Cobra's Market View

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The pullback overnight probably will be bought.

ES daily. At the top of the same trading range it has been in for over 19 trading days. Above the EMA 20, following a strong bull bar.

ES 60 minutes. Pullback to the EMA 20, after 3 good moves up.

Taking profits on Netflix calls this morning. Not sticking around to see if it returns to the overnight highs around $218

SPY 5 minutes. Price action. It opens pretty much where it closed, after a big up day.

Back later ...

Futures Trader 71 showed off his magic machine this morning. Cumulative Delta yesterday was all very large lots, (trading 100 or more contracts per order). Interestingly they squared their books at the close.

Last night recap on ZeroHedge showed that the most shorted index on Bloomberg was up strongly yesterday.

Yesterday's S&P 500 heat map was around 95% green.

Bank of America's Harknett wrote that there is no one left to sell. If he is correct (calling out capitulation) then based on history we have one more major leg down to look forward to.

Approaching target from that advancing triangle
3978-3980
60m

WHY BUY?
[sources: BofA, Pasta, and others]
1) Corporate Buybacks
2) Shorts covering
3) Cash levels are highest since 10/1/2001, surging to 6.1% from 5.6% ("dry powder")
4) Meanwhile, allocation to stocks is finally the lowest since October 2008 (finally catching up to macro pessimism)
5) SPY cleared its 50 dma for the first time since it was lost in April.
Obviously, bulls are in control, swing long but tighten stops as violent reversals can occur.

Sectors and some sub-sectors
sorted ONE DAY

Mr. B quick update...

A few minutes ago we got our tag of the middle keltner band.
We noted edge for that outcome a while ago.
Unfortunately, the juice of the trade was greatly consumed by the falling target rather than rising price.
Also noteworthy, NYMO was ticking the upper Turn Zone when the target was hit.
So, let's see what price behavior develops from here.

Price can certainly continue to climb higher, but we have a bear bias until the upper keltner band gets tagged.

I am down to runners on SPX and R2K.
These were small positions to begin with as we are treating it as bear market rally.

I bought a 50% position in SPXU today

Cup with handle, breakout is more likely which if indeed then it confirms the uptrend day (I missed the early sign of an uptrend day as I was giving my dog a shower).

Possible measured move down. Statistically today should have 60%+ chances to close down so it's normal.

Al_Dente wrote:WHY BUY?
[sources: BofA, Pasta, and others]
1) Corporate Buybacks
2) Shorts covering
3) Cash levels are highest since 10/1/2001, surging to 6.1% from 5.6% ("dry powder")
4) Meanwhile, allocation to stocks is finally the lowest since October 2008 (finally catching up to macro pessimism)
5) SPY cleared its 50 dma for the first time since it was lost in April.
Obviously, bulls are in control, swing long but tighten stops as violent reversals can occur.

Thanks for the info. I'm curious where you get the allocation data.

according to: https://www.aaii.com/asset-allocation/a ... april-2020

stock allocation of 64% is higher than the historical average while the cash is 21%, below the average. you can download the data for free and the lowest stock allocation was in 40s% with cash allocation higher than that during the panic of march 2009. The panic of 2020 was short lived and the stock allocations dipped to 55% while cash went to 26%.

Morad updated his delta chart mid morning. The over 100 lot trades dried up. My guess is the big boys covered shorts yesterday and today squaring up prior to some news events. Why? The popular opinion is that we have now turned the corner on inflation and the Fed will throttle back on the increases in rates sooner than was expected.

DIS
Since 1960, the cost of a baseball game, the movies, and a trip to Disneyland have increased at 2-3x inflation — and families have to work up to 2x as many hours to afford them today.

Double bottom, the low was in for today?

"Mission Accomplished, Hasta La Vista, Baby" [Boris Johnson]

His replacement will be announced September, either:
Rishi Sunak, former finance minister, former Goldman Sachs heavyweight, former hedge fund manager. He married really rich. His wife, whom he met at Stanford, is the daughter of N.R. Narayana Murthy, the Indian billionaire who founded Infosys.
OR
Foreign Secretary Liz Truss who has been the Member of Parliament for South West Norfolk since 2010. She has served as Foreign Secretary since 2021 and Minister for Women and Equalities since 2019. She has served in various cabinet positions under Prime Ministers David Cameron, Theresa May and Boris Johnson.