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Sentiment Under this Bounce – 5 May, 2022

It’s Cinco de Mayo – I’ve always wondered if this holiday was designated just to drink =). If we do imbibe, it’s best to wait for when we don’t have the mouse in our hands.

Market Outlook- Bearish undercurrent with bullish bounce INTO RESISTANCE. Support today 4258 -below there, sellers will strengthen. Above 4389, buyers will strengthen. Metastock has signaled a buy on the dip here. But the dip could be at the bottom of the breakaway all the way down to 4195-4177, so be careful. After reading some notes after the Fed, many were expecting 75 basis points of motion and getting just 50 caused the squeeze. Whether this is the real reason or not really doesn’t matter. What we need to see is what the traders are thinking (based on what they are tweeting)- and interestingly – there is still a great deal of fear.

TRADERS ARE FEARFUL STILL

The average range of returns has been skewed to the right and outside of the normal curve of returns. This likely means that the returns will bleed back into the market.

Relative gamma flows have not changed significantly and volatility is still quite high. Dealer exposure is still negative gamma – implying that the flows are still skewed a bit bearish.

The Motivewave chart shows the prices we have to watch today

NOTICE HOW WE READ THE PROFILE – THIN POCKETS TEND TO FILL OVER TIME

NQ profile action

NOTE THE BREAKAWAY LEVELS

Levels have shifted