Market Analysis and Trades for 3/12
Color Me Unimpressed
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The weekly post and for SPY 0.00%↑ and QQQ 0.00%↑ should be reviewed prior to this. Link to Market Analysis for The Week Ahead
Apologies for the late post. Today was my daughter’s birthday and we were out all day and are on PST.
CPI . . . the catalyst that bulls everywhere were waiting to finally squeeze those pesky shorts! The CPI is soft! Price absolute screams higher to . . . last week’s low (womp womp) and gets mercilessly stomped. There is one problem with having an expectation that shorts are going to be squeezed: this selloff has not been driven by short sellers. Are there shorts in the tape? Of course there are, but this move has been driven by longs exiting as we’ve said since we first sold through the overnight low and prior day low with volume and conviction on 2/20. For this and other reasons, my top trade setup for today was exactly this:
The high on the CPI move was 5675, price consolidated between 5629-5633 (breakdown confirmation) and Tuesday’s high into and just after the open before being lost and offered from below. This produced an 80 handle short (100+ if one shorted 5665-5675 directly) in the morning and the same spot offered two additional shorts later in the day.
There were certainly aspects of the day that were more bullish than we’ve seen recently. Semiconductors were quite strong, and sellers did not make a lower low just a couple of examples. However, on Monday night’s plan I had gamed things out forward a couple of days and bulls have accomplished nothing. This remains, for now, an extremely weak market. Even with the assist of a soft CPI and some volatility crush buyers couldn’t really get off the mat. It is very much on buyers to prove themselves.
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