6/12/20 MARKET CLOSE & WEEKEND 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: $3112 SPX is the primary (larger GEX flip as of Friday close at 415PM) and $3095 is the warning shot.


Large lots asked the small lots "what did the five fingers say to the face?" and then gave the small lots a good Rick James smack on Thursday and reset the market structure for now...we will see if they learned anything this week or come back for more next week and take the market back up to higher levels again...b/c you know what Rick James large lots think about the small lots and their couches...


TODAY'S ACTION:


VIX and VXX flushed out after the huge day on Thursday so not that abnormal... VIX -11.52% and VXX -6.97%


  • UUP chugging ahead off the lows this week +0.27%

  • TLT pulled back after two strong days of advancing -0.96%

  • SPY bounced back but just up to VWAP +1.20%

  • QQQ very little bounce +0.79%

  • IWM the best on the day but the worst on the week +2.40%

  • DIA bounced off support that it had to +1.87%

  • SMH bounced off the orange line support +1.41%

  • FAANGs mixed

  • HYG +0.99% bounced after the clubbing on Thursday

  • XLF ugly week but closed on solid attempt at upside +3.03%


ECCLES BLDG FED/TREASURY CLOSE ZOOM CAM: Things were so dicey Thursday and Friday ...that J-Rome (Ron) and The Manuch (Cowboy) grabbed Kash-Kash (Brick) and Fisher (Brian) to bring to the news channel OPEX fight for next week...they are getting ready at the close in the parking lot of the Eccles...

They are going to take on the Bears led by Chicago's own so...


Our six main things to watch from last week:

  1. COVID19 cases - OUT OF CONTROL INCREASES - 2ND WAVE STARTING...NO ARGUING IT NOW

  2. US/China relations - Rhetoric starting to heat up as are military placements

  3. $USD - starting to look bullish again

  4. Bonds (TLT) - bid this week

  5. VOLS (especially 60+ days out) - term structure is up across the board

  6. GEX levels on a pull back/correction (IF one materializes) - doom loop for now

The bulls saved it into the close on Friday. The overnight gap on Thursday night left a bunch of Fair Value Gaps (FVGs) to the upside in most major index ETFs that along with SPX and NDX will need to be at least attempted to fill this week. The only other outcome is that the gap on Wednesday night this past week was a break away gap similar to February's. I am not so sure about that but will keep an open mind on it being the case - which would mean it will not get filled and we start down again Sunday in the overnight session and just crater.


The above 6 main items to watch that we mentioned last weekend all played out in the worst case scenario for bulls bigger picture. Volatility is now wide awake, range expansion is upon us (big swings intra-day), GEX is flipped (and can swing wildly this week), Bonds are bid (risk off), and the trade that we think could be a widow-maker in the summer here, the $USD, is starting to look to have placed a long term bottom this past week. All of that is bearish. As is the huge volume down and then up on Friday. Huge volume in both directions is bearish. So the bearish case is alive and well after this past week.


The upcoming week is quadruple options expiration (Quad Witch OPEX). This is typically a very important week with wild price swings and then price pinning for Maximum Pain by options dealers. Make sure to look at the Max Pain indicators below for targets. I had mentioned on twitter on Friday that it could easily go up to 3150-3200 area and just make bears give completely up and entice call buyers to roll their positions forward or strike fresh new calls only to turn and close at where we are now or even sub 3000. That is how gnarly this week could be and I expect something like this (price targets are total conjecture).


We could even see the our proprietary regimes we track (equity nirvana vs. the doom loop) swing to each side during the week (because we are pretty close to the flip points) multiple times...so stay nimble. That would mean extreme volatility is lurking which is really confirmed below in the indicators with absolute breadth index reading. Lots of folks did real well this week monitoring the volatility levels we have been tracking and getting in on the spike on Thursday and I suspect that this could be another great week ahead too (and ultimately an incredibly volatile summer) but don't marry a side here until we get through OPEX because it could be very wild. So if 'trading' take profits and if 'investing' maybe buy some low vol stuff or maybe just stay in cash until the week passes unless we get a clear break. If I see a clear break I will state as such that the market structure levels have firmly been reset.


We are bullish liquidity here, bearish solvency. The PPP ends in two weeks and we are dead set in election cycle by July as well FED is tapering REPO right now - so liquidity is drying up and US consumer is toast. So Trump really needs to get another fiscal stimulus pushed through and being able to get another stimulus pushed through may become very hard task this late in election cycle with Democrats. As well, earnings for 2nd quarter start in few weeks and those should be just downright terrible. Bankruptcies are starting to flash hot and so are the risks of CLO/CDO defaults and cascading derivative calamities. A summer of COVID phase 2 plus a solvency crisis would be par for the course here in 2020's version of Apocalypse Now we are living in. But that is still few weeks ahead so can we go higher first, always. But the odds are really stacking up against higher for longer even if we go higher...more likely if we do go higher it will be even more blow off style (fast, furious, and then collapse even faster).


So keep in mind the scenarios ahead, watch the levels, and be a sniper this week as the risk on/risk off regime levels are too close to flip points here with OPEX week (Quad Witch at that) to pick a side and stick to it. Have a great week and all the details, GIFS, indicators, and sarcastic comments are below as usual.


RE our web/mobile app launch update: added some features so looking like couple weeks out - stay tuned as I will update the dates for release as we get into the end of the month but be rest assured, this thing will be in your hands in early July because it will be a hot summer to trade.

SECTORS BROAD MARKET:

Sector Takeways: Bounce was all but baked into the cake after Thursday's massacre and OPEX this coming week so this green is right on cue.


SECTORS BONDS/GOV/SOME COUNTRIES:

Sector Takeways: With risk on bounce, risk off bonds...like clockwork. Countries green with strong $USD is new...

SECTORS SOME MORE COUNTRIES & FEW CURRENCIES:

Sector Takeways: All countries green. $USD green and $Euro is fading now...think they both consolidate this week before big moves.

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: Positive

GEX: Positive

Options Visualization: Max Pain


VIX/VXX Summary: VIX when it realized it was Friday before OPEX and about 20% above options max pain for next week...

VIX and VXX now bullish but it did get quite a bit in front of itself on Thursday. That means we have to be patient and see what comes the first couple days this week. The big question is does the gap get filled that was left behind Wednesday with the overnight action or does it become a breakaway gap. That is the major question to me and I have no edge to that right now so I am flat. If the gap gets filled, then we prob end up back around 3150-3200 level again and assess it there...if it doesn't get filled then it's a break away gap and you can turn the lights out on the bulls here...

INTERNALS


TRIN:

Takeaway: All bulls today.


ADVANCERS/DECLINERS:

Takeaway: Bulls and bulls and bulls and bulls.


200 DMA:

Takeaway: Bounced off the support - fill the gap above?


NYSE ADVANCERS/DECLINERS:

Takeaway: Lots of resistance above now with negative bearish momentum at the moment.


CUMULATIVE VOLUME:

Takeaway: Bounced, let's see if there is any follow through...because momentum is firmly bearish now.


THE DJT: Trump when Powell said the Job's Report was bogus at the presser on Wednesday...

Takeaway: Obviously the NFP was bogus right - we mentioned that last weekend. But for Powell to openly just shit on it and acknowledge it was miscalculated in his opening statement was fascinating...they (FED) don't want any part of Trump right now which is notable...means he is on his own into the election and they may not do anything to help him via extra liquidity. This means more volatility to me and is notable.


ABSOLUTE BREADTH:


Takeaway: This has been pointing to elevated equity volatility for weeks now and here we are with a bullish TREND PATTERN in ABI...I have not seen this before and it could make things very dicey ahead...like ultra shit show dicey. If this remains above the EMAs and the Bull Bear pivot then this could be epic...MONITOR this.


MCCLELLAN OSCILLATOR:

Takeaway: Bounce as I mentioned on Thursday night...sustainable? Yeah if thinking days only.


INTERNALS Summary: Richard has it about right:

We bounced on Friday which alleviated the terminal nature of the indicators that was apparent on Thursday night but we are bearish bigger picture now because of the volatility Thursday...yet we could see bullish bent early in the week...so Yes...wait....No? is about right here. Trade this week as I said in the summary...don't marry stuff until this week clears.

INDEXES:


SPY: 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: SPY VOL Term Structure


SPY Summary: SPY Call buyers hung over after seeing the tiger in the bathroom on Thursday...

Volatility structure across all time frames elevated now...so we should see up/down all week as OPEX flushes out. Could we fill the upside FVG left behind last week at 318? I think so and I would like to see that happen preferably. As mentioned in the VIX section, the other option is that this is a breakaway gap. This is not my expectation now, but still a potential. So keep that in mind on Monday/Tuesday.

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: No matter what happened Thursday, FAANG and Tech buyers standing ready to step back in and party until they aren't...

QQQ at the top end of the range still and could easily turn back up and fill the FVG or even make a new ATH again (it's only 3.5% above to get that done which is 1-2 sessions)...so we are not near a market structure level change yet but volatility structure is elevated across the board being above 40.00 in every time frame we monitor so that means that we should expect 3-4% intra-day moves from here forward until that comes back down (IF).

SMH: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Bullish

Block Volume: Positive

GEX: Negative

Options Visualization: Max Pain

SMH Summary: Bounced where it needed to hold support...momentum is bad but there is that FVG left behind above from Wednesday night...that is the big question, does that get filled and maybe more ATH or not? No edge from me, if this does lose the orange line during intra-day RTH on volume then this goes back to a bearish market structure.

DIA: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Neutral

Put/Call Ratio: Excessive Put Buying

Options Visualization: Max Pain

Volatility Metrics: DIA Volatility Term Structure


DIA Summary: DIA buyers when it bounced off the major support at the end of the day close...

Dow Jones hanging onto major support. Volume was huge Friday again but less than on the Thursday down day. So huge volume up and down on major support levels with a big FVG gap left behind on Wednesday night. If this loses the 245 level and then 237 level its in trouble. Otherwise it will head higher to fill the FVG but with volatility as high as it is above in the metrics it will not be an easy ride up.

IWM: Chart with Detailed Levels

Market Structure: Bearish

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: IWM call buyers stepping up to grab that 6-pack to get the party started earlier in the week...then Wednesday night happened...

This is bearish now below the Bull Bear Pivot. 146.10 is the FVG above that got left behind and it did bounce off major trend line Friday afternoon. Look at where the volatility metrics are for this right now...insane! So this is not going to be an easy upside ride if it chooses to be. It will be violent to the upside (IF) and then could turn right around in the same session and close with a big ugly candle...would not surprise me. This is a great risk/reward trade short here if it can get back to 146.10 in RTH this week (stop 152...so risk 6 bucks for 25+ lower)...but it could just as well be a breakaway gap that formed as the weekly closed below the pivot and is awful looking candle. More beat downs coming for the McLovin Index in the summer for sure.

BANKS & HIGH YIELD CREDIT:


XLF: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Negative

Options Visualization: Max Pain


XLF Summary: The American Psychos are playing me that really good Huey Lewis and the News song to butter me up while they take this back up to the ATM level again...


Banks are bearish now. They report earnings first out the gate in July and have to start giving us those financials with all those pending bankruptcies...can't wait. Same scenario as everything else, either this was a break away gap or we get back to the 25.16 level to fill the gap and test the pivot. Would love that ... hope I get it and I will fire the bazooka again.

HYG: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Negative

Options Visualization: Max Pain


HYG Summary: That 85 level will not be sustainably breached. Period end of story. Max pain is $84 right now.

TREASURIES, $USD, and PRECIOUS METALS


TLT: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Negative

Block Volume: Neutral

GEX: Positive

Options Visualization: Max Pain


TLT Summary: Getting there so far...should be bullish again across the board in every reading but would like to see the FVGs from last week get filled first before it gets more bullish...otherwise this was the breakaway situation again...as listed above in the rest of the summaries.

UUP: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Negative

Block Volume: Neutral

GEX: Positive

Options Visualization: Max Pain


UUP Summary: Looks to have set a longer term bottom as much of the structure of price is starting to come in line. There are no FVGs so this is clean trading and the 26.75 level will be the initial resistance to test the strength of this or if consolidation and further accumulation is necessary before higher levels are seen. I will give some rope to this during the week ahead because of OPEX and would ideally like to see elevated price consolidation up and around the 26.00-26.75 level to let velocity and money flow catch up and turn positive.

GLD: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Bearish

Block Volume: Negative

GEX: Positive

Options Visualization: Max Pain

GLD Summary: Mixed bag here. Been consolidating for a while unable to break through to 169. Systematic selling is increasing here daily. I am not really bullish gold here. I am leaning towards any further price advances make this is a real sell post OPEX. But let's see what happens this week.

SLV: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Positive

Block Volume: Neutral

GEX: Positive

Options Visualization: Max Pain

SLV Summary: Heading lower at this point with max pain this week at $15. That is about 5-6% lower from here. All of the internals are looking weak. If this goes lower that 15.44 test will be ultra crucial for bulls ... below it could see lower (much) levels come into play as this never got past 17.32 here. Still bullish longer term for sure though.

GDX: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Negative

Block Volume: Negative

GEX: Positive

Options Visualization: Max Pain

GDX Summary: Everything about this says that its headed to around $30 level this week ahead. Let's see what happens. I am still bullish long term but really want to see the $26 level FVGs get filled at least before I get reallyyyy bulllllisssshhh.

THE END.



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