Bullish Next Week on Indexes

5 dic 2021

For Next Week (Indexes)
- SPX, DJI, and NDX are diverging (I expect to see an upward impulse rally from each of these); we could potentially see a morning down spike, but I "do not" expect that to hold and markets (in my opinion) will reverse late into the morning to the upside.
- We should see the Semiconductor stocks within the SOX start to have some real issues going into next week for potential short term and long term expiration Option Puts.

Remember:
SPX is the major index itself, SPY is an ETF that tracks the SPX, /ES is stock market index futures, but all correlated. (~ 505 stocks in SPX)
NDX is the major index itself, QQQ is an ETF that tracks the NDX, /NQ is stock market index futures, but all correlated. (~ 105 stocks in NDX)
DJI is the major index itself, DIA is an ETF that tracks the DJI, /YM is stock market index futures, but all correlated. (30 stocks in DJI)

Media:
Lots of news in the media around Covid and it's evolutions; however, the market has known about this for weeks. The market was showing signs 1 1/2 weeks ago a trend change was coming -> the Covid evolutions was the excuse the market needed to deleverage (that was going to happen regardless). Markets always look for a reason to justify the moves up and down -- the media and talking heads do the same thing. Just like indicators, these "post events" are all lagging to what the markets were already signaling. Do Not allow external elements dictate what you're seeing in the charts -- too much of media and articles have "personal intentions" always keep that in mind. And every comment illustration on a Press Release or sponsored article have disclaimers of "forward thinking assumptions" and some disclose "payments from the company for their article and/or provide disclosure of their positional holding(s) in the very item their discussing."

Notes:

• Running a few calculations tonight on the SPX (S&P 500). Perhaps this is the geek in me considering I spend most of my days in AI robotics programming labs as an analyst and data scientist. Most people are not pointing this out. Not the people bragging their “highly sophisticated” algorithms, trading platforms, talking heads on televisions, etc. blah-blah-blah.
  
• We are at an inflection point within the markets. Let’s take all the human emotional thinking and “what-if scenarios” out of the equation and focus purely on statistical math and probability theory.
  
• Do not get caught up into WHY the markets are “going up” or “going down.” Must get that nature of our consciousness out of the equation. This is also the same reason why many enter into trades and lack the capability to cut the bad ones early.
  
  We call this the visual illusion where the brain develops (or blends) our perception of reality and expectations -- this can be applied to the markets because we want an expected outcome.
  
  Now let’s look at what everyone else is not talking about because the media and industry is using their visual cortexes from what they see on television and processed through hearing.
  
  
• Starting Feb. 21, 2020: The markets fell for 30 days and 20 hours a total of -1,124.54 points (-10.36%).
  
• Starting Sept. 2, 2020: The markets fell for 21 days and 20 hours a total of -378.66 points (-10.55%).
  
• Starting Oct. 12, 2020: The markets fell for 18 days a total of -315.91 points (-8.90%)
  
• Starting Sept.3, 2021: The markets fell for 30 days and 20 hours a total of -262.51 points (-8.90%)
  
• Starting Nov 21, 2021: The markets fell (thus far) for 11 days and 4 hours a total of -248.71 points (-5.24%)
  

5 dic 2021

Nota

Just remember... if Jerome Powell comes out and makes the excuse that the New Variant is going to cause the tapering to pause (because he's afraid of the indexes crashing) there is going to be a market reaction. That means Powell will go back to printing more debt increasing the M2 Money Supply and causing the FINRA Margin Borrowing to expand.

Keep in mind that High Beta NDX stocks favor this type of action the most.

5 dic 2021

Nota

But if this inflation continues he will crash the market because you cannot fight inflation by easing -- you need to go the other way. We will just need to take it day-by-day.