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Coolhand's Market Analysis

Weakness Finally Materializes

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I've been looking lower for several trading days and after some modestly bullish, although volatile sessions, we finally got some weakness that stuck. The questions now are how long and how deep?

Given we're still waiting the results of the EU Summit it's impossible to know the answer ahead of time.

Since I'm running late this evening, I'm going to cut this short post just a few charts:

What to do with TSP-namo-png

What to do with TSP-nymo-png

NAMO and NYMO dropped much harder today and flipped to sell signals in the process.

I'm not going to post NAHL and NYHL, but they too dipped and flipped to sells.

What to do with TSP-trin-png

What to do with TSP-trinq-png

TRIN shot higher and flipped to a sell as well. It is also highly suggestive of an oversold market so a snap back rally may be on tap in the very short term. TRINQ on the other hand, while also on a sell, is relatively neutral. That's a bit odd and I'm not exactly sure what to make of these two signals as they are painting different pictures.

What to do with TSP-bpcompq-png

BPCOMPQ dipped lower, but remains in a buy condition. This signal needs to be watched very carefully at this point because it may be giving us an early clue to the possibility of further weakness. But with seasonality on our side I can't fully embrace the idea of anything more than a short corrective sell-off before another run higher. In fact, the way this market is playing out at the moment is exactly what I was looking for.

So the signals are mixed, which keeps the system in an official sell condition. We did have three unconfirmed buy signals the past two weeks so there's reason to believe we will turn higher once we put the weakness behind us. But the EU situation is not insignificant and that muddies the waters on what we might expect from this market over the next few days.

I remain 100% G fund, but I came close to putting 25% into the S fund today. I opted against it at the last minute as this market often moves further in one direction than we might expect. And given today's significant selling pressure I decided the risk was a bit too high to buy this market after a one-day pullback.

I'm not sure if the EU Summit officials will make their announcement before or after our IFT deadline tomorrow and that could make any decision making challenging in what I view a gamblers market.

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