711 replies to this topic

[lawdog]

i see this morning that the ff poll has many more bullish than bearish. based on mark's approach, this would seem to be a buy signal. that is not a big influence, but i am now at 30% short.

[lawdog]

IF this bounce fails to turn into a rally to new highs, it will definitely get the attention of many traders. for the past 13 months, every drop has been quickly followed by new highs. I see a real problem with that happening here.

[lawdog]

35% short; went for the naz100 this tranche

[lawdog]

So the key to  advancing market averages is one which can consolidate without declining very much. That has been the hallmark of the last 13 months, except for the "Three Days of the Brexit". So now that the market is somewhat overbought, we will see if it can hold the gains and regroup for more rally, or will the consolidation result in lower prices in the averages. And that will determine whether I add to my shorts or close them out for losses and get on board the bull train for new highs. I am really struggling right now with my bearish bias and need to be objective here. The market has bounced more than 30 spx pts off the lows of yesterday morning, so now we will see if that is for real. My bias is bearish, but I am feeling gored by the bull, and I can't take much more of that. At this point I have given back all my March gains, so I have worked at it a whole month and not made anything other than for my broker and the market makers who own the computers.

[lawdog]

i stand by my thesis that the decline from spx 2400 has not run its course and more decline is coming. if i become more confident, i will raise my short position beyond the current 35%. if the market can work off its current short-term overbought condition without much damage to the averages, then i will throw in the towel, soaked in bear's blood.

 

and of course twt, but i hate that kind of qualification and equivocation. 

 

again i note that the ff poll is very bulled up, two days running, whereas virtually the entire past 13 months have been bearish. i believe the buy the dip crowd just might get it wrong this time.

[lawdog]

15% more shorts added, now at 50% short. that's quite high for current conditions.

[Rich C]

i stand by my thesis that the decline from spx 2400 has not run its course and more decline is coming. 

You could be right.  The short term trend, the way I see it, is down, shown by the purple channel.  We can run up to 2380 and just be at the top of the down channel.  It depends how much the market wants to correct short term.  Long term, its still a bull market, an aging overvalued bull market with an accommodative Fed (but one whose bias has changed to tightening).  Underlying economic activity is moderately strong and appears to be quickening.  There are a lot of cross currents.

 

Prior to the correction, we had a steep incline (red lines) since Trump's election (Trump rally).  Prior to that we had a less steep channel (black lines), which is more natural looking and probably more sustainable.

 

If you think the Trump rally continues, the market needs to get above 2380 and run in the red up channel.  If the Trump rally is over, the correction needs to continue for a while and bring us down into the more sustainable uptrend in the black lines.  The market is sitting in the intersection of these 3 trends, and it is not clear to me where we go next.

 

There will be no earnings reports for 12 days, so we will trade on something else, Trump / Russia intrigue, Brexit, etc.  Then earnings will start up, and earnings will probably dominate and direct the market for 6 weeks.

 

I've been buying some fallen angels, like XOM and EOG, and TBT on the pullback after the Fed hike.  Bonds are in a bear market so I plan to play TBT, trading it over the next couple of years.

 

 

[lawdog]

Hello Rich, That purple channel could be helpful to consider. I expect a 60-pt drop soon, which could be from 2380 down to 2320. i have obviously been a bit surprised by the persistent strength, but my 50% short position demonstrates some caution. I have had many drawdowns much worse than the one this week, but it still hurts. as I have written before, one usually has to "pay" for a trade with some initial losses. if we hit 2380, i likely will increase my short to 65%. i believe the market has spent a great deal of technical powder to have only 17 points of net gain this week, (though it is more like 40 pts off the monday low, which isn't bad.) 

 

thanks for that chart. I actually have it saved in my favorites for continued reference.

[Rich C]

thanks for that chart. I actually have it saved in my favorites for continued reference.

 

A picture is worth ............           

[lawdog]

still short and feel pretty good about it. maybe we tag Rich's purple top of channel around 2380, but i don't see much ammunition left for the bulls to take it up much more. if we are going to drop at all before June, I suspect now is the best setup we will see. first day of the quarter could see some fireworks in the early going, but the setup is not as good for the bulls as March 1 was where we broke above spx 2400.