Ok bears, I know a saying that's been recycled amongst bears often is "Is this time different?"
Well, unfortunately it has been different as I don't remember going through an entire year with only one single -2% day - especially quite a tumultuous year at that!
Well that's what we've seen, with the one and only -2% day coming way back in Feb.
However the overnight move has breathed new energy back into the bear community so I thought I'd offer some thoughts - and potentially hope for the last remaining bears out there (that haven't been liquidated)
First, let's keep it real by acknowledging last night was a singular event and probably not enough to get too excited over.
With Opex opening the door on Friday for bears and vixperation kicking it down last night that was enough to initiate the sell bears have been hanging for.
I can't say the one session will be enough to keep the momentum going into year end - especially considering bullish flows that usually appear to make all those HFs and instos look very smart by propping price to send out to clients at year end.
For the bulls out there I'd look to 4720 on SPX as the level to climb back over to get my bull boots back on again.
Now let's explore the downside potential.SPX is trading in some rare air up here and the nearest volume shelf below is 4610 - that's first downside target.
Next target below is 4567.50
The third and final target is the target bear wet dreams are made of.
That's right, the biggest and most publicised price magnet on the SPX, it's JHEQX (JPM Collar) at 4515.
After the non stop bull parade it's almost unimaginable that SPX could even see those lows again in our lifetime but you would be surprised at all of the times the JPM collar trade trips price at Q end.
Now here's the kicker.
If we pin AVWAP to the start of the run on 27th Oct it comes out at 4506.75 - less than 10pts below JHEQX!!!
You guys know I love volume but what does that even mean?
It means the volume weighted average price since the moon shot run began is sitting just below JPM collar, so MM's and size traders could sell all the way down to that cost basis and still be in profit!!!
Crazy, I know.
Probably wouldn't want to stake your life on it but just putting it out there that some dreams do come true (hopefully this is one of them for the crew in here)
'IF' (and that's a big 'if') things were to play out to the downside I'd imagine it'd start with a quick short burn back to cost basis above - 4720.
That'd be enough to get dip buyers chasing and last remaining bears to all but give up.
In fact, that's exactly what we've seen on XJO today, so it's definitely a thing.
From there bears would want the sell to start in earnest.
There's minimal insto positioning back to 4610 so that's where I'd expect a decent reaction and that's the level that will ultimately decide if bears have it in them to go on with it.
Anyway, I'll leave all you bears to dream of the possibilities.
I just hope you still have the funds to monetise it...
Play safe and good luck whichever way you trade...
SPX Daily
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(20min delay)