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ST & IT up, approaching key resistance levels


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#1 dTraderB

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Posted 09 January 2019 - 07:24 AM

Still up, near important resistance levels. If SPX 2580 can be taken out on a daily close basis then the markets can rally to 2640 and even  as high as 2700. However, it is more likely that there will be a pullback this week.

 

Here are comments & key levels from GMM

 

 

S&P500 Key Levels by macromon

Stocks have seized the bullish narrative of a dovish Fed and an imminent trade deal with China, which should continue to drive the S&P up to its 50-day at 2639.61.  Note the vicious sell-off in bonds since hitting the recent low of 2.55 percent on January 3rd.  You know our suspicions that bonds have become the instrument of choice for the big global macro equity bears.

The current rally is based on an unstable narrative, in our opinion.   What happens if the terrific trio -- SeanRush, and Ann -- don't like and the trade deal and criticize the president for selling out the base for stock investors?   We don't see the Fed cutting rates or suspending its balance sheet reduction,  which we project at $442 billion in 2019 until stocks are much lower.   The bulls, who are driving stocks higher, are thus cannibalizing their own narrative.

President Donald Trump is increasingly eager to strike a deal with China soon in an effort to perk up financial markets that have slumped on concerns over the trade war, according to people familiar with internal White House deliberations.  - Bloomberg, Jan 8th

Key Levels

The S&P closed just above the key .382 Fibo of the recent sell-off at 2573.61, which opens the way to the next critical range of resistance at 2639 to 2643, the 50-day and .50 Fibo, respectively.   We may see some consolidation before the move there, however.

To the downside, it is now critical for the 20-day to hold at 2528.77, which, keep in mind changes daily.  Also, the index needs to stay above 2593.61, the Fibo retracement mentioned above.

Upshot

We believe stocks are still in a bear market, experiencing a classic nutcracker of a bounce, but reserve the right to change or mind.

unnamed-8.png

S&P500 Key Levels by macromon

Stocks have seized the bullish narrative of a dovish Fed and an imminent trade deal with China, which should continue to drive the S&P up to its 50-day at 2639.61.  Note the vicious sell-off in bonds since hitting the recent low of 2.55 percent on January 3rd.  You know our suspicions that bonds have become the instrument of choice for the big global macro equity bears.

President Donald Trump is increasingly eager to strike a deal with China soon in an effort to perk up financial markets that have slumped on concerns over the trade war, according to people familiar with internal White House deliberations.  - Bloomberg, Jan 8th

The current rally is based on an unstable narrative, in our opinion.   What happens if the terrific trio -- SeanRush, and Ann -- don't like and the trade deal and criticize the president for selling out the base for stock investors?   We don't see the Fed cutting rates or suspending its balance sheet reduction,  which we project at $442 billion in 2019 until stocks are much lower.   The bulls, who are driving stocks higher, are thus cannibalizing their own narrative.

Key Levels

The S&P closed just above the key .382 Fibo of the recent sell-off at 2573.61, which opens the way to the next critical range of resistance at 2639 to 2643, the 50-day and .50 Fibo, respectively.   We may see some consolidation before the move there, however.

To the downside, it is now critical for the 20-day to hold at 2528.77, which, keep in mind changes daily.  Also, the index needs to stay above 2593.61, the Fibo retracement mentioned above.

Upshot

We believe stocks are still in a bear market, experiencing a classic nutcracker of a bounce, but reserve the right to change or mind.



#2 dTraderB

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Posted 09 January 2019 - 07:26 AM

I expect more dovish FED talk buy also careful & subtle talking back some of the ultra dovishness you are hearing from Wall st bulls.

 

Key Events

The Atlanta Fed's Raphael Bostic speaks at the Chattanooga Chamber of Commerce’s 2019 Economic Outlook Breakfast at 8:20 a.m. ET; the Chicago Fed's Charles Evans speaks on monetary policy and the economy at 9 a.m.; and the Boston Fed's Eric Rosengren speaks on the economic outlook at 11:30 a.m.

The Bank of Canada releases a policy statement at 10 a.m.

Crude-oil inventories are scheduled for 10:30 a.m. Stockpiles are projected to have fallen 1.8 million barrels last week, per the average forecast of 10 analysts and traders surveyed by the Journal. 

Federal Reserve minutes from the Dec. 18-19 meeting are released at 2 p.m.

China's consumer-price index for December is out at 8:30 p.m.



#3 dTraderB

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Posted 09 January 2019 - 07:28 AM

Expect a minor pullback or more ...unless the SHUTDOWN is resolved quickly. If that happens then there will be a 100-plus SPX point rally in 2 or 3 sessions

 

McClellanOsc_453.gif

 

https://www.mcoscill...t_breadth_data/



#4 dTraderB

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Posted 09 January 2019 - 07:40 AM

Bullish Trade talk news will send markets up another 2% or more; that with a shutdown resolution & more FED dovishness can take the market to SPX 2700 by end of next week.

However, failure on any of these and any negative political event, here or globally, can send it back to SPX 2400 and lower

 

CHINA, U.S. TO RELEASE MESSAGE ON THURSDAY MORNING:GLOBAL TIMES.

 

MBA Mortgage Applications surge 23.5%, after dropping 8.5% week prior Purchases up 16.5% after falling 7.6% Refise up 35.3% after falling 10.6%

 

Apples Slashes iPhone Production For Second Time In 2 Months



#5 dTraderB

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Posted 09 January 2019 - 07:42 AM

He has been on a winning streak ....'

 



#6 dTraderB

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Posted 09 January 2019 - 07:49 AM

4094_1546987601.png



#7 dTraderB

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Posted 09 January 2019 - 07:52 AM

bye by VXX... thanks for the  profits, now on to your replacement, welcome VXXB, let's have a long & profitable relationship.

 

VXX – Thanks for the Hedgeories
by Michael Chupka
Oh, those pesky Volatility Indexes, ETFs, ETNs, 2X and 3X and inverses...maybe there are too many now. But, unfortunately, it is time to say 'VXX - Thanks for the Hedgeories'
 
It appears Barclay's is shutting down VXX - iPath S&P 500 VIX Short-Term Futures ETN - on January 29th, 2019.
 
VXZ - iPath S&P 500 VIX Mid-Term Futures ETN will also terminate.
 
What is an ETN?
An ETN is an Exchange Traded Note.  Unlike an ETF, if you hold shares in an ETN it is more like holding a bond.  An ETN is an unsecured debt note underwritten by an institution - in this case Barclay's.
 
You can buy shares of an ETN, just like you can with an ETF.  But, the ETN is not invested into the asset it tracks.
 
There are pros and cons to each, but we will save that discussion for another blog.
 
Why Does the Shut Down of VXX Matter?
We share our approach to using Volatility Indexes, ETFs and ETNs as a portfolio and market hedge.  As the unexpected occurs, these volatility securities will swing up (quickly), or down as the market settles.
 
Using Calls on the VIX (Volatility Index), VXX, UVXY or other securities that monitor volatility can result in high returns to counter losses in your portfolio.  At times I found the options on VXX to be less expensive than the VIX, which made them more appealing in choppy markets.
 
VXX (and VXZ) have been good tools to use for this approach.  And since you can buy the underlying, unlike with VIX, you can also trade other strategies such as covered calls, collars, married puts and more.
 
Also, being able to purchase the underlying can work to help manage a Naked Put, Bull Put spread or other plays on VXX if it moves against you.
 
But, now we have one less volatility fund to use as a market hedge.
 
Or, Do We...?
Although VXX and VXZ are reaching termination at the end of this month, Barclay's is replacing them with other ETNs:
 
VXXB - iPath Series B S&P 500 VIX Short-Term Futures ETNs
 
and
 
VXZB - iPath Series B S&P 500 VIX Mid-Term Futures ETNs
 
These two ETNs are already trading and options are available.  Right now they are tracking VXX and VXZ respectively, and will continue on when these two are terminated.
 
How Can ETNs Work as a Hedge?
As we mentioned, shares and options on the volatility ETFs and ETNs can be used to hedge your portfolio for the unexpected.  As market 'bumps' occur, or during weakness as with the last 3 months of 2018, standard volatility securities will spike up (where the inverses will spike down).  If you are positioned to capture the sudden moves in volatile markets, these gains can counter the unrealized losses in other strategies.
 
Here are links to a few of our resources on trading volatility securities as a portfolio hedge:
 
VIX Calls as a Market Hedge - a portion from our End of Year, Favorite Topics of 2018 presentation.  Click HERE to view.
 
Managing Bull Put Spreads, Open Interest, VIX Portfolio Hedge and more!  (VIX discussions begin at the 37 minute mark).  Click HERE to view.
 
Insuring Portfolio with Put Options or VIX Call Options - another blog article, oldie but goody!  Click HERE to read.


#8 dTraderB

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Posted 09 January 2019 - 07:54 AM

Gundlach says this is how stock-market investors can survive the ‘zigzags’ of 2019

https://www.marketwa...2019-2019-01-09



#9 dTraderB

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Posted 09 January 2019 - 07:57 AM

Technically Speaking: Return Of The Bull Or Dead Cat Bounce

There remains an ongoing bullish bias which continues to cling to belief this is "just a correction" in an ongoing bull market. However, there are ample indications, as stated, the decade long bull market has come to its inevitable conclusion.

saupload_Fed-Balance-Sheet-SP500-010719.

 

 

saupload_SP500-MarketUpdate-1-010719.png https://seekingalpha...dead-cat-bounce

#10 dTraderB

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Posted 09 January 2019 - 09:57 AM

Looking to buy QQQ MARCH 2019 PUTS, strike between 165 & 170

 

I want to see the QQQ rally higher  but I will open a position with a few at or just above current levels