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Coolhand's Market Analysis

Bears Making Their Presence Known - Posted by Coolhand

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Quote Originally Posted by coolhand View Post
Before I get into my usual post, I want to address something I said last week because I find it interesting and perhaps even instructive. When the TSP Talk survey was released last week, I said the following:

"The TSP Talk sentiment survey came in bearish this week. That's diametrically opposed to NAAIM. We don't do that often. In fact, as I've stated in past posts, I don't treat our sentiment survey as dumb money. Not when we are collectively aligned to the NAAIM reading as often as we are. But I trust NAAIM more than TSP Talk sentiment reading. Prove me wrong."

Well now, given how the bears trampled the bulls last week, I have to say that it appears I was proven wrong on who I should trust more. Or at least give equal weight.

I did say I consider us smart money as far as the survey goes, but as infrequently as we are misaligned with NAAIM, my default is NAAIM, which is why I remained bullish for the week. It's still a judgement call when you are looking at signals that are not in alignment, but in the future I would give more credence to where we stand collectively on TSP Talk.

Now back to your regularly scheduled program.

The market gave us what for all the world looked like a pretty good set-up for fresh highs after back-to-back rallies on Tuesday and Wednesday. But then Thursday we got selling in spades and that called into question where this market was really headed. Friday's action was mixed and still a bit volatile. The week saw both the C and S funds shed 2.41% on C and 4.39% on the S fund.

Market Talk-spx-png
Market Talk-dwcpf-png

That puts price back at or near the 50 dma on both charts. Support held (so far). So, we now have a 2nd test. Will it hold? I don't know. Momentum is falling hard. The DWCPF did bounce off its 50 dma, but I can't hang my hat on a bottom with it. More or less the same for the C fund, but price is sitting right on support on that index.

Market Talk-nyad-png

Cumulative breadth has now gone bearish, but we've seen this before too, so we can't assume the market is ready to roll over.

This week's TSP Talk survey is pretty neutral. Although NAAIM was bullish with their reading on Thursday (cautiously so), the action that day may have changed that reading. I warned that the fact the bullishness fell as much as it did, even if they weren't embracing the bearish case, was a potential warning.

So, all things considered above I am moving from bullish to neutral. The bears haven't proven anything yet (other than they haven't gone away) and we're still in a bull market. But I would not be surprised if this market goes in either direction next week (or both). The volatility may continue. There are games being played (gamestop, etc.), brokerage outages, banking glitches, etc. happening, which gives me pause as well. Both NAAIM and TSP Talk are either neutral or at least showing respect for potential downside. I don't think this is quite the same market right now and I think I have company with that line of thinking.

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SPY (C Fund) (delayed)

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DWCPF (S Fund) (delayed)

(Stockcharts.com Real-time)
EFA (I Fund) (delayed)

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BND (F Fund) (delayed)

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Yahoo Finance Realtime TSP Fund Tracking Index Quotes