WTH Just Happened?
Daily Plan 12.19.24
Folks,
The action today will go down as truly un-precedented and something perhaps no one saw coming. One after another Orderflow support levels, like 6067 broke and fell like dominos and there was simply no place to hide- for the bulls.
Now while I anticipated this sort of action in early 2025, I was surprised to see this manifest so fast. See below for our post from just 3 days ago.
And on Friday, a couple of days before the weekend post, we did share our view on 5700. See below.
The sell off itself was very orderly and I am surprised it did not trigger any circuit breakers. Now there will be several stories told tonight about what caused this mayhem, but the marker structure had a lot of resistance at 6170, it was precipitated by commentary from Powell which I think was quite hawkish.
The key takeaway for me was that this 4% floor on long ended rates is here to stay, if you believe the FED.
I actually do not believe so. I think this was a co-ordinated setup between the FED Chair and the President Elect.
Trump had been quite clear when asked if folks should buy stocks, and he said he can’t be sure as there can be a dip and the dip is here. From his perspective, lower the markets go before he gets in, better it is from an optics point of view.
So do you buy it?
I think the session tonight in Asia and that 5903 level is going to be extremely important. If we begin to see some sort of balancing here next couple of days, above 5903, this may be a sign that the worst is behind us.
However, the deeper we go below 5903, the closer we get to that 5700. Quite literally.
This is why my key level on the session tomorrow will be 5896-5903. We are trading 5934 at the moment.
Scenario 1: I would like to see some calm to return to the market above 5970 and if we begin to see some prints above 5970, this could lead to a retest of 6011-6012.
Scenario 2: Minus this, 5970 may remain an important resistance for a retest of 5922-5923.
On the downside, if we take out 5896, and remain below it, this could be another volatile session or two ahead of us. The elephant in the room is the Dollar index. We are now a couple of points below that 110. A Dollar that trades above 110 and stays there, is a nightmare for all sort of markets, and stocks are gonna be least of our worries.
Outside of this, I do not think this is a bear market yet, I think as we approach 5700s, a lot more exciting opportunities should open up on the long side. I think lower these markets go, the more compelling case for any one in money markets becomes. I think once we take some of this fluff out, we should stabilize and with Dollar index retreating, we should start to head towards repairing some of this structural damage from today.
Stay tuned.
~ tic
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