2/21 Recap. Ugly Day But The Uptrend Is Intact

What a nasty selloff this morning. I had been warning something like this was coming, all the internals were rolling over, the MACD was negative and the SPY was lagging the IWM for a bit. The VIX exploded today going up 15% and panic followed. As I write this, we’re below the big 400 psychological level of 400, but still hovering around late January levels. Could early February have been a blowoff top? It’s possible, but for the moment the uptrend remains safe and not violated. Let’s look at some charts.

SPY

As you can see below, this violated the bull flag it’s been in for the last 3 weeks. There is still an hour left in the session and it may recover it, but for now a violation is a step in the wrong direction and opens the door to lower levels. Fear not, not all hope is lost…..if you look further out you can see the uptrend from when this big run we’ve had began in October at the lows. That uptrend is still holding, for now, until that is lost, I wouldn’t think of this as anything more than a pullback in an uptrend. You see that downtrend line below at 390? That’s the downtrend we spent all last year in, if we break below that, that’s when you need to get bearish, so not quite yet.

IWM

I kept mentioning last week how this was lagging the SPY which was the opposite of what it had done most of this run up. Small caps always lead in both directions, turns out they were warning us again.

Again, just like SPY this looks like a normal pullback within an uptrend for now because if you zoom out you can see the downtrend IWM spent last year in and this could be just a simple backtest of that trend line before continuation higher, whatever it is, until it breaks back below the trend, it is not bearish.

Dollar

The dollar remains in bull mode as people flock to the safety it offers. It is flagging again, that yellow line below seems like a magnet right now of where the dollar is headed, that likely means equities will remain weak when the dollar maintains this bullish stance.

Oil

This remains busted, 6 straight red candles and trading below all the key moving averages. Odd to think this is here with the rumors of Iran enriching uranium and what that would mean with the United States, Saudi Arabia, and Iran all looking to do something about that in the near future. Oil trades on nothing, the fundamentals really don’t mean much as the paper markets are heavily manipulated. As bad as oil looks, it’s always 1 headline away from a new uptrend.

Today’s Unusual Options Flow & What Stood Out

I’m happy to report that I’m now up to about 1,300 trades placed in my database to share with you all everyday as I post the unusual flows which should continue to help in your discovery process on direction with specific names.