Thread: coolhand's Account Talk

The market bounced a bit on Thursday, which simply means that there remains a floor under this market. But no breakout yet. Resistance is still in play on the S&P 500 and DWCPF. NAAIM sentiment came in relatively unchanged, which makes it neutral. One of my more important indicators, cumulative breadth, remains in a confirmed uptrend with liquidity at a moderately high level. I am anticipating an upside breakout before the end of next week, but for now the S&P 500 and DWCPF charts are confined between support and resistance.

More sideways action today that managed to resolve higher on the day. The OEX P/C was bullish, but the gains were mediocre. Now, the OEX P/C is bearish as we head into Tuesday. There isn't much else to add in this up and down market. I am hoping for an upside breakout this week given bullish seasonality, but rallies are being sold. The good news is that support has been holding. Of course, resistance is holding too. Cumulative breadth and liquidity remain bullish and that should keep a floor under the market.

So, yesterday I said that the OEX P/C was bearish and that had me looking for weakness on Tuesday, which we got plenty of. But it was a mixed close as small caps outperformed, which is a bullish sign. Those in the S and I funds logged gains, which the C fund took a somewhat modest loss. Bonds rallied, and AGG, which is similar to our F fund, tagged its 200 dma before closing under it. It is in an uptrend.

S&P 500.png

We can see that the S&P 500 probed lower and broke both its 50 dma and rising trend line support to the downside, but that long tail on the candlestick shows that dip buyers are quite active as they pushed it back up to close above both key levels. Still, price is going nowhere and a flat RSI and MACD confirm it.

DWCPF.png

The DWCPF closed above its modestly rising 50 dma, but closed right at falling resistance, which is also a potential lower low, though that remains to be seen.

BKX.png

The Bank Index was weak again and price broke that support area once more, but rallied back to the 90 area. It sure looks like someone wants to prevent a more serious decline in the banking sector. That makes sense as a deteriorating banking sector would be a bearish sign for the overall market. It's struggling now as it is.

The options smart money is neutral heading into Wednesday, but the dumb money is bearish and that's bullish. TRINQ closed at a high level and that's bullish too; at least for the Nasdaq.

Given the tenuous geopolitical events now in play, the upside may continue to be limited, but with cumulative breadth still very bullish along with liquidity levels, the downside should remain contained too. Something has to give eventually. I remain a bull, but not a complacent one.

I'm not surprised by the selling on Wednesday, but it sure seemed a bit overdone. This is supposed to be a seasonally positive week, but this market continues to track sideways, and that's frustrating for bulls and bears alike.

S&P 500.png

Price on the S&P 500 closed under its 50 dma and tagged that rising trend line as well. It's not an ugly picture by any means, but strength and momentum both turned lower. It's possible that the index continues to track sideways for now and not break one way or the other, but I'm concerned about downside follow through from here.

DWCPF.png

The DWCPF hit a lower high after all on Tuesday and price is now back under its 50 dma.

BKX.png

The banking sector continued knocking on that support area on Wednesday and price has officially hit a fresh closing low too. I really doubt that traders will ignore a significant breakdown from here. The 50 dma is just now starting to turn down a tad.

At the beginning of the week, NAAIM was neutral, showing both bullish and bearish participation in the market. The up and down nature of this market is consistent with their neutral stance. The options money is neutral heading into Thursday. Cumulative breadth did turn down some today, but it's well away from a negative condition and my intermediate term systems remains positive.

I am a bit nervous now as see no real bearishness out there as this market continues its sideways dance. With strength and momentum turning down on the S&P 500, we may very well get some downside follow through on Thursday. That support line may get broken on that index too, though if it does it may be a bearish head fake.

I am not sure what to expect at this point as it can still go either way, but the lack of upside as we wind down tax season is disappointing to say the least. The banks may be key from here. They can't afford to plunge without likely taking the market with it. That doesn't mean it has to get ugly if it does drop, but it needs to be watched. Hopefully, my nervousness is a sign that a bottom is near.

As I feared yesterday, the market got some downside follow through on Thursday and it did some technical damage.

S&P 500.png

Long term support was decisively broken on the S&P 500. Horizontal support at the March low is now being tested. Strength and momentum continued to plunge.

DWCPF.png

The DWCPF fared a bit better than the S&P in that price is not yet testing its March low, but the lower highs are not a good thing and neither is the degree of time this index is spending below its 50 dma. Still, it's not ugly...yet. The reality is that price is still in the center area of its trading range since December. It could still turn back up and run to fresh highs.

BKX.png

BKX broke an important support line and this will not go unnoticed by traders. RSI is now oversold.

The weekly NAAIM sentiment survey showed these money managers getting more bullish on this action. While that can be bearish in the short term, I don't like to fade these guys. They tend to know what they are doing and often have inside information that we don't have.

The options smart money is neutral to close out the week, but the dumb money is very bearish for Monday (Friday the market is closed). Historically, this is bullish for the market, but I have noticed that the dumb money has often gotten it right for some time now.

My intermediate term system is very close to going negative now and breadth, while still technically positive, is under attack. Liquidity levels are falling too, but are still well into expansion.

It may be that many market participants did not want to be long over the long holiday given the tensions in NK and Syria, but the market also likes to use emotional events to its own benefit, so a bottom could come quickly. Again, note the increased bullishness from NAAIM and the lack of bearishness from the options smart money.

It will be interesting to see how futures look Monday morning.

Thanks for having a Cool-Hand on the analyses throttle, & for sharing openly. Hanging in there & see what happens next week. Happy Easter!

Originally Posted by FAAM

Thanks for having a Cool-Hand on the analyses throttle, & for sharing openly. Hanging in there & see what happens next week. Happy Easter!

Happy Easter to you too, and the rest of the TSPTalk family!

Moving to 30% C and 70%. A lot of stuff has turned down and deteriorating. Today looks negative out of the gate. If that happens, it may shift sentiment enough to the bearish side to justify increased stock exposure. This is my first IFT of the month.

Hmmm, let me guess. Is that 70% S?

Originally Posted by Cactus

Hmmm, let me guess. Is that 70% S?

That's what I was thinking "S". I decided to split to CSI all even % last week from 100% S since last October.

Originally Posted by Cactus

Hmmm, let me guess. Is that 70% S?

Yes, 70% S. I'm on the road this week, so not near the computer much. Just checked in to my hotel.

The markets are up moderately so far. I'm thinking a bottom may be in for now.