Thread: Bear Cave 2 (Bull Allowed)

David Rosenberg
@EconguyRosie
·
Nov 23
No thanks to what the Fed is giving. Everyone’s excited because the FOMC is going to slow the pace after a steady a diet of 75 beepers? So, going 50 basis points (and more!) into the most inverted yield curve since October 1981 is reason to be festive?

#RosenbergResearch
David Rosenberg
@EconguyRosie

Nov 23
Watch the latest edition of my YouTube series Navigating the Noise -- The Long and Winding Road.


The Long and Winding Road

2,433 views Nov 22, 2022
Join David Rosenberg as he takes a look at what real GDP growth did before, during, and after each tightening cycle dating back to the late 1960s

https://www.youtube.com/watch?v=PcJuXdZEQ1s

FED rate hikes: We shall see how it all plays out. I'm sure ready to make 10% on low risk CD's again....

SPX and the DCL: Getting deeper into this daily cycle. We shall see how the test of the 200 day MA plays out. I remain flat the SPX/SPY.

Bottom Line: The SPX continues its move up and remains above the 10, 20, and 50 daily MA's. Very Bullish in a Bull Market, but time to be a tad more cautious this late in the daily cycle during a Bear Market.

It's always possible stocks will complete its YCL and the 4 YCL and the Bull Market will continue. That is not my opinion, but I could be wrong. I will be watching and mainly trading the miners.

Squeeze Play

Stocks are being squeezed by the rising 10 day MA and the declining 200 day MA.

Friday is day 30 for the daily cycle, placing stocks in the early part of their timing band for a DCL. There is a chance that stocks will again be rejected by the 200 day MA – which would then send stocks into a daily cycle decline. However, stocks could deliver a bullish surprise and breakout above the 200 day MA. Typically breakouts that occur later in the timing band for a DCL are rarely sustained. If stocks break above the 200 day MA here, a daily cycle decline that backtests the 200 day MA would likely be needed before a trending move to be sustained.

What are cycles and why do I use them? "For a higher probability set-up that matches my risk tolerance" - I like to say increase my odds for a winning trade....
I use cycles as part of my trading data/system. I use the cycle data mainly for risk management - Buy a larger position close to or at a cycle low, and reduce as we get deeper into the cycle.

Cycle Trading Guidelines
Cycle analysis helps us to determine where we are in the current cycle to help steer us towards a higher probability set-up that matches our risk tolerance.
The ideal time to buy is at a cycle low.
* There are 4 cycle lows that we look for:
– The daily cycle low
– The intermediate (weekly) cycle low
– The yearly cycle low
– the multi-year cycle low
– The status of the yearly & multi-year cycles are the back drop as we monitor the interaction of the daily cycle with the intermediate cycle.
* Generally a swing low in the cycle’s timing band for a low has good odds of spotting the cycle low.
* Place Stop below the cycle low.
* Further confirmation arrives with a break of the declining trend line.
* The yearly cycle low provides the best opportunity of the year for gains.
* Next the intermediate lows (2 or 3 times per year) provide the next best opportunity for gains.
* Followed by the daily cycle low (2 to 4 per weekly cycle).

Cycle Bands

Uptrend Buy Signals
* A swing low above the lower cycle band.
* A close above the upper cycle band.

Downtrend Buy Signals
* A close above the lower cycle band.
* A close above the upper cycle band.



https://lmtoolbox.wordpress.com/6-cy...ng-guidelines/

Shorting stocks is not something most will want to do. I have most of my money in cash earning 3% to 4.5% and when I do place a short position they are "small"...


The process of shorting a stock is relatively simple, yet this is not a strategy for inexperienced traders.
Only knowledgeable, practiced investors who know the potential implications should consider shorting.
--Fidelity Active Investor, "How to Short Stocks", Fidelity.com, November 23, 2022.

How to short stocks
Shorting makes money when an investment decreases, but there are risks.

FIDELITY ACTIVE INVESTOR – 11/23/2022
https://www.fidelity.com/viewpoints/...ail_monthly_AT

Baby Bear Done, Mama Bear Next
Nov. 28, 2022 9:00 AM

As we transition from the first to the second year of a three-year U.S. equity bear market, we are likely to have a similar transition as we had experienced in 2000 to 2001.
Throughout 2022, the U.S. dollar, emerging market securities, and highly speculative assets (think cryptocurrencies) also behaved as they generally do during the first year of major bear markets.
Expect U.S. Treasuries and VIX to surge sharply higher during the first half of 2023, partly to compensate for their overdone 2022 weaknesses.

https://seekingalpha.com/article/456...rm=29822741.46

Chasers have been busy

The huge US equity net short is gone, but we are far from a meaningful net long. Noteworthy is the fact skew has caught some bids lately as people have closed out shorts. The increase in skew suggests people are switching into hedging the downside via puts, instead of running those delta 1 shorts.
https://themarketear.com/posts/ch972zYZY8

One would think the Bulls will cause a nice move back above the 200 day MA in the months ahead. We shall see how it plays out. Long the gold miners and shorting XLE.


Time to think about the January effect?
Scott Rubner on the January effect: "~134% of the FULL YEAR Inflows Happen in January, think 401k/529/company match." January is bigger than all the other months combined...

SPX daily as we head into the close: Back below the 10 day MA. A possible shakeout of the weak hands before the Santa Rally? I don't know, but we are getting deeper into this daily cycle. We shall see if the SPX moves back down into a DCL, and then we get the Year End Santa Rally! I don't make guesses, but I take trade based on my the data I use. Which gives me odds for a possible winning trade.

Flat SPX/SPY......

Still ST trading the miners..... If Jeff's SKI system was correct gold and the miners will soon start moving much lower. I posted that data last week. Sometimes Jeff sends out a free report.

See comments and link below:

His comments: """Now, you should easily see that the green 92-96 index line (the index’s back prices) is plunging. If/When USEX soon rises to above that line it’ll reach 3rd resistance. THIS IS NOT YET A SKI BULL MARKET. A SKI bull requires a rise to above the green line, then a decline back below it, and then a rise back above it (ala January 2016, March 2020, and most of the other bull markets since 1974). Yes, it’s possible that the gold stocks will just continue to rise over weeks without a real correction, but that would be a major BEAR market rally. The real bull appears to “SKI-need” a correction into mid-December to go back below the 92-96 index (probably as that green line rises back up to USERX $10) and then a quick rise back above the index’s line as that green line plunges again.""""
321gold: Special SKI Report #279 SKI?s Explanation for the Rise by Jeff Kern . . .inc

I don't use the SKI system for trading, but have the upmost respect for any mechanical trading system that is supported with historical data. If his SKI data plays out look for a move deep below the 10 day MA into mid December, and a BT of the 50 day ma. His call for weakness was based on the historical data of his SKI system. I'm still only ST trading the miners. I buy and sell them often...


GOLD/GLD/IAU daily chart: All remain below their 10 day MA's...... We shall see how it all plays out as the dollar continues to make huge swings....

25% down from here
DB continues their bearish outlook and sees the recession they have been anticipating draw closer. Bottom line is basically: "We see major stock markets plunging 25% from levels somewhat above today's when the US recession hits, but then recovering fully by year-end 2023, assuming the recession lasts only several quarters." Chart showing recession probability. Looks like a done deal...

https://themarketear.com/

SPX - levels to watch here
The short term 3950-4050 range stays intact for now, but this bull is losing steam. A close below the 3950 support and we risk breaking out of a rising wedge. Not overly pretty.