Nick

Considering the SPY downtrend resumption, I added fibonacci’s and new levels to the chart on Monday. These are theoretical…unless (until?) they’re not. Retirement portfolios prefer the theoretical case. Weekly levels are drawn around large volume points, consolidation periods, and/or interesting candle wicks.

Oil – yet another retest of that 110 level. What I thought was another test and breakout of the 108 level proved to be resistance at 110, the .5 level on the fibonacci. I still think you see a breakout here. Remember, impending China open (whenever that may occur), is a tailwind. Look at the equity charts, they look strong.

BITCOIN – FIRST BTC CHART let’s go. I charted BTC Monday when it was breaking down. It appears as if it wants to hold the weekly lows of ~28,600. Honestly who cares. It’s a risk asset which is trading in tandem with the Nasdaq. Even though Luna/Terra was a stable coin event, it proves something. Crypto is still highly speculative, and should be treated as such from an investment perspective. I’m long crypto and averaging into the dips. Crypto winters suck, and this one may last as long as QQQ bear does unless something changes. If we get a push towards 20k BTC, you apparently get margin calls on firms like MSTR, which would be structurally negative. As of now, all you can do is hope. Let’s play like it wasn’t always hope. Ehem, HODL.

The yellow arrows proved to be a lucky call. Once I put something on the chart, it remains in its original form and eventually gets deleted. I’ll leave all the junk on the chart to see how well my perceived trends persist.

The market firmed up from the recent lows early this week, then ripped following the Fed minutes on Wednesday. In the press conference, Chair Powell said a “75 basis point increase is not something that the committee is actively considering.” I think we saw a short covering rally following the release, trapping bulls into near-term supply (SPY ~428). The market sold off after digesting the news and cluing into the fact that Powell backed himself into a corner. Sure, he can walk back on his comments, but they didn’t warrant the velocity of the Wednesday afternoon move. S&P500 put/call ratio above 1.5 spells short covering to me.

Zoom in – remember, multiple time frame analysis is important if you’re more active than the strict buy-and-hold type. A dip Monday afternoon near my early year downtrend channel was bought up quickly. You can see we failed the 428 SPY level AGAIN into the close Wednesday. This is the third attempt in the past two weeks. CPI data this coming Wednesday. Barring unexpected numbers, I think we see yet another test of the ~428/430 level, and possibly a move to 440 (through yellow channel).

It’s pretty binary. It seems like everyone wants SPY 400…which means 395 (large volume band), and I’ve had a weekly 383 level on my chart for months. I think this precise scenario actually plays out over time, but it may occur swiftly with volatility so strong.

Oil – the equity charts are pushing new highs as oil lifts to 110. Last week it appeared to me that the WTI chart was weakening and the equities may roll with everything else, yet they firmed up well in the face of overall market volatility this week.

I wouldn’t be talking about oil this time a year ago. The best performing stocks YTD: oil companies. Reasonable valuations, strong earnings, (debatable) macro tailwinds, constrained supply dynamics, etc. I traded oil equities on the desk in 2014-15 when oil went from approximately 100-30. Despite its relatively small proportion in the S&P, it is an incredibly important group.

Oil is the kingpin of commodity assets. Various macroeconomic conditions impact supply and influence price. Oil and the market don’t have to trade inversely, although they may in large swings. When oil prices rise to these levels, consumers are constrained, further crimping the economy. Supply dynamics (sanctions on Russian oil) are a tailwind for price. US growth concerns (upcoming recession? Seems like everyone now knows about yield curve inversion) are a headwind for price. China’s covid closure is also a headwind. (Note, China’s closure is also a contributing factor to overall inflation as [not oil, yet consumer & industrial] production growth is falling.)

There’s a political perspective – this is a midterm election year, and high oil prices don’t feel good as voting constituents are hurting at the pump. Sorry everyone, your government officials can’t effect the oil price.

The chart reclaimed my 108 level, which is largely insignificant when you look at the fibonaccis (fibs) on the new chart. From the breakout candle (the base of my yellow channel) to the high at ~130, you can see the confluence between weekly levels and fibs ($100 at the .236 & $115 at the .618). Current price of $110 is at the .50 level. People like to trade round numbers. I’ll save my golden ratio rant for another time, but fibs never cease to impress.

Where does it go? Feels like it wants higher. Keep an eye out – if oil really rips, it could impact your stock market relief rally. If you’re chasing oil equities up here, be tactical.

Stair step up, elevator down. The bears are out.

Bull hopes for a retest were blown as SPY 450.01 rejected and the indexes began rolling over hard. I’ve been saying how lucky I am to be long the FAANG names except for FB & NFLX, which concerned me coming into this week’s earnings. Now my Roth IRA core of big cap tech hurts. This was a make or break week for the market, as these stocks make (made? haha, too soon) up a large portion of the indexes.

Everyone is looking for SPY to break 400. The VIX is hot at 33. The seasonally best performing month in the market, this April was the worst since 1970. Funny enough, in 1970 inflation was at 5.5%, before going to 14% over the next decade. Coincidence? Okay how about this. Worst performing month for the Nasdaq since 2008. I don’t have to tell you tech hurts, Cathie can.

Fed meeting coming up this week. I’m praying for a 75 basis point hike. Let’s really go at inflation. Let’s remove the idea that a mid-meeting hike is on the table. How wild would it be if we hiked 75 bps and the market ripped on the news. Anything is possible.

The Fed is here to nuke the market. As your stocks go down, you feel poorer, reducing the ‘wealth effect.’ You slow down spending, the economy slows, and inflation [is supposed to] slows down.

I think SPY breaks 400, and your next volume node is between 390-395. I’ve left the early 2022 channel on the chart, and the market actually looks like it wants to touch that level before looking higher. Chart above from April 19 to show the levels you’ll see below. Since added an upper trendline and some goofy arrows as my best guess. Cool to continue seeing weekly levels respected (fail to take back 428 – yellow line).

Also fascinating how well Fibonacci’s work on charts. VIX hourly chart going back to February. I’ll get on my golden ratio fanboy session later (but look at the candles touch the levels!). VIX has room to the upside, but you may see a relief bounce in the market in the very short term.

Finally, oil. The equity charts don’t look great – they need to hold, or will roll over with everything else. Mind you, in tough markets, well-performing stocks become sources of funds. High beta stocks will really tumble if momentum takes hold. I like oil long term, but things are rocky right now. That inverted hammer doesn’t look pretty, and forms yet another lower high.

As I play with lines on charts, I recognize the folly in believing I know what’s going on. We’re just having fun.

Things are firming up – is the market climbing a wall of worry? Bear market rally? I’m looking for a retrace (forming a higher low) – which is what you want if you’re hoping for a healthy move. The return of the meme stock is concerning. The continued oversold-growth-stock rip doesn’t feel incredible. Kind of cherry-picking, but I won’t be chasing up here.

Russia. Fed. Oil. Dollar. Volatility. Oooh the bears are coming out of the woods. Not necessarily a sadistic view (human perspective on the events in Europe aside – we’re talking markets), but the negativity is beginning to feel comforting. The ebullience of up and to the right charts doesn’t have the same effect on my comfort. Volatility shakes out weak hands; strong hands in terrible names pay the price. Great quote – there is no bad weather, only bad clothing. If your names are junk (in a rising rate/geopolitical volatility-gripped market), you’re wearing them.

No need to be slow on the oil move, my call last week was blown out on MONDAY. Woof. She’s going higher too – new lines added above (monthly and 1 hour charts).

Bearish trades abound, with the ripping dollar and surging gold prices. Bye bye bitcoin, your safe haven/inflation hedge is a risk asset in sheep’s clothing.

Here’s the beauty of markets – we won’t know how much of the move in gold and the dollar is a result of Russian capital flows, and how much of it is a bearish investment bet until we see the other side.

Weekend check (we could get cute with charts, but there are plenty of charts we could play with); approximate levels:

• WTI Crude: 115
• Gold: 1970
• US Dollar: 98.5
• US10 Yr Yield: 1.73
• VIX: 32

The volatility in all markets have been astounding. Stay safe, my friends.

Endurance in the game is directly correlated to taking calculated risks. If you look around, you have plenty of risk. The announcement of Russia’s invasion of Ukraine didn’t seem to shock the markets. The NYSE Floor legend Art Cashin said something to the effect of ‘Sell the news of war and buy the bombs.’ If you think that’s coarse, you’re in the wrong room. Let’s soften it a bit. Counter-trend rally. Short squeeze. Remember, we’re still getting earnings – companies are shining or flaming with the swiftness.

We’re all market participants. Perspective: I’m 35% cash across my retirement portfolios and 100% cash in my day trade/swing brokerage. I day traded upside calls on QQQ expiring today; I’m not adding to my Roth. I’d rather miss upside than catch downside. We’re waiting for trend correction, not rip-your-face-off bear rallies.

Look around at the risk. No need to be verbose – War & Fed. Pithy and poignant. Rapid inflation….a SERIOUS concern. Yeah – I said cash is a position in this market. No, I’m not a bear. I just don’t think we’re through.

Let’s get cute with some lines. I love this game.

• 1st Chart: Hourly SPY chart with a regression channel. Short term upside to ~450 and resistance at 475. Both psychological levels.
• 2nd Chart: Downtrend line with two of my assumptive ‘trading bands’ on a ‘positive’ basis.

I caveat the 2nd chart’s horizontal levels only because I think the SPY wants 400. It’s a nice psych level amidst a shaky market with rapid inflation and waning consumer confidence. Do the fading covid memories assist the CC picture? Of course. However, let’s not forget the stock market element of household wealth and influx of market participants in the past couple years.

Reminder: cash is a position, and in the summer we’ll likely have a lot more clarity. I’m waiting for a few more rate hikes, and now, more development out of Eastern Europe.

Ooh ooh – oil?? Toppy? Too much macro going on to tell – consolidation at (okay, near) the ~100 level is anyone’s guess as to breakout vs breakdown. Recent high at 100 and a half on the following WTI monthly chart. Longer term resistance at the 110 level. I’m bullish on the economic recovery and ensuing oil demand. That said, it’s my opinion that she needs to breathe a bit.