Global Futures Skid, Volatility Bid

2021年1月11日

Hey guys, sorry I miss you on Friday, I was working on my website. Let’s get right into today’s analysis. Global futures drifted about 1% lower in the overnight session, after the US majors saw new all-time highs (again) on Friday. The Vix is spiking notably, and is up over 11% this morning, as the risk/reward swings even further to the downside. President Trump is being blamed for much of the chaos at the Capitol, as he explicitly said, inter alia, that he would join the march alongside the “freedom fighters,” down to the capitol, where a large group of American’s gathered to express their outrage of the election result. Talks of a second impeachment are circling the MSM, of course, as the democrats take advantage of the opportunity to inflict further damage to the reputation of the Trump Administration, and by extension, the Republican party.

Treasury yields continue to rise, and we’re now sitting around 1.11%, among the highest levels since March 2020, putting upward pressure on the dollar, which is up notably on the day, and is now back at a 90 handle. According to Mohit Kumar, a Jefferies Analyst, “Investors are getting worried about a rise in yields.” Kumar also said, “Risky assets have come a long way and they are now in a pause or profit taking territory.” I think that goes without saying, but it’s always good to hear analysts, and the sell-side in particular, which we're seeing, talking about profit taking. I also think we saw a massive short squeeze last week along with profit taking, similar to the likes of the November M1 explosion driven gap parade.

With the world now expecting “Trillions” in new stimulus from the incoming democratic administration, this could be an extremely volatile week with wide swings in intraday sentiment. We'll be keeping a close eye on the Put/Call this week. In crypto, as we discussed last week, Bitcoin was looking ripe for a correction, and in the overnight session, Bitcoin, along with most of the crypto space, saw a massive correction by as much as 20%, back to a $32,000 handle. Twitter stock is seeing some pressure in pre-market trade, and is down over 6%, after permanently banning President Trump. Clearly, the 70 Million + Americans that voted for him see this move as yet another tactic by the Big Tech cartel to silence conservatives, and specifically, Trump’s audience. No economic data to discuss today, but after last week's weak payrolls report, I suspect all eyes will be on Thursday’s jobs report.

SPY is sitting just under the ascending channel formation (green line) from April 2020, around 381.50. We’re set to gap down, which would imply a near perfect rejection of the ascending channel, leading us to believe there is further downside to at least the top of the white channel around 378. Major support sitting at 370.80, which is the 21 day EMA, and also around 367, which is the lower band of the white channel. If the white channel finally breaks, we’re looking at a convergence of supports around 360, where the top of the megaphone is sitting, along with the 50 day MA (361.22). Imo a september like correction is more than due, but something along the lines of March or even June, would require a stark shift in sentiment likely driven by an unexpected event. It could be the 10Y yield (risk free rate), breaking out to new highs, forcing the FED to tighten monetary policy similar to that of the taper tantrum in 2013/14. We'll have to wait and see.

As I mentioned, we have a new website where we will be continuing with our live daily analysis. We’re offering a free membership (for now), so don’t hesitate to check out the link in our profile if you enjoy the live play-by-play. Thanks so much 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.