Today Was Consequential Despite The Flat Finish
Here is why: As the market consolidates right at key resistance, we can see that for two days in a row we have touched the resistance level on the dot, closing slightly below resistance while consolidating perfectly. Notice how the daily ranges have been contracting on the way down, with today continuing that trend as we experienced a range day that was less than 50% of yesterday's overall trading range. What does this represent? It represents bidders remaining a dominant force in the market. When bidders disappear during a pullback you see large ranges with sloppy price action along the way. When bidders remain a dominant force in the market, you see tight ranges with clean price action as those bidders are consistently deploying capital, efficiently cleaning up any mess that sellers attempt to leave behind. Put as simply as possible: Bidders remain a dominant force in this market. What that means is that all the fear based nonsense you hear about the markets being on their last leg, this being a suckers rally, bear market remains intact, a recession is around the corner and so on should be muted. What is important are the capital flows. And according to everything that price action is telling us, the flows remain very bullish. This is but one of the many bullish indicators of what is to come. The horns are getting sharper by the day. Zenolytics Turning Points is 300+ editions in and only getting better. Find out why institutions and individual investors have come to depend on our service through each and every type of market environment. Click here for details. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of T11 Capital Management LLC just by virtue of access to this website. T11 Capital Management LLC only conducts business in jurisdictions where licensed, registered, or where an applicable registration exemption or exclusion exists. Information contained herein is not intended for persons in any jurisdiction where such distribution or use would be contrary to the laws or regulations of that jurisdiction, or which would subject T11 Capital Management LLC to any unintended registration requirements. Visitors to this site should not construe any discussion or information contained herein as personalized advice from T11 Capital Management LLC. Visitors should discuss the personal applicability of...
Are Investors About To Enter Valhalla?
When we last left off, I discussed the week of June 12th marking a short-term high for the SPX after coming eye to eye with key resistance at 4350. With the SPX putting in its worst weekly performance since early March this past week, it's fair to say that we are seeing the response I expected to this resistance level which now allows investors to judge the health of the markets after this recent runup, along with the potential for further gains. In the same note I referenced above, I discussed the first week of July being the time to pounce on the long side after the coming pullback. In the 354th edition of Turning Points this weekend I discussed the signals the market is sending following this recent pullback, along with why those signals are dictating increased long exposure into the middle of July, at the very least. The current consolidation at resistance is like nothing we have seen since the peak in late 2021/early 2022. In fact, this past week was such a data driven technical bonanza for the bulls that it's not entirely outrageous to say that a vertical ascent could take place into earnings season. The fear of missing out that will develop into early Q3 as investors fear a replay of their Q2 brain fart to remain short or in cash way longer than they should will be reason enough for a flamethrower to ignite the fuse of the market during what is a seasonally favorable period into mid-July. Unfortunately for such a large number of investors, one of my final tweets for 2022 still holds true, even after this recent runup. The other reason investors will be frothing at the mouth after stocks as we kick off Q3 is that Q1 earnings delivered such spectacular results that within a generation of front-runners, there will be a cold, hard sprint to get ahead of the next man to buy some stock prior to Q2 earnings being released. So essentially we have the perfect combination of technical, seasonal and event driven factors coming into fruition as we close out Q2 and enter Q3. Levering up with a mix of small-cap and large-cap names in the days ahead. Horns up. Paws down. Zenolytics Turning Points is 300+ editions in and only getting better. Find out why institutions and individual investors have come to depend on our service through each and every type of market environment. Click here for details. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained...
The Market Setup For The Week Ahead Is More Clear Than Most Realize
Just sent clients the 350th edition of Turning Points going over the setup for the week ahead, along with the opportunities that will emerge as a result. This is a fascinating week coming up on a number of levels. As fortune would dictate, we are going into a pivotal week with CPI, PPI and Fed while sitting at an even more pivotal price level. In case you haven't been following along, I have been discussing the 4300 level for the SPX for a number of months now on both Twitter and here. It's THE most important technical point in the markets, dictating to a large degree market behavior not just for the rest of Q2, but well into Q3, and perhaps the remainder of 2023. We are encountering this price level just as volatility is set to expand this coming week with CPI, PPI, the Fed and Powell. Therein lies the problem for the markets. Unless this coming week is unidirectional to the upside, with the SPX closing at 4400+, there are little pathways to further upside for June. In other words, there is a very high probability that this week will mark a short-term peak for the SPX given all the factors that are working to create a reversal here. The only question is whether that short-term peak will turn into something more. As of now, I have a 2-3 week peak, lasting into the first week of July at the most before the bull makes it back into Q2 earnings. However, given the structure of the decline that is to come, that scenario can change very quickly. The market has sucked in enough participants now that it may just unleash some real pain for sometime to come. I don't necessarily favor this scenario, however, much like I have been doing for most of this year, I am keeping an open mind as to what may lie ahead. Bottomline: Contrary to what most everyone is expecting, there are very few pathways to a bullish outcome this week. The markets will suck investors into thinking otherwise. Don't fall for it. Truth in price comes from Thursday - Friday. How we close the week matters more than anything else. Guard your profits. Zenolytics Turning Points is 300+ editions in and only getting better. Find out why institutions and individual investors have come to depend on our service through each and every type of market environment. Click here for details. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website...
We Have Arrived
I've been discussing 4300 since covering shorts and getting bullish in late March/early April. Fast forward here we are two months later. 4200 really didn't offer up much resistance. 4300-4350 is a different story, however. The high for Friday's trading sessions was 4290. We are now entering the zone. It's not just the generational resistance that comes into play at 4300-4350, going back quite a few decades, it is also a long-term supply area as shown by the following charts of the SPX and NDX. The exact levels the SPX is testing now are where the breakdown in the market emanated from in 2022. Markets have a memory. That memory includes jaded investors who held through the entire scary, Fed induced, macro laced market of the past 18 months. Those investors will be creating supply as the SPX moves back above the breakdown area. To be clear, there is enough emerging demand that they won't be able to tank the markets, but they can grind things to a screeching halt for the time being. A few other factors coming into play, like a spike in yields, has the potential to turn things ugly for a period during the first few weeks of June. Same thing with NDX, supply area ahead. The NDX broke down from this price level in early 2022, retested it shortly thereafter and then fell into oblivion for a time. This becomes a natural resistance area where supply comes into the market for a time. It's not just this resistance that is in play up here, however. In this weekend's edition of Turning Points I shared 11 charts pointing to now being the time to be conservative, at the very least, with long positioning. An important week ahead technically. Let's see where it takes us. Zenolytics Turning Points is 300+ editions in and only getting better. Find out why institutions and individual investors have come to depend on our service through each and every type of market environment. Click here for details. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of T11 Capital Management LLC just by virtue of access to this website. T11 Capital Management LLC only conducts business in jurisdictions where licensed, registered, or where an applicable registration exemption or exclusion exists. Information contained herein is...
The First Half Of June Promises A Different Look From What Investors Have Recently Become Used To
While most everyone was convulsing in fear over the ramifications of a debt ceiling debacle, while also being paralyzed by the emotional abuse the market has handed out on a consistent basis for the past 18 months, the Zenolytics team (consisting of just me) ignored the noise, doing what we do best: That is identifying truth in price. Prior to the acceleration of trend in the NDX and the breakout in the SPX, about 1000 points ago and 200 points ago respectively, on May 18th I published a note on this site titled Here Is Why We Are In The Midst Of The Most Important Move Of 2023, With An Even More Critical Move Being Imminent. Now that most everyone has realized what we knew weeks ago, there is an argument to be made that the markets will be offended for a short period of time. The offensive nature of what has transpired comes in the form of investors believing that the markets will accommodate their sense of cowardice, by allowing a threat free jump into the water now that the danger of getting bitten by any number of fanged creatures has disappeared. Debt ceiling behind us. Earnings better than expected, much to the shock of nearly everyone except for us here. Fed is quickly moving to the rear view, with economic data having less of an impact. All of these macro factors are fantastic indicators of intermediate to long-term strength in the markets. However, over the short-term, the feeling of safety investors have recently experienced must be tested. There are numerous examples of investor comfort coming to a crescendo this past week. Here is one with the 2 and 5 day moving averages of the equity put/call ratio nearing their lows for 2023. And surprise surprise, the last time the put/call was at these levels in early February the S&P was testing the same trajectory we are about to test now. To be absolutely clear, I remain bullish throughout the remainder of this year. The surprises will continue to be to the upside. However, in the very near-term (next 2 weeks), there could be a bit of turbulence to throw everyone off until the markets begin to gain traction in anticipation of what is to come. I'll get to what is to come in a future note. In the meantime, approach new positions on the long side with caution and treat profits with care, while carefully guarding them. Have a good weekend. Zenolytics Turning Points is 300+ editions in and only getting better. Find out why institutions and...