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the bears and how they are reclaiming short-term control how do we notice that we notice it by being below the green line which is my level of support we note that we fell back inside our gap we fell back below 400 we printed a daily lower low and we printed a daily lower high we opened today and gapped up and flushed that is the opposite of a gap down pump up we are closing at roughly 398 and that level is going to be quite important when we look to the options chain a little bit later in the show i would also note that uh qqq or the queues are already below the 50 dna so the reason why this is so important to me is because as a rule of thumb if we're going to print two consecutive daily closes below the moving average for me that signifies that the level is getting lost yesterday the 50ma was at 304.18 today we're closing i'm sorry we closed at 304.41 which means that we saved it by about 20 cents today we did not so today is the first day we have closed below the 50 dma for both for both uh the qs and for spy so if tomorrow we also get it what would that mean it would mean that potentially what we laid out on the weekend in regards to this being a repeat of 2008 could be well underway i'm also trying to find where the dominant uptrend is here and when i look at i'm like okay well this is broken we are below the green line on the weekly as well which means that we're down below the area i would say is support uh we now filled the 400.67 gap and we just faded it's also really notable where we're going to be uh tomorrow why well tomorrow is going to be the end of the month with it being the end of the month when we connect our psychology chart here which we've been reviewing again we reviewed it on the weekend extensively when i look here it's like okay well uh if we're going to keep go up we have to pretty much start doing it right now i think that the the market is now starting to finally finally believe that uh what the fed's gonna do is take us down we're down by 3.3 on the month normally normally we are down by about one percent in august one percent in september so uh what's really important for me going into tomorrow is going to be where we end up getting the low and i say that because our low of the month is today's low at 396.00 so this is important because if we noted that closing below i'm sorry last week closing at the low of the week which we have for the last two weeks in a row now what did that lead to it led to a move down we gap down pump up fade so we filled this gap uh two weeks ago also filled the gap yesterday as it was moving so yes that's the reason why there was no video yesterday um anyways if we now look okay well if the pattern is repeating and we note that gap down pump up the start of the week flush it closing at the low of the week well this week we're only down by about 1.7 that's right only 1.7 we're definitely getting bearish continuation so what i want to look at here is just try to understand again not tell the market what it's doing but try to understand it so yesterday we had a doji which means that yesterday the market was like okay well i priced everything in i filled the gap on the daily filled on the weekly and now i'm closing uh basically where i opened open at 402 close at 402.6 so closing within 0.1 percent of each other what do i note on the daily as well because again i wasn't here yesterday i'm trying to understand ah the red volume that is correct the red volume is back these bears are flexing and they are taking control so again i know it bounced around quite a bit um i think i laid my notes out extensively on the weekend i really appreciate everyone who smashed your thumbs up and dropped a comment i really appreciate all of you um so what's really important is that tomorrow is going to be just another day for the weekly but tomorrow is the close of the month so that level we looked at on the monthly is going to be very important but the weekly chart here tells us that if we're not able to start rallying back up here we're due to fade right we're due to go down uh looking at the queues as well uh this is really significant because this is more than just a back test now we note that we're now right around that psychological 300 we are back below our bear market level we are back below 323 which is 20 off the lows and we're now just battling for the high we were at in august of 2020.
300 basically and uh we're throttling it right we're really rocking it um kashkari today said that hey i was happy to see what the market did in reaction to public speech which means they do actually pay attention to stocks um in the stock market even though they don't always say that joe biden also mentioned that he's going to be running for a second term i don't know if that's bearish i'm not here to comment about that i'm here to look at lines and charts so to tie this all together what i'm really looking at is the round numbers and uh what i mentioned for the if it's 2018 what should be happening sorry 2008 we should go all the way down to the black line lose it dead can't bounce and then that is it that would be our confirmation here and when i went through i explained the reasons why i'm bearish and explained that our algorithm has also predicted it so as long as the path of least resistance remains down technically um and we as we get closer to uh labor day again selling may and go away and come back on labor day so may here closed out at uh four one three and again if we understand the perspective here closing at four one two being down here roughly i don't know about three nine eight um that's about four percent that's right may all the way until now selling may and go away and come back on labor day that's the same here we go right we're down by about uh 15 points or just under 4 it's not really all that much all things considered we went into a bear market and uh we just managed to puke up all of our games so i think i've made things very clear now what i'm going to do is have a look at the chain in a moment but um and more importantly what i try to do when i come back to my desk is not try to tell the market is it doing what i want what i try to look for is can i understand what it's telling me so if now we flip here to a line chart the three charts i was really paying close attention to were sp y for the psychology chart and again noting here that my base case not again my guarantee i can't give you a justin guarantee i'm just a guy on youtube um i think we're gonna coil up into here and then we're gonna lose us into the beginning part of the year doesn't mean that's gonna happen this would be a bear market rally inside of a bear trend so we really have to pay close attention to that uh next thing was arc so looking on the line chart here well we're pretty much back to the green line at 41.2 we're here at 41.8 hey uh it tells us we really shouldn't be going much lower can we carve out a bottom we're down seven percent on the week here woof right but it didn't really do anything today it got most of its damage out of the way yesterday oh sorry this is the monthly let's go to the weekly my bad uh on the week we're down by two percent all things considered it kind of makes sense why well it's already down by 80.
so right back to the green line it's kind of doing what i would expect uh last one last one we looked at here was uh bitcoin and whether or not it is holding the 20k as of right now it's at 19 900. where is that that's right around 20. that looks like a liquidity grab the other thing which is very notable to me is that every etf is red including utilities including energy it is all down all all down um we look here to uh again the options we look at the book call ratio for the s p it's pretty high um it's at 1.6 but the broader market is at 1.09 so it's definitely still skewed a little bit bearish but we noticed that it's kind of concentrated here in svp uh every trillion dollar company is red crypto down and uh what else do we got here uh oil down gold down right everything down the markets really believe in the fed what's the theme of what is higher the dollar so let's look at the dollar here oh my goodness what did i print another high 109.29 was our high we got 109.47 it can just it just continues to grind higher so uh the west is not doing super great it's that everyone else is doing kind of bad but the data today showed us that ah the consumer confidence is actually quite high which means that as gasoline gasoline prices went down the fed's fear of creating a hard landing is again starting to get some uh some some people who were saying hey maybe they can actually do it we're back above 100 which means that that is more confidence than uh than the previous month so that's good and there's also roughly another again 800 000 jobs that are here as well so as they continue to hike there's even more job openings the data print coming in on friday or pay well friday will be especially important but uh we pivoted right at 10 and uh what happened oh baby we went down we went down we went down uh other thing to look at here is going to be the vix the vix over 25.
again chris kelly on bloomberg today said that vixx at roughly 25 26 implies a roughly 1.25 percent move on the day so i'm just going to put the text here as a reminder to myself too so uh vix over 25 right roughly 25 is equal to man i can't type today is equal to a one point two five uh two five percent daily move that's right every day so as we look at the chain this will be especially important because what did s p do ah it closed down by one point one percent giga q closed down by one point one percent yes and the last thing to look at before the chain is just the round numbers what do we got uh spy basically at four hundred right three nine eight point five what do we got cookie q one point over 300.
we got uh es at roughly 4k the nas at roughly 12 500. we got uh oil at 92 we got btc at 20k eth at 15. and with all these splits all these trillion dollar companies are between 100 and about 270 now so we have to pay attention to these round numbers 100 150 those are big numbers and then that's pretty much it okay so now let's see because again selling may and go away and come back on labor day so is there option motivation for these bulls or bears as we get into not just the uh the end of the week but into next month so let's look here at today's chain because it was busy and uh normally i don't like looking as much of the options but because we're in a low volume in a low volume environment or the summer doldrums uh there's more volume happening on the chain or more dollars flowing in options so we really have to pay attention to it because what we went through on the friday stream was noticing that what they'll often do is they will fade the stock fade s p down jack it up like a jackhammer and then fade it again jack hammer it up fade it again jack hammered up fade it down and that's just because they're uh they're scraping the chain here there's hundreds of thousands of options that are trading so the maximum paying area is 400 because uh below 400 everything gets smoked for tomorrow and again max payne does not mean that's what we're going to close it just means if option sellers are in control again the goldman sachs is the morgan stanley's if they're in control they're gonna they're gonna want to get it back up to 400.
then on the call side right everything here pretty much gets smoked too so everything here goes bye-bye and everything below here goes bye-bye uh but uh closing at roughly 398 what i want to look at instead is going to be the options here because right now we're getting a two dollar right two dollars for puts two dollars for calls which implies a right let's call it about 2.2.2 divided by 398.
it's implying about a half a percent move when the vix at 25 implies a 1.2 1.25 move so is there is there a mispricing here i don't know uh these bears wanted down they got the open interest they got it at 400 they got it at 398 where did we close ah 3.98 and they got it at 395. that's correct uh looking on the call side it's pretty soft on the open interest here we note that 405 the 400 is the area the bulls wanted at with volume really picking up at 398 ah it's almost like these option sellers are in control that is correct so again are we going to go back to 400 are we going to fade to 3.95 i think it's really going to depend on what happens going into uh into again that payroll number and positive number what reaction well good data should be interpreted as bad so if we get a green print on payable friday meaning it's higher or it's green what should stocks do they should go down so is that with that being the most important data point and jerome powell telling us that it is the uh the totality of the data was the words that he used totality of the data means that um he can pick and choose what he wants to say is going to be his narrative consumer confidence coming in i know they were watching that it'd be so he's being told hey if you want to go 75 maybe do it and uh right now like i think being devilish is 50 basis points 75 is going to be hawkish and we talked about what that means in terms of the terminal rate or where the fed is going to stop hiking interest rates the market still has more work to do if we're going to believe the fed is truly going to do this when i look to friday sorry friday september 2nd what i'm noticing is that we're getting continuation here 400 to 395 with that same open interest however the open interest is really plugged up here at 400 and we got about 450 in premium which means that we have to be at basically 3.95 for these 400s to get their money back so if we close at 400 that would be maximum pain that's where the most premium gets burnt if you buy options you're like man mine went to zero yep that's uh that's that's options burn where they're trying to burn the value of those options if the option buyers are in control we should close at least at 3.95 and what does that do it means that we're going to likely be printing a lower low we're going to be having multiple days below the 50 dma and the trajectory to get all the way down to that 200 dma seems a lot more likely because this open interest is jacked up on every expiry um post here notably if we look at the monthly for september do we see the same thing we do on these other ones that's the big question so again now what do we understand technically fundamentally where we should be going is there the cherry on top for the people who again who trade a lot of options what do we got here uh 400 to 405 for the call for the bulls we're looking at september 16th through the monthly 16s and all it means is that we're not looking anything below 391 or anything above 406.
the 16s is what's most likely more probable to hit and again what do we note ah 400 is still max payne but they got about uh eight dollars in premium on both sides now right about 15 bucks for a straddle so where's the volume oh no it's the bears that's right it's the bears they got a jack load of uh puts here 400 open interest they got 50k in volume and it continues down to those same strikes uh 398 not really about 3.95 yep uh roughly 55 ooi uh 40 000 in volume and then we even have a tier down to uh 393 for volume so uh i'm noticing exactly what i would expect if we were going to get bearish continuation is it enough for us to repeat 2008 uh up here in a moment if you want to know my deeper thoughts and this is going to be my roadmap for the rest of the year if we do not reclaim that 50 dma uh and we start fading towards the 200 weekly it is looking like we are starting to repeat a deep dark winter thank you for watching look forward to seeing you tomorrow thanks
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