Thread: Bear Cave 2 (Bull Allowed)

SPY daily cycle data: We shall see if next week if we are starting a new daily cycle. Note the weekly and daily charts.... Maybe close enough for a DCL and the start of a new IC.

Close, But No Cigar
We discussed on Thursday that stocks need to close above both the 200 day MA nd the 10 day MA to signal a new daily cycle. On Friday they came close, but no cigar.

Monday was day 33 for the daily equity cycle, placing stocks in their timing band for a DCL. While stocks formed a swing low on Wednesday and printed a bullish reversal on Friday, they remain contained by the 200 day MA. With the 10 day MA converging on the 200 day MA, we are still waiting to see a close above both the 200 day MA and the 10 day MA to signal a new daily cycle.

SPY weekly chart:

Spy daily chart:

Sentiment: buy signal gone
Sentiment half full half empty....The GS Sentiment Indicator measures stock positioning across retail, institutional, and foreign investors versus the past 12 months. Readings below -1.0 or above +1.0 indicate extreme positions that are significant in predicting future returns
https://themarketear.com/

Buy-the-dip: working great since 1950
Past S&P 500 corrections have typically been buying opportunities. Chart 2 shows distribution of 12-month S&P 500 returns following 10% declines
https://themarketear.com/

Fed Caves On Tightenings
Jan. 29, 2022 1:43 AM

Summary
The Fed caved on its last quantitative-tightening attempt, abandoning it years early. Once that tightening forced stock markets to the verge of a new bear, the FOMC lost all courage.

The Fed reversed course abruptly to aggressive new easings. Fed officials talk a big game when stock markets are high, hawkishly jawboning away. But their threatened actions never live up.

With the SPX near records recently, Fed officials are proclaiming an imminent rate-hike cycle and new QT. While those tightenings will start, they will only last while stock markets cooperate.

With the SPX near record highs in recent months, Fed officials are boldly proclaiming an imminent rate-hike cycle and new QT. While the FOMC will start those tightenings, they will only last while stock markets cooperate. That likely won’t be long with valuations forced deep into dangerous bubble territory by the Fed’s epic QE4 money printing. These coming tightenings will be quickly abandoned when stocks plunge.

https://seekingalpha.com/article/448...=26528882.2325

Gold miners: A "POSSIBLE" bounce next week as the Blood Bath for the miners was fast and deep last week!

Long GDXJ, EQX, and VXF

My trend trading system remains on a sell signal, as I continue to scale in and buy shares of GDXJ as it moves lower. I have NO IDEA how much lower the miners will go, but the patterns are looking like a possible bounce soon. As you can see by the lower BB tags and printing long tails on Friday. We shall see how these Hammer patterns play out next week.

Hammer
The hammer candlestick pattern is formed of a short body with a long lower wick, and is found at the bottom of a downward trend.

SentimenTrader
@sentimentrader

Small options traders spent $6.5 billion buying put options to open last week.

That's an all-time high.

Volatile intraday action, scary headlines, and a plunge in speculative stocks triggered panic that was 40% higher than even the worst week in March 2020.


Chart In Focus

Another Oversold 10% Trend of Daily A-D When the 10% Trend of daily A-D gets down to below -600, it shows an oversold condition for the overall stock market. It is possible to get a lower reading than this, but that usually takes a Covid Crash or a Fed and crude oil induced selloff like what we saw in December 2018. The rest of the time, a reading like this is usually enough to mark at least a temporary end to a big selloff.
https://www.mcoscillator.com/learnin..._of_daily_a-d/

VTI daily and a possibe DCL: Back above the 3 ema on Friday so the 10 dma be up next. A gap up on "Easy Money Monday" would smoke some more of the shorts out of their positions and probably reduce the put/call ratio.

I might get a buy signal next week for VTI, but will it get whipsawed?

David Rosenberg
@EconguyRosie

Jan 28
In the span of four weeks, six negative daily Dow reversals of 1%+. This happened 99% of the time in the past in 1987 (crash); 1990 (recession), 1997-98 (Asian crisis); 2000-03 (tech wreck/recession), 2008-09 (GFC), 2018 (Powell!). All either ~20% corrections or 30%+ bear markets
https://twitter.com/EconguyRosie?lang=en

AAIIBULL/BEAR/NAAIM/PUT/CALL daily charts: For those that track Sentiment

GDX/NUGT: I will be trading NUGT as we come out of the next DCL and then flip to GDX as we get deeper into the Daily Cycle. I will be trying to catch the first few days of the oversold bounce. Especially if this is an ICL. (STBD) We shall see if they smack stocks and gold down again once the futures open. I will be watching the dollar.

Long: GDXJ, EQX, and VXF

When did you buy the dip is more important....

Yes I bought the dip and it was a tad early....

Did you buy the dip?
Slightly more bullish seasonality is supposed to kick in going forward, but then another set back later in February. So far it continues to work...