Bear Cave 2 (Bull Allowed)

[robo]

Remember seasonality?
It wasn't long ago everybody was busy front running the January effect. Sentiment has definitely changed and January isn't actually as good as people think, especially not the second part of it. Let's see how this plays out, but the bullish seasonality should kick in later, or is this time different?
https://themarketear.com/

What about VIX seasonality?
VIX seasonality looks "strong"...but don't forget volatility is mean reverting.

 

[robo]

How the Japanese Yen Relates to the Stock Market
Imre Gams | Jan 19, 2022 | Market Minute | 4 min read
What can the Japanese yen tell us about American stocks?

Well, as it turns out, quite a bit.

The Japanese yen has long held a reputation for being a safe-haven currency.

Meaning, when traders are feeling uncertain or fearful, the yen tends to appreciate while risk-on assets like stocks tend to get sold.

But why would the currency of another country be so attractive when the market gets scared and investors duck for cover?
What can the Japanese yen tell us about American stocks?

Well, as it turns out, quite a bit.
https://www.jeffclarktrader.com/market-minute/how-the-japanese-yen-relates-to-the-stock-market/

 

[robo]

The Yield Of Supersafe I Bonds May Soon Reach 6-7%; Don't Wait, Buy In January
Jan. 16, 2022 6:04 AM ET158 Comments57 Likes
Summary

The nice lady with the dog pictured below is in a celebratory mood perhaps because she just bought her annual allotment of I Bonds.

I Bonds are the ultimately safe and effective inflation investment offering flexibility in holding period, a likely 6-7% 12 month yield, and up to 30 years of inflation protection.

This article suggests buying your annual $10K limit a few days before the end of January rather than waiting for the May or November resets.

I Bonds with their zero fixed rate beat the daylights out of TIPS all maturities of which have negative real yield plus vulnerability to a general bond selloff.

Nobody really knows where inflation will go or whether we will experience deflation; I Bonds purchased now defend against deflation too, never declining from their highest accumulated value.

https://seekingalpha.com/article/44...on-reach-6-7-percent-dont-wait-buy-in-january


Consider doing at least some of your 2022 I-Bonds purchases during the upcoming week.


If you buy I Bonds during the coming week then you will get the entire month's interest for January and you will be locked in at 7.12% guaranteed with no state or local income taxes through the end of June 2022:

Kaplan
https://truecontrarian-sjk.blogspot.com/

 

[robo]

Bearish Behavior

Stocks continued lower on Tuesday.

Stocks broke below the day 24 low on Tuesday to extend the daily cycle decline. Stocks also closed below the lower daily cycle band on Tuesday. Closing below the lower daily cycle band ends the daily uptrend and begins a daily downtrend. Closing below the lower daily cycle band also indicates that the intermediate cycle decline has begun. A break below the previous daily cycle low of 4495.12 will form a failed daily cycle, confirming the intermediate cycle decline.
https://likesmoneycycletrading.wordpress.com/2022/01/18/bearish-behavior/

 

[robo]

UUP down and GDXJ up: GDXJ on the move and back above the 10 sma on the daily..... Now, will this be the start of a trending move?

 

[robo]

GDXJ daily: GDXJ made a very nice move up this morning. I'm selling 1/2 of my shares. I will say it again, I'm a trader NOT an investor. The current price is $43.00ish we shall see how it closes. I'm sure the gold bugs are saying this is it again. Maybe it is and that is why I kept 1/2 of my shares. I was also long JNUG at the open. I like to ST trade NUGT/JNUG/DUST on occasion. ( Example - For a ST trade I might buy 2000 dollars worth of NUGT instead of 4000 dollars of GDX.)

01/18/2022 09:38:02 Bought 50 JNUG @ 57.985

I will NOT post my leveraged day trades here at TSP. Way to many..... I'm also not ruling out a ST DUST trade....

 

[robo]

IWM daily: Bottoming? We shall see as many are getting fairly Beared up again. ICL may be coming our way...

Looking to buy some UWM for a trade......

IWM weekly: Tagging the lower BB and 9 weeks below the 10 sma on the weekly chart.

 

[robo]

I Bonds and a comment From Kaplan:


Your fourth-quarter U.S. estimated income taxes are due at midnight, plus you can ensure another 5K in I Bonds for 2021.


If you still haven't paid your U.S. estimated taxes then I would recommend setting up an account at https://eftps.com/eftps/ this evening and paying your fourth-quarter U.S. estimated tax. Even if you don't owe anything, you can intentionally overpay your federal income tax by at least five thousand dollars. When you do your income taxes next month (or later for tardy folks) you will then be able to apply up to five thousand dollars of your eventual 2021 refund toward I Bonds for 2021. This is the only way you can purchase more I Bonds for calendar year 2021. If you haven't done your 2022 I Bonds purchases yet then I would recommend logging in and doing BuyDirect at https://TreasuryDirect.gov/ by next week so you will be credited with interest at 7.12% annualized for the entire period from January 1, 2022 through June 30, 2022.

https://twitter.com/TrueContrarian?ref_src=twsrc^google|twcamp^serp|twgr^author
https://truecontrarian-sjk.blogspot.com/

 

[robo]

SPY daily: The 10 sma moving below the 50 sma should bring out more and Bigger Bears..... We shall see what happens to the put/call ratio as more folks are expecting a deeper selloff.

Heading into the last hour of trading. We shall see if some buyers show up........ The tag of the 100 sma is still in play, but buyers don't seem to want to play. Maybe just to many scared sellers.

Bottom Line: The trend remains down for the SPY.

 

[Bullitt]

Nasdaq now in correction territory, down more than 10% and unable to be saved by beloved AAPL, TSLA, MSFT and NVDA.

SPX sitting on support from September 2021 as all momentum indicators have turned down.

IWM is a total mess and has been since February 2021, yet people still stick with it because it's "aggressive".

All growth estimates in China have seen drastic cuts, but the cheerleaders said Evergrande was a nothing burger the day it broke and have buried it ever since.

The whole time the media has been pushing everyone to be in stocks because of inflation and raising rates. Risk management for most is an afterthought. Why bother investing some in bonds or cash when YOLO and FIRE are unable to happen without 100% allocation to stocks?

You probably saw this already from yesterday. I'm sure those numbers are worse after today:

Around 39% of the stocks in the [Nasdaq] index have at least halved from their highs, according to Jason Goepfert at Sundial Capital Research, while the index is roughly 7% off its peak. At no other point since at least 1999—around the dot-com bubble—have so many Nasdaq stocks fallen that far while the index was this close to its high

https://www.wsj.com/articles/giant-stock-swings-kick-off-2022-11642351304?

 

[robo]

Nasdaq now in correction territory, down more than 10% and unable to be saved by beloved AAPL, TSLA, MSFT and NVDA.

SPX sitting on support from September 2021 as all momentum indicators have turned down.

IWM is a total mess and has been since February 2021, yet people still stick with it because it's "aggressive".

All growth estimates in China have seen drastic cuts, but the cheerleaders said Evergrande was a nothing burger the day it broke and have buried it ever since.

The whole time the media has been pushing everyone to be in stocks because of inflation and raising rates. Risk management for most is an afterthought. Why bother investing some in bonds or cash when YOLO and FIRE are unable to happen without 100% allocation to stocks?

You probably saw this already from yesterday. I'm sure those numbers are worse after today:

https://www.wsj.com/articles/giant-stock-swings-kick-off-2022-11642351304?

If we don't get an ICL and a bounce soon, I will have to rethink my current trading plan.

 

[robo]

SPX - extremely oversold as we approach make or break levels
We closed below the 100 day, RSI is very very oversold and we are close to 4500, the "ultimate" make or break level to watch. Should we close below the 4500 and 200 day moving is the next big support.

 

[robo]

SPY daily: The first test for the Bulls is to close above the 100 sma on the daily.....

Long SSO for a trade: This is a counter-trend trade based on a oversold condition, and a few other indicators I use for ST trading. We shall see how it plays out.

Bottom Line: The SPY trend remains down.

Long GDXJ and VXF

 

[robo]

VIX guy just called us...
Regular readers of TME are familiar with the "VIX guy". He is our contra indicator when it comes to VIX as well as short term market directions. Let us remind you of what we wrote about his latest VIX call on Dec 31: "...his latest logic is basically the inverse of what he said in late November. He has also managed picking up the January effect logic and argues for this market to remain trending higher with diminishing volatility. We did not plan to get excited on the last day of the year, but given his perfect track record, executing the first part of the planned long volatility trade suddenly seems like a good idea." We suggested to look at hedges and pointed out: "...exploring put spreads as a hedge (skew is high)."

This was only twenty days ago and since then a lot of things have changed. The VIX guy called us today outlining his bearish thesis and is basically telling us VIX must go higher: "have you seen the pricing of the rate hikes, tech is going much lower bro, Fed is behind the curve, ARKK is crashing etc". Given his perfect track record (inversely speaking), we find closing out those put spreads and any long vol trades very attractive (would even consider shorting some vols to fit direction trades).

SPX is at must hold levels and VIX has already spiked big. So far we haven't seen the "real" panic in VIX, but note that we are at the same VIX levels as we hit during the early autumn correction, which in our view looks very similar to the current draw down (SPX below the 100 day and hitting the longer term trend line).

https://themarketear.com/

 

[robo]

The First Buy Signal of the Year
Jeff Clark | Jan 20, 2022 | Market Minute | 2 min read
2022 is starting off as a tough year for investors.

As of Tuesday, the Dow is down 2.7%… The S&P 500 is down 4%… And the Nasdaq is down more than 7%.

Conditions have gotten quite oversold. So far, anyone buying into those oversold conditions has suffered from even more selling pressure.

But, that’s about to change…

It looks like the Volatility Index (VIX) is on the verge of generating its first buy signal of 2022.

Take a look at this chart of the VIX along with its Bollinger Bands

he VIX closed above its upper Bollinger Band on Tuesday. When it closes back inside the bands, the VIX will generate a new, broad stock market buy signal. That could happen as soon as today…

VIX buy signals were quite reliable in 2021. Eight out of the 11 buy signals proved to be profitable.

Traders who bought the S&P 500 on the last buy signal in early December saw that index rally nearly 7% over the next three weeks.

Of course, there’s no guarantee that something similar will happen this time around.

But given the current oversold conditions, it looks to me like the stock market is setting up for at least a strong oversold bounce.

And, a VIX buy signal might be the catalyst that gets it started.

Best regards and good trading,


https://www.jeffclarktrader.com/market-minute/the-first-buy-signal-of-the-year/

 

[robo]

VIX daily: A tool I use too, but these indicators only give you higher odds for a winning trade. NOTHING is ever for sure!

Long SSO, VXF and GDXJ.

SSO is a ST trade

 

[robo]

LOL..... Ok..... Thanks for the warning!

It's Time To Go To Cash For The Next 7 Years - 1-Year Update
Jan. 20, 2022 2:41 PM

Summary

This is a follow-up to one of my most popular, and controversial pieces published on Seeking Alpha.

The stock market and bond market remain historically overvalued today, however, the almost all-encompassing bubble has started to break.

On this note, the average Nasdaq Composite stock is down more than 40% from its highs, the ARK Innovation ETF drawdown has exceeded 50%, and SPACs have collapsed.

Popular market barometers like the Invesco QQQ Trust and the SPDR S&P 500 ETF, which are both filled with large-cap growth bond proxies, have begun their descent too.

Under the surface, a historical capital rotation is taking place, and our Best Ideas Model Portfolio returned north of 100% in 2021. In short, it remains a bifurcated market.


"I will go to my grave... believing that really loose monetary policy greatly contributed to the Financial Crisis. There were obviously problems with regulation, but when we had a 1% Fed Funds rate in 2003 after, to me, it was pretty obvious that the economy had turned (up) and I think the economy was growing at 7% to 9% nominal in the fourth quarter of 2003 and that wasn't enough for the Fed. They had this little thing called 'considerable period' on top of the 1% rate just so we would make sure that their meaning was clear. And it was all wrapped around this concept of an insurance cut… I've made some money predicting boom-bust cycles. It's what I do. Sometimes I am right. Sometimes I am wrong, but every bust I had ever seen was proceeded by an asset bubble generally set up by too loose policy..."

- Stanley Druckenmiller
https://seekingalpha.com/article/44...urce=seeking_alpha&utm_term=RTA+Article+Smart
This idea was discussed in more depth with members of my private investing community, The Contrarian. Learn More »

 

[robo]

VXF daily: Remains in a downtrend..... Buyers pushed it back above the 3 ema in early trading, but sellers came in. BTD or STR? Looks like some are doing both....

We shall see how the last 30 minutes of trading goes and if any buyers step-up..... Not looking good for Da-Bulls!

Still long SSO, VXF and GDXJ.....

 

[robo]

SPY daily: The selling continues and the SPY looks to close below the 100 sma again..... LOL.... You can sense the fear of another big sell-off coming soon. We shall see.

Bottom Line: The trend remains DOWN!

 

[Bullitt]

Nasdaq-100 below 200 DMA first time since April 2020. The beloved index that brought so many pajama traders joy during the pandemic is now ripe for one of those Hindenburg omens to kick in.