mcm daily market update 23.May.22

ST trend: up

On Friday we were noting that the o/n ST trend was up, however we did warn that "So for now things look bullish, however I still believe this could be a bull trap, caused by OPEX. Buyers have the edge now, but to confirm the change in trend they would need to sustain a breakout above macro-ML. That would also breakout the upper side of the bear flag. On the downside, sellers need to break down below ML. IF that happens, the danger to the buyers grows exponentially as I believe there is a real chance that we break yesterday's o/n low and potentially go much lower. So if ML is lost, buyers need to be VERY careful.". Buyers weren't able to break above macro-ML and the upper side of the bear flag and we dropped in the "usual" slow grind lower manner until the last 2.5h of the RTH session. The market did break the lows from the prior weak and went about 45 points lower, before finding a bottom. The huge short squeeze in the last 2.5h could be also an OPEX squeeze, as many big names were oversold and the max pain price was higher than where it was then.

Sunday and today saw the market continue the bounce started late on Friday, however it stalled and chopped between macro-ML and ML. Where price goes from here will be important. Same as Friday, this bounce could be only an OPEX short squeeze from Market Makers and now that options expired, we will see if there are genuine buyers here or not, once RTH opens. It is a bit of a coin toss here, I still suspect that this is bull trap though. If buyers can break the o/n highs and sustain a breakout above macro-ML, then we could see a multi-day bounce. However if ML is lost then we could erase the entire late Friday ramp. Compression between the 2 MLs for now, the breakout/down will be large.

mcm daily market update 12.May.22

ST trend: down (with bottoming attempt)

Yesterday we were noting that the ST trend was up as buyers had regained ML and sellers were inefficient on the pullbacks. We did mention that CPI release is "likely to cause some spikes and finally give the direction for at least the 1st part of the day. Overall the market remains weak as any bounce, even large ones, continue to get sold hard. Buyers need to break resistance, then start holding supports on pullbacks to reverse the big trend. Otherwise any bounces are sells.". That played out exactly. The CPI release caused a massive drop erasing all the gains buyers managed to build. The it stopped at the 3950 support lvl and staged an impressive bounce into the 1st hours of the RTH open. After that buyers failed to hold ML and we sold off to new lows.

The o/n continued the bearish character and dropped to lower lows. Buyers are attempting to stick save 3900 and FGSI stubbornly refused to confirm the lows. We now have 3 consecutive unconfirmed lows on FGSI as well as an unconfirmed low on IGSI. So there is at least a bottoming attempt ongoing. Buyers must defend those lows and break the 1st bearish EE lvl to confirm at least a ST low is in. Otherwise the unconfirmed lows set-up can get broken and we continue to sell off.

As a side note - it looks like markets are gripped by extreme fear. It is likely we are going to need a capitulatory action before we find a more meaningful low. As repeated for weeks already, the intermediate target for this down move is, in my opinion, in the 3600 range. That's not even that far anymore as it's "only" 300 points from where we are. Considering that we already dropped from 4600 at the end of March and the brutal sell-off in many stocks, this is likely the initial stage of a bear market. We should get a larger bounce after this capitulatory low, but new ATHs are unlikely to happen for a very long time.

mcm daily market update 7.Mar.22

ST trend: down (with bottoming attempt ongoing)

On Friday we noted that the ST trend was down as sellers pushed prices to lows at the all important 4280 lvl and then rejected price at ML. We mentioned that ML might be back-tested again and also that "bounces are sell opportunities, until proven otherwise". Both came to pass, ML was back-tested and price rejected there once again and sold off to retest the lows, before bouncing back near ML, holding there until the close.

Sunday saw yet another gap down and flush move, as the optimism that the Russia-Ukraine conflict would get solved over the w/e didn't come to pass. We broke Friday's o/n lows and reached 4240 before buyers finally stepped in and bounce price right back to ML. Now we are directly in a big inflection area at ML. Buyers overshoot it, but failed to put some distance to it. So this can be yet another ML back-test which rejects price. ML has proven to be a brick wall of resistance so far, so that would not be surprising. If buyers manage to hold price above ML and keep pushing higher to put some distance to ML, then we might have at least a ST bottom at the o/n lows. Next could of hours and especially how market acts after RTH open will be key for that.