The Market We're In
CLUB/EDGE client post Monday April 15th & "Sell-The-Rip Is Working"
CLUB/EDGE client post Monday April 15th 5:26 PM
The Market We're In
Hot CPI & Hotter Conflicts
Breadth Breakdowns & Net Selling Under Indices
Yen Carry Trade Unwind & Military Threats Winding Up
Negative Gamma & CTA Selling Picking Up
Call Walls Rejected & Put Walls Reevaluated
Technical Trend Breakdowns & Bitcoin Dumps Starting
Insiders Selling & Buyback Blackouts
Fed Impotence & Treasury Excuses
Dollar Makes the Weather & Yields Determine Its Velocity
Now imagine we get Earnings Disappointments & War?
Israel Says Readying 'Imminent' Attack On Iran As Airlines Cancel Flights To Region
Plus my USDTWD chart (see below) is intonating a big breakout.
Remember, I have shown this as a tell of potential war drums sounding in South China Sea as well.
Sell-The-Rip Is Working
Posted under #intermarket-tells is a video that Michael captured from my live trading room Friday that shares all my views on this market - macro to micro - as clients know I have been quite adamant that EVERYTHING CHANGED March 1st when gold spiked higher and told Nasdaq to show the f*** down.
It has been a good run of market timing calls:
Gold spike March 1st to end Nasdaq melt-up.
Silver to follow gold with a squeeze.
USD higher to slow down precious & industrial metal squeeze.
USD spike to trigger spiking yields as headwind to equities AND bonds.
"VIX not done" as equities and bonds sell off.
Oh, I even warned last week that spiking higher yields would see commodities pause & mess with folks.
So now what?
Now We Watch For Round 2 of CTA & Bitcoin Selling
According to Goldman- that first set of Short-Term CTA triggers triggered on Friday ~ 5135 SPX.
Here's what's in store if the selloff continues lower over the next 1 month: h/t @VolSignals
-$20bn of S&P futures for sale if SPX drops ~3% from Friday's close
-$42bn of S&P futures for sale if SPX drops ~7-8% from Friday's close
-$200bn of Global Equities for sale alongside.. in the hard sell case
We got some more of that today as Put Wall of 5080 SPX was taken out.
BofA Friday note I am just seeing now:
"With our CTA model’s S&P 500 trigger now only 90bps away, we could see a scenario of CTA stop loss triggers, vol control leverage unwinds, and levered and inverse ETFs all selling into the close Monday"
CTAs are basically in sell or sell mode here. Downside convexity can kick in even more as dealers are in short gamma.
Bitcoin got dumped this weekend on war drums sounding, only to bounce into resistance at its 50D $66788.
This is a great level to short with proxies as yields rise.
VIX is Not Done
GS says VIX has more room to rise.
"The VIX is up 4.3 points this month to 17.3. Our models suggest that a VIX of 21.5 is consistent with the current economic environment".
What I have been saying is VIX has more room to rise as yields spike higher.
The war in Middle East isn't bidding up VIX.
The war on US bonds & dollar is bidding up VIX.
And that's what most bulls don't realize.
Most bulls "may" be hedged but not yet selling. They think this is war jitters.
Most bulls expect earnings to delight and conflict to resolve.
Most bulls expect tax day (today) and bitcoin halving later this week to serve as the trough of weakness.
I just don't see a bullish backdrop until Fed/Treasury intervenes.
“BOND BULLS NEED TO DEFEND HERE”
I called it earlier from my trading room - after equities opened strongly - I said I don’t trust this market!
Specifically, I said this morning I did not trust my green BXM indicator (see chart below) as it looked like it would turn down - which was bearish markets.
It got rejected on cue: W, D, H timeframes!! Ditto with SVXY!
I posted my thoughts on Sector trend breaks, key Indicator tells + Index levels under #swing-ideas - adding SMH, XLK & COIN shorts.
I reiterated my warning to protect Trend longs.
I even warned past few days that selling could continue in markets as long as my dollar/yield ratio continues to stay above 300 - with likely target of 350!!!
This is dangerous but that is just the market we're in.