Speaker 1: I tell you what, if you're feeling confused about the conflicting signals in the stock market, you are definitely not alone, especially with the rewards that are on the horizon. It's easy to overlook all the risks that are building in today's market, but it's more important than ever to be informed about these investment decisions. So in today's video, we're gonna take a closer look at the risks versus those rewards and kind of go over a bunch of different signal charts in today's video of the Stock Market Brief Show. If you haven't done so already, make sure to hit that thumbs up. That is a thumb, it is greatly appreciated. Let's go ahead and get into it. Welcome back, everybody. So another green, smooth, sailing type of day in the markets. The only sector that was down was none other than the financials. Can't be too surprised there, as financials have been a lead weight in recent trade. Now, if I go on to look at the daily expected moves for the SPYs, this is something that we always keep track of because it's important to understand what the market predicts as far as forward-looking risk. And you can see it came up, it gapped up today, and it started right around that daily expected move. This is why we don't really just chase those type of moves. I know a lot of people that actually, when they come up to daily expected moves or weekly expected moves, they become premium sellers. And it wasn't until later in the day where we can actually put on some type of trade. I mean, you could have shorted it here. Me personally, I was looking for the trend break, the trend broke, we played up to the daily VWAP. The same thing with the Qs, it came up here to the daily expected move, and then it started pushing down, and we closed right around that daily expected move. I don't share this type of stuff to brag about specific trades, but I just wanna show you what it is that I look at intraday in the market to play some trades during volatile times. Now, if we take a look at the bookmap on ES, we're looking at the upper expected move tomorrow at a 4.112, and then the lower end right out there at about 40.55. Now, as you can see, guess what? The 4100 level has not been taken out yet, but we are not that far off. It sure feels like the market wants to push up and absorb that liquidity. If you wanna go ahead and take a look at the daily expected moves and place them on your chart for these products, go ahead and screenshot this. These are the upper levels and the lower levels for tomorrow's trade. Now, they are decently sized because we do have some important macro data coming out, but this data is coming out an hour before the market opens, so it's gonna be interesting to see how the market's going to digest these macro reports. As we've already discussed, look at the market got above this anchored VWAP and above this volume shelf profile, and it just started to continue to push higher. Now, as it stands, when you look at a candle like this, a daily hanging man candle, these could mark potential reversals. It's a little early to tell, in my opinion, but as we stated yesterday, a good stop would be underneath this low. Now, I'd be looking more for a stop underneath this low and still trying to target that 4.10 area up here where it comes into that volume shelf, but the market kind of just presses higher. It gaps, moves, gaps, and moves, and if you really take a look at the 15-minute timeframe, you can see there's actually not much trade going on. So, for example, today, if you were trading this, it is very difficult to get any gains. Why? Well, because we opened here and we closed here, so the market really didn't move all too much intraday, meaning we had that small body, that small candle body right there, and then you can see over here on this day, it didn't move much up until the very end of the day where we saw a little bit of a push higher. So, overall, if I look at the 15-minute timeframe, the bulls are in control. We're above that five-day moving average, so you look for pullbacks to potentially buy. Yesterday, we were hoping that we'd get a pullback into the lower daily expected move. Didn't quite reach there, but we did find that trend line, and if you see the upper expected move, we're not too far off. The daily expected move is a 406.86, so if we get something that the market likes tomorrow and we just open up here, basically, in the cash market session, I'd be probably looking to see it pull back into the weekly expected move and maybe trade around there for the day. Now, if the market sees something it doesn't like, I'd be looking to see if the five-day moving average starts coming back up and start to look for a potential, see how trade takes place at around the 400, 400.50 level would be if we can reach those levels. If you take a look at the Qs, the Qs, upper daily expected move is right around that upper weekly expected move too. You can see here we're just seeing a series of higher lows and a series of higher highs take place, so the bulls are in control as we're above the five-day moving average, as we're above that week-to-date moving average. This is the type of market where you look for pullbacks to buy, but you just need to be constructive and very tactical on how you play that. I'm gonna take a look at the dollar chart. The dollar chart, you can see here, it topped while the, what, S&P 500 down here bottomed, and as you can see, it's in this down channel taking place as while the S&P 500 is in a down or up channel taking place. So there's a very strong negative correlation here, meaning that when the dollar goes up, you can typically see the S&P 500 go down, and one thing that I wanted to call out is the dollar here, it's been pressing lower, but it's also within a wedging-type formation. Remember, markets move between contraction and expansion, and it's getting pretty tight here. So if we were to see the dollar start to break out and try to tag this upper trend line or potentially even move higher, this could act as a potential bear flag where we see the S&P 500 kind of come back down to that 3,900 level, which has been a very strong magnetic type of point many times throughout this trading history in the last year or so. All right, if we continue on and take a look at the zones, the dollar is also, just to note here really quickly, it is towards the lower end, but you can see it closed at 102, and then the low end's at 101, where we're starting to get some red on the screen, meaning that there are products moving into that overbought condition, and we need to be aware of that. As we've stated in this video, right, there are risks and conflicting signals. One of the conflicting signals here is, well, price is moving forward, which is positive, but we're getting short-term overbought signals to be aware of. One commodity to pay attention to is oil. Now, remember, energy is getting beat down, and then all of a sudden, oil broke down, and we're starting to see a reflexive bounce. What's going on here? Well, we're getting a back test of this neckline or this trendline zone breakout, and it's coming back into a declining 50-period moving average. If I were to call this some sort of a structure, I'd consider this a bear flag structure, where we typically have seen sharp moves up followed by sharp decline, sharp move up followed by sharp decline, and so forth, as you can see taking place. So be very careful here with oil. We wanna see, if you are bullish, you'd wanna see it kind of flag out and maybe consolidate its recent gains and then start to move higher, but as it stands right now, this is something very similar that we have been seeing. Now, let's go ahead and take a look at some of these indicators. This is where it's gonna get a little bit interesting, because we do have, like I said, quite a few conflicting signals. There's a lot of things to say, hey, take your foot off the gas here. There are warning signs, and then there's other things that say, hey, when we get pullbacks, let's buy them, unless, you know, until it doesn't work. One of the signals here is the summation index. The summation index helps us identify changes in trend. When the parabolic star down ticks, boom, we are identifying a potential change in trend, and you can see, changed over here. We saw the NYSE New York Stock Exchange move up. We saw it change right here. We saw it move down. We saw it tick over here. It moved up. We saw it tick down over here. We saw it move down. Now, we're seeing it tick, so perhaps, yes, maybe it's short-term overbought, but perhaps this is starting the start of a new trend to the upside, potentially to the prior level of resistance, right at around 15,750 to 16,000 for the New York Stock Exchange, okay? You can look at the NASDAQ summation index. This is the NASDAQ composite index, and it hasn't fully ticked over yet, but it's not too far off, so this will be one to watch, too, in coming days. If, yeah, even if we take a little bit of a breather here, but this starts turning back up, this could identify a potential change in trend here as well marking that, hey, we are looking pretty bullish, so that's the bullish start of it. Going into more neutral stance right now is looking growth relative to value on a 10-period rate of change. The growth relative to value line is actually hidden on the chart. I'm showing you what the cues look like. I really wanna call out the rate of change. When the rate of change crosses down through the zero marker, as you can see highlighted on the screen, these red lines, sometimes it brings in weakness to the cues because the cues are heavy growth names. So what am I seeing now? Well, I'm seeing the rate of change start to tick down. When it crosses up through the zero line, sometimes you see some strength. Sometimes when it crosses down, you see some weakness as it marked this bear market right here, bear market rally top, and it also marked this bear market rally top there as well. Well, we're starting to cross down through that point, so is this telling us, as we're seeing the NYSE summation index click up, this is a broad index, a lot of value names in there, and we're seeing the growth to value come back down with a slowing rate of change, is this kind of telling us that, hey, we might see some move into more value names, and that's a possibility and something that we need to keep an eye on. I wanna show this tweet by Michael Guyad. It says, nothing matters until it matters, and when it matters, it's the only thing that matters, and housing is about to matter. April. His tweets are funny, they make me laugh. And what he's trying to say here is, yeah, risk, like, there are warning signs of risk here, and it doesn't matter until it actually does, right? And then all of a sudden, people are caught flat-footed. One of the things about housing that, you know, he didn't say this, but I'm thinking he's saying this because of this sharp decline in the price of lumber, and when you see sharp declines in commodities, it is typically, we see that in stage six to stage one in the business cycle, and we are seeing this commodity get hit very hard here in the month of March. Now, in a couple videos ago, I showed you the housing index, how it was coiling up very, very tightly here. Remember, markets, they move between expansion and contraction, and once they contract, it's just letting you know that, hey, once they contract, it can move to expansion, which means volatility is going to come. Now, whether that's to the upside or to the downside, we don't know, but what we do know is, once the move starts, we can see a lot more volatility. When I look at the housing index here, you can see a couple of divergences, right? When the housing index puts in a lower high, but the S&P 500 puts in a higher high, it is marked tops in the S&P 500, and we're kind of seeing that right here, so it's gonna be interesting to see if the housing market pops to the upside, as we do have a couple indicators, like the MACD trying to do a bullish crossover. Maybe it's telling us that we might see a pop higher, and then it'll confirm this, and it'll be what it is, or perhaps this does break down to the downside here in the month or so, and then all of a sudden the S&P 500 eventually follows. Another tech tweet that he tweeted out was the lumber relative to gold, it warned of risk offs in stocks in the advance of 87 crash, 90 crash, tech bubble, 2008, 2011, which we talked about in the prior video, the debt ceiling crisis, 2018, 2020, and it's warning again. Now, when I posted this chart on Twitter, this is the lumber to gold ratio here, and I'm applying the 13-week rate of change. This is what he has wrote about in his award-winning white paper, and people looked at this and they said, oh, well, what about when the signal clicked here, the market moved up, or a bunch of times, like right here, it moved down, but the market was moving up. If you read the white paper, you'll better understand what the signal actually means. It does not mean, hey, market crash is coming, right? And as you can see here, the signal is turning down. As a lumber to gold ratio, it's hitting a new yearly low. This is not a positive sign overall, but what it's telling us is saying this, hey, the conditions are there for something bad to potentially happen, and this has signaled in front of all of these crashes. So even right here where it signaled it off and the market moved higher, it was warning us that, hey, the conditions for something bad to potentially happen are rising. So it says, hey, and Michael uses the analogy, if you're driving in a car during the sunshine, you don't really need to worry about, but if it's storming rain, are you going to let off the gas a little bit and drive more safer? Well, while the rate of change crosses down through the zero line, it tells us, hey, it's raining outside, take your foot off the gas a little bit and drive more carefully, and that is what it's signaling to us right now. So I hope that makes sense. And like I said, this is yesterday's video. One of the interesting notes about the 2011 crash that Lumber to Gold actually called out was also in 2011, it was known as a debt ceiling crisis and we had rising CDS, and that is very similar to what's actually taking place now. Another interesting indicator is looking at SPIP, so tips over GOVT, which is a Poor US Treasury Bond ETF. And what I pointed out here in the past was, let me move that back down, oh man. What I pointed out here back in the past was when the rate of change gets above that 1.2, 1.3%, what has happened is we typically see spikes in volatility not too far after. I don't know why this is, it was something that I found and I was like, hey, maybe I'll just keep tracking it. But then when it crosses down through minus 2%, the rate of change, well, you typically see volatility subside. So boom, it subsided, boom, it subsided, boom, it subsided. The most recent one was right here and it subsided quite a bit. Now, the last time that it actually increased was right here so it got above this line and it started seeing a pop in volatility. We saw it right here where it saw a pop in volatility. This is by no means perfect indicator. It did fire off two times here. This is around the time where we got more zero date options in fall and you could see volatility actually subsided. So it's not a perfect indicator but it has a decent track record. And the reason why I'm calling it out is because we're reaching back up to around that 1% marker, very similar to how we got right over here where if I drew a straight line down, guess what? We saw a volatility spike there shortly after. So if this starts to rise more or stay up in these areas, is it telling us that there might be volatility around the corner? And this does pair very well with the zones looking at volatility which we've been talking about here. Volatility is at those lower ranges of these zones. So you need to be very aware of the risk, once again, that are building. Another interesting commodity to watch is copper. Copper has been holding up relatively well and looking good but I wanna call out, there are times where we see these divergences, surprisingly where copper gets a lower high but at the same time, S&P 500 gets a higher high. Copper has kind of give us an indication that the S&P 500 might move down lower. And this isn't something that I'm just bringing up. I talked about it here, I talked about it here, we talked about it over here and we even talked about the bullish divergence here and the bullish divergence over there. So what I'm bringing to your attention here is another negative divergence. S&P 500 is pushing up while copper is actually moving down. Now, how can we negate this? Well, the copper would have to start breaking out higher and then it'd be totally fine. Another thing to pay attention to is the best performing sectors year to date are discretionary communication services and technology. And this is right here, it lines up with the beginning of trying to find a stock market bottom, but it's also right there when the business cycle is starting to turn into full recession. So times are tough, right? This is relative performance. It doesn't mean that these can't go down, right? It's totally normal to see these types of things go down, but it does feel like as far as price goes for a stock market bottom, I don't know where that is or if we've already hit it, but it does seem as far as time goes, we are nearing that process. That's all I got for you on today's episode, everybody. That was a whole load of content. Hope it helps out. I'll see you on the next episode.