As noted, evidence for a low in the S&P is strong. Friday’s low is at the line that crosses the January and February lows and the LONG TERM parallel (see below chart). Also, VWAP from the 2020 low in SPY held last week (see 2 charts down). 4105 is the initial level to pay attention to but 4270s in the index and 426.00s in SPY line up more significant levels…eventually.
SPX took out the 2/24 low (invasion low) before reversing higher to finish with a high volume reversal (see below). The low was right at the median line of the bearish fork too. Sentiment across virtually all major asset classes is insanely extreme (USD, bonds, and equities). The median line tag and reversal from under the February low is a perfect setup for a squeeze higher. If however price breaks below the median line then the market would be in crash territory.
Today was a classic ‘sell the news’ day with the news being Russia attacking Ukraine. A more accurate term is ‘fade the news’. SPY carved a high volume reversal. We saw one of these at the 1/24 low. Prior to that, you’ve got to go back to 2018.
January produced some monthly reversals of note. SPY made a 1 bar monthly volume reversal. Notice that reversals also occurred in June/July 2007 (high) and October 2002 (low). There were failed signals however in 1997. Obviously, monthly signals may not be all that timely. These are ‘big picture’ observations. It’s important to understand in light of weekly bullish reversals in indices last week! These charts are shown below the monthly charts in this post.
SPX printed 4447 after the close. This is a good spot for a bounce, especially given elevated volumes in SPY and QQQ today. The red bars on the charts below indicate when the volume is at least 1.5 x the 20 day average at a 50 day low. The market usually bounces following one of these high volume days, although there are of course exceptions. My ‘favored’ view is that price bounces but that the bounce fails near 4530.
BTCUSD is off 13% since the top last week. If price drops under the short term lower channel line near 56830 then weakness will be considered impulsive and ‘waterfall’ weakness would be on the table. Watch for resistance near 61850. The weekly chart is shown below. This looks ‘toppy’ to me. Yes, ‘toppy’ is an official technical term. Former trendline support has provided resistance on the way up, a doji candle formed last week, and the rally failed after taking out the prior high. Seems bearish. Finally, is BTCUSD trying to tell equities something (see 2 charts down)
SPY made a volume reversal last week. The red and blue bars on the chart indicate volume reversals at at least 5 year highs/lows. The signal is rare. Proposed resistance levels for ES and NQ futures (see next 2 charts) are about 4500 and 15460.
Today’s USDOLLAR low…11635. Price reversed sharply higher after low print. UUP, the USD ETF, made a high volume reversal today. The only other volume reversal on the first day of the year was in 2017, which was a high. This is only the 4th bullish reversal since inception of the ETF. The previous 3 worked. Those charts are below.
In financial futures, dealers are considered the ‘smart money’. They tend to be bearish at the top and bullish at the bottom. So, it usually pays to pay attention when their position becomes extreme. Well, the dealer short position in Euro is basically off of the bottom of the screen. In fact, the dealer short position in early 2018 (last big EURUSD high) pales in comparison to the current position. Price wise, pay attention to the levels noted yesterday.