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There is hope...


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#1 Rogerdodger

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Posted 14 May 2022 - 08:42 PM

Mike Burk comments:

"The last brief rally was just a setup for further declines. There is hope, though: The extreme numbers of new lows leading up to the rally implies a retest in the near future."

 

Seasonal observation:

Average returns for the coming week have been modestly negative by all measures.

 



#2 pdx5

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Posted 14 May 2022 - 10:36 PM

Another viewpoint:

The major U.S. stock market indexes have lost roughly 12% to 25% this year, a painful setback after two years of gains. Time to buy? Not so fast, based on a technical analysis of current market conditions.

Andrew Addison, a veteran market technician, proprietor of the Institutional View research service, and a sometime contributor to Barron’s, sees more downside ahead for the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite, given the dearth of stocks resisting this year’s selling pressure.

Unlike fundamental analysts, who try to determine asset value by studying financial or economic factors, technicians examine chart patterns, and trading volume and other statistics to identify likely turning points. “When markets are about to make a meaningful turn, you find that the action in the index is camouflaging strength or weakness beneath the surface,” he says.

At the moment, there is no camouflage: Things have been ugly, above and below.

There is no evidence that more stocks are reversing their downtrends as the broad indexes fall, he says. Nor has there been a “meaningful contraction” in the number of stocks hitting new lows, or a notable increase in the percentage of stocks trading above their 50-day or 200-day moving averages. “Until the market’s internals improve, any rallies are likely to be short-lived, like a tropical rainstorm,” he says.

Technical analysts also study support and resistance levels, points at which investment demand or supply has stopped selloffs or rallies in the past. Addison sees support for the Dow around 29,000 to 30,000; the blue-chip average was around 31,950 on Friday.

Now that the S&P 500 has broken below 4050, downside risk is 3800, and potentially 3600, based on his reading of the index’s chart. A decline to 3800 would imply a loss of 4.8%, based on Friday’s price of 3990.

Addison has spent a lot of time studying the Nasdaq 100, a market-capitalization-weighted index of the 100 largest nonfinancial companies listed on the Nasdaq, and a proxy for the growth stocks that drove the bull market to dizzying heights. At a recent 11,945, it is getting close to support, he says. “We could see the Nasdaq 100 start to stabilize around 11,000,” he adds, noting that the index spent about six months, from last June to December, in a trading range of about 10,500 to 11,000.


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#3 brucekeller

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Posted 14 May 2022 - 11:43 PM

Seasonality has been a little wonky lately. April was supposed to be pretty much up all month, and instead was quite the opposite, although sell in May held true.



#4 Rogerdodger

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Posted 15 May 2022 - 12:10 PM

Seasonality has been a little wonky lately. April was supposed to be pretty much up all month, and instead was quite the opposite, although sell in May held true.

 

Actually Mike Burk's statistics, based on the 4 presidential years, has been right on target!
.

 

April 9: I expect the major averages to be lower on Friday April 15 than they were on Friday April 8.
April 16: In addition to the ongoing bear market, Seasonality for the coming week is awful.
April 23: Average returns for the coming week have been mixed and weaker during the 2nd year of the Presidential Cycle than other years.
April 30: In addition to the on going bear market, Seasonality for the coming week is modestly negative.
May 7:The market had a relief rally early last week which sets it up for a bad week coming up.  The PPT (plunge protection team) will be busy. In addition to the on going bear market, Seasonality for the coming week is modestly negative.
May 14: The last brief rally was just a setup for further declines

 


Edited by Rogerdodger, 15 May 2022 - 12:26 PM.


#5 beta

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Posted 15 May 2022 - 12:57 PM

Remember the Bradley cycle?  See March 2022 update here: https://www.amanita....ewsletter-e.pdf

 

It's consistent with the views of Ellioticians who have been predicting we've reached the end of the Grand Supercycle.


Edited by beta, 15 May 2022 - 12:59 PM.

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#6 MDurkin

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Posted 15 May 2022 - 01:09 PM

Remember the Bradley cycle?  See March 2022 update here: https://www.amanita....ewsletter-e.pdf

 

It's consistent with the views of Ellioticians who have been predicting we've reached the end of the Grand Supercycle.

. "Back to the Stone Age is the motto for most of the world in the 2020s, first especially for the evil empire (USA). Only 4 power centers can at least partly uphold their infrastructure in the 2020s: (1) Russia & satellite states (2) China (3) Middle East (4) Eastern Europa Intermarium 3SI 3-Seas-Initiative".


Edited by MDurkin, 15 May 2022 - 01:09 PM.


#7 q4wer

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Posted 15 May 2022 - 02:21 PM

Conclusion

There is hope.  If the huge decline in the number of new lows holds we could be looking at a nice rally.  The extreme numbers of new lows leading up to the rally implies a retest in the near future.

The strongest sectors last week were Utilities and Energy (for the 2nd week in a row) while the weakest were Banks and Precious Metals (for the 4th week in a row).

I expect the major averages to be higher on Friday, May 20 than they were on Friday, May 13.



#8 cycletimer

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Posted 15 May 2022 - 06:07 PM

Conclusion
There is hope.  If the huge decline in the number of new lows holds we could be looking at a nice rally.  The extreme numbers of new lows leading up to the rally implies a retest in the near future.
The strongest sectors last week were Utilities and Energy (for the 2nd week in a row) while the weakest were Banks and Precious Metals (for the 4th week in a row).
I expect the major averages to be higher on Friday, May 20 than they were on Friday, May 13.



I agree Q, though tne forthcoming rally is a gift for those still Long to lighten up a bit. The bear market has further to go. Actually, this Beast will continue thru 2023. We’ll get a few face-ripping, short-lived rallies but the trend is down for awhile.

#9 12SPX

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Posted 16 May 2022 - 08:17 AM

As I mentioned on d's thread, this will be all about expiration this Friday and there's a great chance for the market to move up into it.  Could wait till Friday 1 before though the way this market is moving lol!!!