Wednesday, August 19, 2015

Index #ES_F #SPY #NQ_F #QQQ #IWM Bias Update and Levels for Wednesday, August 19, 2015

Index #ES_F #SPY #NQ_F #QQQ #IWM Bias Update and Levels for Wednesday, August 19, 2015SocialTwist Tell-a-Friend

ESU5 SPY S&P500 went from several weeks of a lower high formation to a macro wedge this week within the 2015 eight month boring range and did so on hope for no ¼ point rate hike in September due to more bad news out of China, Oil making new lows this week, and the lowered guidance from Walmart yesterday.

However and even though breaching the lower high formation the reality of both US and global bearish divergences finally seems to be impacting the potential for new ATHs, which for me that confirmation is not coming from today’s (Aug 19th) morning sell off but rather due to the fact ESU5 continues and has now failed at getting and holding above Daily center Sigma several times so far in the 2nd half of 2015. New ATHs are now likely not to be seen unless a very dovish Fed appears (??).

I continue to find it extremely funny (in fact hilarious) at how the entire US stock market is solely and only dependent on a ¼ point rate hike in September (or not) now that 2015 earnings have failed to lead the S&P500 to new ATHs. Everyone knows a ¼ or even a ½ point rate hike after six years of zero interest rates will have little to no impact on the economy and/or any impact to the day to day/pay check to check person which is about 82% of Americans.

What a small rate hike will affect is the easy money the US stock market has made including all of the easy and artificial 800+ S&P500 points on the heels of the “bad is good for stocks” QE3 era. This tells me the other 18% of Americans who participate in investing/trading (including 401ks) could care less about the overall economy and is only concerned about the easy money coming to an end or not, otherwise the reality of global economies, global stock markets correcting, and low oil prices would already have the S&P500 well into a long overdue correction from extremely (and artificial) overbought conditions.

QE3 was nothing more than a way to artificially inflate assets for the “wealth effect” through 401ks which now has the US stock market addicted to the Fed. The “wealth effect” has been so important ever since unemployment hit +9% that I will be willing to bet the government would not waste five years and waste resources to blame a “flash crash” on one trader if a “flash crash” now happened in the opposite direction and was a “flash melt up” for an even better “wealth effect”.

For now the S&P500 remains out of reality due to its Fed addiction but the reality is “reality will catch up” one day just like when realty returned after every American became an expert real estate investor overnight back in 2004-2008. This does not mean stocks like AAPL, FB, TSLA, NFLX, GPRO, DIS, and even TWTR do not have a fundamental “Growth” story and future; it just means these stocks will correct technically regardless of fundamentals when the overall market corrects which is definitely not a matter of “if” and only a matter of “when” reality returns to US stocks.

For the remainder of the week or post Fed minutes I will have an eye on 2088s-2094s zone and 2061s/60s for ESU5, for IWM 121.30 and 118, for NQU5 4546s and 4471s/70s, and for AAPL (a huge market leader) 116.60 and 114.45 then 112.

Ethan Premock
Futures & Options Strategist
Hamzei Analytics, LLC

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