Thread: coolhand's Account Talk

Originally Posted by cmil1212

What coolhand said. Disregard. Wasn’t my place.


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05/18/2022

19.51

-100

0.00

0.00

50.00

87

44.74

Humm

I gave a warning last week that NAAIM was showing significant leanings to the bearish case and so far the action has justified that warning. Rallies have been substantial, but very brief (so far).

This week, NAAIM got even more bearish. Bullish longs cut their bullish leverage by quite a bit. Sentiment overall shows more conviction to the downside. The bears have not increased their leverage yet, but that may be caution in the face of bearish up-thrusts even as they are looking lower.

I remain bearish and continue to expect an overall trend lower, but beware of sudden, sharp drops if support keeps getting taken out.

Just in time for us not to have IFT's available for the end of the month.

No big changes to NAAIM today. The overall reading is a bit less bearish, but still bearish. Bearish leverage was tempered back to neutral this week, which means the bears do not expect to hit any (short) homeruns in the short term. The bulls had only a modest increase in long leverage, which changes nothing in that regard. These money managers remain bearish overall, which makes one wonder what they may be looking for to happen. I doubt they are simply technical managers and have no reason not think some of them have inside kind of info on what may be happening under the hood so-to-speak. That's part of what makes them smart money. They may know things we do not. I can only speculate, but it's why I like to follow their clues.

Another week and another intriguing NAAIM reading. I say intriguing because while the market has been in rally mode of late, today's NAAIM reading shows these money managers are not only not buying into the rally, but got leveraged short by a good margin. The bulls among them are not arguing much either as they are not levered up long and the so the reading remains bearish overall.

I should also point out that just because the market rallied hard the past week and they (NAAIM) were bearish, does not necessarily mean that they were collectively wrong (outside of the short term). Even for smart money it can sometimes be impossible to time an expected move in market direction with surgical precision. They may be early to a big push lower right now, but that does not necessarily mean it won't happen. Remember, some of them have long positions in case they are early with their shorts.

We'll see how it goes of course, but I'd be uncomfortable with betting big on the long side with a reading like this.

The thought also occurs to me that early bears often get punished (like now). What happens when they capitulate?

So, the bears among NAAIM pressed their short positions last week by increasing their short leverage. It would seem that those bears did not get what they were looking for as the market has been in a short term range with neither bulls or bears getting much satisfaction. As a result of this market action the NAAIM bears have gone neutral now. They appear to be in cash or hedged neutral. The bulls saw only a modest increase in bullishness, but they are not leveraged, so they are not particularly trusting of this market either. The overall NAAIM reading is neutral to modestly bearish now. The mean average is now at its highest level in 7 weeks, but that is more a reflection in a lack of downside sentiment conviction than anything else.

It seems it is too early yet to get overly bearish (and actually put your money behind that sentiment). So, the caution flag remains out as far as NAAIM is concerned.

The latest NAAIM reading shows these money managers going from modestly bearish to bearish. It was a good size move in sentiment, which could bring a relief rally within a day or two, but I'd not look for much more even if we get it. Interestingly, short leverage is not being used much, so there would seem to be a healthy respect for wild swings that could catch a trader out of position (imagine that). The market tries to keep as many traders as possible out of synch; especially with large moves. Even smart money can get caught in the short term. Also of interest is that long leverage ramped up presumably for a possible short term rally, but I do not know exactly when the bulls among them took long leverage positions, so maybe the market tanked when they leveraged long?

The market remains dicey for both bulls and bears at the moment, but the longer term favors bears right now.

The latest NAAIM reading shows this smart money going from bearish to even more bearish this week. But that bearishness is not translating into leveraged bearishness (yet). The bulls are in the minority and they continue to take some leveraged long positions. So, this smart money remains very wary of this market and I suspect we will see the bears take leveraged positions again sooner or later, but they are not ready to take that kind of risk at the moment. Overall, the reading is very bearish, but cautiously so.

I forgot it was Thursday and time to post the latest NAAIM readings. Let's get to it.

The latest reading is not a big change from last week. The bulls remain about where they were positioned last week (in the minority with some leveraged long positions). The bears remain bearish, but have reduced their short positions significantly. This suggests the market may be near another upside move.

I would say the short term is on the bullish side, but the longer term (weeks to months) remains bearish.