SPY / SPX / ES - Shortened Week AheadAugust did not end well for Buyers. Rate Creep across the curve applied pronounced pressure.
RISK OFF is in trade across all Sectors within the X Complex.
TNX from a Rate perspective - Rate instability and lower rates?
At present, No. Bond VX is kicking up. It is however not damaging Banks as of yet, Financials are hanging
on... slightly.
Will the VIX Spike to 38 to 41? The ES would need to collapse to and through 3600, SPY clearly to new lows.
VVIX is seeing the out-of-control setup - Few Puts in SPY, Few participants in VIX Calls due to IV.
Prices sit at the most Pivotal area. Volimes are the main takeaway. Cumulative NYSE TICK took us
sideways into the Close. Is the selling slowing down... that will depend on whether we see compression
this week within a trading range.
Friday was a Trending Day. Can Buyers Create Balance here? It will require a SOH on the SELL SIDE.
Market Internals need to HOLD. Look below and fail is open as well.
11 of the past 19 September's ended up with 8 ending Down. The past 20 years have been highly volatile
and I find it a generational approach more relevant than the overall historical as HFT/ALGO Trading has
become dominant with increased Volatility - It's my approach this September.
Alladin will be extremely busy this Month - chalking up further gains for Blackrock. The Quarterly close
will provide important answers to a Trend in decline at present. It is somewhat overstretched on OSCs,
but Summation Indexes have more work to do. This can provide ever-increasing Volatility as we see the
VIX Curve pricing in expanding VX for several months.
VIX - % Contango
SEP M1 @ 3.90%
OCT M2 @ 1.80%
NOV M3 @ 0.37%
DEC M4 @ 3.30%
JAN M5 @ 0.25%
FEB M6 @ 0.82%
MAR @ Par with FEB
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Year to Date - August opened the Dunk Tank once Powell delivered his May FSR Objective affirmation
for Asset Prices and Interest Rate Forward Guidance.
Winners:
Energy + 30.10 %
Utilities + 5.64 %
Losers:
Consumer Non-Cyclical -6.55 %
Financial -10.81 %
Transportation -15.08 %
Basic Materials -15.26 %
Technology -31.79 %
Healthcare -26.92 %
Consumer Discretionary -26.06 %
Services -21.44 %
Capital Goods -20.45 %
Retail -18.52 %
A very brutal 2022 into the month of September - where Monthly, Weekly, and Daily timeframes are
within poor Structure.
August SPY Monthly provided a very nasty inverted Hammer. Sellers stepped up in spades at the Highs
and Sold to the opening Print, and through the Opening Print - to close on lows.
September's opening print did not hold the lower Body Bar on Friday - a poor close to the week with
options settlement into the Cash Session.
Buyers were non-responsive at best. Sellers sold through on increasing volume for the 3rd consecutive
day.
September's big events are ahead - the 13th CPI. Powell will provide color commentary on the 21st.
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Last Month's Price action served to expand the range for Major Indices.
Monthly timeframes continue to hold Lower Highs, not a good look from the June Lows at present.
The 379.92 Level is the .382 and Pivotal for the Month of September, it is presently the initial implied
Lower Range for the SPY on the confirmed break and closing below the Trend Line Support.
SPY 50% resides at 349.12 - the opening to a larger and lower low - into the Gap Fill @ 338.50.
Obviously larger targets below on increased panic and further Selling.
Price is currently sitting on top of what was prior support.
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I have cautioned for some time, Rates were a distraction too far larger issues within the Global Economy.
Repeatedly.
There are 3 legs to this stool.
Forward EPS, which remains incredibly high based upon earnings projections and their required adjustment
too far lower expectations. These have been partially priced in after Powell dropped the Hammer. There is
more work to do there.
QT remains a recycling operation - in through the out door with the appearance of an aggressive FED - while
advancing CBDC via FED NOW/FED DIRECT at an increasing pace for Rollout. This and 41067 won't bode well
for Crypto IMHO. Simply adding to the avalanche of impending exits which can be triggered by any panic in
trade.
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After large declines for all Major Indices... we've never seen a real Flush down panic, not one.
This is a once in 100 years Bear Market and it will be difficult to navigate as the Algorithms are growing
increasingly predatory.
Be careful out there, reduce Size and be on guard for increasing VX in September.
Bearish Sentiments @ AAII are rising to 50.6% again. Stop runs on trailers and catching traders offsides
should be anticipated.
We will see if the breakdown hammers this lower or price can manage to consolidate in a larger range
this week - expanding to the downside but providing outsized squeezes based on the Gamma / Delta.
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A Break of 388.96 has the potential and higher probability of creating a massive flush down and panic move to the downside.
Price is currently sitting on top of DOM Support or what many refer to as a Volume Node, I'm old, Depth of Market (DOM) is my preferred nomenclature.
3 Weeks of selling favors the Sellers - expected moves will produce lower Highs in Trend. Daily DT is another large Lower Low.
The Daily TF is the confluence with the Trendline @ 390.85 - BREAKING THIS will get nasty.
Buyers will absolutely need to defend early this Week, 399.50 may limit the upside in the Range.
379 to 399.50 is the Larger Range this week.
408.25 breaks a Potential Bear Flag.
Sector Support appears to be a Risk OFF in ALL Sectors.
HYG will provide leading indications as will XLF - breakdowns here would be very NEGATIVE.
Can Buyers consolidate here... we will see.
Take care and be cautious - trade Safe, Lower highs in the XLK will provide entry into the Trend.
