My inbox has blown up with questions about what I’m seeing in markets that made me text this message to Premium members today:

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Notice that the sell-side volume is picking up into the downward move on the Russell 2000 ETF IWM:

Russell 2000 stock chart

A highly respected and well known perma-bull (I don’t want to hurt someone’s reputation and business so I’m withholding the name) said a couple of days ago that volume was picking up to the downside because that was actually waves of buyers coming into this market, LOL. Reality check: if waves of buyers were coming into this market in great enough numbers so that you could see their activity in daily volume numbers, price would be going up, not down.

Notice that if you take the last 10 days of market action, it is totally dominated by sellers. The reason I’m looking at the last 10 days is because that’s when the Russell 2000 bounced down off its 50 day moving average (MA) as the 50 day MA became resistance.

On the S&P 500 1 hour chart, notice that the 13 hour MA line is acting as resistance:

SPX 1 hour chart

Furthermore, the CTM is in the dreaded red zone which indicates a strong down-trending market.

Put buying has exploded higher relative to call buying over the last 2 days. This means institutional traders are once again hedging their long positions with put insurance.

OEX chart with Equity Put Call Ratio chart

Finally, the S&P 500 daily chart shows that we are back testing the February 2018 lows at 2,532 and intra-day, we actually broke that level and hit 2,528.71.

SPX daily chart shows market is at the lows of the year

The S&P 500 is at it’s lows for the year as we end the month of December. So much for the guys on CNBC like Steven Grasso and Art Cashin who said a couple of weeks ago that an end-of-year Santa Claus rally was likely coming. This is devastating to Bull’s psychology. Speaking of devastating, look at what happened intra-day today on the 5-minute chart:

SPX 5 minute chart

As I’ve said before, the market exists to screw the greatest number of people at any given time. Bulls got destroyed in every way today. The rally at market open lasted long enough to suck a lot of longs in, and then sellers sold into the upward move and left the Bulls all as bag-holders. Bulls got b*tch slapped, kicked, and spit on today. This kind of beating does not go without repercussions to trader psychology. In other words, I see a Bad Moon rising.

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