6/19/20 SPECIAL EDITION: MARKET CLOSE & WEEKEND Update - Consolidated Analysis

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


BEFORE WE GET STARTED A COUPLE NOTES:

  • Charts are new - they are our latest app build and have some more 'secret sauce' built in now so spend some time on them b/c they have VPOC and FVGs and Bull/Bear Pivots clearly displayed and will really help you pick out the levels key to both bull or bear perspectives

  • We are also building more new proprietary internal readings but those won't make it into the app until late July so we keep the existing ones as they are for now.

  • App beta user emails start going out shortly - so make sure you have signed up for at the bottom of the blog site (if you have not already)...all emails we have on file will get beta access and then discount codes to use after broad market release in July

  • All Max Pain readings are now rolled out to next expiration FYI

  • The Choose Your Fighter is just a special segment this week as there is a consensus battle on a few fronts between two distinctly opposing views that I thought could be addressed in jest...so we measure both sides and weigh some odds lol

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: $3100 SPX is the primary (larger GEX flip as of Friday close at 415PM) and $3090 is the warning shot.


(Of note here: this was a very slight edge to the doom side out the limbo box based solely on the CLOSE data from Friday. But then after hours up to 5PM EST futures close, $ES mini futures traded down to $3060 levels so effectively much cleaner into the doom loop area hence the rating).

CHOOSE YOUR FIGHTER SEGMENT:


FIGHT 1: COVID19 vs. The FED+Treasury

COVID19:

VS.


THE FED+TREASURY:

Advantage: Right now favors COVID because of the lack of understanding on how to deal with it and the FED fired first and may have played their hand too early...but the FED/Treasury are pulling out all the stops that MMT has...but COVID is out of control again...so...


FTW (For the Win) Odds: 67% COVID vs. 33% FED

FIGHT 2: Dollar Bulls vs. Dollar Bears

$DX Bulls:

VS.


$DX Bears:

Advantage: Right now it favors the $DX bears because it is the 'perceived' path of least resistance (and is being traded accordingly to that narrative). However, if the tables flip on this one ($UUP over $27 / $DX over $100.4) then odds flip to substantially to the bulls running away and scorching the earth.

FTW (For the Win) Odds: 42% $DX Bulls vs. 58% $DX Bears


Here is why if this flips the $DX Bulls will run away with this...the world NEEDS dollars to function as noted in the diagram and in a debt default cycle there ARE NOT ENOUGH dollars... so they get SCARCE and become more immensely more valuable. The FED will have to start straight QE again in order to try to solve this:

FIGHT 3: Davey Day Trader Global Global VS. Legacy Macros

DDTGG:

Legacy Correlation Macros:

Advantage: Push...both are approaching it from opposite ends holding onto realities that are highly inaccurate and (DDTG will be annihilated with another doom loop episode as stocks don't 'always go up'...he hasn't figured out the GEX cycles+FED inverse liquidity episodes thing yet) and (LCMs have been annihilated by GEX cycles+FED liquidity for a decade+ now 'as stocks always go up' when short vol strategies are working).


FTW (For the Win) Odds: 50.1% DDTG vs. 49.9% LCMs. More likely is mutually assured destruction.

FIGHT 4: New Dawn Liquidity Bull Market VS. Debt-pocalpyse Bear Market

Liquidity:

Solvency:

Advantage: This is a tough one b/c you have to incorporate COVID19 into the mix now (b/c without it clear winner is liquidity this massive). The sheer mass of insolvency about to happen is hard to comprehend much less account for tactically. The FED has taken care of market liquidity in spades (right Rick?! as they have started a real cocaine party in the markets) but has not enough tactical time and barring outright becoming the National Bank of the US they may not be able to backstop all of the defaults which in the end will cause the dollar to eventually rise...gotta give the edge to the Solvency issues here.


FTW (For the Win) Odds: 39.22% Liquidity vs. 60.78% Solvency

FIGHT 5: Long Volatility vs. Short Volatility


Long Volatility:

Short Volatility:

Advantage: The short vol Night King creates a hoard of walking dead zombies (Co.s) that just consume the general population as realized volatility is not allowed to happen and nature doesn't run its course (corporate darwinism is not allowed so all become the Night King's army of the dead). Danerys and her dragons are the perfect representation of the long volatility team here as they are, after years of being repressed and beaten, starting to fight back with limited concern for casualties and have some deep seated anger issues themselves and can/will scorch the entire seven markets in the end if things get out of hand after they finish annihilating the Night King and the Zombie co. army...which I suspect that they will do just that at some point. Advantage Long Vol.


FTW (For the Win) Odds: 71.18% Long Vol vs. 28.82% Short Vol

We will come back to these five fights at the end of next quarter and see how we fared in our odds making attempts... onward to the market action of the day below!

FRIDAY's QUAD WITCH OPEX ACTION:


VIX and VXX were sold hard right at the open and then rallied bottom left to top right and pulsated higher into the close and then after hours - watch out... VIX +6.62% and VXX +1.60%


  • UUP closed up a little +0.11%

  • TLT was down early and closed higher after COVID news +0.08%

  • SPY opened up high and sold off all day -1.01%

  • QQQ all over the place bu finished unch -0.02%

  • IWM opened higher and sold off all day -0.52%

  • DIA opened higher and sold off all day -1.01%

  • SMH opened higher and sold off all day -0.47%

  • FAANGs mixed

  • HYG -0.52% can't go any higher

  • XLF worst of the pack today and was stick saved into close -0.66%


ECCLES BLDG FED/TREASURY CLOSE ZOOM CAM: This is the scene from Eccles parking lot as they are now rallying every acrnoym together to battle this time as COVID is (like Thanos) probably coming for it all...they have to start thinking out of the box. Liquidity is not the weapon for COVID. I have stated again and again that COVID19 is the kryptonite. It was in Feb/March and it very much can be again.

Our six main things to keep watching for:

  1. COVID19 cases - Dangerously out of control now in southern states. Everyone needs to be safe. Not a joke in any way...please take this seriously.

  2. US/China relations - Rhetoric keeps ratcheting up as well as are military placements...including an impromptu visit from South Korea to our military late this week ... seems they are very concerned about their partners to the North.

  3. $USD - bullish

  4. Long bonds - bid

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

  6. GEX levels - doom loop for now (just slightly)


The bulk of the data below will show you that it appears we will start a leg down here. Is that a 'bullish correction' (taking a break in the nirvana regime) or a 'resurgence of the bear' (starting a full blown doom loop again)? I am going to go with ... undecided at the moment.


Tech and Semis look bullish and more likely corrective unless below 20% on the downside. SPY meh as it could go either way. IWM, XLF, and DIA look like bear food. VIX looks like it COULD get really bullish here, but even then it may be that it isn't going to be as easy as March with a relentless spike...could be more impulse/rest/impulse/rest...etc.


I am leaning right here towards a down leg that lands at the initial levels noted on everything below. Then we take it from there because of the war between liquidity/solvency/COVID is not going to be a straight line i.e. the FED is not going to give in so easily as they have shown thus far. Having said that, they are fighting a tough game to win now with COVID kryptonite back in their hands making them sick and hurting their powers. If they are overwhelmed or fail to react quickly or their reaction is ineffective, then you could have a full on doom loop phase (not just an episode) fire back up again.


Let's see how the next couple weeks progress ... all the details are below and the new charts are incorporated with much more information than before.

SECTORS BROAD MARKET:

Sector Takeways: Started out strong and finished weak for equities sans Biotech with the infinite COVID cure bid....precious metals also bid.


SECTORS BONDS/GOV/SOME COUNTRIES:

Sector Takeways: Bond land unch. Countries mixed.

SECTORS SOME MORE COUNTRIES & FEW CURRENCIES:

Sector Takeways: Other countries red...$USD meh

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: Negative

GEX: Negative

Options Visualization: Max Pain


VIX/VXX Summary: VIX and VXX surprised me Friday as they seem ready to get the game going again...

VIX and VXX didn't wait until next week. As soon as the SPX gamma rolled off on Friday at the open (VXX was bid) and VIX calculations skewed towards puts immediately driving up the measurement. This did surprise me short term, but not intermediate term. I was expecting this to happen at some point, but honestly thought it would be next week. Having said that the COVID news was bad Wed onward and then AAPL came out with the widow maker news they were giving into the virus and closing stores again...they are the darling and the darling cried uncle...let's watch this for next week intently to see what happens but if VXX gets going there is very little resistance above as you can see from the volume profile.

INTERNALS


TRIN:

Takeaway: 3 bulls 1 bear.


ADVANCERS/DECLINERS:

Takeaway: Bearish all around.


200 DMA:

Takeaway: Ugly. Spent 3 days above the bull bear pivot. That's it. Momentum rolled over as well.


NYSE ADVANCERS/DECLINERS:

Takeaway: Big time fail day...from testing resistance to looking at the lower support up next is bearish.


CUMULATIVE VOLUME:

Takeaway: This is really a puke looking pattern here. Not bullish and momentum just rolled over.


THE DJT: Trump preparing for the rally in Tulsa tonight...

Takeaway: What is he doing? Rally in Tulsa today? With all they got going on there? I am more amazed everyday at some of these decisions...


ABSOLUTE BREADTH:


Takeaway: This has been inverted lately...


MCCLELLAN OSCILLATOR:

Takeaway: Kicked lower and momentum is looking weak...


INTERNALS Summary: Welp...

I checked the readings Friday at the open and they were predominantly green. I checked the readings after the expiration and they were meh. I checked the readings after AAPL news broke and the selling intensified. The rally at the end of the day that was then sold into the close changed nothing (in fact further intensified the downside readings). These internals are in the 'danger' camp after the action Friday. It genuinely could have gone either way, but they project in the short term at least, the downside to get started. We will take it from there.

INDEXES:


SPY: Chart with Detailed Levels

Market Structure: Neutral

Momentum: Bearish

Internals: Bearish

Block Volume: Positive

GEX: Negative

Put/Call Ratio: Neutral

Options Visualization: Max Pain

Volatility Metrics: SPY VOL Term Structure


SPY Summary: SPY bulls when I start talking about even a pull back...

$285 level probably gets tested shortly. Then we will go from there. That is 2 FVGs below and where VWAP (volume weighted avg price) and VPOC (volume point of control) are sitting. Let's see what happens there and then readdress everything. Bulls bounce it there and head higher OR bears blade cut that and start another down leg. That is about 6-7% lower...let's see how it shakes out.

QQQ: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Positive

Block Volume: Positive

GEX: Positive

Put/Call Ratio: Neutral

Options Visualization: Max Pain

Volatility Metrics: QQQ Volatility Term Structure

QQQ Summary: This what I think of when I think of tech right now...

Just using the charts...$225 and even $215 could be seen very easily and that would just test the bull bear pivot and the VPOC and VWAP levels. That's between 14-18% lower from here. If that comes to fruition (high probability)...then we take it from there. Should that $215 level go (which has been VPOC) for a while, then we have a bear...if it doesn't go, then this can keep going higher in the intermediate term.

SMH: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bearish

Internals: Bullish

Block Volume: Positive

GEX: Positive

Options Visualization: Max Pain

SMH Summary: Based on the charts, we should see a test of the 131-135 area at some point soon. This is about 10-15% lower. If we take that out, then new bear leg in motion. If we don't take that out, then VPOC and bull bear pivot hold, we will head higher. Let's see what shakes out.

DIA: Chart with Detailed Levels

Market Structure: Neutral/Borderline Flip

Momentum: Bearish

Internals: Negative

Block Volume: Neutral

GEX: Neutral

Put/Call Ratio: Put Buying

Options Visualization: Max Pain

Volatility Metrics: DIA Volatility Term Structure


DIA Summary: Dave is DIA a buy here?....

DDTG loves all the DOW components...but...the bulk of the transactions are looking like large lots do not like DOW components all the sudden. VPOC is over price (bearish) and the bull bear pivot is lurking right under where we are...DIA better hold $237 on any correction/pull back move or it will be back in the bear's hands and there is a big large lot in Omaha that is sitting there waiting for the right moment...

IWM: Chart with Detailed Levels

Market Structure: Neutral (but bearish on one bad day now)

Momentum: Bearish

Internals: Bearish

Block Volume: Negative

GEX: Negative

Put/Call Ratio: Neutral

Options Visualization: Max Pain

Volatility Metrics: IWM Volatility Term Structure


IWM Summary: IWM longs right now looking at the chart and the VIX...

All of the volume sitting above price (VPOC overhang now is bearish) and GEX is negative. Price is sitting just below the bull bear pivot. First real FVG lower is 124.66. Momentum is decisively bearish. This is the index littered with zombies...could get really ugly below 125...so these support EMAs better hold it together here.

BANKS & HIGH YIELD CREDIT:


XLF: Chart with Detailed Levels

Market Structure: Bearish

Momentum: Bearish

Internals: Negative

Block Volume: Negative

GEX: Positive

Options Visualization: Max Pain


XLF Summary: It seems like it may be that time...


Banks are cleanly bearish below the pivot. $21-22 level is clearly a support at the VPOC point. I can see these heading down there to $22 (about 8% lower) pretty quickly but that level will hold at first. If that goes, different narrative. But let's take it one leg at a time...the upside is 25.19 level for the mini FVG that was left behind by a tick.

HYG: Chart with Detailed Levels

Market Structure: Bullish (but really neutral)

Momentum: Bearish

Internals: Neutral

Block Volume: Negative

GEX: Negative

Options Visualization: Max Pain


HYG Summary: You can see why the FED stepped in now looking at the volume profile. In the lower ranges 65-75 there is NO ONE HOME. Buyers were panicking and the system was at risk of unraveling. This is why the programs have been targeted at holding this up. Problem is COVID is back and the most at risk CLOs are in the HYG/JNK/BKLN/LQD. FED is in a box now...is the market frontrunning them? Idk but with the VPOC sitting above price all the sudden after Friday it is worth noting and monitoring. Lots of FVG support below. I think $77 level is the line in the sand if this were to get bearish again that must hold. $85 is a level that will not be breached...and if it was, would be ultra inflationary.

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: Bullish action but there is a bunch of volume to chew through between here at 165.00. IF that area is taken out, this will get very bullish again. Regardless, big picture is bullish as long as the bull bear pivot remains below price along with the VPOC.

UUP: Chart with Detailed Levels

Market Structure: Neutral (sitting at the pivot)

Momentum: Bullish

Internals: Negative

Block Volume: Neutral

GEX: Positive

Options Visualization: Max Pain


UUP Summary: The dollar is a major component of the puzzle. There are a ton of FVGs above that need to be filled and they line up with a test of the VPOC (which currently is sitting above price). Momentum should take this up to test that level (about 3% higher from here). That level is the $27 level in UUP and it coincides with a pull back in the indexes we are seeing above. IF that level is breached and flipped, then there could be a major move coming. IF that level is not breached then the reality may be that this could be an intermediate top that coincides with further equity strength. That is TBD...so let's see what happens when this gets there.

GLD: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Mixed

Block Volume: Bullish

GEX: Positive

Options Visualization: Max Pain

GLD Summary: You can see when looking at the chart there is very little bearish about gold big picture. The VPOC is around 142.50 and the bull bear pivot and VWAP are at 150 level. Problem is readings are so spent to the upside and there are so many FVGs to the downside that are magnets for gap fills with the major large lot volume support much lower. If this gets corrective, 150 level is really good level to reload IF it were to come into play.

SLV: Chart with Detailed Levels

Market Structure: Bullish (neutral more like it)

Momentum: Bullish

Internals: Neutral

Block Volume: Positive

GEX: Positive

Options Visualization: Max Pain

SLV Summary: VPOC is above price but mixed bag on the internals. This has 9 FVGs lower that are magnets for gap filling. I am totally on the fence here with SLV. Bad close yesterday on this as well and all the major volume sitting above price = bearish until that is cleared up.

GDX: Chart with Detailed Levels

Market Structure: Bullish

Momentum: Bullish

Internals: Negative

Block Volume: Negative

GEX: Positive

Options Visualization: Max Pain

GDX Summary: $28-28.50 level is major VPOC support and would take care of 2 FVGs that have to be filled at some point. Ideally I would really like to see 26.20 get tagged on a correction. Will any of this happen? Probably...just has to have time to get there.

THE END.



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