So this will be a one off post from my daily posts i do.. elsewhere.
We all know that one belligerent, bombtastic, annoying person right? Either the drunk, the partisan, or just plain abrasive? That's the market right now.
Today we saw SPX and SPY gain starting from futures open last night, to today ending with a gain of 1.54% or over 50 points. On no news, no real fundamental basis, and no real reason. Just speculation, euphoria, manic panic buying, and "if it ain't broke don't fix it."
Well. I think we're about to see a change to that. If not by the end of this week then by early next week.
SPX is historically in overbought territory on the daily. I haven't been able to find any higher reads than we had today other than Jan 2018. Which promptly saw a 10% correction, a counter trend, and then a subsequent 20% pullback.
Now, i understand these are different times with different circumstances. But by all measures. Either the technical, fundamental, or psychological we're overextended. We have now had close to a 600 point run in maybe two months with very little to no pullbacks. No breathing that comes with trend, countertrend, trend. Particularly in about the past month or so.
We've now gone parabolic. And In NDX we now may be starting to see the beginnings of a blow off top. With AAPL and TSLA having exhaustion gaps this morning which threatened to take the entire market with it.
On top of now being parabolic on SPX, which has joined NDX in its parabolic march to Valhalla we are now firmly in the speculative and mania stage of the "Public" portion of bubbles. Now, i'm not saying this trend is done completely. But what i am saying is people are now getting rich buying weekly calls on.. Anything and making shit tons of money. And don't get me wrong, that's not a bad thing. But at some point the music stops and when it does there's going to be a shit ton of people who don't have chairs. The market is too easy to trade right now.
And on top of both of those. The VIX. The VIX got crushed in what i am thinking was a short squeeze on Friday, and it smashed the weekly reversal candle back down to where it came from, and finished incredibly bearish. But fast forward to this past Monday we had a 14% rise in the VIX on a .2% down move in the SPX. Yesterday we had something along the lines of a 1% down move on an SPX up move of .7%. Today, we had a 1+% UP move on an SPX 1+% UP move.
The writing is on the wall.
You factor all that in with the call skews flipping from calls to puts on both QQQ and SPY and i think we're about to see a pretty scary reversal. When you stretch the rubber band this far. The snap back will be just as intense. Just like at the COVID drop and subsequent counter move.
This can last for a few more days. But not much longer. And when the heavy metal music in the distance comes around the corner and the Thunderdome kicks off it's going to be fast, violent, and just as irrational as this move upwards.
There is so much more to it than this. But i just wanted to push this post and idea out because it's close. Very, very close.
SPY chart showing the parabolic move
SPX chart showing how close we are to the decade+ long trendline from the 09 bottom. I apologize for the clutter.
Better look at the title chart.
VIX showing the complete rejection it has of the idea of this rally and what looks like a breakout from a months long falling wedge.
QQQ chart showing this last parabolic move and the bearish daily hangingman we printed today.
Head on a swivel.
We all know that one belligerent, bombtastic, annoying person right? Either the drunk, the partisan, or just plain abrasive? That's the market right now.
Today we saw SPX and SPY gain starting from futures open last night, to today ending with a gain of 1.54% or over 50 points. On no news, no real fundamental basis, and no real reason. Just speculation, euphoria, manic panic buying, and "if it ain't broke don't fix it."
Well. I think we're about to see a change to that. If not by the end of this week then by early next week.
SPX is historically in overbought territory on the daily. I haven't been able to find any higher reads than we had today other than Jan 2018. Which promptly saw a 10% correction, a counter trend, and then a subsequent 20% pullback.
Now, i understand these are different times with different circumstances. But by all measures. Either the technical, fundamental, or psychological we're overextended. We have now had close to a 600 point run in maybe two months with very little to no pullbacks. No breathing that comes with trend, countertrend, trend. Particularly in about the past month or so.
We've now gone parabolic. And In NDX we now may be starting to see the beginnings of a blow off top. With AAPL and TSLA having exhaustion gaps this morning which threatened to take the entire market with it.
On top of now being parabolic on SPX, which has joined NDX in its parabolic march to Valhalla we are now firmly in the speculative and mania stage of the "Public" portion of bubbles. Now, i'm not saying this trend is done completely. But what i am saying is people are now getting rich buying weekly calls on.. Anything and making shit tons of money. And don't get me wrong, that's not a bad thing. But at some point the music stops and when it does there's going to be a shit ton of people who don't have chairs. The market is too easy to trade right now.
And on top of both of those. The VIX. The VIX got crushed in what i am thinking was a short squeeze on Friday, and it smashed the weekly reversal candle back down to where it came from, and finished incredibly bearish. But fast forward to this past Monday we had a 14% rise in the VIX on a .2% down move in the SPX. Yesterday we had something along the lines of a 1% down move on an SPX up move of .7%. Today, we had a 1+% UP move on an SPX 1+% UP move.
The writing is on the wall.
You factor all that in with the call skews flipping from calls to puts on both QQQ and SPY and i think we're about to see a pretty scary reversal. When you stretch the rubber band this far. The snap back will be just as intense. Just like at the COVID drop and subsequent counter move.
This can last for a few more days. But not much longer. And when the heavy metal music in the distance comes around the corner and the Thunderdome kicks off it's going to be fast, violent, and just as irrational as this move upwards.
There is so much more to it than this. But i just wanted to push this post and idea out because it's close. Very, very close.
SPY chart showing the parabolic move
SPX chart showing how close we are to the decade+ long trendline from the 09 bottom. I apologize for the clutter.
Better look at the title chart.
VIX showing the complete rejection it has of the idea of this rally and what looks like a breakout from a months long falling wedge.
QQQ chart showing this last parabolic move and the bearish daily hangingman we printed today.
Head on a swivel.
