For those of you BTFD’ers who came rushing in sans February 9th…I think you will learn soon that yesterdays pigs are about to become tomorrows bacon. To add a little color and context here – consider the following:
- January 26th 2018 All Time Highs (yet again) – SPOOS: 2872.87
- February 9th 2018 VIX Volcano Panic Lows – SPOOS: 2532.69
- The leg of this viscous and short lived panic was 340.18 SPOOS points – the most dramatic leg since February 2016. Nearly an 11% +/- haircut.
- The fact of the matter is we only recovered 221.83 of those points or roughly < 66% of the range. Only to hit checkmate.
Now then, Lets Go To The Video Tape!
- Four consecutive trading sessions – every time the S&P has crossed the 50 MA – it has been sold down. This is somewhat remarkable when you consider the high to low ranges have exceeded 30 to 35 SPOOS points in each session. And it has been the same pass the peanut shuffle daily – highs made shortly after the cash open – lows made at or very near the cash close. This is textbook bear market behavior.
- Note Money Stream – It did a complete U-Turn back on February 26th – even though prices looked to be moving higher. Luring the unsuspecting in to the illusion that we could get back to January 26th highs. Good luck wit dat! Money Stream is further confirmation that The Five White Guys Who Run Wall Street are selling that 50 MA every time we even kiss it.
- For now it is the 100 MA that has caught support – emphasis on “for now”. Should this level fail, and it shall – we would not see meaningful diatonic support until the 2597 levels, and the 200 MA near February 9th lows.
- Short term VIX which is a 9 day forward gauge as opposed to notional VIX – is well off the vix-plosion highs and now back in the mid 19’s. That may feel low but it is 90% higher than where it spent the better part of 2017.
Long story SHORT traders? The Fed is dead, and they have taken the Plunge Protection Team with them. No more free money, no more NIRP. Trump nailed this coffin shut when he fired Yellen. Expect a retest of the February lows sooner rather than later. And you can forget about the January 26th highs for at least the next 2 1/2 years. Shiver me timbers!
I am KingCAMBO…smoke em if ya got em…and that’s how I roll!