Just When the Bull Pulls Me Out, the Bear Drags Me Back In. Tribute Was Fully Paid.

…and just when the bull pulls me out, the bear drags me back in.

CORRECTIONS AND CLARIFICATIONS: Last week this letter stated that sideways was the most likely outcome. This was an opinion. The family regrets the error, and the opinion has been taken for a drive.

Gawd knows I’m trying my best, but it seems my opinion is for shit still, and at least the data and the setups are producing the goods like a mafioso paying tribute to the Don, and in this case tribute was fully paid to Don Bear, brown envelopes were exchanged and rings were kissed, and maybe some favours were exchanged!

Extract from Don Bear’s ledger, Wednesday’s collections. NazQuack: 1 brown envelope, paid promptly. S&P: 1 brown envelope, slightly damp. Uncle Russ: 2 envelopes and a written apology. Uncle Dow: a note saying he’d been asleep, could it wait.

It seems the AI trade started to suddenly unwind and got a swift kick in the squishy unmentionables, as the main indexes (except sleepy Uncle Dow, who lived up to his name) saw one of the bigger 1 day moves in 6 weeks, this time to the bear side. Uncle Russ slipped into correction territory. Is the bear finally coming to town for a belated S&P and Naz party?

For the record, money ran into longer-dated bonds rather than out of them, and high-yield credit barely flinched (HYG -0.36%, with an 8-session range of just 0.83%). That’s the look of a crowded equity trade unwinding, not a funding scare.

Who paid, who didn’t, and who turned up late to dinner, all below.

Market Snapshot

• S&P 500: 7,718.94, -1.11%. One of the bigger 1 day moves in 6 weeks, to the bear side.

• NazQuack: 29,950.82, -2.02%. Tribute paid in full.

• Uncle Russ: 2,729.53, -1.93%, and into correction territory.

• Uncle Dow: Lived up to his name.

• Bonds: Bid, as the money ran for duration.

• Crude Oil: Rising lows inside the range, range high target in sight. More below.

• Bitcoin: Bitcoin’s bull flag continues to grind, more on that below.

VIX seems to agree with the bear (again) and was carded at the door.

Door policy, strictly enforced: smart casual, no bulls, nobody under 16.

Over 16, yup, you’re in. Also popping out of a triangle type pattern, 19 is what I’m looking at next, when we can switch out the kiddy party to a ‘kegger’!

Gold has also been basing again just above its prior July/Aug range, a push above 4240 could well be fun.

SPX – The least likely thing, a little more down, actually happened.

A spokesman for the bear said he was not in the area on Wednesday, has never heard of the AI trade, and was at his mother’s all afternoon, where several bonds can vouch for him.

Well, the data and the patterns continued to say bear despite sentiment shifting, along with the seasonality, back to bull. That has not changed, and the least likely thing, a little more down, actually happened. To say I’m stunned doesn’t quite cover it, and I’m tempted to start fading my opinions lol.

That said, the data and patterns we’ve been looking at on the cleaner charts this week and last said we were at the upper end of the range, and given the opinion, sideways seemed most likely, and as a premium seller directionality doesn’t matter too much, as long as you’re not wrong, or even if wrong small, we can still get paid.

Anyway, bear-neutral might be closer to my view, combined with the patterns and data. And then wallop! Thanks bonds and AI trades unwinding, I’ll take a faster payout.

The TnT flipped to bullish on the very last bar yesterday. Price has not gone above the trigger bar, and so far the overnight price action is 20+ points lower, so while we have the bull, it’s going to void most likely at the opening bell.

Crude Oil – The range is once again evolving.

Crude oil’s range is once again evolving, and the rising lows match up with the rising highs inside of the larger range, and the next push up should take us to the range high target we have been watching and waiting for all of this month.

Then we can assess for the trip back lower or the breakout for higher moves.

Bitcoin – Nothing new is developing in the form of a breakout.

Bitcoin has made every payment into the channel on time, and has so far been allowed to keep both kneecaps.

Bitcoin, let’s zoom in a little this time and look at the channel we’ve been looking at. Price is pushing off the lower channel, and since nothing new is developing in the form of a breakout, then a move higher to the range highs is most likely.

This month seems to have been the same range patterns everywhere, playing out almost to perfection.

Premium Poppers and the Wall of Wins – Tribute was fully paid to Don Bear.

The Premium Poppers kept on popping, both SPX and RUT had matching setups, and of course the community has smashed it once again.

• James D. (looking back at Tuesday): “Loss on SPX LP & RUT Pulse – if I’d waited and taken the RUT LP could have been a win”

• Bill S.: “made my 50% on the SPX”

• Don E.: “closed RUT for 50%; closed SPX for 40%” and then “Closed RUT LP for 40%; closed SPX LP for 45%”

• ehvpsd: “50% winner on SPX. Nice chunk of cash..”

MEMO, all associates: anyone absent on Wednesday will still receive their share. It will be described to them in some detail by those who weren’t.

• James D.: “Looks like it’s been a great day for PP’s but I was out – typical!”

• Zach: “Same here James. Glad others capitalized!”

• House rule of the family: late arrivals to dinner still eat. They just sit nearer the kitchen.

• James D.: “Well I took the risk getting to the SPX bear late and I just closed it for around a 55% profit :-)”

  
  

  Meme of the Day:

  

Trade well,

T2 Markets

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