🚀 The $SPX Soars to New All-Time Highs!

🚀 The $SPX Soars to New All-Time Highs!

**🚀 The $SPX Soars to New All-Time Highs!**

After breaking out to new highs at the end of last week, the $SPX has shown impressive strength with only a minor pullback this week—a successful retest of the 5670 breakout level. 📈 We’re witnessing new all-time highs daily, both intraday and at closing, confirming this bullish momentum with strong price action.

**Key Support & Resistance Levels:**

– **Support at 5670:** This level now acts as solid support. Some might argue that support extends down to 5560, but a move below 5670 could be a warning sign. A decline below 5560 (which I don’t anticipate anytime soon) would suggest a bearish reversal and imply that the recent breakout was a false one.

– **Upside Potential:** With $SPX trading at uncharted highs, traditional resistance levels are absent. We’re using the +4Σ “modified Bollinger Band” (mBB) as a target, currently at 5810 and gradually rising.

**Market Indicators to Watch:**

– **Equity-Only Put-Call Ratios:** These ratios have been flirting with sell signals but haven’t confirmed them. The standard ratio hit a new relative low recently, keeping it on a buy signal. The weighted ratio is moving sideways—technically a sell signal, but not actionable unless it starts to rise swiftly.

– **Market Breadth:** Breadth has been reasonably good, with both breadth oscillators remaining on buy signals. They’re in overbought territory, but that’s acceptable when $SPX is breaking out to new highs.

– **$VIX Signals:** The $VIX is giving mixed signals. On one hand, the “spike peak” buy signal from September 9th is still in play and has been profitable. On the other hand, the trend of the $VIX sell signal persists since it hasn’t fallen below its 200-day Moving Average (currently at 14.90 and rising). The $VIX staying above 15 keeps this sell signal active.

**Conclusion:**

The majority of our indicators are bullish, and with $SPX confirming its upside breakout, we’re maintaining a **core bullish position**. We’ll continue to monitor for any confirmed signals and will take partial profits on positions that are deeply in-the-money.

**Stay informed and let’s navigate these markets together!**

#StockMarket #Investing #SPX #MarketAnalysis #BullishTrends

$SPX Update: Mixed Signals as Market Trades Within a Broad Range

$SPX Update: Mixed Signals as Market Trades Within a Broad Range

**$SPX Update: Mixed Signals as Market Trades Within a Broad Range**

Just a week ago, the outlook for the $SPX appeared bleak. The index had broken down from its trading range of 5560-5650 and swiftly dropped to the 5400 level, signaling bearish momentum. However, following this plunge, an oversold rally kicked in. By mid-week, $SPX was once again testing the 5400 support level. Despite the renewed pressure, buyers came in strong at this critical point, triggering a sharp 230-point rally in just two trading days.

With this rapid recovery, $SPX has now returned to the 5560-5650 trading range, where it hovered for more than two weeks during the latter half of August. This leaves the market at a crossroads, with resistance standing firm at the top of the range (5650) and just above it at the all-time high of 5670. On the flip side, the 5400 level has demonstrated its strength as solid support, having held up twice during recent sell-offs. Another crucial level to watch is 5370 — a close below this point could spell significant trouble for the market.

At the end of the day, the $SPX remains stuck within a fairly wide trading range, with strong support at 5400 and formidable resistance near 5650.

### **A Closer Look at Market Indicators: A Mixed Bag**

As is often the case when the market is trading in a range, our technical indicators present a mixed picture. Despite the significant rally over the past four days, some bearish signals persist, creating a conflicting view for traders.

#### **Put-Call Ratios Remain Bullish**

The equity-only put-call ratios are still signaling a buy, as they continue to decline despite the recent sell-off in stocks. This pattern is largely driven by two factors:

1. **Significant Numbers Rolling Off the Moving Averages:** Larger values are dropping off the 21-day moving average, which supports a more positive outlook.
2. **Lack of Heavy Put Buying:** Interestingly, put buying was relatively muted during the recent market pullback, suggesting that traders weren’t aggressively hedging against further declines.

#### **Market Breadth Shows a Reversal**

Breadth indicators, which measure the number of advancing versus declining stocks, have swung from extremely negative to extremely positive in a very short period of time. This rapid shift has not only erased previous sell signals but also produced new buy signals. Such quick reversals in breadth are indicative of the volatility and uncertainty currently gripping the market.

#### **$VIX Indicators Send Conflicting Signals**

The $VIX, often referred to as the “fear gauge,” is presenting conflicting signals, which further complicates the market outlook:

– **$VIX “Spike Peak” Buy Signal:** A buy signal was triggered on September 5th, suggesting that volatility may decrease in the near term, which could be bullish for equities.
– **Upward $VIX Trend:** Despite the buy signal, the overall trend of the $VIX remains upward, signaling ongoing uncertainty and serving as a sell signal for stocks.

It’s somewhat fitting that these contradictory $VIX signals are playing out while $SPX is stuck in this wide trading range, as the market appears uncertain and directionless for the time being.

### **Trading Strategy: Stay Flexible**

In conclusion, the market continues to operate within a broad trading range of 5400 to 5650, with mixed signals from technical indicators. The $SPX has shown strength on the back of its recent rally, but resistance looms at the upper end of the range, and the support levels, though strong, are not immune to pressure.

Given this uncertainty, our approach will be to:

– **Trade Confirmed Signals:** Focus on signals that have clear and strong confirmation before taking positions.
– **Roll Deeply In-The-Money Options:** As part of our risk management strategy, we will roll options that are deeply in-the-money to lock in profits or mitigate losses.

In such a volatile environment, flexibility is key. We will continue to monitor the critical support and resistance levels, as well as any shifts in the technical indicators, to navigate the market’s ups and downs with a steady hand.

*Disclaimer: This post is for informational purposes only and should not be construed as financial advice. Always do your own research or consult with a professional before making trading decisions.*

Analyzing the Recent Downturn in $SPX

Analyzing the Recent Downturn in $SPX

***

Hello, fellow market enthusiasts! Today, let’s delve into the recent turmoil in the $SPX and uncover the factors driving this bearish trend.

**A Manipulative Rally and Its Aftermath**

The pattern of lower highs and lower lows on the $SPX chart continues to signal a bearish environment. Recently, we witnessed a very manipulative month-end rally, likely using the FOMC meeting as a smokescreen, which propelled $SPX over 100 points higher in a blink. This sudden surge seemed aimed at ensuring month-end performance fees. However, once that period concluded, reality set in, and $SPX plummeted 300 points in just over 24 hours of trading.

**Breaking Support Levels**

This latest plunge has broken support at 5400, a level that had held intraday declines multiple times in the last week and a half. Moreover, the gap down to 5370 has now been filled. A close below 5370 will add another bearish element to the $SPX chart, with the next support level potentially as low as 5200, mirroring the late May lows.

**Key Indicators Align with Bearish Sentiment**

Several key indicators are aligning with this bearish sentiment:
– **Equity-only put-call ratios** remain on sell signals. These ratios maintained their upward (bearish) trend even during the recent $SPX rally. They will stay bearish until they reverse course and begin trending downward.
– **Breadth** has shown strength, indicating small caps are outperforming big caps. However, if breadth turns negative again on Monday, breadth oscillators will confirm sell signals.
– **Implied volatility** is signaling a bearish state for the stock market, despite some mixed signals.

**Volatility Spikes and Sell Signals**

On July 31st, a “spike peak” buy signal was triggered when $VIX closed exactly 3.00 points lower than its previous peak of July 25th. However, this signal was invalidated as $VIX surged through the old peak, now trading at a near-panic level of 28. A trend of $VIX sell signal was also triggered on July 31st, when the 20-day Moving Average of $VIX crossed above the 200-day MA. Since $VIX was already above that MA, it signaled a sell. This sell signal will remain in effect until $VIX closes below its 20-day Moving Average for two consecutive days.

**From Bullish to Bearish: A Rapid Transformation**

The market has transformed from a bullish juggernaut in mid-July to a state of disarray within a few weeks. We are observing more sell signals and will act upon them as they are confirmed.

Stay informed and vigilant in these turbulent times. The market is always evolving, and understanding these shifts can make all the difference in our investment strategies.

Until next time, stay savvy!

**Categories: Market Analysis, Stock Market Insights, Technical Analysis**

**Tags: $SPX, Market Trends, Technical Indicators, Volatility, Bearish Market**

Feel free to share your thoughts and experiences in the comments below! How are you navigating these market shifts?

Market Momentum: Small Caps (Russell/IWM) Joins the Rally

Market Momentum: Small Caps (Russell/IWM) Joins the Rally


Hello, market enthusiasts!

The market is on fire, with the pace of trading accelerating to new heights. The excitement that has propelled the S&P 500 ($SPX) is now spilling over into small-cap stocks like those in the Russell 2000 Index ($RUT; IWM). This surge in small caps has expanded market breadth, turning a previous negative divergence into a positive one. Cumulative Volume Breadth (CVB) has been hitting new all-time highs alongside $SPX almost every day in July, signaling that this is no longer just a NVIDIA (NVDA)-driven market.

Put-Call Ratios: A Closer Look
Equity-only put-call ratios are hitting new relative lows, levels we haven’t seen since the last bull market ended in late 2021. As shown in Figure 2, during periods like July 2023 or March 2024, these ratios can stay low while the stock market continues its upward trajectory. It’s important to note that while these low levels indicate an overbought condition, they are not a sell signal. A true sell signal will emerge when these ratios begin to rise sharply from their lows.

Improved Market Breadth
The inclusion of small caps has significantly improved market breadth. Both breadth oscillators are currently on buy signals and have finally moved into overbought territory, confirming the strength of the market’s rally.

Volatility and VIX
The $VIX continues to trade at very low levels, supporting the ongoing rise in stock prices. The trend of the $VIX buy signal, generated back in March (highlighted in Figure 4), remains in place. However, caution is warranted if $VIX rises above its 200-day Moving Average, which is currently at 14.40 and starting to decline again.

Our Strategic Stance
We continue to maintain our “core” bullish position, complemented by several other long positions based on buy signals from various indicators. We are also rolling calls up to higher strikes when they get deeply in-the-money, optimizing our returns amidst the ongoing market strength.

Stay tuned for more updates and insights as we navigate these exciting market conditions. Keep riding the wave with us, and happy trading!

Bears on rise

Bears on rise

## Why I Sold My Tactical Long Trading Positions and Raised Cash to 30%

Last Friday, I made a significant move by selling all my tactical long trading positions and raising my cash level to over 30%. Additionally, I plan to hedge the remaining strategic long positions by selling covered calls. Here’s why I’m taking these steps:

### Seasonality

July is typically the last strong month for the stock market before the summer and autumn correction period sets in. This seasonal pattern has been consistent, and I’m cautious about the upcoming correction phase.

### Earnings Season

With the earnings season kicking off, there’s heightened anticipation as guidance has been raised across the board. While expectations are high, there’s also a risk of disappointment if results don’t meet these lofty projections. Moreover, even positive earnings reports might not translate into favorable price actions if the good news is already priced in.

### The Bond Market

The bond market has been reacting sharply since the Biden TV election campaign mishap last week. We’ve witnessed a significant bear steepening, breaking the upward trend of the TLT ETF. Treasuries are now pricing in the potential of a Trump 2.0 scenario.

Long-term US government bond prices have plummeted since the presidential debate, with the 10-year Treasury yield rising from 4.29% on Thursday to nearly 4.50%, the highest level since May 31. This increase comes despite favorable economic indicators, such as the lowest year-over-year print for the personal consumption expenditures deflator since March 2021 and another sub-50.0 report for the M-PMI on Monday.

Economic expectations for the long term are shifting, although the Federal Reserve’s interest rate policy outlook has remained relatively stable. The 10-year TIPS yield has increased by around 14 basis points to 2.15% since Thursday.

### Bottom Line

If Trump wins, the market anticipates a combination of stronger economic growth, higher inflation, and increased Treasury supply. This outlook is particularly bearish for hypergrowth stocks. Given these factors, I believe it’s prudent to lock in profits and observe how the US navigates the presidential battle between the old white men.

In the comments, I’ve included a chart of the Nasdaq 100. Late in 2023, I projected an index level around 20500 for the Nasdaq 100 as my target for 2024. Last Friday, the Nasdaq 100 briefly crossed 20000 before reversing, which might indicate a top. Alternatively, we could see another upward move in July before the anticipated correction. However, several negative divergences under the surface are too complex to detail in a short blog post.

**Market Alert: Navigating the Shifting Tides of the S&P 500** 🚨

**Market Alert: Navigating the Shifting Tides of the S&P 500** 🚨

🚨 **Market Alert: Navigating the Shifting Tides of the S&P 500** 🚨

📉 The S&P 500 has long been a beacon of resilience, steadfastly holding the 5050 support line. For weeks, this seemed a reliable floor, guiding us through uncertain times. Yet, recent developments have sent ripples through the financial landscape as the 5050 threshold was not just approached but decisively breached.

This shift isn’t just numerical; it’s symbolic. The breach has transformed the 5050 mark from a support to a formidable resistance, highlighting further resistance levels at 5150 and the zenith at 5260. Amid this, a silver lining emerges just above 4900, with major support waiting at 4800 – a historical pivot point that merits our attention.

But the narrative deepens beyond price levels. The equity-only put-call ratios, a harbinger of market sentiment, have risen, echoing the sell-offs and solidifying bearish sentiments.

📊 Moreover, market breadth tells a tale of decline, with daily advancements dwarfed by retreats. This isn’t merely statistical; it’s a signal, reminding us that an oversold market isn’t an automatic buy signal. It’s a nuanced landscape, where brief rallies may not suffice to herald a bullish reversal.

🔮 $VIX is presenting us with some very interesting data for the first time in a while. Not only that, but there is some conflict between the major $VIX signals. A “spike peak” buy signal would occur when $VIX closes at least 3.00 points its highest price reached during this most recent spike. So, that’s the good news.

The bad news is that a trend of $VIX sell signal has occurred. That took place at the close of trading on April 17th, when the 20-day Moving Average of $VIX crossed above the 200-day Moving Average (and $VIX was above the 200- day MA, too). It is shown in the circle in Figure 4. These are often intermediate-term signals.

🐻 In response, our stance has evolved. No longer are we anchored in bullish optimism. Instead, we’ve pivoted towards a measured bearish posture, anchored by a bear spread that responds to the $SPX’s recent closure below the 5050 line.

As we navigate these turbulent waters, our guiding principle is agility. We stand ready to adapt, responding to the market’s signals with precision and prudence.

To my fellow investors: Let’s embrace this period not with fear, but with the resolve to seek opportunities within the challenges. The path ahead may be fraught, but it is rich with potential for those prepared to navigate its contours.

Stay informed, stay agile.

#Finance #Investing #SPX #MarketAnalysis #Volatility #Adaptability