Post-Plunge Reflections

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Days like today (Monday) are bittersweet. It’s great fun watching one’s account value roar higher, but at the same time, you know it’s going to be all over way too soon, and things will get dull and listless again. It takes a lot of patience to finally wallow around in a day like this. Now we have to deal with the stupid bounceback.

Let’s look at ETFs to get the lay of the land. The Dow 30 is still rangebound.

slopechart DIA

Its brother, however, the Transports, has completed a huge topping pattern. So, yeah, put a fork in it.

slopechart IYT

Of course, the only asset gaining value today was bonds, and on huge volume. I have been pointing out the change in trend for many weeks, but I had no hope that we would absolutely pole-vault over the trendline. The 40 year bull market in bonds is clearly intact, because The Fed Has No Alternative.

slopechart TLT

Thus, with interest rates crumbling away, the banks have also completed a monstrous top. And I can’t think of any group on the planet more deserve of plunging stock prices than the banks.

slopechart KBE

This is reflected in the XLF too, of course, although it’s going to take a failure of that lower horizontal to really light this bottle rocket.

slopechart XLF

The biggest loser today, as you know, was oil, which got totally firebombed with the OPEC+ announcement. It might bounce, and bounce big, but the die is cast. That horizontal line is going to be a lead wall.

slopechart USO

And the same words apply to the energy stocks.

slopechart XLE

Materials have the same well-formed price gap that just about every other financial instrument in the universe received today. This will be a vital demarcation for short positions.

slopechart XLB

One of my (many) positions is puts on the EFA, but the gap is meaningless here, since, as an overseas underlying, almost every single day is a gap.

slopechart EFA

Perhaps the most important chart of all is the small caps, which reached the lower echelon of its 2021 range, and on hearty volume.

slopechart IWM

Gold got beaten down early in the session, but to its credit, it held its own quite well. C’mon, gold! You can do this!

slopechart GLD

Next week is an absolute tidal wave of tech learnings, which should help inform QQQ direction. As for now, the short-term trendline is broken.

slopechart QQQ

Finally, the MidCaps finished up a squeaky-clean right triangle pattern.

slopechart MDY

I hope you folks had a profitable Monday. Just to say once again, I exited my short-term positions early Monday, but I am steadfast in all my others, bounce or no bounce.