Market Update for Thursday, July 20th, 2023

Good afternoon, traders. We have some interesting developments.

Today, the S&P 500 took a break from its relentless bid and, at the open, gapped to a point around which we could generate a bull flag:


From there, it attempted to rally right from the open, but then the bull flag first began to fail and we even lost the bare minimum of up trend lines in the process. That was briefly defended and it looked as though the breakdown of the bull flag and loss of trend were going to be false, but then the whole thing failed again and we lost the bull flag and the trend line for good.

And if you’re bearish, that’s an excellent start.

I have been hoping to see a bullish structure fail at a high. I’ve been way too stubborn in looking for that, first with this ascending triangle, and then with this one, too. I have not wanted to give too much benefit of the doubt to the bulls because I think we’re approaching a very dangerous turn in the market and they’ve got literally just about everyone frothed up to an extreme we very rarely see. That’s been painful and silly of me and I won’t be able to take as much credit for getting the “next leg down” in a bear market right because of my stubbornness up here, but I am worried about what might end up looking like a catastrophe once it’s over. But the sheer strength of the mega-caps in particular this year is an awesome testament to the extremes to which the market is capable of going. Expecting them to rally strongly after their poor performance last year is one thing (I did expect that very much), but to expect them to retrace as a group to within an inch of their all-time highs—and almost in a straight line—that’s the kind of unexpected market extreme that I’ll probably spend years trying to wrap my head around:


Astounding. And because of this strength in these names, these stocks have dragged the NDX nearly as high and the S&P farther than I thought was fairly reasonable. But, we still have—I believe—a lot of reasons to expect a big market turn, and I’ve got to stick with what I believe to be true. The general thesis that I laid out a couple of weeks ago remains every bit as acceptable to me here as it did there. If we’re entering a big, recessionary phase of a bear market, they need a bullish public into which they can sell, and it still looks like they have just that. If these mega-caps running up like this doesn’t make things feel like they’ve “returned to normal,” than nothing will. Part of me wonders if they had to push it this hard and this far just to get people to really commit to the idea that we’re “back to normal” (I doubt that we are).

I submit to you:


After a string of the highest readings in over a year, we got an even higher one today, the highest in over two years (April ’21). That’s a big jump, and it might have come at the worst possible moment.

Anyhow, we’ll see what happens from here.

Let’s look at a zoomed in view of the S&P, we’ll take a look at Apple, and Tesla, and the VIX, the oh so beautiful VIX (have I told you that I love her? [blushes]).

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In sum, plenty of good things to look at. We’ll see if we get some followthrough. It’s been a bit of a ridiculous journey, but there’s still a lot of promising things for the bears here. We’ll see what the market brings us next.

I hope everyone has a wonderful evening.

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