What the Fitch downgrade did today
Most people think that the Fitch downgrade from yesterday was the trigger for the very predictable downturn that was expected anyway. It is strange how when the markets do poor one day that the pundits make it seem like it was inevitable.
I do not trade on feelings though, only on price. One important point I tracked today was that both the SPY and QQQ went beyond their weekly expected moves to the downside. There is a 68% chance that price closes within the expected move at the end of the week. So, there is a chance we have somewhat of a bounce back this week for price to move into that expected move range. Then again, it is only a 68% chance.
While sentiment clearly seems to have turned negative (on almost a dime it seems), we should remember that markets do not move in a straight line (unless it is AAPL of course).
Major Markets Trending
For me the above table is the best guide that tells me how the markets are trending. Note the cells with borders are the changes this week so far. We can clearly see the deterioration in all the major markets.
SPX Sectors Trending
Every sector had its trending deteriorate in some manner. The XLY is the first to turn short-term bearish (defined by me when the 10day SMA crosses below the 20day SMA). And others could be following soon.
Expected Moves Update
The above are the tickers for which I am tracking the expected moves this week. A quick explanation of the table:
The 4 range columns are the expected moves at the beginning of the week for price to close at the end of the week.
The last price is highlighted in yellow which is the last normal hours trade price.
The change from week start is simply the difference between the week start price and the last price. This indicates the change this week so far.
The distance from low is the last price subtracted from the low range price. If the number is red, it means the price has already gone beyond the low range of the expected move. We can see that for several of the tickers including SPY, QQQ, TSLA and NVDA the price has already gone below the low range of the expected move. There is a 68% chance that price recovers ground and closes within the original range. So, looking at the distance from low % column, there is a 68% chance that the QQQ gains back +0.46% to stay within the expected low range.
The distance from high has the same logic.
Last but not least, the VIX was up +16% today and closed above a 16 handle. This indicates we may have some turbulence in the markets providing some swing trading opportunities for people who like that.