Hey guys, so as we discussed on Friday, the short-term bearish harmonic has now broken, and we're seeing some aggressive selling this morning off the back of the new stimulus deal, mutated covid-19 strains in the UK, and mass global lockdowns. For the few bears left standing, the megaphone is now back in play at 359. Today's supports are 363.30, 362, then finally, the almighty megaphone baby. We've been waiting patiently for this shift in sentinent to come in the form of a sell the news event, and so I know many of you are excited to finally see a notable correction. The monthly candle has always looked like an anomoly to me, and price action in November and December felt almost like an injustice. If today's selling persists, and we lose 359, the bulls are in serious trouble.
I appreciate 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.
I appreciate 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.
Note
Vix broke the key 25 level, and as we discussed on Friday, breaking 25 meant the path to 32 was short, and what do you know, we hit a high of 31.50 in pre-market trading. Imo this is only the beginning: Note
Ouch! Note
First support hit at 363.30 (200 period MA on the hourly): Note
Testing second support here (lower band of the ascending channel) around 362: Note
Put/Call is now at it's highest level since mid-November, and is clearly breaking out. We're sitting at .566. Let's see 60 today baby: Note
The 10Y yield is pretty quiet today, but I suspect we will continue to march higher, until we breakout very soon: Note
The Dollar just saw it's biggest daily spike in 6 months. King Dollar, is that you?: Note
Second test of 362, and another rejection. Let's see if the bears use this rare momentum to break us below: Note
Retesting the 200 period MA on the hourly at 363.30. Polarity principle should issue a rejection, and send us back to retest 362.Note
There's the first rejection, let's see if the bulls retest: Note
Put/Call is now at .59! There goes any chance for positive sentiment coming to save the day: Note
View of SPY from the 15m showing 3 tests of the 200, and 3 clear rejections: Note
Bulls broke through, and we're now sitting a stones throw away from the 21 period EMA on the 15m. Let's see if they make a run for it: Note
Bulls testing the 21 period EMA on the 5m around 366. Let's see if the bears issue a strong rejection: Note
*Correction above: 21 period EMA on the 15m.Note
The bulls are very ambitious today, and are going for the gap fill around 367. We appear to be shaking out the weak hands (profit takers), and attracting some buy the dippers as well. Let's see how long this interim bounce lasts...Note
SPY has just about filled the gap, and the majors are now down less than 1%. Vix is getting hammered back to a 25 handle. Looks like the worst is over, right? I'm not buying it. I'm expecting another leg lower shortly. Bulls may try to test the 50 period MA on the 15m (368.33), but I don't see it happening...Note
1m view of the relentless buy program which started around 10:30AM across the majors: Note
Check what happened to volume, the second we broke below the channel on the 1m. Algos jumped in and bought immediately. *singing* "I always feel like, somebody's watching me": Note
Yup these are regular candles, not heikin ashi. Lol. The 50 period MA on the 15m and hourly (368) was just tested. Now that we're seeing several moving averages converge around 368, let's see if the bears show up with a leg lower. Note
Power hour is approaching. No sign of the bears as yet, although volume has fallen off a cliff, and the bounce appears to be losing steam...Note
Here we go: Note
Bulls catching some support at the 50 period MA on the 15 minute around 367.37. Let's see if the bears try to recapture the 50 in the final 15 minutes of trade...Note
That's all folks! Interesting day of trade to say the least. It was a take (baby) profits, and buy the dip kind of day. We saw a buy program here that was straight up linear from around 10:30AM to 1:30PM. Could have been buy backs, the banks were definitely buying the dip today, their stocks have been hammered this year, and now they got the clear from the FED. Some weakness was evident as we approached power hour, but it was a buying spree once again into the close. We closed just below the convergence of hourly and 15 minute moving averages around 368. But, on the daily, we saw clear support at the 21 day EMA (365.20). Overnight, I suspect we will get a lot more information on the depth of the global lockdowns, as well as more info on how effective the stimulus deal actually is. I see further downside as the week progresses, and Vix closing the week significantly higher than 25. Risk protection is very cheap right now considering the economic landscape, so trade accordingly.
I appreciate your time today guys, I hope you enjoyed the analysis, and thank you for all your support. I love trading, I've been investing and trading my entire adult life, and I plan on doing it for many more years to come. Have a great night, and see you tomorrow. Cheers! Michael.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.