8-5-22 SPY/ ES Futures and Apple weekly recap and analysis
Well just when you think the bears are finally going to catch a break… the bulls pull the biggest PSYCH of the year. Today was even more impressively frustrating as from 11am until 1145am on SPY and from 11am until noon and 2pm until 245pm on VOLSPD the bears had locked in what we call extreme momentum. This was the first extreme bear momentum I have seen in weeks. Usually once a level of extreme momentum like this is locked in it takes a big move to get that momentum to break, however, the bulls both times broke that momentum and 180’d this.
The dips are still call buying opportunities… the MM are just getting better and better at selling these red days and trapping the bears.
So a few very interesting things to note that has changed from last night around 7pm until now…
Last night markets had price in an 87% chance of a 50bps hike for the September meeting after this mornings employment numbers the market now is nearly 50/50 whether it’s a 50bps or 75bps hike. Was that unbelievable drop pre market the market pricing it in already? Or does that still need to be priced in? Will markets not care until CPI Wednesday? So there is this too which is interesting…
I took this picture last night of the expected CPI when I was making my CPI post…
Check out the consensus… they actually today (at some point) lowered the expected CPI consensus by 0.2%. I find this very odd and suspicious to say the least that they lowered the expected CPI consensus so close to CPI.
I have two theories on todays actions… 1. The employment numbers clearly caught the MM and markets as a whole by a big surprise… I mean this opening was more red then GDP confirming a recession and gave CPI a run for its money. I believe todays action (especially looking at things like IV rank) shows the MM had today already priced in as a bullish day. It would explain a lot of what happened intraday today. 2. The markets/ feds (whoever you think is in control) realized that with a huge employment number like this with an expected terrible CPI (forecast is 9.1%) markets are panicking. They are doing everything they can to keep this market from crashing into the abyss.
Think about it whats really driving this current bear market rally? Overall after the last CPI and last FOMC markets are pretty much under the impression that the feds about to pivot in September. This is why the GDP/ recession and last CPI is being shrugged off and why you don’t hear the “panic” talk much anymore about the next rate hike, cpi, etc. etc. However, today was the first time the markets really said wow with numbers like this feds aren’t going to pivot and the rate hikes aren’t done yet. Markets are late to react (usually one day) to new like this and I believe we could see that reaction Monday and Tuesday. We have CPI on Wednesday and I think that’s going to be a big deal…
I am still working off the impression that we are consolidating like we did from May 27th until June 8th before the CPI dump. If this is true then Monday (Tuesday at the latest) should start a pretty impressive and aggressive sell off.
This last week has also set up a pretty large symmetrical breakout/ down (red lines) triangle that will most likely play out Monday if not Tuesday at the latest. Key support is 410.3 (which breaks the overall 8 week long bull channel) and resistance is 413.9.
We are still stuck right between the daily 100ema and daily 200ema and we need to pretty much wait for one of this to hard break before we can finally see if we are going to 430 or 390s.
It is important to note that we have not put in a new high since Wednesday so we are starting a lower high trend. If we once again reject that red solid resistance line at 413.9 Monday then I would feel more confident that we are going to drop next week.
Key levels to watch next week remain the 100ema at 407.5 and the 200ema at 417.4. Overall nothing is happening until one of those is broken.
The ES futures daily chart is looking similar yet a little different. I said yesterday “we are here” referring to the June 27th/ 28th candles and had we not had that ridiculous bull run at open and had we crashed down EOD like was expected we would have finished nearly identical to those days. However, we put in yet another doji on the daily.
The bulls were able to reconfirm bull channel support tho at open and still haven’t broken that 8 week long support line.
We here too are stuck between the daily 100ema at 4085 and daily 200ema at 4184.
The symmetrical triangle in play here too shows support at 4115 (which breaks bull channel) and resistance at 4158 (key resistance for the last 3 days) for Monday.
Futures did finally break that extreme bull momentum support line that I mentioned I suspected would happen today since SPY broke its yesterday.
Overall the weekly SPY and ES futures charts are looking very similar. I am highlighting the May 31st weekly candle here on both SPY and ES. I am looking for a similar pattern to play out next week. This week we attempted to break out of this 415/ 4162 weekly level resistance. We tested this resistance numerous times this week, however, we failed to close over this key weekly resistance every day this week.
I am also seeing that this May 31st weekly candle is the week before June CPI. Which also plays further into line of expectations that Monday and Tuesday is going to lead to a big sell off going into CPI on Wednesday. This would now be the 5th weekly candle to attempt to and fail to break this 415/4162 level.
We may open Monday red and just drill all week but I suspect Monday we test this level one more time. A rejection here should result in further downside.
Key support for the now 8 week (9 week starting next week) bull channel is 409.1/ 4100. If and when that support is finally blown through I suspect a large selloff fuel by CPI.
If you read my CPI document you know I expect blood next week. Whether we get that or not? Well that’s a different story. The bulls are still beyond in control its not funny. At every possible weak breaking point they manage to muster together some unexpected strength.
Apples daily chart is still looking hella bullish with them too refusing to give up any of this relentless bull momentum. However, like SPY yesterday Apple broke the week long extreme bull momentum support line. That’s the first strike the next strike is going to be breaking that bull bull channel support line.
Now despite the bull strength today the daily chart is still looking like we are putting in a teepee (the opposite of a v bottom) top. With the big run up, a doji and now a lower candle I suspect this COULD be the start to the top.
I will be watching closely Monday for this blue support line at 159.8 and the red resistance line at 164.6. Apple has been even putting in large green days or small +/- 0.5% days for the last 8 weeks (minus maybe 2 bigger red days). Overall its going to take some pretty big news to put apple in the ground (it did open down 1.6% today which was a good start…).
The trend as you can see is Apple puts in a high then has about 2-3 days of small drops before it puts in a massive green day. If this trend continues we should see a small retrace before Tuesday is big green, however, if markets can break this trend and we break that key 159.8 blue bull support line we might finally fill that gap.
There really isn’t a whole lot to be said about apples weekly besides this 8 week channel is hella impressive. This is actually Apples first 5 green weeks in a row since October 2021. It is also the most impressive bull run Apple has had since Covid recovery…
Weekly support is 160.8 and resistance is 172.
The VIX continues to impressively unwind. This week with CPI we are either going to see the VIX finally go back to 30 or we are about to see the VIX go back to 15.
Overall this was actually a great week for me. I had a good time getting back to me taking these quick scalps.
The biggest L this week came on Wednesday when I let a put run to -73% and refused to close it at -30% when it felt like it wasn’t coming back and then not closing it at -50%. I held onto this loser WAY too long (I didn’t accept how strong the bull momentum was at the time) and that turned a GREAT week into a red week. Overall I am happy with how my week went, the play I made and my win rate. Had I cut this loser it would have changed my week from red to green. I continue at times to take losses fast enough.
Today was a good day with 3 nice scalps. My only regret was that 1dte put. I took it before the mid day reversal (when momentum was at the bear extreme) I hit about 10% profits, however, my conviction based on what I saw was so high I didn’t take profits as I suspect we would see a retest of 409… as you can see how the day went that did not pan out very well for me… I was unsure whether to let this ride to Monday or not. I would need a 409 breakeven Monday in order to see green.
I weighed the risk to reward on this on whether It would be better to salvage this and use the money Monday or whether I thought we would open and drill right to 409 to make it worth holding. In the end I chose to mitigate the loss. This was another good lesson for me that no matter how strong my conviction is and no matter what im seeing and how good it looks and how strongly everyone else also sees what I see… always protect profits.
In the end I had a great week and felt like myself again this week for the first time in a while. I look forward to next week.
Remember to always have a plan, protect profits, and never get greedy. This market is chewing up and spitting anyone out who remotely get greedy or who thinks they are smarter than the MM is. Overall, protect your profits and protect your portfolio… there are better times ahead of us.
Have a great weekend guys!
Note- I will have a youtube video up tomorrow at some point… DM me if youd like a link as a I do not wanna get banned here but I know a lot of you have been asking about it.
Submitted August 06, 2022 at 03:27AM by DaddyDersch
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