Bear Cave 2 (Bull Allowed)

[robo]

Jeff Weniger
@JeffWeniger
The 20% of stocks with the Highest P/E beat the 20% with the Lowest P/E by more in the 10 years through Covid than they did in the 10 years to the peak of Dot-Com mania in 2000.

The next 10 years may look very different.




https://twitter.com/JeffWeniger/status/1616183214724235291?mc_cid=407f2b2876&mc_eid=5b348a9ca0


https://mailchi.mp/felder/earnings-are-unsustainable?mc_cid=407f2b2876&mc_eid=5b348a9ca0

 

[robo]

We could get a much higher VIX and a much deeper pullback for U.S. equities in 2023 as compared with 2022.

I expect the S&P 500 Index to probably drop below three thousand at some point during 2023. If this occurs around mid-year rather than near the end of the calendar year, and if it is accompanied by the highest level for VIX since March 2000, massive investor outflows, and heavy insider buying, then this could provide our first opportunity to actually close out short positions and go heavily net long many deeply-undervalued securities. This would not be because the bear market will be over, as 2024 will almost surely feature the greatest percentage losses of the entire bear market. However, it could be possible to make numerous diversified purchases of washed-out securities around the middle of 2023 which could be huge winners within several months at which time most of them should be sold.

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

 

[robo]

For now the SPX remains on a buy signal. The SPX is now above the 10,20,50 and 200 day MA's. We shall see how things play out this week,

If You Believe The Stock Market CRASH Is Over You're In For A Rude Awakening- KING Of All Indicators
https://www.youtube.com/watch?v=aCxhZ1H2f5A

 

[robo]

Another Sign of Trouble for This Market

The Importance of Bond Yields
I’m talking about the 30-year government bonds yield. It’s the annual interest rate that the U.S. government will pay out on its 30-year bonds.

But the significance of it is much more than just the payout on bonds.

https://www.jeffclarktrader.com/market-minute/another-sign-of-trouble-for-this-market/
You see, this market also signals what investors think of the broader economy… as well as influencing the interest rates that are paid on loans.

Another important point about bond yields is that the yield of a bond (how much the bond will pay out) moves opposite to the price of the bond.

In our current economic environment, the market has been selling bonds when it thinks that inflation is headed higher, and the Fed will raise interest rates.

On the other hand, the market has been buying bonds when it thinks that inflation is stabilizing, and the Fed will slow down or even halt their rate hikes.

With that in mind, let’s look at a price chart of the 30-year government bonds yield. This yield is considered by many investors as the bellwether U.S. bond… ( The last chart)

 

[robo]

SPX and VXF weekly charts: VXF moved above the 50 week MA..... We shall see if the SPX can follow. Both are currently on buy signals. Week 4 for the SPX.... As was pointed out by likesmoney. We are fairly deep into the weekly cycle, but that doesn't mean the SPX and VXF can't continue higher.... However, one should be using some Risk Management this deep into the weekly cycle. Best to use the weekly data when trading TSP funds and the daily cycles can be used in a trading account. Well, that is what I do. Vanguard money market is currently making around 4.5% as I wait for a better setup to buy at an ICL.


Resistance At The 50 Week MA

Stocks rallied for 1.19% on Monday to break out to a new daily cycle high.

While stocks broke out to a new daily cycle high on Monday, they have consistently been rejected by the 50 week MA since April. Stocks would need to close above the declining 50 week MA before any trending move can be sustained.

At 15 weeks, stocks are nearing their timing band for an intermediate cycle decline. If the resistance at the 50 week MA holds, stocks will likely decline into their ICL. And stocks would then have a better chance at sustaining a trending move if they break above the declining 50 week MA soon after emerging from the ICL as oppose to doing so on week 15.

https://likesmoneycycletrading.wordpress.com/2023/01/23/resistance-at-the-50-week-ma/

 

[robo]

It ain't over...
...till SPX closes "well" above the negative trend line and the 200 day. 4050 is a big level to watch.
https://themarketear.com/posts/c0TYTRiC8m

 

[robo]

Chasing
The crowd has been forced to chase the SPX as well as downside protection (SDEX). Rising skew actually means they are paying up for downside protection in relative volatility terms.

 

[robo]

Welcome to overbought
Chart showing RSI of NASDAQ and SOX, but as we all know, overbought can stay overbought for longer than most think possible (same with oversold).

 

[robo]

QQQ daily and weekly: Maybe a tad overbought on the daily, but the weekly needs to show me some BEEF! It continues to make lower highs and remains under its 50 week MA. The daily remains on a buy signal and its 200 day MA be up next..... So are you trading the daily or the weekly charts. I trade both.... For the TSP funds and Vanguard investing account I use the weekly charts. But for ST trading I use the daily charts, and trade both ways.

 

[robo]

Pushing Your Luck


John P. Hussman, Ph.D.
President, Hussman Investment Trust

January 2023
The problem with speculation is that there’s usually a gap between the underlying risk and the inevitable outcome. The gap is most dangerous when there are potential rewards for pushing your luck.

In July 2007, Chuck Prince, the CEO of Citigroup, famously pushed his luck saying “When the music stops, in terms of liquidity, things will get complicated. But as long as the music is still playing, you’ve got to get up and dance.” The deterioration that would shortly unfold into a global financial crisis was already underway. After years of Fed-induced yield-seeking speculation in mortgage securities, aided by demand from yield-starved investors, and abetted by Wall Street institutions that were all too ready to supply new “product,” the inevitable implosion would produce a 55% loss in the S&P 500, and a 98% loss in the value of Citigroup.

The bottom line is simple. We don’t require forecasts, but investors should not ignore risks or insist on pushing their luck. The present combination of extreme valuations and unfavorable market action creates a “trap door” of downside risk for the financial markets. Likewise, the persistence of extreme valuations – in the absence of the causes and conditions that encouraged those extreme valuations – creates risk. The tendency of negative estimated risk-premiums to resolve into deep market drawdowns over the next 30-36 months creates risk. The reliance of investors on “forward earnings” multiples that embed record profit margins creates risk. The assumption that inflation will come down in a rapid and linear fashion, despite historical persistence of inflation, creates risk.


https://www.hussmanfunds.com/comment/mc230123/

 

[robo]

Massively unchanged
Just a gentle reminder, this market still lacks a new trend. Both SPX and NASDAQ are basically unchanged since May last year...
https://themarketear.com/posts/cVt8RKCctI

 

[robo]

Short pain in a pic
Not only is the crowd not long enough risk, but they have shorts that hurt big as market, especially tech, exploded higher yesterday. According to GS, yesterday was the biggest short covering since June 2022 (99th percentile 5yrs).

 

[robo]

VVIX knew
Muted VVIX eventually "spilled" over to VIX that moved lower post the initially sharp move lower in October. Note that VVIX and VIX have been moving in opposite directions lately. Nothing huge, but worth watching. VIX at these levels looks relatively attractive given the fact we have several macro events as well as big earnings coming up.

 

[robo]

A Recession Indicator With a Perfect Track Record

Jeff’s Note: Today is the start of what I predict will be 44 days of hell. You see, due to a federal law, hundreds of stocks are set to experience one-day drops of 10%, 20%, 30%, or more…

When I correctly predicted the 2000, 2008, and 2020 crashes, few people believed me. But when stocks collapsed, it crushed the retirement dreams of millions of Americans. So please don’t take this warning lightly.

A Perfect Track Record
The Fed is mandated by Congress to keep prices stable, and people employed… hence the focus on inflation and the labor market when it comes to interest rate policy.

But the problem is that both inflation and employment are lagging indicators… meaning they’re among the last things to worsen when the Fed is deliberately slowing the economy as they’re doing now.

So, in order to stay one step ahead of where things are going, it pays to follow leading indicators of activity.

That’s why I closely follow the Conference Board’s Leading Economic Index (LEI). It’s comprised of 10 underlying metrics and historically leads key turning points in the economy by around seven months.

And here’s where the bad news comes in… LEI is falling sharply.

The drop is surpassing levels that have a perfect track record at predicting recessions. You can see that in the LEI chart below…
https://www.jeffclarktrader.com/market-minute/a-recession-indicator-with-a-perfect-track-record/

 

[robo]

We shall see how his list plays out. I just follow and trade the MA's! However, I do plan on being a tad more patient and disciplined in 2023.

David Rosenberg
@EconguyRosie
·
19h
Last Chance to Access -- The 2023 Outlook: Year of the Rabbit Means Hopping Back to the Bond-Bullion Barbell

My advice for the coming year is to be patient and disciplined.
https://twitter.com/EconguyRosie/status/1617941991941148673/photo/1

 

[robo]

Sell lows, chase highs pain is back

Good luck hedging short gamma
SPX futs basically flat here, but with some major intraday moves. As we pointed out earlier today (here), the market traded into rather deep short gamma at lows today, making dealers longer and longer deltas on the way down. Few of those just watch 60 points lower market and were most probably puking deltas close to lows. These same dealers became shorter and shorter deltas all the way up, and post the 75 points move higher from lows, a lot of forced buying has been executed. All this while we are unchanged on the day...
https://themarketear.com/posts/cbx5Wn5eIN

 

[robo]

XLE daily: Looking to short this sector again. We shall see how this pattern plays out. The pattern indicates the next ST move is down... But as we all know, NO ONE knows for sure. Still, I like the odds for a shorting XLE over chasing it on the long side.

 

[robo]

It sure looks like a breakout..... We shall see how it plays out.... I have NO POSITIONS in this sector.

NASDAQ - working on the break out
Above the negative trend line, above the 12k level, but still below the 200 day moving average. The "tech as the main pain trade" logic continues to work very well and frustration is running high. Let's see how far they "must" chase this.

 

[robo]

VIX/VVIX and the US dollar: Waiting to see how this pattern plays out....

The U.S. dollar index may be bottoming along with VIX.


VVIX may have completed a multi-year bottom on January 5, 2023, while VIX may or may not have ended a downtrend of more than one year when it slid today (January 27, 2023) to 17.97 at 12:15 p.m., thereby marking its lowest point since January 13, 2023.


The U.S. dollar index, representing the value of the greenback versus a basket of currencies, slid to 101.504 at 1:52 a.m. on Thursday, January 26, 2023, thereby marking its lowest point since May 31, 2022.

Kaplan


True Contrarian
@TrueContrarian

Jan 19
I predict we're entering the 2nd year of a 3-year bear market. My post also appears in Seeking Alpha in "Caldron Bubble" at

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

 

[robo]

SPX daily: We shall see how the breakout plays out..... A very nice move back above the 200 day MA. The SPX remains on a buy signal and is trending above the 10,20,50 and 200 day MAs.


Keep a Close Watch on This Bullish Market Bluff

You might have even spotted it yourself. It’s a large, inverse head and shoulders pattern.
https://www.jeffclarktrader.com/market-minute/keep-a-close-watch-on-this-bullish-market-bluff/