S&P500 Holy Crow Missal: June 30-July 4

No Man's Paradox

Image 1. Passive investors and index funds, now and forever. Pink Flamingos, J. Waters (1972)

In this weekend’s piece I presented a paradox on systematic liquidity: the relationship of the Fed, the Treasury, and financial markets. The thesis was not far off from my writings from the inception of Crowstack, but now we have solid evidence!

Last weekend we noted that the market was pricing an Iranian capitulation - and if you read the Western headlines that checked out. But the inconsistency in Western headlines would normally force one to dig just under the surface (we’ve been programmed otherwise, unfortunately) - and that is where the story quickly changes.

Regardless, the official story and what the market anticipated is in.

Oil is back below danger levels (the key 70). Iran suffered a blow out of nearly all top leadership - including the previous assassination of Raisi - and Pezeshkian might as well be softly Israel-friendly. That alone is a huge loss. But Iran is quietly flipping the table on Azerbaijan, the staging ground for Israeli attacks and covert ops. That is now blown, as well as the bulk of Israeli sleeper cells in Iran.

This remains an ongoing conflict capable of surprise.

Iran indeed have a surprise that must remain sealed and buried in the Western press. I can’t get into that here or now, but they are much further along than would even be admitted. But for the intrepid observers, I’ll drop a hint: Israel got a taste of spicy.

But *more* importantly, two of three main indices crossed into new all time highs last week. And that means: no shorting the top! Yes, I left off the Russell on purpose, it’s as reliable to as a post-SPAC merger. Let’s navigate this new territory in ES together.

Another side note - I was wrong on oil: CL broke the 70 support, which I indicated was key to watch. It blew through a day after I released my piece, but that’s a lesson that it’s better to be wrong early in the markets than late! It has since been basing at the next key level 65. A break of 63.75 could see the 60s ultimately tested.

Reverend Bird’s Missal

The market is in full price discovery mode after breaking balance to the upside. We are one time framing up (OTFU) on all timeframes - and sellers must break a prior day low to bring the market in balance before I consider a swing short.

My main targets last week were 6220 and 6250 - with the latter trading into the weekend on Globex open. There is currently a massive buying volume shelf at 6200 - as well as being a key pysch level - so I’ll keep it simple and use this as the weekly pivot.

The 6300 level is ostensibly the key goal for buyers early in the week which can see some resistance, especially as a 50% range extension from earlier in the year! Above that consider 6335, with 6400-05 as the ultimate prize.

I had a few questions about extensions into uncharted territory: I am finding sets of 30 points to work well at this time, but Fibonacci ratios can work well, too. Not to mention key psych levels like 6250, 6300, and so on. Keep it simple.

Image 2. ES weekly chart

First of all, that is one hell of a weekly profile - ‘weakly’ pushing higher, leaving behind many short targets in the form of poor structure. That is likely to get filled in any liquidation scenario, which ultimately strengthens the market when weak shorts are forced to exit positions. Key targets at 6170, 6109 balance high, 6081 gap to 6050.

Image 3. ES daily chart and structural levels

Crow’s Nest: Monday June 30

Monday pivot 6231 - Friday upper LVN. I lean short with 6255 defended.

a) Early bid at 6243 can see a push into the ONH / 6255 with a break targeting 6270, with 6285 gating to 6300 at an upper extreme. Test and defense of pivot is more likely to see two-way action from 6225 to 6260.

b) Momentum below pivot targets 6220 and 6205, both which can see responsive bids. Extreme targets are 6195 and 6181 to break daily OFTU.

c) VIX pivot 17.20. We may see selling with the index over 17.60, and buying further supported below 16.75.

Keep it simple, and don’t be a birdbrain!

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