Jump to content


Finally, the POWELL PUT comes, BULLS on the rampage!

  • Please log in to reply
33 replies to this topic

#31 dTraderB



  • Traders-Talk User
  • 4,857 posts

Posted 07 January 2019 - 07:26 AM

Anyone knows this guy? 

Good stuff here:

Mark Young: Wall Street Sentiment -- Bear Market Low?
Mark Young |  January 06, 2019 at 04:15 PM


In our last submission, we were firmly in the Bull camp as we were hammering out the late winter lows. Since then, we saw a dramatic rally and, over the past couple months, a painful decline. In fact, the decline took us into what we call a "Bear Market Condition." This is not a signal, by any means, but it does tell us that the market is more likely to behave perversely and Buy signals are more prone to fail. That being said, I think it quite possible that the lows for this little Bear Market may be in.

Why? Well, my read is that the market needed a correction and only extended because they feared excessive Fed tightening. Even before the Fed Chair softened his stance, it was clear that there was little need for aggressive tightening. The Long Bond was under 3%, signaling that bond holders (those with the most to lose from inflation) aren't worried about inflation. Moreover, while the economy has been robust, Capacity Utilization is still well below inflationary levels.15468196115191912407155.pngCould something else be on the horizon? Perhaps some major financial meltdown? Well, if we look at those who lend money to companies in the financial industry, we can see that they are commanding very little risk premium on money loaned vs. non-financial companies. This again means that there's very little chance of something going wrong behind the scenes in the financial industry.1546819634140310837961.pngFor comparison, look at where things were prior to the last Bear Market:15468196587301850149303.png

So, while the Fed has been an issue, it seems that they may be less of a problem for now and their policies haven't damaged the financial companies in any meaningful fashion.

So, what makes me think we have a low in place? Well, first is the Relative VIX, one of our very favorite "Bottom Spotters," which shot up on this decline to very high levels. True, it didn't get as high as it did last winter, but we also don't have the aberration of all those VIX derivatives and leveraged ETFs to deal with. By any stretch of the imagination, the Relative VIX is historically quite high.1546819681795657048776.png

Not only did the Relative VIX get to very high levels (indicating pessimism to exploit), but almost all the other measures of sentiment showed extreme levels of fear/pessimism. Investor's Intelligence, after a long stretch of Bullishness, fell to Buy territory (under 1.0) which, over the last decade has been a rather timely Buy signal. Also, CNN's "Fear & Greed" Index fell to near-record low (Bearish) levels just days ago.15468197054661806143661.png

Additionally, speculators in the SH have been shorting like the world was coming to an end this last week. On Wednesday and Thursday, there was $229MM and $222MM in net new shorting, which is very high indeed. The 7-day cumulative measure shows $283MM-- a Buy -- and the 21-day shows $587MM -- also a strong Buy. All of the forgoing indicates that not only ar.....




#32 dTraderB



  • Traders-Talk User
  • 4,857 posts

Posted 07 January 2019 - 07:32 AM



15464494555481465143762.gifSeasonality is bullish into Thursday (Santa Claus rally). The above chart is “The American Association of Individual Investors Bull Bear ratio.” The chart above goes back 9 years and shows the times when the 3-period moving average of this ratio fell below .75 (current reading is .59). This ratio suggests an intermediate-term low is forming here. At some point the December 24 low (2350 SPX) may be tested, but a 50% retracement of the down move, which is near the 2630 SPX range, may come first. We have been long from the 2750 range and may sell if and when we get to the 2630 range, possibly entering a short position for a test of the low. The first half of 2019 could see lots of volatility. Have a happy New Year.




#33 dTraderB



  • Traders-Talk User
  • 4,857 posts

Posted 07 January 2019 - 03:35 PM

Really busy day! 


Are bulls losing their grip on this rally? 


Is the rally over?



#34 dTraderB



  • Traders-Talk User
  • 4,857 posts

Posted 07 January 2019 - 03:42 PM

I am also thinking of opening PUTS now, preferably APRIL 2019 deep in the money QQQ puts, starting with a small position, maybe 5, and then adding during the next few days. 

Most likely, will close my XLF calls, still slightly down on these but way better than when SPX as trading with a 2300 handle!


Greatest surprise is my 1500 GE stock portfolio is actually in the green now, 22 cents!


Douglas KassVerified account @DougKass
FollowFollow @DougKass

I have not had any shorts for awhile. Over the last month I aggressively added to my long book at lower $s. I am now making a tactical move back to market neutral. On @realmoney Time To Get More Conservative - Moving Back Towards Market Neutral @jimcramer @tomkeene @TeamCavuto

9:42 AM - 7 Jan 2019 from West Palm Beach, FL

Edited by dTraderB, 07 January 2019 - 03:43 PM.