Bear Cave 2 (Bull Allowed)

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SPX daily: The pattern and current daily ST buy signal has worked out well so far. We shall see if this Bear Market rally has some legs. One would think a move up to at least the 20 dma to start, and then we can see if it can tag the 50 dma. We shall see if the VIX can move back below 23ish. I'm playing Bear Market rules for all of my trades.... My next trade will probably be to sell these long positions and buy back SDS. However, that is up to the market..... I will NOT hold any long positions once we tag the 50 DMA. That does NOT include the gold miners as I trade them differently.

Holding a much smaller position at TSP than at Vanguard. 25% at Vanguard (VXF) and 10% C Fund at TSP.

SPX daily chart and a closer look. Will we get a 50% retracement? That would take the SPX just under the 50 dma.... We shall see how it plays out....


Bottom Line: I'm trading using Bear Market rules, and I DO NOT know how far this move up will run. I be staying VERY nimble and trading mainly at Vanguard and in my other accounts.

Have a nice day..... Not much to do now, but see how all of this plays out.

Long SPY, VXF , SSO and GDXJ.... I will be selling SSO today.
 

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They call it range trading for a reason
SPX is back inside the big range post the latest squeeze. Range trading is a special beast to trade, and most suck at buying when it "feels" the world is ending, and selling when it "feels" the only was is higher.
https://themarketear.com/posts/cZY5QpPGZm
 

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Why The Bear Market In Stocks May Only Be Halfway Through

jessefelder

October 5, 2022
Given that we are now in a bear market (however you choose to define it), history suggests we may only be about halfway through the process. Previous downturns driven by the bearish trifecta noted above were both more prolonged and more significant in terms of price decline than what we have seen in the stock market so far. Of course, history doesn’t repeat itself but it often rhymes; so while the current bear market is unlikely to follow the pattern perfectly, the price analog in the chart above may be as good a map for the road ahead as any you’ll find.
https://thefelderreport.com/2022/10/05/why-the-bear-market-in-stocks-may-only-be-halfway-through/
 
If this is the start of something bigger...
...then there will be a lot of pain. Dead cat bounce, or not, but the latest two day squeeze has been extreme. The question is did we just front run seasonality by a few days?
 

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GDX daily: The battle at the 50 dma by the buyers and sellers continues as we move into day 4 since moving above the 50 dma. One would think a BT of the 10 dma is coming soon.... So it's day 4 since moving above the 50 dma.... We shall see how it plays out...

Long GDXJ
 

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Miner Buy Signal

likesmoneystudies

The Miners delivered a buy signal Thursday.


The initial thrust out of the day 16 DCL saw the Miners close above the upper daily cycle band. Closing above the upper daily cycle band ends the daily downtrend and begins a daily uptrend. It also indicates that the ICL has been set.

The Miners backtested the 50 day MA on Wednesday then formed a swing low on Thursday. Forming a swing low above the upper daily cycle band indicates a continuation of the daily uptrend and signals a cycle band buy signal.
https://likesmoneycycletrading.wordpress.com/2022/10/06/miner-buy-signal-5/
 

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Retail Army selling the rally
Retail traders used to be happy dip buyers, but they were sellers for the second week in a row. Is this a contrarian factor? This past week they net sold -$1.1B. Notably they sold the rally on both Monday (SPX +2.59%) and Tuesday (+3.06%). Retail traders net sold -$2.4B of single stocks. Large cap tech names including AAPL (-$470MM), META (-$134MM), and GOOG (-$128MM), in particular, suffered from heavy selling. The last two weeks represented the worst selling in single stocks since March 2020. This bearish sentiment was also evident in the options market. Retail traders sold -$1.0B of delta.
https://themarketear.com/posts/cZP0uIxLk5
 

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SPX daily: Buyers coming in so it looks like another go at the 20 dma. The last two times it failed. The current Bullish pattern remains in play... "IF" it can close above the 20 dma and start a trending move the 50 dma will be a tad tougher. ( purple line)
 

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Estimating Downside Market Risk - "Our most reliable equity market valuation measures project 10-12 year S&P 500 total returns near zero"

October 16, 2022
Value is not measured by how far prices have declined, but by the relationship between prices and properly discounted cash flows. When the cash flows are very long-term in nature, and the deviation from median historical valuations is extreme, simply attaining those run-of-the-mill valuation norms can imply seemingly preposterous losses. Then the market suffers seemingly preposterous losses anyway.

The bottom line depends on your investment horizon. From a short-term perspective, we should certainly expect periods of market loss to be punctuated by clearing rallies that are “fast, furious, and prone-to-failure.” We periodically reduce the extent of our defensiveness when the market becomes particularly oversold, but we’re not inclined to take outright bullish positions in an overvalued market with still-unfavorable internals. Broad improvement in the uniformity of market internals could signal fresh speculation, but we’ll respond to that sort of shift when we observe it. No scenarios or forecasts are required. From the standpoint of long-term returns and potential full-cycle losses, valuations are nowhere near levels that we associate with satisfactory outcomes.

Our most reliable equity market valuation measures project 10-12 year S&P 500 total returns near zero, implying that the “equity risk premium” relative to bonds is still negative. Likewise, bond yields remain inadequate relative to prevailing inflation, employment, and economic conditions. Meanwhile, market internals continue to suggest persistent risk-aversion among investors, and yield pressures – at least for now – remain upward. Taking these conditions together, it’s worth repeating that a market collapse is nothing but risk-aversion meeting an inadequate risk-premium; rising yield pressure meeting an inadequate yield. Short-term volatility and clearing rallies aside, our outlook remains defensive here.
https://www.hussmanfunds.com/category/comment/
 
SPX daily and the 200 dma: The SPX remains far below its 200 dma, but that's another story!

200dmas have long been considered one of the most important lines in all of technical analysis, largely for two reasons. First, 200dmas tend to run parallel with the secular, or long-term, trend in force in any market. Thus a 200dma is like a big arrow pointing in the direction that a market is heading. Second, 200dmas tend to form the most foundational bull-market support or bear-market resistance of a secular trend. Short countertrend pullbacks (in a bull) or bear-market rallies (in a bear) tend to end at the 200dma.

https://www.zealllc.com/2004/relativity.htm

Relativity Trading
Adam Hamilton
Archives
Oct 16, 2009

The ultimate key to success in all trading, both long-term investment and short-term speculation, is simple. Buy low, sell high. Excel in this, and trading the financial markets will eventually make you wealthy. But implementing this well-known proverb into your own trading certainly isn’t easy. As always, the devil is in the details.

To paraphrase Pontius Pilate’s famous rhetorical question to Jesus, what is low? What is high? In order to buy low and sell high, traders must gain insights into how to define these conditions in real-time. Without building this crucial skill set, everything else a trader achieves including emotional mastery will be for naught.
Oct 16, 2009 Relativity Trading Adam Hamilton 321gold ...inc ...s
 
robo said:
Estimating Downside Market Risk - "Our most reliable equity market valuation measures project 10-12 year S&P 500 total returns near zero"

https://www.hussmanfunds.com/category/comment/
Click to expand...

This was good in that article:
There are three principal phases of a bear market: the first represents the abandonment of the hopes upon which stocks were purchased at inflated prices; the second reflects selling due to decreased business and earnings, and the third is caused by distress selling of sound securities, regardless of their value, by those who must find a cash market for at least a portion of their assets.

– Robert Rhea, The Dow Theory, 1932
Click to expand...
 
SPX daily: We shall see how this gap up plays out??? So far the pattern is playing out and indicates the move up is not over. But, one should keep in mind we are trading in a Bear Market not a Bull.
 

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BIG BOTTOMS (October 16, 2022): Most investors misunderstand bear markets. Bear markets create opportunities for much greater and much faster profits than bull markets. This is because 1) bear markets on average last about one-third the total time of bull markets; and 2) the annualized percentage fluctuations in bear markets are roughly triple those during bull markets.


A bear-market bottom is a lengthy process, not an event.

During bear markets some assets tend to complete their lowest points within one year of the original top. If we begin counting this bear market starting with the S&P 500 all-time zenith of 4818.62 on January 4, 2022 then the bear market is 9-1/2 months old. This is roughly the time when a wide variety of assets including U.S. Treasuries, gold mining and silver mining shares, and some currencies including the Swiss franc and Japanese yen often complete their bottoms prior to powerful uptrends.
https://truecontrarian-sjk.blogspot.com/
 

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SPX daily: Holding above the 10 and 20 dma's again. The 50 dma is up next and is around 3900ish..... However, the SPX first needs to breakout above the upper BB. We shall see if buyers keep coming in..... Plenty of short-covering causing some of this move...

Bottom Line: Bear Market rules still apply in my opinion, even though the pattern indicates we "SHOULD" move higher.

Going flat in TSP, but I will still be trading VXF at Vanguard. Impossible to trade this market using TSP funds. The TSP S and C funds are great for Bull markets, and the G Fund is great for Bear Markets.
 

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SPX daily: The bullish pattern remains in play. We shall see if the SPX can move back above the 50 dma in the days ahead.... Selling 1/2 of my VXF position at Vanguard. Why sell 1/2? Because we are still in a Bear Market, so I'm trading using Bear Market rules. I still think (based on the pattern and the data) this move has more to run on the upside. VXF - The 38.2% be up before the 50dma.... However, I trade VXF using the SPX data......
 

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TLT on the move:

Finally, TLT is firmly into its target zone now, so I'm going to give my first warning for "bear caution" since I published this target back in April. As of yet, there's nothing even vaguely bullish in the chart, but my gut has started saying: "be careful, bears" -- for whatever that's worth.
Pretzel Logic's Market Charts and Analysis
 

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