Bulls High as a Kite on Optimism
US Futures drifted higher in the overnight session, with the S&P hitting a fresh all-time high of 3,859.62. We saw continued weakness in the labour market this morning, with jobless claims coming in higher than expected (exp 845k) at 900k, and over 5MM continuing claims persist. Not that the labour market has anything to do with this super cool new MMT economy. But, I figured I'd mention it nevertheless.
Vix saw it's key ascending trendline break for the first time in almost 8 weeks. This may come as a surprise to many volatility traders, but as we mentioned in our live analysis yesterday, the Vix contract rolled over, and absent any negative inauguration outcomes, which was always unlikely given the incredible military presence in washington, there was potential for VIX to be sold off similar to what we saw in November. So said, so done.
I'll be watching Vix closely today to see if we get support at the post March crash low, and then potentially accumulating more UVXY sub 10's. Risk protection is cheap in my opinion, and stocks are not just overvalued, that would be one thing. But, stocks are at all-time high's, with the QQQ's hourly RSI just below 85. That's extremely overbought folks. I've been looking at the Bollinger Bands a lot more lately, and I've noticed that in many cases, in the past week or two, we've seen a standard deviation of up to 3, struggle to contain the euphoric price action. This isn't going to last forever, as we all know, and so I will continue to position for the worst case scenario, and I won't let greed overwhelm my investing and trading principles.
Key levels to watch on SPY today are the all-time high, of course, near the green ascending trendline around 386, the upper band of the white channel around 380, and the 21 day EMA around 375. I'm keeping an eye on the dollar as well, as we've been expecting a breakout off the back of a potential inverse HS pattern, which could be about to materialize. This would coincide with a rise in yields, which should also see the 10Y yield breakout to the 1.25% - 1.41% range. As always, I appreciate your time today guys, and I hope you enjoyed the analysis. Cheers, Michael.
*I am/ we are currently holding positions in UVXY, HUV, HQD, QID.
Vix saw it's key ascending trendline break for the first time in almost 8 weeks. This may come as a surprise to many volatility traders, but as we mentioned in our live analysis yesterday, the Vix contract rolled over, and absent any negative inauguration outcomes, which was always unlikely given the incredible military presence in washington, there was potential for VIX to be sold off similar to what we saw in November. So said, so done.
I'll be watching Vix closely today to see if we get support at the post March crash low, and then potentially accumulating more UVXY sub 10's. Risk protection is cheap in my opinion, and stocks are not just overvalued, that would be one thing. But, stocks are at all-time high's, with the QQQ's hourly RSI just below 85. That's extremely overbought folks. I've been looking at the Bollinger Bands a lot more lately, and I've noticed that in many cases, in the past week or two, we've seen a standard deviation of up to 3, struggle to contain the euphoric price action. This isn't going to last forever, as we all know, and so I will continue to position for the worst case scenario, and I won't let greed overwhelm my investing and trading principles.
Key levels to watch on SPY today are the all-time high, of course, near the green ascending trendline around 386, the upper band of the white channel around 380, and the 21 day EMA around 375. I'm keeping an eye on the dollar as well, as we've been expecting a breakout off the back of a potential inverse HS pattern, which could be about to materialize. This would coincide with a rise in yields, which should also see the 10Y yield breakout to the 1.25% - 1.41% range. As always, I appreciate your time today guys, and I hope you enjoyed the analysis. Cheers, Michael.
*I am/ we are currently holding positions in UVXY, HUV, HQD, QID.
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