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Last week I admitted my surprise at the V-shaped recovery, but disclosed that I had drank the Kool-Aid and saw the recent move as bullish with more upside ahead. That was the correct call and we indeed made new highs. I pointed out mid-week on Twitter that the 5 and 10 trading days after making new highs from a V-bottom (over the last couple years) has typically led to a choppy rangebound market with a slight upside edge.
Given the previous track record that is shown below the implications for next week is continued consolidation in which we work off overbought conditions through time and not price. Typically during these consolidations we have seen rotation, which I also highlighted last week mentioning a pause in the biotechs and resumption in the energy and industrial sectors. That rotation did indeed begin last week and I would continue to look for rotational opportunities including into bonds (disclosure I am long TLT from Thursday 11/6).
How far are we into new highs from the V-shape recovery Sassy?
We are currently at 4 trading days out from new highs and 0.63% above those highs. Below are the stats from the V-shape recoveries over the last two years. The average 5 trading day move above highs is +0.52% and +1.3% 10 trading days out. 
Is there any other reason you expect range bound choppiness next week Sassy?
Yes. Actually there is. Looking over many of the open interest momentum stocks as well as the indexes, the calls and puts are fairly split giving some clues to the possibility of continued consolidation (for more about how I use open interest, read here). Below is the open interest of SPY. If 203 is able to hold, price will face resistance near 205/206. If price does move below 203 it would give more credence to the possibility of choppiness as opposed to a grind higher with support around 201.50 and better support at 200. 
What is the main take-away Sassy?
The main take away is the risk/reward in the very near term favors a rangebound market that further consolidates the recent move before another bull leg higher. The intermediate and longer term outlook remains in a bullish trend. Good luck next week.
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New Highs From the Infamous V….What’s Next?
For market commentary, open interest and intra-day/week set-ups, check out a subscription.
Last week I admitted my surprise at the V-shaped recovery, but disclosed that I had drank the Kool-Aid and saw the recent move as bullish with more upside ahead. That was the correct call and we indeed made new highs. I pointed out mid-week on Twitter that the 5 and 10 trading days after making new highs from a V-bottom (over the last couple years) has typically led to a choppy rangebound market with a slight upside edge.
Given the previous track record that is shown below the implications for next week is continued consolidation in which we work off overbought conditions through time and not price. Typically during these consolidations we have seen rotation, which I also highlighted last week mentioning a pause in the biotechs and resumption in the energy and industrial sectors. That rotation did indeed begin last week and I would continue to look for rotational opportunities including into bonds (disclosure I am long TLT from Thursday 11/6).
How far are we into new highs from the V-shape recovery Sassy?
We are currently at 4 trading days out from new highs and 0.63% above those highs. Below are the stats from the V-shape recoveries over the last two years. The average 5 trading day move above highs is +0.52% and +1.3% 10 trading days out.
Is there any other reason you expect range bound choppiness next week Sassy?
Yes. Actually there is. Looking over many of the open interest momentum stocks as well as the indexes, the calls and puts are fairly split giving some clues to the possibility of continued consolidation (for more about how I use open interest, read here). Below is the open interest of SPY. If 203 is able to hold, price will face resistance near 205/206. If price does move below 203 it would give more credence to the possibility of choppiness as opposed to a grind higher with support around 201.50 and better support at 200.
What is the main take-away Sassy?
The main take away is the risk/reward in the very near term favors a rangebound market that further consolidates the recent move before another bull leg higher. The intermediate and longer term outlook remains in a bullish trend. Good luck next week.
For trade ideas, open interest and constant market commentary check out a subscription.
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