This SPX chase was no joke!
[NOTE: This was posted in large part under #chase-ideas but our bot didn't populate correctly so I'm reposting here which can handle long-form better.]
1st gap was filled at 4480 area on way to trendline resistance today near 4490. [ WE HIT ALREADY]
2nd gap is much higher near 4575, but let's see how VIX does with its hrly gap fill at 14.30!
Using my custom indicator shown on the left with SPX on the right, if we close back above 4490 on the wkly, and my ratio of dollar/yields stays below 270, we could move there by September OpEx.
My best tell for market direction: SVXY above 87.82 wkly close is bullish; rejection here is bearish.
Still no trend reversal lower for SVXY or indices until 82.33 wkly close below.
So use this as your friend for market direction for which we have had a gap up Monday with follow-through AND YET, no wkly follow-through.
My intermarket tells showed Monday that breadth break-down had stopped falling, and with it some buying, so given today's events, both breadth and net buying has picked up.
But it was the market-moving news that created the chasing!
Market spiked higher when 10Y was dumped with USDJPY (which equates to risk on) when JOLTS data showed a strong weakening on open jobs.
But we were already feeling the tone of a bid on stronger China plays - something I discussed yday on Bloomberg and in my #samanthas-market-thoughts yesterday. Here are the latest China policy tweaks (read: in-country interventions to stimulate investment and consumption) - all in the last 11 hours.
CHINA WILL CUT RATES ON EXISTING MORTGAGES AS SOON AS TODAY
CHINA BANKS WEIGH FURTHER DEPOSIT RATE CUTS TO BOOST GROWTH.
CHINA STATE BANKS/FUNDS SEEN AGGRESSIVELY BUYING STOCKS TO PROP UP THE MARKET
And then news hit during my trading room that court approved a Bitcoin ETF which SEC had previously stopped. This put a sharp reversal in all bitcoin proxies and further emboldened bulls.
So lots of reasons for market moving higher - China capital market incentives; JOLTS data showing labor market loosening; USDJPY rejection with US softness and BTC excitement.
Having said that, we are still susceptible to wild intraday reversals into end of week, and definitely into September that can get us back below 4373 weekly close but if we continue to unwind these shorts, SPX GAP FILL AT 4575 IS POTENTIALLY IN PLAY, negating my $4000 by end of quarter.
A wee bit early for me to call it as the week is full of economic data - including PCE Thursday and NFP Friday. Big picture, Craig and I 100% agree:
I think rest of week labor data will be fine and now better than expected and PCE is likely going to come in a little hotter so its tricky here but when the market gets excited about buying risk on the potential for recession (which is what we are seeing today), its kinda silly to me but they still are thinking the Fed is going to be cutting imminently and that's wrong still in my view.
Just yesterday, the Fed Funds futures market was pricing in a better than 50/50 chance of another rate hike before the end of the year with the first real chance at a rate cut coming in either May or June.
The higher for longer theme on rates is firmly in place and will likely remain there for at least another 2-3 quarters so TODAY'S current rally on falling 10Y yields is likely a sharp unwind of the puts that had accumulated past two weeks, and especially after NVDA earnings sell off.
Speaking of which, I have an afternoon interview on my X post that went viral on NVDA and CoreWeave, to try and unearth more about what may be happening behind the scenes on this big sentiment tell.
Then an X Spaces tonight at 7PM if anyone is around
Tomorrow afternoon, Craig and I meet to connect the dots in our bi-weekly Macro EDGE Roundup. So lots more macro and micro coming each day ;-))
Did you enjoy #samanthas-market-thoughts posted above? Then you would love full access to her and her live trading room, detailed macro and intermarket analysis, not to mention full portfolio of trades across Chase, Swing and Trend timeframes!
Upgrade to CLUB or EDGE today!