The 250K Portfolio was down -1.4% on the day after some flash selling at the end of the day. We are down about -1% on the month. Thursday's and Friday's have been more favorable, and we are at a bounce or stop point in the drawdown curve.
The S&P futures were in a 17.25 point range before making a 20 point move lower starting at 3:27 pm EST. This move increased its daily range of 17.25 points to 29 points in only 3 minutes from 3:27 pm EST to 3:30 pm EST before pausing and then quietly drifting higher. It closed the day in the upper half of its daily range. That type of price action is always suspect.
I haven't seen a market that has this many stop running V-Reversals, especially in a supposedly strong bull market. The daily charts look normal from a longer-term investment perspective, but the intra-day patterns are extremely unusual. The frequency of V-Reversals continues. The Advance Decline line represents the broader market of 3700 stocks while the Nasdaq 100 is only 100 stocks. The two are not always correlated but are typically somewhat correlated. This year we see a persistently stronger inverse relationship between the Nasdaq 100 and Advance Decline line. We saw the Nasdaq futures sell off at the open while the Advance Decline line surged to +1000 levels.
We had some short trades working early in the day. When the market reversed, we became net long for an end of day rally and were about to go up for the day, but the market spiked lower, without taking out the lows on the day Nasdaq, but hitting our stops before slowly recovering.
The bounce point today in the Nasdaq, at the lows was the weekly close. The Nasdaq and S&P closed down last week. The market is trying to defend last week's weekly close since it is not used to having a down close the last four months.
The inverted yield curve continues for about a year and a half. The S&P hasn't had a 2% correction in a long time and the number of days the VIX is below 20 is also extreme.
The V-Reversals were down today but up on the week. The Vipers are in a short-term drawdown but at a good entry point.
Tomorrow is PPI as we discuss the drawdown curve and position sizing opportunity at this drawdown level that is in line with day of week and time of month analysis that is very favorable for a recovery and bounce back trading day. The time of month is also lining up to a seasonably favorable time of month historically.
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