The Week Ahead + Watchlist 1/10-14

We are starting to see a real shift in the price action that may actually match the narrative. I am going to lean in and take a closer look before I reach a conclusion.

  1. There is a clear shift to the downside over the last week or so. And I am thinking we will see some more downside near term. I am by no means calling a top here. I am not in the business of calling tops and bottoms in the market. I am just laying out what I am seeing in the Price Action & Order Flow.

  2. Here is what the market breadth looks like. As you can see we are shifting down:

3. Here is the flow over the past week. The money pretty much left everywhere else and poured into Energy & Financials, to a lesser extent:

  1. The Rate Hike, Inflation & Supply Chain narratives are still driving things at the base level and the price action is reflecting that; because Commodities & Financials are usually beneficiaries of high rate environments. On the other hand high growth stocks with little/no earnings and lots of debt usually get punished in these environments. Just look at $XLK & $ARKK.

  2. As I said, this by no means is pointing to a market top. What we are seeing is rotation as of now. We will just continue to be mindful of the context and take one trade at a time.

  3. We are currently holding only the $VXX Calls in the IVtrades account and will be looking to add a few more positions this week. 

  4. Here is this week’s watchlist:  

See you tomorrow