Bear Cave 2 (Bull Allowed)

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SevenSentinels
@SevenSentinels
·
Sep 16
September 8, 2022

We Have Opened Our Latest Weekly Article To Any Who Wish To Understand What The Recent NYMO Low < -101 Is Telling Serious Traders:

The REST of the Story- When NYMO Falls Below -100
September 3, 2022

Our story today may not be “The Godfather.” But it’s one that every serious trader might find at least as compelling.
The story begins with the 1929 stock market crash and the Primary Bear Market that followed:

That pattern over the last century is clear, and to quote Jesse Livermore again:
“What happens today has happened before and will happen again.”

https://sevensentinels.com/the-rest-of-the-story-when-nymo-falls-below-100/

 

[robo]

Bear Market trades: Base hits sounds good to me....

Breaking the PPT intervention
https://blog.smartmoneytrackerpremium.com/

 

[robo]

SPX daily: I still have some concerns too..... Day 4 since the SPX moved below it's 10 dma..... Well, we did get the bounce based on the pattern, but now what? We shall see how the lower BB tag plays out, and if the pattern is still in play as it indicates. The SPX could still move lower. I'm trading the MA's and cycle data, not the pattern. However, the patterns are warning signals just like sentiment data many like to use. The pattern does indicate the odds for another bounce is getting close, and the cycle data supports it. Let us not forget those lower gaps. Will they fill? They could, so one has to be careful here. LOL..... we shall see how it all plays out, and I will be trading SSO again once I like the setup. I will not be making many TSP moves as I wait for all this to play out. The Fed remains with it's foot on the gas pedal for additional rate increases and the market/investors are running for safety. If you are buying CD's or 2 year notes look for 4% rates soon.... That is what many investors are doing. If you are down big in TSP there could be some nice rips as Bear Markets are known for this, but it's impossible to trade using a TSP account with only two moves a month. TSP is great in a Bull Market, but in a Bear Market one needs to be very careful and spend time in the G Fund while you wait for the next Bull to show up. It takes rare extremes before Bear Markets end.

 

[robo]

Undercut In Play – Update

Stocks undercut the day 54 on Friday.

While stocks undercut the day 54 low on Friday, they also formed a bullish reversal. The bullish reversal eases the parameters for forming a swing low. A break above 3880.95 will form a daily swing low. Then a close back above the 10 day MA will have us label day 62 as the DCL. Stocks are still in a daily downtrend. They will remain in their daily downtrend until the can close above the upper daily cycle band.

If day 62 is the DCL, then stocks will be beginning the 2nd daily cycle for the intermediate cycle. I have some concerns once stocks confirm the new daily cycle, which I discuss in the Weekend Report.
https://likesmoneycycletrading.wordpress.com/2022/09/17/undercut-in-play-update/

 

[robo]

SPX monthly:

 

[robo]

SPX monthly: If you look at these historical Bear Market patterns for the SPX, and the 200 month MA's, you get a better idea of just how far above the mean the last Bull market was. If this pattern holds, then we are still a long way to getting back close to any type of normal valuations and the 200 month MA. Now, I don't know how this will play out. It's just not normal to be this stretched above the 200 month MA. It's been six months since the SPX went below its 10 month MA and give me a sell signal. That doesn't mean I'm not short-term trading the rips and dips. Bear Markets have some excellent rips to trade, but one has to remember that those gains will be given back.

Bottom Line: The SPX remains in a downtrend, and the gap between the 10 month and the 200 month MA's still remains very stretched. Well, that is if you track patterns, and I do. So unless it's different this time, and it "COULD BE" - the SPX will continue to move down and correct until it is much closer to the mean.

I continue to trade this like the SPX is in a Bear Market until the data changes. So in my opinion, stay nimble because the SPX remains in a downtrend far above the mean of its 200 month MA.

 

[robo]

Thoughts on expiration
Spotgamma explains some of the expiration dynamics: "...we are now back to a put-weighted expiration, and in these environments we often see lows come on the Monday after OPEX (i.e. 9/19). Recall that markets drove lower into both March & June quarterly expirations. You can see in the chart below a jump after June OPEX – and also gaps in the market tied to July & August expiration. Whats interesting here is that July was a put-weighted expiration (market gap up) & August was call-weighted (market gap down)." They also note that some 20% of total SPX put positions (delta weighted) are expiring..but don't forget FOMC is around the corner...

Placing the buy order at SPX 3021
From the one and only Hartnett, the most accurate of strategists out there... Nothing new really, but a quick reminder from his latest note: "...average peak to trough decline 37.3%, average duration 289 days; history no guide to future but history says bear market ends Oct 19th 2022 (35th anniversary Black Monday) with S&P 500 at 3020 (note Nasdaq already down -29%)"
https://themarketear.com/posts/cMAREryAt0

 

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Looking for a better setup to take a ST long trade. If you just have to be in this market, trade it, don't buy and hold it. I'm going to stay very nimble when placing all of my trades and moves in the months ahead.


Put love is back
The crowd continues doing what they do best: hating puts at local market highs, and loving puts at local market lows. Is this time different?

Finally some fear
We haven't seen this much fear in a while. Getting closer to a bounce?

 

[robo]

SPX daily: Getting closer to filling the gap @ 3800ish as we get deeper into this cycle. The last bottom did undercut the 10 dma a couple of times before it took off. We shall see if we fill the gaps, or maybe make a higher low, or how about a lower low. We will just have to wait and see how this plays out as investors try to better position their accounts. Bear Markets are not easy to trade and cash is KING! Another rough week for investors! Waiting to take a ST SSO trade......

 

[robo]

GOLD/IAU/GLD: I bet lots of stops were hit today! We shall see if gold can close back above the 1675ish area before the close....

 

[robo]

Bear Markets - What do the last 85 years tell us?


Bernstein looks back to European Markets in 1970s (as well as the US back to 1937) to draw key insights about market behaviour relative to the changing macro forces of inflation, yields and growth. We choose the bear market of the 1970s as it is considered representative of the current situation. There were 2 bear market rallies back then, but the final recovery kicked off only after a sustained period of downward trending inflation i.e., when the market had enough confidence in the improving macro environment. The market recovery lagged the peak inflation by 3-4 months in the 1970s. Zooming in on the current situation, the outlook around inflation is still uncertain. While there are some signs of easing (e.g. supply chain pressure, some commodity prices), the energy crisis gives upside risk to the inflation situation in Europe. We have identified 8 bear markets of more than -20% drop in Europe prior to 2022. The average duration (peak to trough) for such bear markets is around 11 months and the average peak to trough drop has been -37.5%. The peak to trough observed from January 5, 2022 has only been -15.9% so far. Learning from the past (1970s), it would be early to call a market recovery yet.
https://themarketear.com/posts/ciq0DnB6bJ

 

[robo]

5% - here we come
TS Lombard's Steven Blitz with his latest take on Fed and inflation:

1. Our adjusted Taylor rule model now suggests that the funds rate should be set between 5% and 6%

2. Put the soft landing case to rest..."There are no soft landings when core inflation is running at an annualized 7% M/M, 6.5% on three-month percent change basis and 6.4% over six months, when the unemployment rate is 3.7%."

3. 100 bps hike next week will give them room for 50bps in Nov and 50 bps in Dec - there are only 2 more Fed meetings after the Sep meeting...and the Nov meeting is 1 week before mid terms...

4. t. It increasingly looks like a 5.0%- 5.5% funds will finally push the economy into recession – if it happens early in 2023

 

[robo]

SILJ/EQX/GDXJ/GDX: A look at the weeklies after today's closing prices. All below their 10 week MA's again. We shall see how this week closes...... It sure looks like they are all close to bottoming. But, as you can see on the chart below this isn't the first time some of them moved above their to week MA's only to get smacked back down. Note that the GDX is a tad different and it's the one I use for MT trading. I will post a closer look in a different chart.

Bottom Line: We be getting closer, but still not MT buy signal for the miners based on the data I use. Having a blast ST trading them, but they are not always winners.

 

[robo]

The Fed will raise its overnight lending rates 0.75% in exactly one week.


Exactly one week from now the Fed will make its late-summer interest-rate announcement. Look for a 0.75% increase in the rates that the Fed charges banks to borrow money overnight as well as the rate that banks charge each other to borrow overnight. The Fed is trying to very tardily compensate for its catastrophic failure to raise these rates near the end of 2020.


The Fed's inexcusable delay enabled some of the most extreme asset bubbles in history to be formed since the start of 2021. The creation of such bubbles induced many to starkly overpay for stocks, houses, used cars, art, and baseball cards near the top, with many of the same people eventually confusedly dumping these at deep discounts within the next few years.

Kaplan


MAMA BEAR (August 9, 2022): Throughout 2021 some analysts compared the U.S. stock market with Goldilocks and her porridge: not too hot, not too cold, but just right. Unfortunately many of them played hooky in kindergarten so they never learned that Goldilocks is always followed by the three bears. This truancy has come home to haunt analysts and investors in 2022 which featured the appearance of Baby Bear throughout the first half of this year.


Far too many analysts have recently rushed to declare that "the bear market is over" but, alas, we haven't seen either Mama or Papa so far. Mama Bear is about to surprise many with her dramatic entrance. Unlike Baby Bear, Mama needs a lot to keep her well fed, so she's going to be around for a year or two. Once she's had her fill, Papa Bear will bring the proceedings to a thunderous grand finale.

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

 

[robo]

SILJ/EQX daily: Both are holding above their 10 dma's: I'm ST trading both right now.... I wait for a weekly buy signal from GDX before taking a MT position.

Long EQX and SILJ.....

One hour to go before the market closes.... Not sure if I will hold these positions overnight yet...

 

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It is a Conundrum if one used only cycle data to trade. The odds keep increasing that we will get a DCL soon, but there are other things to watch right now. Investors are worried, the insiders continue to sell their shares., and the Fed is going to continue to increase rates. My next trade for the SPX will probably be SSO. For now I wait! I will continue to trade extremes and use Bear Market Trading rules.....

SPX daily with 2 hours left in the trading day:

 

[robo]

I would agree!

Conundrum

likesmoneystudies

Sep 13

Stocks dropped over 4% on Tuesday to close below both the 50 day MA and the 10 day MA.

Stocks closed above the declining trend line on Friday to seemingly confirm the new daily cycle. Tuesday's big selloff presents us with a conundrum. Either the daily cycle topped on day 4 or stocks are still seeking out their DCL, possibly stretching the daily cycle past 58 days.

Over the past 8 years there has been precedence for a stretched daily cycle to get past 58 days to 60 even 61 days. However, there has not been one instance where a daily cycle peaked on day 4. And the fact that the 10 day MA did not turn up makes it likely that Tuesday was day 58 of a very stretched daily cycle. Under this scenario, stocks are likely to undercut the day 54 low before printing their DCL. What is clear is that stocks are still in a daily downtrend. They will remain in their daily downtrend until the can close above the upper daily cycle band.

https://likesmoneycycletrading.wordpress.com/2022/09/13/conundrum-2/

 

[robo]

Sentiment: can get much more bearish
In "real" sell-offs this GS indicator can get much lower. But not for very long...

 

[robo]

I have NO IDEA how this will play out, but I have two over 200k CD's I will be renewing soon at much higher rates. They moved the RMD age to 72 now which is good for us. LOL.... I was hoping for 75....

Bottom Line: Investors are trying to figure out what to do!

THE underweight
Some pundits referring to this chart as "contrarian" and that the market can't move lower...Not working today, and last time we were in this territory the market crashed another 35-40%.

https://themarketear.com/posts/cQX7gXeCQh

 

[robo]

SPX takes out 50 and 100 day moving averages
Earlier today, in our thematic email "The bounce has played out. Risk reward from here not attractive" (more here), we suggested not to get greedy and pointed out the most recent marginally bearish factors. Nobody had a clue about the CPI print and the reaction after, but here we are. SPX is crashing below the 50 and 100 day. 3900 is the short term must hold level to watch. CTAs continue selling lows and buying highs, just as the short gamma crowd is doing. This market is frustrating the masses and creating huge p/l pain.