Going to break down this update using the 5 elements I have been looking at since learning more about market mechanics. Looking at the market in this way has helped me a lot recently when it comes to timing moves.
I have gone on a steep learning curve this year but it’s been really great.
So I look at 5 elements each day:
5 On chain
Technicals – Some possible signs of a bottom when you look at SPX weekly candle – Inverted hammer. BUT absent of this generally overall the TA picture isn’t great. BTC still in a range, possible bear flag.
Fundamentals – Not great at all, macro environment is still grim as ever. This week we have some CPI data and some heavy Bank ER’s at the end of the week and I see this as a downside risk.
Mechanics – Smart Vs dumb money index is still at extremes with retail in fear mode and smart money feeling more optimistic. Looking at Long short ratios + Volumes we’re not in the ‘’overly bearish’’ state we were in before last weeks squeeze – I’d say we’re middle ground positioned here so no HUGE conviction in either direction BUT still a short side bias.
Sentiment – I still see influencer plebs trying to play short term longs – Still some evidence of denial when I look at sentiment but bullishness has cooled off a little since last week… Understandably.
On chain – BTC continues to look Ok – I am seeing some light signs of big money flows withdrawing BTC from exchange in big chunks but I still don’t feel I have enough evidence of big smart money flows here. @everyone I grew up in the generational bull as many as you have so I’ve really had to adapt and go on a steep learning curve this year but it’s been really great.
CONCLUSION : No clearly defined edge RIGHT NOW (But that can change throughout the week). But as of right now we’re in a kinda ‘’Middle ground territory’’ – The mechanics aren’t overly bearish or bullish, technicals don’t look good enough to long or short here and although I think influencer sentiment is still overly bullish its not euphoric enough or confused by the market enough to warrant an edge.
Take last week for example – All the plebs thought the markets were going up because of a possible pivot being priced in. HOWEVER we knew it was purely mechanics AND options showed the late shorts were almost all taken out. That’s an edge where you take a big bet on the other side.
No edge right now but as I said that could change. I imagine we range through to Thursday, maybe get some short term upside but keep your eyes on all of the above and an edge might reveal itself.
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