13 replies to this topic

[OEXCHAOS]

From the weekend letter:

 

Last week, I said that IT Momentum had turned up and confirmed, but that ST and Swing Momentum were neutral. I noted that all were rather flat and buried, so they were not much help. The Options were almost all Bearish, except for the OEX P/C which was flashing a Buy. We acknowledged that we have some really overdone sentiment, but we noted that we are at a point of recognition with a lot of factors working for the market between the strengthening economy, good capacity utilization, and, looking forward, good earnings and better tax policy. Plus, we noted that there's no place to put money besides the stock market. So, sure, sentiment was really over done, but at this point in this rally, looking for a top based upon even the most reliable sentiment, is all too likely to be painful. I thought we'd do well to buy dips here. And that proved to be a good approach. It's important to note that sentiment won't stop a rally. What it tells us is if there's good fuel for a decline, IF there's reason to sell. Without that reason to sell, there's not likely to be a decline. In fact, the excessive Bullish sentiment tends to be supportive of the rally. As we've seen. Tonight, we've got a Buy from the VIX P/C and a Sells from the CBOE:SPX, the Options Oscillator, and the Fully Long Fully Short (at least for now). The lack of Short Bears suggests no top on Monday. Ordinarily with sentiment like this, I'd be inclined to look for some selling, but we're at new highs in a parabolic rally in a uniquely positive context. Until we see some deterioration, I'd not be worrying about catching a decline. This rally could get even crazier. I have been a professional investor since before the Crash of '87. This market has a very different feel from the markets prior to the big Bear Markets that we've had over the past 30 years.  I'm not going to stand in front of this rolling freight train.

[12SPX]

From the weekend letter:

 

Last week, I said that IT Momentum had turned up and confirmed, but that ST and Swing Momentum were neutral. I noted that all were rather flat and buried, so they were not much help. The Options were almost all Bearish, except for the OEX P/C which was flashing a Buy. We acknowledged that we have some really overdone sentiment, but we noted that we are at a point of recognition with a lot of factors working for the market between the strengthening economy, good capacity utilization, and, looking forward, good earnings and better tax policy. Plus, we noted that there's no place to put money besides the stock market. So, sure, sentiment was really over done, but at this point in this rally, looking for a top based upon even the most reliable sentiment, is all too likely to be painful. I thought we'd do well to buy dips here. And that proved to be a good approach. It's important to note that sentiment won't stop a rally. What it tells us is if there's good fuel for a decline, IF there's reason to sell. Without that reason to sell, there's not likely to be a decline. In fact, the excessive Bullish sentiment tends to be supportive of the rally. As we've seen. Tonight, we've got a Buy from the VIX P/C and a Sells from the CBOE:SPX, the Options Oscillator, and the Fully Long Fully Short (at least for now). The lack of Short Bears suggests no top on Monday. Ordinarily with sentiment like this, I'd be inclined to look for some selling, but we're at new highs in a parabolic rally in a uniquely positive context. Until we see some deterioration, I'd not be worrying about catching a decline. This rally could get even crazier. I have been a professional investor since before the Crash of '87. This market has a very different feel from the markets prior to the big Bear Markets that we've had over the past 30 years.  I'm not going to stand in front of this rolling freight train.

I find it interesting that sentiment is at bullish extremes, the cboe put/call 10-day is at extremes yet you guys still find buys on the market technically.  We're also setting new records on no -5% decline in the market.  Can't even remember a -2% decline.  I only trade expiration cycle to cycle so don't really care but I'm thinking of long term investors,,,,do you think its wise to be buying in here or are you cautious with those type of investors?

[fib_1618]

From this past weekends Weekly Breadth Data review:

With the BETS holding steady at a +80 this week, there doesn't seem to be a technical reason why to deviate from our ongoing travels along the bullish path of least resistance as market internals, on an intermediate term basis, remain quite healthy.

**********
All that really matters when comes to the direction of market prices is:
How much money (liquidity) there is at any given time and then whether or not its being put to work. Sentiment is just a secondary, emotional reaction brought on by the various levels of this same liquidity pool.

Fib

[12SPX]

From this past weekends Weekly Breadth Data review:

With the BETS holding steady at a +80 this week, there doesn't seem to be a technical reason why to deviate from our ongoing travels along the bullish path of least resistance as market internals, on an intermediate term basis, remain quite healthy.

**********
All that really matters when comes to the direction of market prices is:
How much money (liquidity) there is at any given time and then whether or not its being put to work. Sentiment is just a secondary, emotional reaction brought on by the various levels of this same liquidity pool.

Fib

Totally agree, ever since the Fed has gotten involved technicals have really taken a back seat and its all about liquidity!  Unhealthy but true!

[fib_1618]

From this past weekends Weekly Breadth Data review:
With the BETS holding steady at a +80 this week, there doesn't seem to be a technical reason why to deviate from our ongoing travels along the bullish path of least resistance as market internals, on an intermediate term basis, remain quite healthy.
**********
All that really matters when comes to the direction of market prices is:
How much money (liquidity) there is at any given time and then whether or not its being put to work. Sentiment is just a secondary, emotional reaction brought on by the various levels of this same liquidity pool.
Fib

Totally agree, ever since the Fed has gotten involved technicals have really taken a back seat and its all about liquidity!  Unhealthy but true!

Although monetary policy has a direct correlation as to keeping the liquidity pool from drying up to overflowing, there are times (as they are now) where the reinvestment of capital can have broader affect. For example, the FED has been tightening rates for over two years now, but still, the market is able to go higher based on the idea of money (investment capital) rotating from areas of perceived overvaluation to that of being undervalued. So it should be made very clear that all technical tools in the technicians bag of tricks begins and ends with market liqudity (as measured by cumulative advance decline lines) as both to its direcetion and, more importantly, the velocity in which its moving.

Bottom line: technical analysis ALWAYS works no matter its source or creation...its up to the analyst to just follow what the math says is to what the best odds are as to eventual maket direction, and leave the whys and wherefores to fundamentalists and the media to figure out after the fact.

Fib

[Data]

The central banks are still buying more than the supply.  Ten years of purchases and negative rates have shrunk the annual deficits in Europe and Japan since the average duration is 7-8 years. There is also the negative deposit rates and the yield curve control to push big money into stocks instead of money markets and bonds, respectively.

[alexnewbee]

Short 2829. Stop 2833

[melonseed]

Short 2829. Stop 2833

I thought you'd never appear.  and what did u short? Mar contract high was recorded 2828.25 on my platform.

Edited by melonseed, 22 January 2018 - 03:25 PM.

[melonseed]

From the weekend letter:

 

Last week, I said that IT Momentum had turned up and confirmed, but that ST and Swing Momentum were neutral. I noted that all were rather flat and buried, so they were not much help. The Options were almost all Bearish, except for the OEX P/C which was flashing a Buy. We acknowledged that we have some really overdone sentiment, but we noted that we are at a point of..."

 

 

It was good read. Thanks.

[alexnewbee]

 

Short 2829. Stop 2833

I thought you'd never appear.  and what did u short? Mar contract high was recorded 2828.25 on my platform.

 

does not matter. stopped now.