50 replies to this topic

[dTraderB]

• Investor sentiment (a contrarian indicator) is the most bearish in the last five years. (Bespoke)

 

 

 

The biggest threats?

• A breakdown in trade talks.
• A more aggressive Fed.
• An “earnings recession.”
• Sentiment reducing the P/E multiple.

What might go right?

I will mention some of the scenarios they see, and then add a few more ideas in the final thought. Without endorsing a specific person, target, or idea, here are some of the scenario elements.

• Solid S&P earnings growth. The group sees $170 – 178 for the S&P 500. Only 5-6% growth with no added tax reduction stimulus. (This is actually less than the first-rate analysis of bottoms-up estimates (9-10%) from Brian Gilmartin).
• Progress on the China trade front in early 2019.
• Attractive valuations, after the recent selling.
• Moderation in Fed rate increases – maybe one or two.
• Limited downside risk.

Ed Yardeni notes that “You had a bear market in the P/E multiple, but a bull market in earnings.” This is another way of describing emotion in place of analysis.

https://seekingalpha...-ahead-go-right

[dTraderB]

FED saving the market, again?

 

Fed Rally?

BY SVEN HENRICH ON DECEMBER 16, 2018

"...What will the Fed do this week? One rate hike and stop, putting their rate hike schedule on hold into 2019? Not raising rates and admitting the Fed made a policy error bringing its credibility further into question? Reducing the speed of QT?

Either way Jay Powell has a tough task this week. He’s the bag holder dealing with the fallout of what Ben and Janet bestowed on him, a market that can’t handle even a neutral rate. Pathetic. Bears have been right all along. The debt construct can’t handle normalized rates. We’re not even close to normalized and already the walls are closing in as the 6 risk factors hang like a sword of Damocles over the market.

And debt is expanding all around us virtually ensuring the next recession. Already in 2018 government debt has exploded by over $1.3 trillion, accelerated by tax cuts, and it’s getting much, much worse: U.S. government debt is rising at the fastest pace since 2012 and is projected to jump by $7.5 trillion from 2016 to 2023.

All this already built in before a recession hits and will make these numbers much worse crystalizing what I said earlier this year: This tax cut was the wrong plan at the wrong time and it will make everything that is to come worse.

Conclusion: Remaining on the cusp with price actioning worsening the Fed may again turn out to be the temporary saving trigger for a market that has been so dependent on it staying accommodative for 10 years. Let’s not forget the Jay Powell was still uttering the word “accommodative” during his most recent press conferences.

For this week: Sellers must force a weekly close below the .382 fib and February lows to fully trigger a topping pattern that points to 2341-2460 on $SPX, buyers need closes above the daily 5 EMA and the weekly 5 EMA. But not just a 1 or 2 day wonder rally will do. No Sir. Buyers need a face ripper rally to avert the break of the 2009 bull trend for now and move the debate into 2019. The technical parameters exist, but the bar is high."

https://northmantrad...2/16/fed-rally/

 

 

 

 

[12SPX]

Nice, have a great trip Cycle and thanks Db for all your posts always love reading them as they are so concise to the important stuff regarding trading!!

[KCScott]

haha 

 

Our first job as chartists is to identify the bigger trend at work. Once trend direction is established, we can then direct our focus and set our trading bias. I try to focus on resistance, bearish setups, and bearish patterns during a downtrend. By extension, I try to ignore dubious support levels, bullish setups, and bullish patterns. I am working under the assumption that the bigger downtrend is the dominant force at work. A downtrend environment favors bearish resolutions over bullish resolutions. Bearish patterns have a better chance at success than bullish patterns, while resistance levels have a better chance of holding than support levels. It is all about probabilities.

Invariably, there is always another support level below current prices and we could draw dubious support lines all day. Marking support levels in a downtrend is just creating more noise. The chart below shows the S&P 500 with at least nine possible support levels. As far as I am concerned, the trend reversed with the price breakdowns and bearish breadth signals in mid-October. Once the trend turned down, support levels based on prior lows became noise in my book.

There is probably one "critical" support level in this bunch, but good luck picking the right one. The S&P 500 is clearly not "On Trend" and I will not be marking support levels until the index actually reverses its downtrend. In Dow Theory terms, the onus is on the bulls to prove the bears otherwise. Until then, I will respect the downtrend and be a good Grinch. Merry Christmas and Happy New Year!

https://stockcharts....edaboutit-.html

 

 

Good Prognosis - the weekly trend  below agrees. Bearish 17/43 EMA cross on the weekly.

Agree on Selling into any bounces, and your dubious floors for 2019 may all still be too high....  2150????

 

[dTraderB]

Good ramp up overnight, then it was sold.

Still many sellers in this market....including me, in my first trade

[dTraderB]

Unless there is a major recession e.g. GDP dropping by more than 5% per quarter for two or three reporting periods, I don't see 

SPX going below 2200

[dTraderB]

Low of the day may be made in pre-cash session

[dTraderB]

Added SPY MAR 2019 255 calls

 

Let's load up for this rally!

 

Looks like that was the ST low 

 

Of course, it is the ST low until it is not

[dTraderB]

1. Walter Bloomberg‏ @DeItaOne 10m10 minutes ago

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   GUNDLACH SEES 10-YEAR TREASURY AT 6% BY 2021: CNBC

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   *Walter Bloomberg‏ @DeItaOne 18m18 minutes ago

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   JEFFREY GUNDLACH SAYS 'PRETTY SURE' STOCKS IN BEAR MARKET: CNBC

 

[dTraderB]

GUNDLACH comments reversed the rally