SPX SPY ES for 7/12/24
Steak or Bear Meat?
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The full weekly plan and commentary should be reviewed ahead of this post. WEEKLY PLAN
For SPY 0.00%↑ we saw today the reason for our caution initiating new money longs all week, especially on rips higher. We finally got the liquidation I was looking for. The question now, is whether or not it is over. We were specifically prepared for this bearish scenario on a soft CPI which I hope allowed many of you to protect any open positions you may have had.
Indeed we got a nasty failure to sustain the CPI move and it turned into a trend day down. Positioning had been wildly overstretched long QQQ 0.00%↑ are under-allocated to IWM 0.00%↑ and to a lesser extent $DIA. Additionally, as deleveraging occurs, many funds were long tech and short these other areas and therefore had to cover those shorts. There are two questions we must now ask.
Is this deleveraging complete?
Will new money longs initiate on IWM 0.00%↑ and the beaten down DIA 0.00%↑ names or was this short covering only?
It is possible we see a massive rotation take place, and it is possible that once the short covering is done these names will go back to underperforming and be great targets for new money shorts.
I posted a prospective daily box in the Discord and we traded off an intraday box the back half of today. These boxes will determine how tomorrow, and likely next week develops.
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