Thread: Bear Cave 2 (Bull Allowed)

Huge short-term rebounds were common in 1931, 1974, 2001, and 2008, with these years sharing a common thread.


The biggest downward corrections and bear markets usually feature the most dramatic short-term rebounds, with 1931 being by far the top in that category with 2008, 2001, and 1974 not far behind. It is likely that the recent sudden surge higher for QQQ and similar baskets of large-cap U.S. equities are in the same category. This behavior encourages Bogleheads not to sell at favorable prices and induces momentum players to keep piling in and out at the wrong time. If you're wondering why you or someone you know didn't sell in a year like 2008 and 2001 then headlines about big up days for U.S. stocks often emotionally dissuade many investors from getting out until it is too late.

https://twitter.com/TrueContrarian?r...Ctwgr%5Eauthor
https://truecontrarian-sjk.blogspot.com/

Are we currently in a Bear Market? It depends on who you ask......

LOL...... I'm RICH!


David Rosenberg
@EconguyRosie
·
4h
Yesterday, I published my year-end chart package – there are no new eras, excesses are never permanent and mean reversion is unavoidable. Sign up for a free trial to access it. https://bit.ly/3EB6Yno

https://twitter.com/EconguyRosie?lang=en

John P. Hussman, Ph.D.
@hussmanjp
·
2h
Every deficit of government must emerge as a surplus to corporate profits, household savings, and foreign countries (via trade deficit), where their income exceeds their consumption and net investment. As the deficit narrows, combined surpluses will shrink as well. #arithmetic
https://twitter.com/hussmanjp?ref_sr...Ctwgr%5Eauthor

StockTrader'sAlmanac
@AlmanacTrader
·
Dec 2
December Almanac: Small Cap Effect & Santa Claus Rally - Trading in December is holiday inspired and fueled by a buying bias throughout the month. However, the first part of the month tends to be weaker as tax-loss selling and yearend...
https://twitter.com/BobLoukas?ref_sr...Ctwgr%5Eauthor

SPY daily after the close: Whats not to like? We should see some new buy signals from some of the Guru's, and the chasers should come into play. LOL.... if they didn't already buy. I took profits...... I will wait and see how this plays out! It will not take much to hit another ATH or maybe a lower high. We shall see!

Do not forget these (upcoming) risks
Despite the brutal short squeeze, there are risks to consider going forward. Volatility remains huge, both ways. Few risks to focus on according to Nomura:

1. Op-Ex and Fed next week

2. CTA deleveraging “sell triggers” will remain “proximate enough” to spot after this imminent covering squeeze tuckers-out

3. Skew stays completely “jacked up” and stress-y

4. US inflation prints are not expected to peak until 1Q21, it is highly probable that “Fed Put” strike is now much lower

The crowd has been shocked, both ways. Maybe this market needs to thread water and sober up before any new meaningful direction can take place...

Stretched valuation is more broad-based
Morgan Stanley believes the Fed pivoting to a faster taper (not Omicron) is the primary driver of the market’s de-rating over the past two weeks. However, P/Es are still higher than they were two months ago at nearly 20x… with 70% of S&P 500 industry groups currently trading in the top 25% of historical forward P/E levels going back to ’10, and all but five groups (out of 24) trading above the SPX’s average multiple since ‘10 (15.9x). Bottom line: Elevated valuation is pervasive despite a lot of focus on a concentrated market, which strengthens the case for a market multiple de-rate, and the importance of stock selection.
https://themarketear.com/

LOL..... It was a nice move up and smoked the shorts again....

Boom Goes The Dynamite
Posted on December 7, 2021

While stocks formed a swing low on on Monday, they were contained by the 10 day MA.

Boom.

Stocks gapped above the declining trend line to end up rallying for 2.07% on Tuesday to signal the new daily cycle. Stocks also closed above the upper daily cycle band on Tuesday. Closing above the upper daily cycle band ends the daily downtrend and renews the daily uptrend.


Stocks are heading into the most bullish time of the year. If stocks can quickly breakout above the all-time high of 4743.83, that could trigger a melt-up phase.
https://likesmoneycycletrading.wordp...smoneystudies/

Not sure the COT matters, but someone is sure hedging going into next year.

The spread in sentiment between Smart and Dumb Money is historic
Jason Goepfert
Jason Goepfert
Published: 2021-12-08 at 0700 CST

Historic spread between Smart and Dumb Money

The past couple of weeks has triggered a drastic shift in sentiment. The confidence in a rally among Smart Money indicators has jumped. It would be even more extreme if there wasn't a curiously large plunge in "smart money" commercial hedger positions in equity index futures.

We can see the stark change in attitude below. Despite the weird increase in a net short position in index futures, Smart Money Confidence jumped to 77%, the highest since late April 2020. Dumb Money Confidence plunged to 30%, the lowest since early April 2020.
https://www.sentimentrader.com/blog/...bd3-1271291994
Current Commitments of Traders Charts

LOL..... A different take on the Smart Money...... Do you track what the insiders are doing? I sure do......

For the record: I DO NOT use this type of data for trading. However, I do track it.
When The Smart Money Says ‘Sold To You’

jessefelder
December 8, 2021

Over the summer I highlighted the rapid increase in leverage being put to use on the part of speculators in the equity markets. Since that time, it has only continued to grow. Margin debt, call option volumes, net futures positioning and leveraged ETF assets (depicted below) all show these folks putting on the most extreme leverage we have ever witnessed.

What makes this all the more notable is that the smartest of smart money, corporate executives and other insiders, are now selling at the fastest annual pace on record (largely driven by the most valuable companies in the market). Setting aside the economic message of the indicator below, the simple fact that insiders are taking the other side of speculators’ record leverage is significant, especially given their stellar track record.
https://thefelderreport.com/2021/12/...s-sold-to-you/

Hmmmmm..... Once again I DO NOT use this data for trading. The smart money looked pretty Bullish to me during the 1999 and 2007 tops. Not that I care. I just thought I would look over and compare the historical data.

Some thoughts on this and note this is NOT a current article. Again, something I DO NOT use for trading. I track several indicators, but the overall trend is what I'm trading.

Smart Money Index: What It Is and How It Works

https://www.warriortrading.com/smart-money-index/

Some historical charts about the smart money that I found after a web search. Looking for tops around 2008. Not looking up data about the dumb money.
https://www.google.com/search?q=smar...APG0aBEWvuYaaM