12/21/21

STOCKS – GS

MACRO – SPY, QQQ, ARKK, XLI, XLE

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The game between the S&P 500 and the VIX is getting pretty stupid. The VIX gapped higher yesterday, reaching 27, and today it goes back to 21, and you keep having these Vanna squeezes. There was nothing more bullish or bearish today to push the VIX down and stocks up, but that is what is happening. So everyone is again talking about an end-of-year melt-up. That’s fine and all, but this feels more like a game than a bull rally.

It is starting to feel like turbulence, and with many macro factors at play, turbulence makes sense. Essentially, you have a Fed in the middle of shifting monetary policy, which leads to tightening financial conditions, creating all of these violent moves.

S&P 500 (SPY)

The S&P 500 filled the gap at 4,620, but now there is a gap at 4,570 that needs to be filled. The RSI, the MACD, and the advance/decline line haven’t improved at all. The trends are still quite bearish for all three. So outside of the Vanna squeeze today the technicals didn’t improve by very much.

Additionally, the index could not clear the big resistance zone that exists around 4,660. It is looking much more like a retracement of the big move down following the FOMC meeting last week.

NASDAQ (QQQ)

The NASDAQ 100 rallied by 2.25% and closed right at resistance at $389. The MACD and the RSI are still very bearish as well for QQQ. So I really don’t think much has changed as of yet.

ARKK ETF (ARKK)

ARKK may be the most telling of what happened today. Notice how it gapped higher, over resistance at $98.50, gave back all the gains, and closed below resistance at $98.50. It has a weak look to it.

Goldman (GS)

The banks are similar, with Goldman rising, filling the gap at $381.90 and then moving lower into the close.

Industrials (XLI)

I had a double-take because the XLI industrial ETF looks like the Goldman chart.

Energy (XLE)

The XLE did the same exact thing.

Good luck tomorrow.

Mike