Morning guys welcome back to the channel. Appreciate you guys tuning in before we jump jump into the technical analysis side of this we're going to talk a little about the interest rate uh increase that just happened. Yesterday um with the fed announcement okay so you're looking at the market the feds raise rates by 075. And you can read this across the entire internet today okay they raise rates by 075.

The market rallies. Most people i would assume go how does that even make sense they have to raise rates by 075. Percent because inflation is so bad and the market skyrockets that almost seems completely opposite. Yes.

That is true that's that does seem completely opposite of what what should happen now the reason that you probably feel that way if you are feeling that way. And i know many of you you aren't feeling this so. While i'm saying this you're like what is this guy even talking about me right and if that's not you then that's all right. But for some you could be looking as like how in the hell is this going up.

So much and we're raising rates because inflation's so bad and really. There's two lenses that you can view this situation through one of which is the correct one and the other one you're just in instinctively um. Used to using more frequently so there's two lenses one's a stock market lens. And one i would label as a consumer discretionary lens.

The consumer discretionary lens. You've been using your entire life. The stock market lens. You've only been using for as long as you've been in the stock market.

So knowing that would be one of the reasons as to why the market rallying with a 075. Interest rate hike with bad inflation would cause. Many to be confused. And the many that are confused are most likely confused because they're viewing.

Things through the consumer consumer discretionary lens. Which they themselves have been using their entire life. As opposed to a stock market lens. So the difference between those two lenses is one looks at wow.

We have bad inflation interest rates are going up. And how is that good for anything in the stock market's going up it's not good they're completely right on all fronts. It's not good. But the stock market doesn't necessarily care about your feelings.

And what you think it does what it believes is best for the market within the immediate so in the immediate inflation is bad the worst thing. We could do is not raise rates or raise rates too extreme the best thing we can do is raise rates at whatever the market feels is best for the current market. So the conclusion we come up here with and this thesis. We come up here with is since there's inflation.

You have to raise rates. You can't not raise rates. And you can't raise rates. Too quickly that is the viewpoint of the market and the stock market participants in those that view the market through the market lens.

Then you have everybody on the other side of the coin. Who goes inflation's bad right and they're raising rates. Which means. It's harder to borrow money at a lower cost.

None of this is good which in a theory is not good especially. If your consumer spending discretionarily or you need to buy a home and you have to borrow money not good for you but in terms of the economy in overall not use an individual. But grouping everything together at this moment in time okay july 28th of. 2022 the best case scenario is a 075 basis point hike for the market and we know that because of efficient market hypothesis.

It's called emh. Okay. Efficient market hypothesis. Okay.

Emh basically means all that the information that can possibly be known about the publicly traded stocks in the publicly traded stock market is already and always will be available to those that are willing to seek the truth or seek the answers alongside of that emh also states that since all information about all publicly traded stocks in the publicly traded stock market is available then all prices in the market are efficient in the sense that they're trading at the price that is most relevant considering all of the publicly available knowledge because they're publicly available stocks in publicly traded stock market. So everything there is to be known about the stock market is known and the price that you are currently seeing is a reflection of everything that is currently known alongside of the psychological aspect. Which is the supply and demand fear and greed are people driving prices up significantly higher than they really should be even given all of the publicly available knowledge. We have etc.

Etc. So the emh hypothesis and description and definition basically is that everything you have in the market is a reflection of everything that can and is known therefore what you're seeing is what you get and that is correct based on the emh system and strategy and so the reason. I went through that little debacle and um spiel is because the emh efficient market hypothesis um. I don't want to call it strategy.

But i can say the efficient market hypothesis shows itself really well every fomc meeting in the run up to and what i mean by that is before every fomc meeting. There's always going to be a discussion. What should the rates go up by should they go up should they not go up should we change should we not change. But by the time.

The meeting ends up happening. The market already decides on what it wants. So. Though the feds raised by 075.

Percent rate increase. Yesterday and you can't say for sure that they were going to do that prior to the run up for a couple weeks. We all expected it right there's not one market participant that does this on a daily basis. That's up to speed on things that would not have told you that it was going to be 075 rate hike yesterday.

It was expected it was known hence the efficient market hypothesis. Um scenario and that is all information about the stock market is and can be publicly known and in with that being said all the prices that you see in the market are reflection of that therefore. The market is an efficient market in the sense that everything to be known is had and can be attained and the prices are reflection of everything that is known and can be obtained in the current market situation. So that is my whole spiel on interest rate.

Hikes expectations going into them looking at it through a different lens. Um. Now. We're gonna go into the analysis side of it the statistical probabilities.

And the moving average system okay so going into. Yesterday. My morning video suggested looking for a bearish move to start but not being extremely bearish because i basically figured we were going to continue trading long so overall. I was pretty much looking for a dip on the day and then watching things long bias all right we didn't really get and so let's look at that we didn't really get much of a dip yesterday.

I mean we we pretty much didn't i think at all it was like three candles down and then up um. So yeah you can see the nasdaq starts with just a little baby one little baby. One not much and i was kind of thinking we might retest this lower level of 297 before continuing higher regardless. It didn't happen we went straight into a rip okay so looking at the nasdaq first because the nasdaq has most of the levels.

All right. So you can see this was that statistical probability that created the pre market high and that ends up being your pre market high breakout. Okay cool and then you will see that later in the day as the fomc and things conclude and they announce blah blah blah. And the market digests it the market goes to a big rally it ends up topping out at.

40288 our statistical probability for the spy was 40279. So we stopped 9 cents higher or just above that level all right so when we bring down this chart. We're gonna go into this one full screen okay so you guys know this chart we bring it up every day. This is the moving average system chart.

And so to put it simply just a couple days ago when we got this cross. We mentioned watching the markets you know bearish or when you get that cross you can watch bearish right so you get 700 points down all right and then the following day. We gap up and over the 50 and with one two three four five six seven candles of trading seven thirty minutes of trading seven thirty minute candles of trading. We get a bullish cross and that would be your buy signal right there so that's a signal to start adding long all right and shortly after you get a gigantic rep.

All right so this was your most recent sell signal there into there and then that was your most recent buy signal. Okay now if you're someone who went short here took no profit and then let this bounce back up you basically be at a break even loss. If you stop that right there okay. And that's one thing to remember is that a lot of times.

Um. You know in a pullback scenario. When it's just a quick pullback crossover and then it's going to flip back to bullish. When it went where it flips back to bullish will generally be the same price point at.

Which the previous cross the bare side happened so i want to confuse you too much there. But concept being is this is a low risk entry retest. The 50 sma after a cross and slides down 700 point swing. This way all right take some profit following day.

Gaps up it breaks the 50 sma that's your stop out you close out you wait for the blue to cross the red when the blue crosses. The red. You take an entry with a stop loss below the 50 and then that would be your play. So yesterday ended up watching the markets long staying long.

Primarily all day. I still have one call on the market um for the spy up to like 404. I played 404 calls yesterday. We hit a higher 403 um.

I sold most of my stuff into this top and now i'm just holding one to see if we continue so um. So yeah. That's a lot of talking i hope i'm not confusing anyone or boring anyone to death. So next thing that we'll discuss is kind of maybe what we can expect here um.

Okay uh. So what can we expect here. Let's see 10 days 30 minutes back to every time frame all right so this 10 day 30 minute time frame. So the blue cross over the red.

So we're long bias right so we're not big swing short until this crosses back below. The blue. Okay we're not going to be swing short till that happens so that crosses back below the blue you can see pull backs in between all right so for one. Today this ema.

Level this is at 39790. That would be a level to watch for the market to pull back to this 50 sma. I don't think that's going to happen. Unless.

The market just got destroyed. And it was a big fake out yesterday then then that's not going to happen so so right now you have 50 sma support at 39477 probably not gonna happen you have 84 39784. Right now that's going to change going into the open a little bit that can that could happen all right. So that's where uh simple moving average support levels would be all right now we're going to dive into the actual statistical probability charts all right so you should realize why the markets on the spy random 402 and topped right so if we look at a five day one minute chart yesterday five day one minute chart you're gonna see our probability lines.

One and two so you pretty much will notice from the fomc we break out we run. We don't really get much hesitation resistance. Until what that probability okay so you go up shy. It pull back run to it again big pullback.

Then break over maintain pullbacks above flag breakout run to the next probability up. This is where that one tops trends. All the way back down to the recent probability that it just broke and then that's where it maintains for after hours trading and then pre market. We break down the probability.

So that is a breakdown. A few minutes later we pop up for a re test. Which didn't fully re test. But we got close so this means that is the long breakout level on the day.

Unless. We are above that we will not see continued long bias rips in the immediate okay also when you look at the. Nasdaq the nasdaq has its statistical probability at the price of 30553. Which is pretty much where you saw that pre market wick run to so um.

So for right now. 456 is the first level that would need to break on the spy to continue running the market upwards. Then after that your first level of. Resistance you would run into would be.

30653. And that would be on the spy. Um. As i was saying.

Before i kind of was thinking. We would see this market run into prices of you know maybe 415. 410s. No more than 418.

Now so anywhere from 418 to 410 is kind of where i thought this market was gonna try to get to um. But anyways so we've done great from the 364 bottom. I'm going to be staying long bias. The market for now until we get a bearish cross.

I think we could start this day with the pullback to maybe retest some areas lower before trying to continue moving higher. But ultimately going to stay on the long side until we get that new cross on the downside and then we'll be bearish. Now do remember by waiting for this blue level to cross the red within this day. You would have missed this big gap up right so looking at this day.

When we were selling down. Unless. You bought the low of this red day that was selling down. You would have missed that gap up okay by using the moving average crossover.

Here. You wouldn't have been able to even consider getting long until like right here in this day. So yes you'd miss the gap up. But you could have caught the fomc rip right so um.

Just something to consider all right. So. With that being said. Guys um.

Just. Watch the markets. Overall long bias. Um.

As we get near no. There's one more thing. I gotta say um. We just got back to the long term.

Statistical. Mean. So that is kind of important that's the first time. We've gotten there in in a long time uh.

So definitely an interesting spot and if we do end up breaking out the long term statistical. Mean. That's where we would we would look for this market to trend out into this 414. Arguably 418 area going into next week.

And then that's where i would say you're getting pretty close to a top. Okay within this move so that being said. I'll catch you guys in the next one everybody take care.