 Hey everyone, this is Mike and my capital with a update today is Tuesday June 6th and around 6 30, New York Times. So markets here have been closed I had noticed something that I thought was interesting. It might be a value for you tomorrow So the last couple of times we've seen the market rally. We've seen, you know, these sort of reversal candles now on a couple of occasions and Typically what we've seen is a pullback thereafter that reversal candle And you can even include this one in here, which I didn't highlight. But again This has been a familiar pattern. This is something to watch obviously for tomorrow We have, you know, basically it would be easy to sort of get a sense of whether that's gonna work or not I mean all you have to do is take out the high of 4,300 Tomorrow and then obviously that would suggest that this pattern has been killed and there'd be further upside Likewise, if we were to break below 42 70 or 42 60 or so it probably opens the door to a steeper drop Maybe back towards 41 70 or so in the coming days and again This would be a pretty good indicator with a gap also to fill it 42 20 Which may be a more immediate area to look for if this level of support around 42 70 ends up breaking So again, I thought that was rather interesting. It seems to be an easy way to keep track of potentially Where markets can go tomorrow you can see even in this case We had a big sharp rally and we kind of leveled off for a couple days You can see here a big sharp rally kind of leveling off here So something to pay attention to he's saying the same thing here We had to move up and we leveled off so again This looks just very similar to what we've seen in the past and it's something worth being aware of at the very least And also today we had a pretty big move in small caps We've been we were talking about we had to really hold this 172 area on the small caps and we had some resistance at 176 So the 172 area certainly held We were able to gap above resistance at 176 and you can see now We're sort of testing this upper upper is upper level of resistance on the IWM depending on how you want to exactly draw it out so Again, you're gonna need to see the market hold above this this 183 60 level on the IWM and that potentially sets up further room to rally to around 187 Likewise, if you move back down below this trend line, you know, this is a big get this is a big kind of Wall that needs to be closed I guess if we were to see a drop and it could be a significant one, you know Well with a gap feel all the way back down to 176 So this is something to keep an eye on again and these are very easy to sort of because if you see the market, you know Immediately get above these sort of intraday highs that we've seen on the IWM the the SPX and even the NDX Which is this one here Again, you can see the same sort of thing if you look at it on a daily chart You can see the reversal candle yesterday and then a very similar price action today In terms of market breath, it's certainly improving a little bit with the movement in the Russell 2000 But when you look at the the New York The New York summation index it doesn't it's still in a negative number and and overall this looks like a fairly weak Rally thus far again You're gonna want to really see the breath in the IWM continue to get better in order to Kind of confirm that there's potentially more upside WM is also a little deceiving because the KRE is a very big component to the IWM And that was up almost five percent today being the regional banks And there's certainly more room for them to rise from here clearly very oversold momentum has certainly shifted More bullishly and you can certainly see that there's room for it to really move up to around 45 or so Before we really hit any resistance So you're gonna want to watch the KRE very closely because if that's performing well That means that the IWM is gonna perform well But the little trick here is that if you start looking at the ratio of the QQQ to IWM I mean this thing hit, you know record highs. I would say all-time highs right in terms of the ratio Which really means that it's potentially possible that you could see the QQQ and the S&P 500 really Underperform over the next couple of days if the IWM really starts to catch a meaningful bid You can see it even on this sort of scenario So what this means is that because the mega cap names have sort of led the market so much higher It's kind of distorted the indexes a little bit And so what's possible here is you have a move into you know Sort of regional banks and an broadening of the breadth in that part of the market But the rest of the market doesn't really participate Just like the small caps were kind of left out as the rest of the market rallied at least on the major indexes So this is something to be aware of Obviously the other thing here is that the VIX index has moved sharply lower You can see that right now. It's it closed basically today at $13.95 This is a level you haven't seen on the VIX really going back to Basically before the pandemic began And so basically every single gap here has been filled on the on the on the VIX and You know, the question really becomes is how much further can the VIX go down Clearly trading all under all under all the levels that were witnessed during 2021 When we had quantitative easing which helps to dampen Volatility and makes it really ideal to short volatility We clearly don't have that right now Although the reserve balances and the balance sheet have sort of Leveled off I would assume that now that the debt ceiling has sort of cleared That eventually you're going to start seeing reserve balances begin to decline again Which really doesn't make it a great environment to short vol But this is certainly what you've been seeing and interestingly today You saw the VIX fall by about 5 but the VIX was basically flat And you can see the ratio is pretty much back also to you know levels that were before we had the big sell-off last year So this is sort of an interesting dynamic where you're seeing basically, you know the the vol of the The measure of implied volatility for the VIX basically kind of Showing some signs of bottoming and maybe putting in a bottoming process here with this reversal candle on june 2nd While the VIX index is still making a low or low So this is also something to be very aware of because This is beginning to look like a very crowded trade and obviously we have option exploration For the VIX on the 21st, which is the week after next So this could still persist for a little bit But the other thing that's also interesting when it comes to option exploration is just taking a look at the way the The open interest levels are and gamma levels are for the VIX You can see that basically There's really very little gamma down here below 14 and that's because there's really no open interest below 14 So you're sort of entering a period where It almost seems like the pain trade for the VIX would be to go higher And for all these puts to get crushed and lose a lot of value So this is a really tricky spot here in terms of Where you are with implied volatility and how much lower it can really go And it's something certainly to be aware of and to be watching closely And and so again also when just looking at sort of the Positioning for the spx tomorrow at least based off of today's levels again, you can see that the The big the big gamma level which is likely to offer Resistance right now is at 4,300 And if we go out to the exploration date on the 16th, which is the big exploration date You're going to see that it's also at 4,300 So the gains on the s and p may actually be sort of limited unless you can really pierce through this 4,300 level with some Authority it just doesn't look like there's as much pull from an options perspective for it to go much higher Than that level at this point obviously these levels can change and it's worth something checking tomorrow The other thing if we kind of circle back to the DAX, which last time we spoke we had mentioned the island reversal top To this point that island reversal has actually still held You can see that there's been a clear level of resistance up here around 16,000 16,100 or so so again, this is something to watch obviously a break of 16,100 Sets up a climb to around 16,150 and more importantly would kill this island reversal pattern And would really sort of suggest that maybe there's further to go on the upside Likewise, uh, there are still a gap here to fill at 15,850 But really for you to start thinking about further downside, you need to see it get below 15,650 or so Anyway, that's all I have. Hope you have a great rest of your week. Bye