The Finish Line Is In Sight
Good morning, folks! For those of you in Canada, I hope everyone had a great holiday to start the week. Let's get right into today's analysis. After rolling sell programs yesterday to kick-off the month of August, US Futures are drifting higher on Tuesday with the Dow up 0.25% to 34,808, the S&P up 0.22% to 4,389.50, the Russell up 0.46% to 2,221.10, and the Nasdaq up 0.14% to 14,973.50 as of 8:30AM. SPY saw yet another rejection at wedge resistance, but the 21EMA (w) around 419.33 has been successfully defended since it was recaptured in May 2020, and as long as this support holds, we're going to continue to melt higher. Having said that, we just saw 6 months straight of gains on the SPY, and imo we're unlikely to see a 7th given the macros, low liquidity, heavy geo-political risks, and policy risks that are looming this month. I believe the finish line is (finally) in sight.
The US10Y yield continues to slip after the 200DMA rejection at 1.41%. We've now lost weekly MA supports as well, including the 100MA (w) at 1.1988%, and the, 50MA (w) at 1.1961%, and absent a recapture by EOW, we could to be on the verge of a massive puke toward the August 2020 lows around .50%. The last time this happened, of course, was February 2020 just before the 35% market crash. Let's see if history rhymes.
After a solid rejection at wedge resistance, the dollar (DXY) saw notable support at the 50MA (w) around 91.70, and is hovering just above around 92 as we approach the open. If sentiment is in fact about to shift negative, the dollar may be in the midst of a technical retest of the 50MA (w), before setting up for a retest of the wedge once again. Let's see if the bulls can defend the 50MA (w) into the weekend.
In volatility, the Vix has been making higher lows for 6 weeks in a row, and is sitting at a 19 handle ahead of the cash open. The descending trendline is still holding as resistance for now, but judging by the stochastic RSI on the weekly time frame, and the PA off recent multi-year ascending trendline support, we're likely at the onset of another major spike in the Vix. First, we'll need to see the 25 level captured on the weekly candle, which would set us up for a second leg higher toward the upper band of the ascending channel around 50.
Have a great day of trade, my friends, and let's see how the cookie crumbles this week. Cheers! Michael.
* I am/we are currently long UVXY, HUV.
The US10Y yield continues to slip after the 200DMA rejection at 1.41%. We've now lost weekly MA supports as well, including the 100MA (w) at 1.1988%, and the, 50MA (w) at 1.1961%, and absent a recapture by EOW, we could to be on the verge of a massive puke toward the August 2020 lows around .50%. The last time this happened, of course, was February 2020 just before the 35% market crash. Let's see if history rhymes.
After a solid rejection at wedge resistance, the dollar (DXY) saw notable support at the 50MA (w) around 91.70, and is hovering just above around 92 as we approach the open. If sentiment is in fact about to shift negative, the dollar may be in the midst of a technical retest of the 50MA (w), before setting up for a retest of the wedge once again. Let's see if the bulls can defend the 50MA (w) into the weekend.
In volatility, the Vix has been making higher lows for 6 weeks in a row, and is sitting at a 19 handle ahead of the cash open. The descending trendline is still holding as resistance for now, but judging by the stochastic RSI on the weekly time frame, and the PA off recent multi-year ascending trendline support, we're likely at the onset of another major spike in the Vix. First, we'll need to see the 25 level captured on the weekly candle, which would set us up for a second leg higher toward the upper band of the ascending channel around 50.
Have a great day of trade, my friends, and let's see how the cookie crumbles this week. Cheers! Michael.
* I am/we are currently long UVXY, HUV.
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