Week of May 12 - AAPL/BTC/DJI/VIX/10yr
Last week we had record low volume on indexes as they drifted higher. There as a drought of news to move the market - and the volume was reminiscent of a holiday week.
Indexes
The DJI went vertical to fill the last weekly imbalance we had that was MOST in the premium of the swing.
From HERE - we are at a major deciding point. The weekly chart still is bearish and we need to confirm this was just our back-test.
YM1! needs to respect this weekly FVG and starting heading lower confirming this as our "lower high". Wicks above and outside the weekly FVG are permitted - but notice how they closed the weekly candle INSIDE the FVG - this means that the FVG is still being respected. IF we can get confirmation of this being the lower high as set - the next logical targets are the April Lows/LOY.
The scam-ridden
NQ1! didn't do much this week but flop around inside a 2% range. I have no clear weekly bias on Nasdaq so I can't really comment too much on it.The best thing I can see is that
AAPL is holding up here, but its ready to drop lower into the gap that was created. Once that happens, the market will go with it. So far, its just a series of lower lows and lower highs.
Sectors
One thing I want to touch on - is where we are in the cycle. The way we can identify this, is that we can look at typical "late cycle" charts on Energy/Materials/Metals and compare them to the SPX. When you see these sectors rallying - its typically near/at the market tops.
Here is chart of XLB/XLI/XLE/XLP/
When you see Materials/Industrials/Energy/Staples all running up like this - it means that money is moving from things like tech and communication services - and into "safer" sectors.
Bitcoin
One of my favorite things to look at for a risk-apatite gauge is Bitcoin.
Weekly BTC is down by 17%. IF it doesn't bounce from down here and soon - a new bear market will begin. This week will give us CPI/PCE reports mid week that will be the key driver for the next market move.
VIX
Another concerning thing for bulls is the fact that the VIX is now near its yearly lows, and indexes aren't making ATH.
Again - This all smells super trappy as the market is setting up for the move during the mid-week inflation report releases.
Interest Rates
Rates are rolling over. The 10year continued its march lower this week and is now respecting bearish FVGs which is what we want to see. Half the reason that markets were able to drift higher this past week was due to the rates market being stable. This Bond trade is a longer term swing as I think that rates will crater during the coming recession.
So far - the 2/10 spread remains inverted for 2 years now. This is a RECORD duration and depth of yield curve inversion. This spread has a 100% accuracy rate when it comes to predicting recessions. Note the dates in the vertical white bars - once the 2s/10s un-invert - we have a recession 100% of the time.
So here is the setup I am watching for this week;
- We saw YM pop into our MOST premium weekly IRL level - from here I will be looking for 4hr charts to displace lower and start the march towards nLOY.
- Looking for interest rates to continue to march lower - this will be bullish for indexes (at first) as indexes tend to ignore WHY rates are dropping for a little while.
- BTC needs to make a stand here - or its going to enter another bear market.
Until next week - We'll be watching.
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