May 3 Market Update | Technical, Fundamental, News
Description:
An analysis for the week ahead.
Points of Interest:
4/29 Rejection; 2780 Gap; 5/1 Split b-Shape Profile.
Technical:
Other broad market indices, such as the Nasdaq have shown extreme relative strength in the weeks prior, with the /NQ spending a significant amount of time building value above it’s 61.8% retracement, a bullish sign. Indices such as the NYSE Composite paint a picture of relative weakness.
On the last two days of April, the S&P 500 failed to break into a low-volume area, a space that often serves as strong resistance or support.
Wednesday trade seemed a tad excessive, putting in a p-shape profile on higher volume, a sign of strong long-side participation and short-covering.
Technically, the market ended its advance from the March 23 low, as signaled by the failed break higher from last-week’s balance zone (more in last week’s post) and Friday’s gap open.
Friday’s gap (a signal that we’re out of balance) was formed by larger players that perceived value away from price. The right move at the open was to wait since many gaps are filled in morning trade. Obviously, responsive participants failed to close the gap and the market continued lower to a high-volume area.
Friday’s b-shaped, multi-distribution profile points to liquidation of old longs and emotional participation. Additionally, the profile is split and rounded at the bottom (i.e., market got too short). Since the market is too short, I’d expect some sort of quick snap higher, up to the low-volume split (i.e., resistance) or 2860. The low is a structure that will most likely be repaired in subsequent sessions.
The broad market appears ripe for a pullback. In case of upside, target is 2860. On a continuation lower, targets include 2787 (convergence of significant references), 2633 (top of prior-balance), and 2566 (half of the 3/23-4/29 advance). If the market reverses and overtakes the initiative activity that created the gap, then sentiment has changed.
Scroll to bottom of document for non-profile charts.
Fundamental:
Key Events: April Employment; ISM Non Manufacturing; ADP Employment; Trade Data; Earnings.
Overwriter flows to cut volatility; if gamma flips long, then speculate with cheap calls. bit.ly/3b0IHas
If the market slips into short gamma, then it’s possible to get another push lower. bit.ly/3fd8I9W
Yield volatility further muted due to success of Fed action. bloom.bg/2WoElof
Investor confidence high despite lower sentiment amongst business owners. bit.ly/3bYNxXe
Alongside soaring cloud usage, new contracts from bigger clients drop-off. reut.rs/2VVS0nN
U.S. threatens tariffs on China over virus outbreak. reut.rs/2WmwgR4
Sprint lost 350K phone subscribers last quarter. reut.rs/3aZwi6E
Britain hires Morgan Stanley for help on its aviation rescue plan. reut.rs/2SxBOr0
Fed, ECB, BoJ hone in on improved lending, bond-buying. bit.ly/2ykJ6aB
Main Street Lending program improves access to “bottomless supply of cheap capital” (bit.ly/35oUHS9).
ECB cut rates and introduced new facilities to ensure financing of the real economy. bloom.bg/3d8F18a
Gold and natural gas to benefit in the face of economic weakness. bit.ly/3aWoLpn
Increased bond issuance will come alongside massive future downgrades. bit.ly/2Wk7hhd
Even after the reopening, the economy will be “shackled to only 25-50%” (bit.ly/3ffZV72).
Fed action has diminishing returns; “I fear the effects will be short-lived” (bit.ly/3ffZV72).
Despite the downturn, startups are hiring and raising funds. bit.ly/3bZl2bM
U.S. tells Saudi Arabia to cut oil supply or lose military support. reut.rs/3fbp3Ml
OPEC+ cuts for May, June total 9.7 million barrels per day (
USO, USL, 
DBO). tmsnrt.rs/2Yoj7d3
Boeing (
BA) and Embraer (
ERJ) deal scrapped, freeing up cash. bit.ly/2VY9XSE
Auto loan extensions to slow note payments, increase borrower distress. bit.ly/2VY9XSE
China reforms for small banks lowers risk from coronavirus disruption. bit.ly/2VY9XSE
Great Migration: Coronavirus to cause shifts in population density. bit.ly/2z512G2
Sentiment: 30.6% Bullish, 25.4% Neutral, 44.0% Bearish as of 5/1/2020 (bit.ly/330VhEp).
Gamma Exposure: (Trending Lower) 721,282,138 as of 5/1/2020 (bit.ly/2UpgtRE).
Dark Pool Index: (Trending Higher) 48.3% as of 5/1/2020 (bit.ly/2UpgtRE).
Index Analysis:
SPX: 
SPX
NDX: 
NDX
RUT: 
RUT
DJI: 
DJI
NYA: 
NYA
UKX: 
UKX
NI225: 
NI225
HSI: 
HSI
Futures Analysis:
/GC:
GLD
/CL:
USODBOUSL
/NG:
UNG
/ZB:
TLT
Disclaimer:
This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve, especially me.
In no way should this post be construed as investment advice.
An analysis for the week ahead.
Points of Interest:
4/29 Rejection; 2780 Gap; 5/1 Split b-Shape Profile.
Technical:
Other broad market indices, such as the Nasdaq have shown extreme relative strength in the weeks prior, with the /NQ spending a significant amount of time building value above it’s 61.8% retracement, a bullish sign. Indices such as the NYSE Composite paint a picture of relative weakness.
On the last two days of April, the S&P 500 failed to break into a low-volume area, a space that often serves as strong resistance or support.
Wednesday trade seemed a tad excessive, putting in a p-shape profile on higher volume, a sign of strong long-side participation and short-covering.
Technically, the market ended its advance from the March 23 low, as signaled by the failed break higher from last-week’s balance zone (more in last week’s post) and Friday’s gap open.
Friday’s gap (a signal that we’re out of balance) was formed by larger players that perceived value away from price. The right move at the open was to wait since many gaps are filled in morning trade. Obviously, responsive participants failed to close the gap and the market continued lower to a high-volume area.
Friday’s b-shaped, multi-distribution profile points to liquidation of old longs and emotional participation. Additionally, the profile is split and rounded at the bottom (i.e., market got too short). Since the market is too short, I’d expect some sort of quick snap higher, up to the low-volume split (i.e., resistance) or 2860. The low is a structure that will most likely be repaired in subsequent sessions.
The broad market appears ripe for a pullback. In case of upside, target is 2860. On a continuation lower, targets include 2787 (convergence of significant references), 2633 (top of prior-balance), and 2566 (half of the 3/23-4/29 advance). If the market reverses and overtakes the initiative activity that created the gap, then sentiment has changed.
Scroll to bottom of document for non-profile charts.
Fundamental:
Key Events: April Employment; ISM Non Manufacturing; ADP Employment; Trade Data; Earnings.
Overwriter flows to cut volatility; if gamma flips long, then speculate with cheap calls. bit.ly/3b0IHas
If the market slips into short gamma, then it’s possible to get another push lower. bit.ly/3fd8I9W
Yield volatility further muted due to success of Fed action. bloom.bg/2WoElof
Investor confidence high despite lower sentiment amongst business owners. bit.ly/3bYNxXe
Alongside soaring cloud usage, new contracts from bigger clients drop-off. reut.rs/2VVS0nN
U.S. threatens tariffs on China over virus outbreak. reut.rs/2WmwgR4
Sprint lost 350K phone subscribers last quarter. reut.rs/3aZwi6E
Britain hires Morgan Stanley for help on its aviation rescue plan. reut.rs/2SxBOr0
Fed, ECB, BoJ hone in on improved lending, bond-buying. bit.ly/2ykJ6aB
Main Street Lending program improves access to “bottomless supply of cheap capital” (bit.ly/35oUHS9).
ECB cut rates and introduced new facilities to ensure financing of the real economy. bloom.bg/3d8F18a
Gold and natural gas to benefit in the face of economic weakness. bit.ly/3aWoLpn
Increased bond issuance will come alongside massive future downgrades. bit.ly/2Wk7hhd
Even after the reopening, the economy will be “shackled to only 25-50%” (bit.ly/3ffZV72).
Fed action has diminishing returns; “I fear the effects will be short-lived” (bit.ly/3ffZV72).
Despite the downturn, startups are hiring and raising funds. bit.ly/3bZl2bM
U.S. tells Saudi Arabia to cut oil supply or lose military support. reut.rs/3fbp3Ml
OPEC+ cuts for May, June total 9.7 million barrels per day (
USO, USL, DBO). tmsnrt.rs/2Yoj7d3 Boeing (
BA) and Embraer (ERJ) deal scrapped, freeing up cash. bit.ly/2VY9XSEAuto loan extensions to slow note payments, increase borrower distress. bit.ly/2VY9XSE
China reforms for small banks lowers risk from coronavirus disruption. bit.ly/2VY9XSE
Great Migration: Coronavirus to cause shifts in population density. bit.ly/2z512G2
Sentiment: 30.6% Bullish, 25.4% Neutral, 44.0% Bearish as of 5/1/2020 (bit.ly/330VhEp).
Gamma Exposure: (Trending Lower) 721,282,138 as of 5/1/2020 (bit.ly/2UpgtRE).
Dark Pool Index: (Trending Higher) 48.3% as of 5/1/2020 (bit.ly/2UpgtRE).
Index Analysis:
SPX: SPXNDX: NDXRUT: RUTDJI: DJINYA: NYAUKX: UKXNI225: NI225HSI: HSIFutures Analysis:
/GC:
GLD/CL:
USODBOUSL/NG:
UNG/ZB:
TLTDisclaimer:
This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve, especially me.
In no way should this post be construed as investment advice.
This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve (myself especially), so if you see something wrong, speak up.
This is a page where I look to share knowledge and keep track of trades. If questions, concerns, or suggestions, feel free to comment. I think everyone can improve (myself especially), so if you see something wrong, speak up.
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