Thread: coolhand's Account Talk

Wall Street really liked the recent Fed comments on interest rates and now with the news below possibly allaying the 'trade wars' concern I can't help thinking that this 'one-two' punch may generate at least a short term rally next week. Pure speculation. FWIW:

U.S., China declare 90-day halt to new tariffs, White House says

https://www.yahoo.com/finance/news/u...--finance.html

Well, I sure didn't see Monday's rally coming. Not that the market couldn't tack on some gains, but my indicators were flashing caution signs.

S&P 500.png
DWCPF.png

Today's action firmed up the bullish case. Price on the S&P 500 closed well above its 50 dma, but a higher high has not been made, though it isn't far off if the rally can extend. Price on the DWCPF closed at is falling 50 dma. It too has not yet made a higher high. The trend is up right now, so a higher high may be in the cards.

Breadth flipped positive today, decisively. I want to see that if I'm to entertain any notion of being bullish myself. The OEX is neutral, but the CBOE remains bearish (that didn't matter today). Momentum is rising.

The market is due a pullback, but seasonality may make it difficult for the bears to get much traction to the downside. Futures are a bit negative this evening, so we'll see what happens. If you aren't already aware, the market will be closed on Wednesday for a national day of mourning.

Originally Posted by coolhand

If you aren't already aware, the market will be closed on Wednesday for a national day of mourning.

I did not know this, thank you.

I knew there was a reason I wanted to be bearish and Tuesday's action remined me of it. Just as indicator were starting to flip positive, the bears ambushed and mauled the bulls for some heavy losses.

S&P 500.png
DWCPF.png

A large portion of recent gains were wiped out and we can see from the charts that price is well below key moving averages once more. Momentum has turned back down and breadth has flipped negative once more.

TRIN closed very high on Tuesday, which is bullish for Thursday. The options are neutral. NAAIM reports on Thursday.

I am shifting back to a bearish stance once more (longer term). Shorter term I think the market bounces on Thursday.

Another factor?

This Is Why Stocks Fell and It Wasn’t Trade or Yield Worries

https://mottcapitalmanagement.com/th...yield-worries/

Well, it sure didn't take long to retest the lows. Thursday's action began where Tuesdays left off as price plummeted right at the open. But once price traded in the area of its previous low, the market firmed up and erased most of its losses or even tacked on gains depending on the index.

S&P 500.png
DWCPF.png

We can see that the market remains vulnerable, but the bounce suggests a move may be starting back toward the recent peaks.

Breadth remains negative. TRINQ is bearish for Friday (Nasdaq). The options have not reported this evening for some reason. NAAIM got a bit more bullish and is neutral.

My read is that this market may be trapped in a trading range for the time being. Someone did not want this market to hit fresh lows; at least not yet.

I am leaning bullish for Friday.

Is that a triple bottom on the DWCPF?

Originally Posted by bmneveu

Is that a triple bottom on the DWCPF?

Both charts are showing triple bottoms, which normally is bullish. I would not make that assumption in this market, however. There is a battle going on between powerful forces for control of the market and so I recommend tempering expectations either way. NAAIM is spread out between bulls and bears and is neutral overall. They probably understand what's happening on a deeper level than most.

Price tested the previous lows again on Friday and closed at a fresh low, but not decisively. Still, it isn't look good for the bulls.

S&P 500.png
DWCPF.png

Both charts now sport negative crosses of the 50 dma through the 200 dma. Momentum has turned down. Breadth is negative. TRINQ closed very high on Friday, which is bullish (in a normal market). The OEX is neutral as is NAAIM. The CBOE is leaning to the bullish side. TSP Talk got bearish, so that's bullish from a contrarian standpoint.

LT SPX.jpg

Every once in a while when the market is struggling, I trot this chart out. We can see the technical deterioration of the S&P 500 here. Working my way through the circled areas from top to bottom, note that price is showing volatility, but has not fallen apart (yet). MACD is now in a danger area. RSI is near its neutral line after dipping lower a few weeks ago. MACD on the bottom indicator is also in a danger area.

If you're bullish, this chart should concern you. That's not to say things can't turn, but you'd be ignoring some serious cracks in this market (remember, this bull is on the older side). All things considered, the PPT is probably working hard to keep price from plunging much lower and at a faster rate. That doesn't mean they can defy gravity forever, it just means they are trying to control the unwinding of the Fed's balance sheet in as controlled a manner as possible. The system is not designed to go up forever (you can bank on that).

I do not know how long price can stay in a relatively controlled orbit. We may be seeing a controlled sell-off over a longer period of time (unlike 2001 and 2008), but I am not sure. I've been saying most of the year that I am longer term bearish and that has not changed. For next week, we could bounce given the fresh low, but for how long? Buyers are disappearing of late, so any bounce may be followed by more selling. Will seasonality save the market? I don't consider seasonality to be much of a factor in the current market context, so I'd be inclined not to bet heavily on it. I think you can still take your shots at upside action when things are looking dire, but the highs are very likely in the rear view mirror. Rallies should be sold in my opinion.

The bears got the upper hand to start off the week, but the bulls (PPT?) turned it around to keep the indexes at least somewhat buoyant.

S&P 500.png
DWCPF.png

Long tailed candlestick on the S&P 500, which suggests a bottom (ordinarily). Similar situation on the DWCPF, but a new closing low was established.

Breadth hit a new low on Monday's action, so the turnaround did not improve that indicator. My intermediate term system is not far from flipping negative again.

The OEX is leaning bullish for Tuesday. The CBOE is neutral.

No change to the current technical picture (bearish). It's possible that a bottom may be in (for now), but futures are pointing lower as a write this so another wave of selling may be on the way. It's not an easy market to make money in for either side.

So, Monday we saw price spike lower early in the trading day, but rally back to near neutral by the close. Tuesday, we got the opposite. Up at the open and then down into a neutral close (relatively speaking).

S&P 500.png
DWCPF.png

The DWCPF closed at a lower low today. The S&P 500 ticked a bit higher. Price is in an area of support, but how supportive is it really?

Breadth ebbed lower today and remains negative. The OEX is bullish and the CBOE is neutral.

I don't have a strong conviction either way for Wednesday, but since the OEX bullish I'd be looking for a least some measure of buying on Wednesday; even if it doesn't hold.