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Bottom Line:
Markets are comprised of various constituencies of market participants. All futures and commodity markets can be driven directionally ONLY by its biggest players.
What we are seeing now in the stock indices is a battle between the Big Money players over the macro questions surrounding Fed policy. My experience as a trader has led me to the conclusion that it is pointless for me to try to guess how the macro situation will play out. It is also totally unnecessary for me to know in order to find opportunity in the time frames I trade.
It can be incredibly comforting to view the markets through the lens of Auction Market Principles. They work, and are “working” now.
The difficult part of this for a lot of people is the danger of the incredible noise generated by this or that narrative.
We trade price action. We make or lose money based on price action. Price action determines the important level in all time frames. It is timelessly consistent and objective.
Something will give soon regarding the huge divergence between the Russell 2000 and the NDX. “Healthy” stock market trends do not display this type of extreme disparity between indices. The key will be the price levels of each.
Details below and in the video.
Weekly SPX KRAs:
On a weekly basis the SPX is between important pivots of several degrees.
Daily SPX KRAs:
The SPX is almost exactly the same distance from critical intermediate to long-term levels.
Weekly NDX KRAs:
There is no objective potential “resistance” in the NDX above last week’s highs until the high of last August.
Daily NDX KRAs:
12953 to the upside and 12563 to the downside are CRITCAL levels in the NDX for next week.
Weekly RUT KRAs:
RUT must close above 1802 to give confidence an important low could be in place.
Daily RUT KRAs:
Friday’s trade with the RUT reversing sharply and closing on its highs after breaking to the downside from a mature Balance Area makes this a bullish looking chart, at least for the very near term.
Friday’s low must hold under any bullish assumption.
Weekly DOW KRAs:
DOW weekly chart is the definition of “in the middle of nowhere”.
Daily DOW KRAs
Last week’s high and low are the immediate levels to watch.
Internals
There is nothing bell-ringing between price/breadth at the moment.
30m Breadth
This view perfectly reflects the day-to-day flip from panic to manic with little follow-through.
VIX
VIX has remained stubbornly elevated above 20 for the past 11 sessions, but we haven’t seen anything resembling an extreme.
US 10-yr. Notes
From last week and no change….
Notes and other US debt instruments remain historically volatile and that is like to continue through next week.
US Dollar
Expect the Dollar to remain volatile, but favor shorts.
Gold
Gold may be in the process of forming a Balance Area. Longer uptrend is intact as long as 1935 holds.
Crude
Crude must show momentum above 71.74 to restore any bullish outlook.
