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And Here We Are...

Bear Market Continues

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#1 fib_1618



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Posted 26 October 2023 - 12:55 AM

Critical couple of technical days coming up for the longer term bull market as we have bullish divergences building on a short term basis at this time (that of 4-6 weeks). Problem is that the growth area is starting to collapse now (primarily in the small and mid cap issues), and if these same internal divergences break down near term (that of days), then the current declining price sequence is likely to pick up speed to the downside toward the current chart objectives of challenging the lows of September and October of last year. Internal "whispers" are suggesting that a full scale capitulation sequence is now needed to cleanse the system completely (to provide synchronization between the market indexes) before any notion of an internal foundation, from where prices can later build on, can be created. It would seem that a solid move above the 5% level in the 10 year note might the actual trigger to such an event, with the time window for a possible bottom in prices then moving to sometime in mid November.


Between now and then, we have a Fed meeting next week, with the FedWatch tool touting a 97% chance of no change in rates. What's interesting, however, is that the December meeting is now showing a 29% chance of another 1/4 point hike which wasn't on the radar 2 weeks ago.


We'll see how it goes.



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#2 RadioHead



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Posted 26 October 2023 - 03:41 AM

Right now the futures (ES and NQ) are sitting at support levels (being down overnight). I would prefer to see VIX being higher than current levels. So far the market went down about 10% over the last 3 months. So far I have seen traders being concerned, a bit fearful, but no real fear or panic. Obviously it would be better to build a real bottom after a washout, but it is not necessary.


If the market is pricing in a potential recession (small caps certainly are) then we will see another 10% or so on the downside. If not, then this is not a bad place to make a bottom. After all, this is the end of October.


I agree with your analysis regarding some internal indicators diverging bullishly. But I would prefer higher VIX and some more selling in magnificent 7 stocks to be a bit more confident in a bull case.


Having said that, there is a lot of value in small caps (industrials, materials, energy....) and a lot of overvaluation in NASDAQ. Pretty soon a market neutral trade like long IWM / short QQQ will make a lot of sense. It is not a bet that IWM will go up and QQQ will go down. It is about relative performance regardless of the direction. Typical hedge fund trade.

#3 K Wave

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Posted 26 October 2023 - 12:13 PM

another perspective....big moment in time here




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#4 12SPX



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Posted 26 October 2023 - 01:15 PM

As I said getting exciting and even though I think its going to go up for a bit I'll put my longer term profit stop on the NDX at 14175 and will buy again lower....

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