 Hello everybody, it is Swing Jam with Xtrace and today I just want to do a little market update. The goal of this video is going to be showing you how I analyze spy, how I set up my levels and what other charts or indicators I use to give me some sort of sense of direction on where the major index is and most of the stocks are going to be going. So the first thing I'm going to do is start by analyzing spy and when I analyze any chart is I'm just going to go the monthly time frame and set my key levels. This kind of gives me a grounding base on what's important. What I'm really looking for on this larger time frame is levels where we get the most support and resistance bounces where these horizontal levels are going to give us the most, you know, change of trends. As we keep zooming in, I'm just going to be changing the colors of these lines just so it's easier for me to identify these levels later on. So again, I'm really just looking for these major support resistance levels. This is a very good indication on where you want to be going long and short and where you want to be, you know, basing a lot of your major trades off of. So finally I'm going to go to the daily and I'm just going to repeat this process and continuously be changing those colors. So when I zoom in on other time frames, I know which levels have the most significance. Now once I've done this, I will do the Fibonacci's. We're just going to be taking the swing high and the swing low from COVID. I think this is pretty easy and really the only Fibonacci you need to use. If you want to use another Fibonacci though, you can take the swing high and swing low from the 2007 crash or the housing market crash. You can make this yellow or even green and we zoom in and we get those secondary levels. From here, I'm just going to set my anchored view off points, swing lows and swing highs. In any sort of area, we have a large volume candle, a key gap up, a change of direction, you know, a key date. So the first day of the year, first day of the quarter, or like I previously said, any swing highs or swing lows. Finally what I'll do is do trend lines. So for example, I could take this trend line here. I like to clone it and make parallel channels. The reason why I like to do that is because channels are actually pretty effective ways of getting entries in. They're very clean. They're very easy to use as well. And when you clone them instead of redrawing them, I find those trend lines that have more significance. But okay, now that we set up spy, here's kind of what my thoughts are. If we look back, we see a pattern that most of the time, especially in 2021, at the end of the month, the last two weeks of the month, we had been seeing more weakness. On top of that, after the options expiration week, we also see weakness as well. So those two things in conjunction, we're seeing a lot of weakness and a good possibility of a pullback. And last week, last Friday was the monthly options expiration. And it also was the midpoint of the month. So the fact that we're seeing two pullbacks on Monday and Tuesday are not very surprising. We also broke the 8SMA, which is pretty good short-term resistance level. It has been, it was around about 15 or 16 bars. So it was a very needed test of the 8SMA. We were almost 2X extended from that range. So I'm thinking that an 8SMA test is fine. As for the 20SMA, we're getting extended away. But as we consolidate up here, the 20SMA will continue to rise up. Another thing to add is that seasonally, if you look at the Traders Almanac, this is a bullish week. So the fact that we are bearish going into Monday and Tuesday is a troubling sign. From here, now that I have my levels for SPI, and on a short-term basis, if we go to the 65 minute, really any break of this 410 level, I'd be very, very bearish on. And you could call this a head and shoulders. You could actually call this two head and shoulders. You could have your left shoulder here, your head, your right shoulder, and you could do the same thing if this other one is the left shoulder. That whole first head and shoulders pattern is the head, and you have the right shoulder right here with the yellow circle. So now that I have my sort of game plan for SPI and what my key levels are going to be, now I could kind of assess these other ETFs, or these other indicators that I use. And the first one I use is HYG. This is High-Yield Corporate Bond ETF. I see that when you have any sort of market pullbacks, so for example during the COVID crash, we can see that this ETF has large drawdowns. So as we could see on Friday, if we go to the weekly timeframe, we did hit a key resistance level, and we quickly pulled back to the EMAs and the anchor D-Wops. So for right now, I think the HYG is fine. If we break this blue band though, from the recent high, most likely we'll be pulling back all the way to 200 SMA, or this 8572 level, and if we go back to SPI, that would be a drawdown around to this 392 level. So it's definitely downside. I would like to see on the volume on SPI though, I would like to get a close above 100 million on the volume. If we want to see any sort of big bearish action, so far we've had not seen any sort of a major supply come in. If we look back a couple months ago, we could see that once we saw these large supply candles coming in, the character of the trend was changing. Before there is very low volatility churning upwards candles, after this large volume day, we had large spreads, high volatility, and a lot of sideways action. So I'm waiting for another one of those high volume candles to give us an indication that we're going to be changing character. We're changing the type of trend that we're seeing. So far, we have not seen that. Second thing I'd like to look at is the DJ20 or the transports. Personally, I find that the transports are a very good tool on understanding when the markets are going to top. If you see extreme weakness in the transports and those start topping out, I think they're a pretty good indication what the rest of the market will be doing. And as you could see from these transports, we have not seen any sort of major pullback. Instead, we've seen some consolidation, which is a sign that the market was weakening. Again, you could say the same thing was seen right around here in the beginning of March when spy had that pull down. But again, we saw the DJ20 have some relative strength. So the pullback was not that violent. Finally, I'd like to look at the VIX. And as you could see, we did have two inside candles. Wednesday was a large range day. And Thursday and Friday, we had that range condensing. The same thing I was seeing here at April 1, 2, and 3, after that third day or that second inside candle, we saw a large pullback to the downside, which for the markets for spy is a nice upwards move. You could go back and back test this, but when you usually see two inside days on the VIX, a large expansion day for the markets and the VIX usually follows. That's a pretty good indication on expected volatility coming within the next one or two trading days. The next point I want to look at is leadership. What sectors are leading and what is lagging? My first thing I like to note is that stocks like FSLY, the old leaders of 2020, things that we saw leading right when the pandemic ended. I shouldn't say ended, but right when the pandemic went to a lockdown mode. We saw stocks like FSLY, Wayfair. We saw these types of stocks leading the market. And pretty much since the July to August area, they've been completely flat. Then you've had your 2021 growth stock. So we can look at something like GME, DVD, even stuff like Neo, Tesla. We saw these stocks kind of topping out near the either December or November of 2020 or the February and early March of 2021. Other examples are PLUG, BLNK, the examples go on and on. So what I'm trying to point out here is by the leadership, we're seeing these high growth named stocks that usually carry the markets higher have kind of been stolen, which allows or pretty much leaves the only option left for the markets to continue going upwards is your classic fang stocks, so your Googles, your apples, Amazons. As you could see recently in the past two weeks, they've had large rallies. Even other large cap stocks like HD, Lowe's, Staples, these other sectors that are usually don't have as high volatility, XLU. As you could see in the past one to four weeks, these stocks how to have carried the leadership, we can even go further. The next step or next stage of this analysis would be looking at recent breakouts or recent stocks that attempted breakouts. You can look at something like ZIN, as you could see here. This was the first breakout level and this was the second breakout level. Something like Yeti, even FUTU, S.E., we could see that these even MWK, stocks that attempted to break out but have continuously failed. We've seen this over and over again. Even stocks like CLF, high volume gap up breakouts, they've all been failing. These are signs coming into the past one or two days that were signal points or possible warning signs that were able to allow you to spot this action beforehand. This was all mentioned in the Sweeney's chat. It's a chat in the Discord server, you guys should check it out. I mentioned a lot of these indications coming up in the next one or two weeks that we're most likely going to see some sort of pullback. You could also look at, like I said earlier, the options expiration. Usually after the options expiration, you'll see some sort of pulldown so the dealers or the sellers of these options that you guys all buy can reposition themselves. Their end game is to become delta-neutral, so when they are selling calls or selling puts, they need to buy or sell shares to remain balanced or to remain hedged. Usually we'll see a pulldown in the first one to three days of the week following so they can reposition and buy or sell their shares at those according levels. Now I'm going to go into what my thoughts are for the market. Currently, I think we will probably see more downside and we're going to see a further rotation into these value stocks, so stocks like K.O. Or the stocks that are really low, beta, high dividend-paying stocks. These are the ones that are probably going to continue getting the rotation inwards. XLP, for example, a lot of these food-based stocks, we can pull up the holdings of XLP. You can see that a lot of these were pretty green today. PM, we could go to KR, grocery store chains. We could keep going. Let's go back to XLP, CL, MDLZ, even something like Hershey. A lot of these stocks are going to probably be taking this rotation in as if you look, you know, if you zoom out to the weekly or monthly time frames, you could see that they were flat for a large majority of the time. So as this money is being sold out of these high growth names like Tesla, it's going to be filing a home in these undervalued sectors. I would also say a sector like GDX is pretty undervalued. We had a clean breakout of this downtrend, or if we zoom out to the weekly time frame, this bull flag, and we're about to reclaim the 50 SMA on the weekly time frame. We also saw a very nice day today as it was pretty green in a very bearish tape, which is a sign that rotation is going to be coming into the sector. You can also look at the spot price, XAU, and furthermore, if we go to copper, what I like to do is I like to compare it to gold. Usually when you see that this ratio copper versus gold, when it's going downwards, you're usually going to see some sort of market pullback or some sort of rotation into the value names, even when it's consolidating. That's usually a very good side. We're seeing this indicator of relative strength, not RSI, but relative strength, comparing one stock to another. For example, we can even do GDX to gold. As we could see, if we zoom out here and pull this chart up, we broke this downtrend as well. We're seeing that GDX is outperforming the spot asset, and that's what you usually see when you see gold bottom out, or even most commodities, oil, even corn, soybeans. The actual individual stocks will outperform the base asset or the spot price you're looking at, and it's a good sign that we're going to see continuation to the upside. I think we'll see a continued trend throughout the rest of the month of spy rotating outwards into more value names. While large tech heavy ETFs, such as QQQ, we'll see further downside action. I want to pull up QQQ for a second, because we see a look above or fail, or a quick pop above to new all-time highs, and now we're quickly bringing stocks downwards, or we're quickly failing this breakout. You also had a testing can on the top of the trend with high volume, which is another indication that a pullback was probably going to occur. If we go to the 65-minute timeframe, we kind of have the same sort of support spy does. I think if QQQ breaks this 335 level, we're going to probably go all the way down to fill this gap here at the 324. Or at least go down to this gap level at 332. You can look at something like S and H, which usually leads the tech sector, and that has extreme relative weakness in the past one or two days. So there's not many good indications or signs that these tech heavy assets or tech heavy ETFs are going to be outperforming anytime soon. You can even look at something like Tesla. It's been pretty consolidating here. We kind of had an inverse head and shoulders, but the follow-through wasn't that great. And we're below the year-to-date anchored view up. So in my opinion, algos will be selling their pops instead of buying the dips. When stocks are above the year-to-date anchored view up or the 200 SMA, they will be buying those dips. So just a quick recap. I think we're going to see more downside if 410 for spy and for QQQ's 335 breaks. And regardless of that, I think we're going to see continued rotation into value-based sectors. So that's going to be XLP, XLU, XAU, which is gold. I think these sectors are going to be seeing more inflows in the next two to four weeks. So I hope you guys enjoyed my analysis on the markets and the way I break down the markets and kind of how I analyze them. I hope you guys picked something up and have a great trading week.