So yesterday turned out to be the worst start to a year since 2016 for markets. However, this morning's sentiment is quite bullish, as investors panic bid the majors at the open. SPY is back at the 50 period MA on the hourly (370.57), which also happens to be converging with the 21 period EMA (370.30). If 370.57 holds up as resistance, we could see a sharp rejection back to the 21 day EMA (368.25). If the 21 day EMA breaks, we'll revisit the white channel around 365, and potentially break through this time, paving the way to the top of the megaphone around 360. If we see increased bullish behaviour as the morning progresses, I suspect we may potentially revisit yesterday's opening levels around 375. Highly unlikely imo, but don't forget there's also a possibility we revisit the top of the channel which would set a new all-time high near 377. Personally, I'm positioned for the bottom of the white channel to fall out, and for a comeback of the almighty megaphone.
Imo you have to ask yourself, what does it matter to markets how the Georgia elections turn out, or who the President is for that matter, when both the dems and republicans are cheering on MMT, while the real economy crumbles? All I hear these days in politics is "Print! Print! Print!" The narratives that explain price action each day, are the equivalent of the story of Santa Claus coming down billions of chimneys in one night to deliver secret gifts to your children while you sleep. They're just stories folks, often with no connection to price action whatsoever. Take eveything you hear and read with a pinch of salt as we must not confuse narratives with truth.
The game is all about reading between the lines, and I'd like to leave you guys with a recent quote from legendary investor, Carl Icahn, "In my day I've seen a lot of wild rallies with a lot of mispriced stocks, but there is one thing they all have in common. Eventually they hit a wall and go into a major painful correction. Nobody can predict when it will happen, but when that does happen, look out below.”
Thanks for your time today guys. If you enjoyed the analysis, please hit the Like button and subscribe to our profile. The information and analysis shared in this post is not financial advice. Always conduct your own analysis and research. Cheers, Michael.