought on the lows but I am hoping I don't regret that. Put my back the truck up spot on the chart. Think this is early on in new longer term uptrend.

UUP: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Bullish

Internals: Negative

Block Volume: Negative

GEX: Positive

Options Visualization: Max Pain

UUP Summary:

Channeling its inner Neo...telling all the haters to bring it after getting hammered session after session for a while... $USD looks primed to get moving now. Next 2-3 days are key to taking off or revisiting the lows once more on positive divergence. I am thinking the low is in, but it could revisit one more time so keep that in mind if you are up (use stops until it releases then move them up).

GLD: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Bearish

Block Volume: Negative

GEX: Positive

Options Visualization: Max Pain

GLD Summary: This is solid into today's massacre. Let's see how the next couple days roll.

SLV: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Positive

Block Volume: Positive

GEX: Positive

Options Visualization: Max Pain

SLV Summary: Max pain $15.00 next week...just keep that in mind again here as this looks to be in trouble if it breaks the area we are currently sitting.

GDX: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Negative

Block Volume: Negative

GEX: Positive

Options Visualization: Max Pain

GDX Summary: Spiked and crapped post FOMC. Deeper correction could start to materialize...keep that in mind.

THE END

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