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Market Commentary: Markets This Week

Mar. 21, 2021 10:24 PM ETSPDR® S&P 500 ETF Trust (SPY), VIXEFA, EWJ, FXB, FXC, FXE, FXY, GLD, IWM, QQQ, SLV, UUP
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.


  • SPX Monday Narrow Closing Range: 3883-3943.
  • SPX Monday Broad Closing Range: 3844-3968.
  • SPX Weekly Range: 3850-3990.
  • VIX: Underpriced.

There is no doubt that I am emotionally bearish on the market but the wonderful thing about having objective models using market structures like the proprietary one I built and use is that it is inconsiderate of my frail human emotions. My model returns probabilistic outcomes and that is what I trade. This approach simultaneously creates good trading outcomes and saves me from bad trading outcomes. The result is that the model tells me that the market isn't nearly as dire as I feel the market is at this time.

Still, the market is being won over by the bears. Each attempt at a solid breakout is repelled putting us in an at-best consolidation market and at-worst the throes of a dying bull market.

S&P 500 (SPY): Further consolidation after failed bullish breakout

NASDAQ (QQQ): Further consolidation after failed bullish breakout

Russell 2000 (IWM): Further consolidation after failed bullish breakout

European Equity (EFA): Bullish after a successful breakout

Japanese Equity (EWJ): Cautiously bullish after a successful breakout

U.S. Dollar (UUP): Bullish after a successful bullish breakout

British Pound (FXB): Bearish after a successful bearish breakdown

Japanese Yen (FXY): Bearish. Not even a hint of bullishness

Euro (FXE): Bearish with a good chance of a further breakdown

Canadian Dollar (FXC): Consolidation after a failed bullish breakout

Gold (GLD): Bearish. I will look to short if we can make $164-165ish

Silver (SLV): Bearish. Currently in consolidation.

And now is the time when I contradict what I've just said because of the reality of implied volatility. My model prices downside implied volatility fairly versus the market but shows implied upside volatility underpriced which indicates that there may be some alpha generation in the purchasing of out-of-the-money S&P calls expiring Friday. Now, I will leave a few things to the imagination and not give away strike selections for free. But, feel free to use your imagination on this one.

Happy Trading and I'll see you again on Tuesday morning!

Analyst's Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in SPX over the next 72 hours.

I am an active trader and may take a long or short position in any securities mentioned at any time. With that said, I closed the week almost entirely in cash so that I can take an objective look at the markets and decide where I want to position myself.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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