Short

Updated

The Truman Show

So yesterday turned out to be the worst start to a year since 2016 for markets. However, this morning's sentiment is quite bullish, as investors panic bid the majors at the open. SPY is back at the 50 period MA on the hourly (370.57), which also happens to be converging with the 21 period EMA (370.30). If 370.57 holds up as resistance, we could see a sharp rejection back to the 21 day EMA (368.25). If the 21 day EMA breaks, we'll revisit the white channel around 365, and potentially break through this time, paving the way to the top of the megaphone around 360. If we see increased bullish behaviour as the morning progresses, I suspect we may potentially revisit yesterday's opening levels around 375. Highly unlikely imo, but don't forget there's also a possibility we revisit the top of the channel which would set a new all-time high near 377. Personally, I'm positioned for the bottom of the white channel to fall out, and for a comeback of the almighty megaphone.

Imo you have to ask yourself, what does it matter to markets how the Georgia elections turn out, or who the President is for that matter, when both the dems and republicans are cheering on MMT, while the real economy crumbles? All I hear these days in politics is "Print! Print! Print!" The narratives that explain price action each day, are the equivalent of the story of Santa Claus coming down billions of chimneys in one night to deliver secret gifts to your children while you sleep. They're just stories folks, often with no connection to price action whatsoever. Take eveything you hear and read with a pinch of salt as we must not confuse narratives with truth.

The game is all about reading between the lines, and I'd like to leave you guys with a recent quote from legendary investor, Carl Icahn, "In my day I've seen a lot of wild rallies with a lot of mispriced stocks, but there is one thing they all have in common. Eventually they hit a wall and go into a major painful correction. Nobody can predict when it will happen, but when that does happen, look out below.”

Thanks for your time today guys. If you enjoyed the analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research. Cheers, Michael.

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Continuing our analysis from yesterday, let's go to the 1m. As you can see we got a notable rejection at the 50 period MA on the hourly which is the upper white line segment (370.55). We're observing an ascending channel formation (red dotted lines) with support now sitting around 368.50.

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Vix is still looking toppy, but is holding on to a 27 handle for the moment. I see the highway of MA's below as interim support, and the upper green (dotted) line around 29.50, as major resistance. If we break 29.50, we're going to the moon:

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Looks like the bulls are about to lose the bottom of the channel. Let's see if they can hold the line:

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Clean break of the channel:

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Bulls are about to lose the 21 day EMA at 368.08. Also looking at the 200 period MA on the hourly (367.17) as potential subsequent support...

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Back at the channel, which should now act as resistance:

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Bulls walk through the channel like it's not even there:

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Let's assume my trendlines were slightly off, and this was a bounce off the bottom of the channel. Moving over to the hourly, the bulls have 2 key MA's above; the 21EMA (370.15), and the 50MA (370.67). Let's see if they go for the top of the channel around 371.75, or if they see a rejection at one of those 2 key MA's:

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You can see the spike in volume and price as the bulls capture the 21EMA on the hourly, and kiss the 50MA:

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View from the hourly:

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Vix is now back at the highway of MA's around 26.50. We may be seeing the low's of the day. Let's see if Vix can hold onto a 26 handle into the close:

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Rejection at the 50MA on the hourly (upper white line):

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Bulls just caught support at the bottom of the channel once again, but they're running out of room, as the floor catches up with the price:

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This could be a cup and handle formation, similiar to the one we observed yesterday. The MA's have to hold up, or the bulls are going to run wild.

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View from the hourly as the bulls march towards the 50MA once again. This is setting up as a bullish move, based on the technicals, but I think the lack of volume speaks wonders in this move. This run is about to lose steam:

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Looks like we're setting up for a big move:

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Vix is back at a 25 handle. Either we puke imminently, or Vix spikes back to 29's. Everything is setting up for a big move here, let's see what happens next:

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The energy sector appears to be supporting the entire global market today. We're up a whopping 5.70%:

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10Y yield is looking strong, up around 4% on the week. Bonds are so incredibly inflated with the infinite demand from central banks. I wonder what might happen when the risk free rate is back at 2%?

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The dollar continues to get absolutely hammered. We're down about half a percent on the day:

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Put/Call ratio still incredibly skewed, but showing signs of life. You can see the bottom formation being dragged on. Patience is the name of the game:

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Another rejection, looks like this is going to be a 99th hour fight. Time's up:

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First probe isn't going over well with the bears:

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View from the hourly as we test the 50 period MA once again:

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There's that move we've been waiting for. Look at volume:

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View from the hourly:

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Check volume now, who called powell?:

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Vix back at a 24 handle as the bulls decide whether or not to go for the upper band of the white channel. They'll need to start by winning the 50MA on the hourly candle. They've already captured it, but holding it is a different story:

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Looking a bit bearish on the hourly, but as long as the channel stays intact, we're going higher:

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Second largest volume print of the day just reversed price action after the bulls lost the lower band of the ascending channel:

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It was essentially a perfect bounce off the 50 period MA on the hourly:

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Wowzers:

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That's all folks! The bulls successfully defended the 21 day EMA, as well as the short term moving averages, including the 50 period MA, and 21 period EMA on the hourly. The red (dotted) intraday channel was lost, but the main white channel is holding up, and bulls are in a strong position heading into the overnight session where gravity clearly doesn't exist anymore. We should be getting some news tonight about Georgia, so trade accordingly.

I hope you guys enjoyed the analysis today. Have a great night. Cheers!

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Hedge_Of_The_World

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