6/15/20 MARKET CLOSE Update - Consolidated Analysis

Updated: Jun 16

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: $3110 SPX is the primary (larger GEX flip as of Monday close at 415PM) and $3080 is the warning shot (which we are at right now so warning is here).


Everyone who was short Friday thinking it was roll time is really mad at the Fed today - like really mad at them. Why though? Its OPEX week (guaranteed shenanigans + Quad Witch) and did they do anything different this week than last week..not that I am aware of? I.E. they are buying everything to increase prices and foster refinancing especially corporate credit?...hasn't worked for the economy lately other than creating violent short squeezes and creating really bad stock market behavior like below...(I mean REALLY BAD behavior) that will definitely come back to haunt folks soon enough.


Charlie Munger said something to the effect of, "If you show me the executive's incentives I can tell you where a business is headed." If you extrapolate that to the broad economy and include the FED then the incentive of large public companies is now to get so big that you are not allowed to fail (TBTF corporate version). Then the executives of that company ensure that they get large enough in their market impact and their employment size so that it ensures that the FED will bail them out...because that is the incentive structure that the Fed created...dummies.


But here is a new wrinkle to that gambit...since the market knows that they will get bailed out, then everything is about how cheap a security is perceived to be compared to the other offers for sale (because "stonks always just go up" as Portnoy is akin to saying) which effectively renders the market just a greater fool gambit until it breaks...a la Hertz. "We buy it because it's cheap" they say on reddit...


Here is an absolute gem from today - save this for the future. This stock offering was disclosed and then approved by the SEC. File it on your desktop titled Bagholderspecial.


It was approved and dudes are vehemently angry at this and say "this is criminal?" OF COURSE IT IS! No one gives a shit though AND...it has happened many times below in the history of man and finance and yet we never learn so stop crying about it and watch the regimes already and just go from there!


As for why I say move along, it's because this has happened OVER and OVER and OVER in human history. Here is an small excerpt from the extremely thoughtful and well written blog on finance history in regards to speculative manias that are created from terrible credit/lending behaviors (detailed over at Investor Amnesia (https://investoramnesia.com/2020/05/02/speculative-booms/))


Hertz definitely will classify in the "too foul to touch" category.


And here is the accompanying epic cartoon from that era when the large lots (specs) are done inflating prices via gorpy low volume increases (which the FED has enabled in our time) then are so eloquently blowing the wind (bullshit valuations and electronic stock certificates) out their asses with the bagholders dying to gobble them up in the wonderful stench of the flatulence:

It was like these guys were writing the best GIFs ever even before there were GIFs..."snatching electronic stock certificates out of the FED enabled large lot's flatulence"...its literally my new take on the FEDs actions from here on out. That is all this market is at this point...the picture above - but with iPhones.


This has happened before. It will happen again. So I would just rather identify the looped regimes in place ... and go long/short accordingly as it helps to avoid the stench of the flatulence...


TODAY'S ACTION:


VIX and VXX still working off the overbought conditions from last week's napalm sessions... VIX -4.68% and VXX -2.56%

  • UUP consolidating this week probably -0.42%

  • TLT consolidating and may even be red some this week +0.06%

  • SPY up as expected +0.93%

  • QQQ up as expected +1.22%

  • IWM just squeezing the shit out of shorts from Friday +1.97%

  • SMH bounced as expected off support +1.30%

  • FAANGs all GREEN

  • HYG +0.97% got an erroneous boost at 2PM but still below the pink line

  • XLF squeeze today and should extend higher as the week progresses +1.38%


J-ROME AND THE MANUCH AT THE CLOSE ZOOM CAM: drooling over the High Yield announcement at 2PM that got another 1.5% up across the board...just great work you two...keep it up!

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

  • COVID19 cases - INCREASING

  • US/China relations - NO NEWS TODAY

  • $USD - Red

  • Bonds (TLT) - Unch

  • VOLS (especially 60+ days out) - Red

  • GEX levels on a pull back/correction (IF one materializes) - Flattened Out


From the weekend expectations for OPEX week we are 3/5 thus far:


1. Range Expansions both directions - check

2. GEX flips multiple times - getting close

3. OPEX induced short squeeze from last week to kill bears and make them quit (IWM low to hi 7.5% intra-day today) - check

4. OPEX induced rally (off said short squeeze to get bulls to roll calls or even better buy fresh ones further OTM) - check

5. Close the week lower than where we start for maximum pain on both sides - unknown


Let's see where we go from here. Watch the price levels for each chart as that is the most important thing this week moving forward.

SECTORS BROAD MARKET:

Sector Takeways: Green except for 'nature's flatulence'


SECTORS BONDS/GOV/SOME COUNTRIES:

Sector Takeways: Other countries stumbling a bit and bonds bid with the Fed's daily guarantee

SECTORS SOME MORE COUNTRIES & FEW CURRENCIES:

Sector Takeways: All currencies green with $USD red.

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:


VIX/VXX resting at the moment...

When you go up 50% in a day last week you deserve to nap during Quad Witch OPEX.


This is intermediate term bullish now and short term bearish bent (this week). Accumulation is taking place internally that has not been seen in a long time and if that persists this week, could be really wild in the back half of the week and into next week (expected).

INTERNALS


TRIN:

Takeaway: 2 and 2


ADVANCERS/DECLINERS:

Takeaway: Bulls for the most part


200 DMA:

Takeaway: Trying to recover. Love to see this fill the gap at the bull bear pivot.


NYSE ADVANCERS/DECLINERS:

Takeaway: Bounced so far and trying to turn momentum.


CUMULATIVE VOLUME:

Takeaway: Ditto NYSE A/D


THE DJT: Dude is sick (like physically sick)...did you all see the West Point videos? Looks like he had a stroke or something -


Takeaway: No impact at this point. Powell neutered him last Wednesday.


ABSOLUTE BREADTH:

Takeaway: Just keeps on heading to extreme volatility - I am not going to ignore this again...the old fool me twice deal


MCCLELLAN OSCILLATOR:

Takeaway: Bounce underway.


INTERNALS Summary: Bulls have the ball here early in the week.

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: Vol still elevated across the board. Selling systematically again today under the surface. This should fill the FVG at 318 later this week unless something dramatic happens...having said that with vol this elevated...be on alert for gap and crap around that area..

QQQ: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Negative

Put/Call Ratio: Call Buying Again

Options Visualization: Max Pain

Volatility Metrics: QQQ Volatility Term Structure

QQQ Summary: QQQ call buyers showing up again...this is setting up one helluva crack when this terminates...resistance is clustered above but can easily make a new high this week if it gets bullish.

SMH: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Bearish

Internals: Bullish

Block Volume: Positive

GEX: Neutral

Options Visualization: Max Pain

SMH Summary: Bounced off the orange line...looking for the FVG fill above. After that area should head lower into summer.

DIA: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Negative

Put/Call Ratio: Neutral

Options Visualization: Max Pain

Volatility Metrics: DIA Volatility Term Structure


DIA Summary: Heightened volatility is creating massive ranges for the week. Love to see the FVG fill up above another 5% as that would just crush bears and be a killer shorting spot. One can hope...

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: Scorching vol here...expect ever more ranging all over the place all week. This thing is a dying shark on the deck of the boat right now...just taking sailors arms off before that last gaff goes in.

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: Bring it to me...please just bring this back to me at 25-26? I know that I am ...

...but the ATM clicks on for me again at 25-26.50 so just help me out here and get it up there again.

HYG: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Bearish

Internals: Positive

Block Volume: Negative

GEX: Negative

Options Visualization: Max Pain

HYG Summary: In Jerome we trust. But he can't beat the pink downtrend line...no one can.


TREASURIES, $USD, and PRECIOUS METALS


TLT: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Neutral

Block Volume: Neutral

GEX: Negative

Options Visualization: Max Pain

TLT Summary: This should fill lower FVGs this week...if it doesn't could be setting up to get real bullish.

UUP: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Bullish

Internals: Negative

Block Volume: Neutral

GEX: Positive

Options Visualization: Max Pain

UUP Summary: Expected consolidation all week and back and forth with max pain at $26. Think this stays in and around this area until large lots are done with OPEX related distributions.

GLD: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Bearish

Block Volume: Negative

GEX: Positive

Options Visualization: Max Pain

GLD Summary: Something looks off here. Sold hard into the rally today...Max Pain way lower...this one has me curious through end of the week.

SLV: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Neutral

Block Volume: Negative

GEX: Positive

Options Visualization: Max Pain

SLV Summary: Max pain $15.00 and looks to be losing steam and interest...watch out.

GDX: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Negative

Block Volume: Negative

GEX: Positive

Options Visualization: Max Pain

GDX Summary: Same boat as Gold...this gets bought hard every mention of the FED buying something else, but there is no break out and follow through...running out of time to bust $34 and head to $40. Needs to get on it or risk heading to $30 or lower.

THE END

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