Weekly Macro Analysis 3.08.24
Danger Area
My Risk Signals show a clear picture, with market participants rotating out of aggressive sectors heavily and into defensive sectors. Yet retail seems unfaced and keeps buying this dip. That to me is a very dangerous signal and although I like to remain bullish, this is not the time to buy the dip.
This doesn´t mean we can´t get a buyable bounce here, but unless we shift into a more Risk On regime, I will leave this market alone. Its a treacherous environment for a swing trader.
Weekly QQQ:
Right now we are in a much steeper correction than in 2023 and in 2024. At the same time we saw strong volume on the downside in april, followed by a rally on light volume, that is now getting sold on big volume again.
Daily QQQ:
Here we can see the distribution days, which were even in march/april more than usual. Right now we see heavy distribution, big volume on big down days, that close on lows.
We lost the 50DMA, backtested it and got rejceted, followed through on the downside and lost the AVWAP (Anchored Volume Weighted Average Price) from the april low.
Closer Look:
We found support at the last high before the april correction, after already giving back 11% on the index. This is where normal corrections end. For bears, I think it would be bad Risk / Reward to short here.
I would expect a lot of chop here, big up and down moves, but not a loss of that level yet, if we see a multi day rally, I could see another drop, to undercut fridays low and to rally from there, this would be a buyable dip, if my Risk Signals are turning up again.
However if money keeps rotating out of Risk On assets, and we see sharp moves down that slice through support, we could be in for a bear market.
Last week I presented three possible opportunities, that looked much better than to buy the dip in QQQ.
Two of those got hammered: Small Caps and Crypto, but the third one, the true Risk Off expression worked beautifully:
T-Bonds rallied almost 5% on big Volume and seemed to have finally broken their downtrend.