“Seen a shootin’ star tonight
Slipped away
Tomorrow will be
Another day” Shooting Star, Bob Dylan
“As soon as you think you’ve got the key to the stock market, they change the lock.” Joe Granville
On Monday, we stated that our expectation was for “bearish momentum” on Thursday.
That played out in spades. And while our daily “Roadmap” suggested selling pressure from the open and then a rug pull after 1:00, the rug pull came early in the session.
Sometimes these intraday pivots invert.
Be that as it may the put options members purchased on Wednesday exploded and we rang the cash register on the last piece with the SPX down nearly 100 points.
Members bought the SPY January 30th 695 Puts for 2.55 and sold the last tranche yesterday at 8.70.
Why? It was within a stone’s throw of its 50 day line.
In fact the QQQ had a picture perfect test of its 50 day line perpetuation a near complete retracement of the knife down into 11:00.
An hourly QQQ shows the selling cascade erupted when a Jump the Creek sell signal was triggered on breakage below Wednesday’s gap up.
When its 50 hour moving average was reclaimed the Q’s pushed to their 20 hour ma. …leaving an Holy Grail sell setup (a test of the 20 hour moving average).
The Roadmap projects a down open today followed by a rally and a consolidation with a resumption of the selling momentum on Monday.
Standard operating procedure for the Algomatics squeezing the put and call premium from Thursday on a sideways stint today then delivering the promise of Thursday’s waterfall on Monday.
The interesting price action is going to be in GLD.
Yesterday’s morning report showed the weekly GLD below from the October 2022 bottom at 150.50.
We offered that from that October 2022 low that January 29th aligns/vectors 509.
GLD gapped up sharply to a high of 509.70 on Thursday and quickly tobogganed to 468 before a counter trend rally played. Out.
While GLD eked out a new high close it scored the largest range day in at least 4 years.
Meanwhile GDXU left a Gilligan sell signal—a signal reversal bar with a gap up to a new 60 day high with a close at/near session lows.
The signal was shrugged off with GDXU running back up scoring another gap up to an all time high on Thursday.
I can’t help but think that the first mouse got the squeeze and the second mouse got the cheese.
In other words the first sell signal got squeezed, while the second sell signal (Thursday) may get the cheese for the bears…at least in the near term.
Downside follow through targets the open gap near 362 and the 20 day moving average which has acted as support since the vertical run began in November.
SLV is a more complicated picture.
It left a signal reversal bar on Monday and gapped up to a new high yesterday.
The opening gap defined the high with SLV mirroring the intraday waterfall delince like GLD before rebounding to close precisely where it did on Wednesday.
From this 110 high, 180 degrees down on SLV is 90.
270 degrees down is 80 while a full 360 degree correction ties to 73.
The 50 day moving average is at 66 but moving up and could be at 73 in early February.
Interestingly 110 and 73 align with February 9th.
A few of my buddies who are traders and are long gold and silver over the last few weeks tell me they would not even consider selling their positions.
This is what markets do.
They are traders become holders.
The question is are they bag holders.
Do you think gold and silver and the precious metal miners will just let players get stopped out of vertical runs without extracting some blood?
No. That’s not how it works.
That said if you follow the signals and don’t get mesmerized by the noise you will recognize this week as an exit ramp.
In sum, it will be interesting to see if the market gets upside traction following Thursday’s reversal.
Alternatively, a drop below Thursday’s low will give a Keyser Soze sell signal…a Reversal of A Reversal.
Fast moves come from false moves.
If the SPX and QQQ skid back below Thursday’s lows over coming days, the presumption is the respective 50 day moving averages are toast and confirmation of a top of some degree will be in place breaking the bottom of a 7 week trend channel.