Capitulation Low? Not Yet!
This post is in follow up to my October 13th client post: Still Waiting for a Capitulatory Low
Since Friday October 27th, SPY has fallen 10.3% since July 31st with Russell down 18.4% in the same period; Nasdaq 100 is down 11% since July 19th - two days after I made my SWING SHORT bets the market would roll over.
All the while markets have corrected, the USD and 10Y yield have been grinding ever higher and my DXY/10Y ratio firmly above 300 line-in-the-sand, which as I warned were major reasons for the expected equity and bond sell-off. The spotlight on geopolitical concerns has "only" been in play since October 6th, with no end in sight for a stand-down or resolution.
With these macro headwinds, not to mention disappointing earnings season in general and the weakest sales bests in the US in a decade specifically, it is very difficult to cover short and swing long without my intermarket analysis confirming. It is not enough for me to simply follow consensus that expects bullish seasonality.
And here’s why: nothing has based enough in my charts to give me conviction we are done going down!! And two days of an expected VIX crush Monday and Tuesday into a known VIX-crushing event of FOMC Wednesday, is not enough to flip me swing long, yet.
I was early calling this top and I may be late calling this bottom, but I see no capitulation low, yet.
PMOBUYALL signal offers up nothing:
My NDX, SPX, NYSE McClellan Summation Indices offer up nothing:
My SPX roadmap posted/shown regularly still has $4000 written all over it.
My Growth-to-Value Rotation charts - on weekly and daily timeframes - are still intonating a likely pullback in mega cap tech (MAG 7).
My NYSE composite work still shows massive breadth destruction and weak price action with no support or turn.
Even my NYSE Advance-Decline has broken a massive trendline on both weekly and monthly levels:
My Nasdaq McClellan Summation for NASI is in deep correction territory with no sign of reversal yet.
My stacked technology ETF chart shows SOXX has rolled over (top panel, not since Dec 2021).
Many of the stocks have pulled down IPO and FINX FinTech ETFs to display what I affectionately refer to as "dead money".
With Software Infrastructure ETF (IGV) held up by mostly MSFT, with Cyber Security ETF (HACK) also losing altitude and pointing down.
Most sectors look like Banks: falling and not yet based, reversed.
Foreign Market ETFs of EWJ and EWG have fallen with rising US dollar and yields with NIKK and DAX showing no sign of capitulation despite tagging support.
Yield Curve is still de-inverting pulling forward recession risk:
Volatility big picture is not done going up.
Breadth continues to be abysmal.
But we did bounce on key Nasdaq support like I mentioned Friday in my post: "Bounce Hard or Trounce Hard".
BUT CAN WE FOLLOW THROUGH IS THE QUESTION!?!
Long story short, I posted this stacked options chart of SPY on JULY 31ST with my projection to $400 / SPX $4000.
As you can see, it is the last level of size to take out!
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