KISS Market Report – focused exclusively on technical charts and swing set-ups across multiple asset classes. Mella’s chart work is focused on identifying the big market turns along with intermediate trade set-ups being a key part of her service.
Below is an excerpt of the KISS Market Report From November 10, 2017 titled: November 10 Update.
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KISS Market Report November 10, 2017:
So yesterday we had some movement. Us shorts are like vultures at the moment, feeding on scraps! Book book book are my cries on a pitiful 1% down move. I’m screaming at the husband, he’s screaming back at me lol, he relents and it turns out i was right. Rinse and repeat.
Look nothing has changed. Nothing. Internals continue to scream something is up BUT price continues to go UP. The $VIX 2 hr chart is all that has mattered in 2017 and that’s the end of it. Sven shouts at me saying ‘but $SPX isn’t oversold even on the 2 hr’ and i shout back ‘IT DOESNT MATTER’. And yesterday was once again another example of what matters.
I honestly am massively shocked at how little volume there is. I mentioned on stream yesterday that IF the $VIX hit 14 it would flag up a massive overbought read. Just shocking. What does all this mean? Signal charts/credit all screaming and yet the $VIX is not moving. 2017 the year of nothing matters and volatility has been killed.
For years I’ve been hearing the elastic band is getting stretched and I’ve disagreed with it until now. 2017 has been the start of the stretch IMHO and hence we are seeing these dislocations across everything. THIS IS NOW THE START OF THE BUBBLE. So while i am no bear this action we have seen this year, if allowed to continue, will not lead to a correction but a crash. There i said it.
So how do we trade this. Well we continue as we are. Sometimes Sven is a little too aggressive and i get that. His brain power is much larger then mine and he see’s everything. I’m the simple one hence my KISS approach and unfortunately for all you intellects i Trump you (haha).
While I agree we have to be short I also believe one can not stay aggressively short until the program changes. This means booking on our 2 hr Vix chart and hedging. Downside action has been pitiful and although this has been the right path forward one has not been able to go balls long on just a 2% dip. So yes maintain one swing short but book gains and grab hedges. IF the program finally changes i.e. the bubble finally burst then we have the swing short.
I get asked all the time about downside targets on the $SPX. This continues to be a redundant question. It’s NOT about the $SPX its about the $VIX. 14 has us overbought on the daily and 20 has us screaming. The $VIX can rise 50% and the $SPX can drop 2%. There, Merry Christmas!
Anyway, focus is key in trading and it’s about the here and now.
$SPX remains technical and that’s all i care about, as does the $VIX.
$SPX broke its wedge, hit double bottom at 2566 and bounced. It doesn’t get much simpler then that. I can’t really say what happens next specially as it’s Friday. If we continue to consolidate today then I’m inclined to say we are forming a bear flag that should take us lower. I will know more by the end of trading session.
So this morning we are back down again and chart looks like this:
$SPX – poss bear flag and h&s with NL at 2566
We have noted both $JNK & $HYG but I’m looking more at the $NYMO myself. This has consistently given us a bottom for the markets and i do not have a buy signal here yet.
My suspicions here remain that this dip will get bought and a rally to new highs will come into the new year. Credit, banks, transports are all lining up for a bounce. Now altho i say new highs for the new year there is a possibility that actually these form h&s on the dailies but it’s too early to tell.
So i love the long $RUT trade here and def think we need to stick with it. We keep bouncing in my buy zone and i would love to see it at its lower buy level. This would also line up nicely with the $RUT daily.
$RUT 2 hrs
$TRANS – setting up for a long at TL and 200ma
This way we will have some nice longs as hedges while maintaining at least one large swing short ($DOW)
Now we have seen how perfectly this $DOW is tracking this huge weekly channel. BUT i remind u that it rises each week. And there are several more weeks in this year!
Same applies to $XLF which I’m watching closely.
So short term it remains all about the $VIX and at least yesterday’s move cooled off the 2 hr chart so i will be watching that again today.
I will catch you all on stream!
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