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And Then It Happened...
01-25-2020, 03:10 PM,
#1
And Then It Happened...
And Then It Happened...

<span property="schema:name" class="field field--name-title field--type-string field--label-hidden">And Then It Happened...</span>

<div property="schema:text" class="clearfix text-formatted field field--name-body field--type-text-with-summary field--label-hidden field__item"><p><a href="https://northmantrader.com/2020/01/25/rejection/"><em>Authored by Sven Henrich via NorthmanTrader.com,</em></a></p>

<p><strong>And then it happened. Rejection.</strong> And with rejection come technical consequences. Perhaps the start of the first correction of 2020, the first correction since the Fed went wild on the intervention front in October.</p>

<p><a data-image-external-href="" data-image-href="/s3/files/inline-images/Rejection.png?itok=PHG1MDPH" data-link-option="0" href="https://www.zerohedge.com/s3/files/inline-images/Rejection.png?itok=PHG1MDPH"><picture><!--[if IE 9]><video style="display: none;"><![endif]--><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/Rejection.png?itok=w9P7Apcm 1x" media="all and (min-width: 1280px)" type="image/png"></source><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/Rejection.png?itok=w9P7Apcm 1x" media="all and (min-width: 480px)" type="image/png"></source><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/Rejection.png?itok=w9P7Apcm 1x, https://zh-prod-1cc738ca-7d3b-4a72-b792-...k=w9P7Apcm 2x" media="all and (min-width: 1024px)" type="image/png"></source><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/Rejection.png?itok=w9P7Apcm 1x" media="all and (min-width: 768px)" type="image/png"></source><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_mobile/public/inline-images/Rejection.png?itok=PHG1MDPH 1x" type="image/png"></source><!--[if IE 9]></video><![endif]--><img data-entity-type="file" data-entity-uuid="c4ebb8ca-52b2-4fe0-8cdc-e0f58b313ae0" data-responsive-image-style="inline_images" height="283" width="500" src="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/inline-images/Rejection.png" alt="" typeof="foaf:Image" /></picture></a></p>

<p><strong>The confirmation remains outstanding, but technically vastly overbought markets are at high risk of a sizable reversion trade.</strong></p>

<p>One wouldn’t have known from the pre-market action on Friday as $NDX once again made a new all time high following tech earnings and $ES came within 1 handle of making another new high.</p>

<p>But the signs were already there. Suddenly last week more and more indices stopped playing the new highs game and started lagging as reality finally mattered on Friday and even the Fed’s ongoing liquidity machine couldn’t stop the selling.</p>

<p><strong>It is with some irony one can observe that the downside began the same week FOMO articles dominated the news front last weekend, led by Barron’s $DJIA 30,000 hype cover</strong>:</p>

<blockquote class="twitter-tweet">
<p dir="ltr" lang="en" xml:lang="en" xml:lang="en"><a href="https://twitter.com/hashtag/FOMO?src=hash&ref_src=twsrc%5Etfw">#FOMO</a> weekend<a href="https://t.co/HHlwj4qUNN">https://t.co/HHlwj4qUNN</a></p>
— Sven Henrich (@NorthmanTrader) <a href="https://twitter.com/NorthmanTrader/status/1218557586313744384?ref_src=twsrc%5Etfw">January 18, 2020</a></blockquote>
<script async="" src="https://platform.twitter.com/widgets.js" charset="utf-8"></script><p><strong>Oops, they’ve done it again?</strong></p>

<p>The $DJIA never made a new high and literally peaked the Friday before the weekend when Barron’s published its article:</p>

<p><a data-image-external-href="" data-image-href="/s3/files/inline-images/DJIA-4.png?itok=2ogpnlm4" data-link-option="0" href="https://www.zerohedge.com/s3/files/inline-images/DJIA-4.png?itok=2ogpnlm4"><picture><!--[if IE 9]><video style="display: none;"><![endif]--><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/DJIA-4.png?itok=Yoqzp4bd 1x" media="all and (min-width: 1280px)" type="image/png"></source><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/DJIA-4.png?itok=Yoqzp4bd 1x" media="all and (min-width: 480px)" type="image/png"></source><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/DJIA-4.png?itok=Yoqzp4bd 1x, https://zh-prod-1cc738ca-7d3b-4a72-b792-...k=Yoqzp4bd 2x" media="all and (min-width: 1024px)" type="image/png"></source><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/DJIA-4.png?itok=Yoqzp4bd 1x" media="all and (min-width: 768px)" type="image/png"></source><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_mobile/public/inline-images/DJIA-4.png?itok=2ogpnlm4 1x" type="image/png"></source><!--[if IE 9]></video><![endif]--><img data-entity-type="file" data-entity-uuid="24a69726-739a-4fff-8fa4-00af9d6b6fe8" data-responsive-image-style="inline_images" height="229" width="500" src="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/inline-images/DJIA-4.png" alt="" typeof="foaf:Image" /></picture></a></p>

<p>And while $NDX proceeded to new highs in its ever rising channel...</p>

<p><a data-image-external-href="" data-image-href="/s3/files/inline-images/ndx1-1.png?itok=vkQvRygz" data-link-option="0" href="https://www.zerohedge.com/s3/files/inline-images/ndx1-1.png?itok=vkQvRygz"><picture><!--[if IE 9]><video style="display: none;"><![endif]--><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/ndx1-1.png?itok=1kbsxWyu 1x" media="all and (min-width: 1280px)" type="image/png"></source><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/ndx1-1.png?itok=1kbsxWyu 1x" media="all and (min-width: 480px)" type="image/png"></source><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/ndx1-1.png?itok=1kbsxWyu 1x, https://zh-prod-1cc738ca-7d3b-4a72-b792-...k=1kbsxWyu 2x" media="all and (min-width: 1024px)" type="image/png"></source><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/ndx1-1.png?itok=1kbsxWyu 1x" media="all and (min-width: 768px)" type="image/png"></source><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_mobile/public/inline-images/ndx1-1.png?itok=vkQvRygz 1x" type="image/png"></source><!--[if IE 9]></video><![endif]--><img data-entity-type="file" data-entity-uuid="21fc592f-5e29-471e-a23f-ce3059b2c3eb" data-responsive-image-style="inline_images" height="225" width="500" src="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/inline-images/ndx1-1.png" alt="" typeof="foaf:Image" /></picture></a></p>

<p>..., that channel got busted a day after we talked about a larger sell signal on $NDX in <a href="https://northmantrader.com/2020/01/23/black-candle-magic/"><strong>Black Candle</strong></a>.</p>

<p>Signaling further trouble was the break of the rising wedge on $NYSE:</p>

<p><a data-image-external-href="" data-image-href="/s3/files/inline-images/NYSE-10.png?itok=Dj-pLoCz" data-link-option="0" href="https://www.zerohedge.com/s3/files/inline-images/NYSE-10.png?itok=Dj-pLoCz"><picture><!--[if IE 9]><video style="display: none;"><![endif]--><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/NYSE-10.png?itok=ETotRnlk 1x" media="all and (min-width: 1280px)" type="image/png"></source><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/NYSE-10.png?itok=ETotRnlk 1x" media="all and (min-width: 480px)" type="image/png"></source><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/NYSE-10.png?itok=ETotRnlk 1x, https://zh-prod-1cc738ca-7d3b-4a72-b792-...k=ETotRnlk 2x" media="all and (min-width: 1024px)" type="image/png"></source><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/NYSE-10.png?itok=ETotRnlk 1x" media="all and (min-width: 768px)" type="image/png"></source><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_mobile/public/inline-images/NYSE-10.png?itok=Dj-pLoCz 1x" type="image/png"></source><!--[if IE 9]></video><![endif]--><img data-entity-type="file" data-entity-uuid="f9d98e17-ab70-4678-8a7e-0ffa33814b7b" data-responsive-image-style="inline_images" height="315" width="500" src="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/inline-images/NYSE-10.png" alt="" typeof="foaf:Image" /></picture></a></p>

<p>Yet $SPX held its channel for the moment and $VIX held resistance:</p>

<p><a data-image-external-href="" data-image-href="/s3/files/inline-images/SPX-VIX_1.png?itok=5tTemP9h" data-link-option="0" href="https://www.zerohedge.com/s3/files/inline-images/SPX-VIX_1.png?itok=5tTemP9h"><picture><!--[if IE 9]><video style="display: none;"><![endif]--><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/SPX-VIX_1.png?itok=iu936Grz 1x" media="all and (min-width: 1280px)" type="image/png"></source><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/SPX-VIX_1.png?itok=iu936Grz 1x" media="all and (min-width: 480px)" type="image/png"></source><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/SPX-VIX_1.png?itok=iu936Grz 1x, https://zh-prod-1cc738ca-7d3b-4a72-b792-...k=iu936Grz 2x" media="all and (min-width: 1024px)" type="image/png"></source><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/SPX-VIX_1.png?itok=iu936Grz 1x" media="all and (min-width: 768px)" type="image/png"></source><source srcset="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_mobile/public/inline-images/SPX-VIX_1.png?itok=5tTemP9h 1x" type="image/png"></source><!--[if IE 9]></video><![endif]--><img data-entity-type="file" data-entity-uuid="d2fba2c9-b070-4d46-9e83-0dc174e60198" data-responsive-image-style="inline_images" height="333" width="500" src="https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/inline-images/SPX-VIX_1.png" alt="" typeof="foaf:Image" /></picture></a></p>

<p>For now, but a break on both fronts suggests more volatility to come and sizable corrective risk.</p>

<p>This next week will be subject to lots of further headline risk. The coronavirus is instilling fears. As one of the risk factors outlines in <a href="https://northmantrader.com/2020/01/21/lurking-risks/"><strong>Lurking Risks</strong></a> the news of more infections appeared to trigger some quick profit taking on Friday. A quick containment can spark a big relief rally, a further spread could inspire much more selling as one would have to assume an at least temporary impact on growth.</p>

<p>Next week also comes with another Fed meeting where the Fed has to give guidance on its future liquidity operations. A slowing in liquidity could be seen as relative tightening which may well be unwelcome for a market that has relied on nothing but artificial liquidity. We’ll also still have to see the earnings reports of major tech stocks such as $AAPL, $AMZN, $MSFT, $TSLA, etc, many of which are vastly overbought (<a href="https://northmantrader.com/2020/01/24/80s-party/"><strong>80’s party)</strong></a>.</p>

<p>What is the corrective risk, when do bulls lose control, where’s support, what could be corrective risk targets/zones? Join me in this week’s video update:</p>

<p><iframe allow="accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture" allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/G2ZUKZToDd0" width="560"></iframe></p>

<p>*  *  *</p>

<p><em>To get notified of future videos feel free to subscribe to our <a href="https://www.youtube.com/channel/UC-_tUpRdhh7Qc3vn6FFbhGw">YouTube Channel</a>. For the latest public analysis please visit <a href="https://northmantrader.com/">NorthmanTrader</a>. To subscribe to our market products please visit <a href="https://northmantrader.com/market-services/">Services</a>.</em></p>
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<span rel="schema:author" class="field field--name-uid field--type-entity-reference field--label-hidden">
<a href="https://www.zerohedge.com/users/tyler-durden">Tyler Durden</a>
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<span property="schema:dateCreated" content="2020-01-25T18:50:00+00:00" class="field field--name-created field--type-created field--label-hidden">Sat, 01/25/2020 - 13:50</span>

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