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Turn Risk Windows for the Week of December 27th


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#1 Douglas

Douglas

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Posted 24 December 2021 - 12:42 PM

According to my risk summation system, the days next week with the highest risk of a turn in or acceleration of the current trend in the DJIA are Tuesday December 28th and Friday the 31st.

 

Last week had high risk window readings just about every day, and as has been the case so many times in this FED funny money fuelled market, a swift, sharp sell off on Monday was followed by an epic short squeeze driving the DJIA up almost 1400 points from its low on Monday.  Late Thursday the rally motor appeared to be running on just fumes, so I'm a bit surprised that the system thinks the turn will be Tuesday and not Monday, but it is what it is.

 

If this latest covid manifestation turns out to be as non-lethal as it now appears, the FED, which has been dragging their feet on tightening  will suddenly be caught with their pants down around their ankles again.  Good covid news early in the new year should be accompanied by a 2 year note slaughter.  If not, the FED is yet again all bark and no bite.

 

Back on the 16th of December I posted a note touting the Pound.  Of course the very next day it tanked, but it didn't take out the recent  low support that I showed on the chart.  Since that quick retreat, it has been on a pretty good tear, and if Boris can just avoid another faux pas and covid cooperates, that rally should have some legs.   Also if the FED really is just trying to jawbone inflation and not do anything substantial, that will just lengthen the Pound's stride.

 

Merry Christmas,

Douglas


Edited by Douglas, 24 December 2021 - 12:45 PM.


#2 Douglas

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Posted 24 December 2021 - 02:15 PM

The TSP and AAII sentiment surveys are currently saying very different things.  This week the AAII says that only 29.6% of its survey participants are bulls, but TSP says that a very high 73% of its are.  The bulls in the AAII survey do appear to have more feathers than fur based on how fast they fly to the bear camp at the first hint of any selling.    The plots below show 4 week averages of the Bulls - Bears in both surveys.  In the steady up trend in the plots below, peaks in the bulls-bears have only been able to identify risk for a minor pull back.  Is the horned TSP or the feathered AAII currently making the right contrarian call?  

 

 

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Regards,

Douglas


Edited by Douglas, 24 December 2021 - 02:19 PM.