Might want to keep this conversation to PMs. Thanks.
Tom
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As I suspected since the selling started last Thursday, market character appears to have changed. How deep will this go? I have no idea, but support lines are already being tested.
S&P 500.png
DWCPF.png
Price closed under the 50 dma on the DWCPF, while price on the S&P 500 closed just above it. Volume remains elevated.
NYAD.png
As I mentioned in my last post when breadth was still looking sideways I said that if the selling continued, breadth will begin to fall. And now it has. It is now bearish.
Because of the suspect nature of this decline, I am not leaning toward a quick recovery. I am also not expecting a gloom and doom final outcome. For market timers, an opportunity is likely at hand.
It isn't often I go against NAAIM, but I am flipping bearish. They were bullish at the beginning of the deep decline early in the year, but eventually went bearish. This action is similar enough to get defensive despite that last bullish sentiment reading.
NAAIM dropped 12% from 8/26 to 9/2. I am guessing this Thursday it drops another 10% at least. Because of the week gap in between surveys, it wouldn't surprise me if they are already headed bearish - just haven't reported out yet.
After 3 days of hard selling in a row, the market bounced on Wednesday. The bounce comes in the area of the 50 dma. Will that act as support? Maybe, but I'm not betting on it.
S&P 500.png
DWCPF.png
We can see that the 200 dma is still well under the 50 dma. That may be a target area for the bears (assuming the 50 doesn't hold).
NYAD.png
Breadth bounced, but remains bearish.
Considering the speed at which the market declined (from all-time highs) I think it is too soon to look for a bottom. The bears may be looking to trap any dip-buying bulls in here with this rally.
NAAIM reports tomorrow. Let's see what changes the smart money may have made since their last reading.
I remain bearish.
NAAIM came in bearish today. That confirms the bearish action and what we might expect for at least the next few days, but I suspect it may be longer than that; perhaps 2 or more weeks of overall negative action.
NAAIM dropped from 95 to 53. Last time it dropped that much was in March. I think you are right that we are in for a few more weeks in Bearish country.
The bulls tried to add to Wednesday's gains, but were eventually beaten back by selling, which took the indexes into negative territory in afternoon trade. Confirmation of the negative action came today in the form of a bearish NAAIM reading.
S&P 500.png
DWCPF.png
The 50 dma is the current battle area and is providing support to this point, but I suspect it will not hold.
NYAD.png
Breadth remains bearish.
The latest NAAIM reading showed a significant shift from bullish sentiment to bearish sentiment. This tells me that the smart money does not expect a quick turn back higher, so I believe we are looking at overall negative action for more than just a few days. If support at the 50 dma fails, watch the 200 dma for support.
I disagree. The volume and volatility are simply not there, but rather peaked, and declining. The aaii likewise flipped strongly bearish (low 20s bulls), which is bullish. The 50 DMA/EMAs are so far supportive. I say today is/was the buy.
Thanks Cool, You saved me a world of damage to my TSP account this year! I appreciate your posts and analysis!
Scout
Last week, the S&P 500 and the DWCPF were thrown for a weekly loss.
S&P 500.png
DWCPF.png
So far, support at the 50 dma is holding on the S&P 500, but closed under that level on the DWCPF on Friday. Volume has fallen off since the initial 2 days of the sell-off, which we might see as at least somewhat supportive for the bulls. Momentum is falling and the indexes are not oversold (not that they need to be for a potential reversal).
NYAD.png
Breadth remains bearish, but it is holding steady at the moment.
The TSP Talk survey came in less bullish, but it's still bullish. On the other hand, NAAIM had a significant reduction in bullish positions and I now view the reading as bearish overall (maybe bullish in the very short term (1-2 days)). I warned that NAAIM may go bearish if the selling continued and went bearish myself before the reading was released. I said that the action was reminiscent of the action back in February and that NAAIM may not see a bearish reading as quick as we might like (for confirmation purposes).
But we got confirmation from the smart money, so that's a warning.
Yes, the worst may be over, but without confirmation (no, we don't have any yet imo) I cannot embrace that. I think risk is now to the downside until proven otherwise. I am not bearish because I want to be bearish, I am bearish because the smart money is bearish. That doesn't necessarily mean the market falls apart, but downside risk is elevated regardless. If the 50 dma doesn't hold, price may test the 200 and that's much lower. We'll just have to see how it goes.
I remain bearish unless the bulls can prove they still have control.
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