Bear Cave 2 (Bull Allowed)

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There should be lots of talk about this move....

Breakout
Posted on November 16, 2020

Stocks breakout to close at a new all time high on Monday.

Stocks printed a bullish reversal on Tuesday at the neckline support. Stocks backtested the neckline support on Thursday then formed a swing low on Friday. Stocks closed above the upper megaphone trend line on Monday. Long positions can be entered here using the September high as the stop. And a close above the day 6 high of 3645.99 would mean that a bubble scenario is back on the table.

https://likesmoneycycletrading.wordpress.com/2020/11/16/breakout/
 
In todays overall economy covering the top six gaps would hurt but is recoverable. The bottom four gaps would put a real hurt on everyone and could take a long time to recover from especially with todays unemployment and economic fragility. With the Corona virus still raging around the world the bottom gaps would be world changing. Just my opinion.
 
Love it or hate it, the market keeps moving higher and the trend remains up. But we will pay a price down the road. For now we can just keep making more money. For those that don't own stocks, they continue to be left behind. The Fed continues to add about 80 billion a month to the party.

Monthly data:

https://stockcharts.com/h-sc/ui?s=$SPX&p=M&st=1998-01-24&id=p17239694341&a=790678474


The result: The most disconnected market in history untethered from the economy and fundamentals.
A market now valued at $37.45 trillion or 177% market cap to GDP.
It is the biggest bubble of our life times entirely dependent on permanent intervention.

https://twitter.com/NorthmanTrader
 

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And just to give you the historical perspective:
The Fed has been managing these markets with printing ever since the GFC and they have never stopped, only paused here and there.
This year they went fully obscene.
It has distorted everything.

https://twitter.com/NorthmanTrader

Look what the M1 did once the Fed started adding fuel to the markets. (Red Line moving up) More money should have went to main street not wall street me thinks.

https://stockcharts.com/h-sc/ui?s=$SPX&p=M&st=1980-01-24&id=p01051151506&a=779469474
 

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Pushing Extremes

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

November 2020


The one reality that you can never change is that a higher-priced asset will produce a lower return than a lower-priced asset. You can’t have your cake and eat it. You can enjoy it now, or you can enjoy it steadily in the distant future, but not both – and the price we pay for having this market go higher and higher is a lower 10-year return from the peak.

– Jeremy Grantham, CNBC, November 12, 2020

In calling the current market the third “Real McCoy” bubble of recent decades, Jeremy Grantham described, in his own words, what I call the Iron Law of Valuation: a security is nothing more than a claim on some set of future cash flows that investors expect to be delivered into their hands over time. The higher the price an investor pays today for some amount of cash in the future, the lower the long-term return the investor can expect on that investment.

https://www.hussmanfunds.com/comment/mc201116/
 
The dumb money continues to make money as the smart money reduces and the insiders continue to sell.

With that said - The trend remains up!


SentimenTrader
@sentimentrader

4h
While bulls are buying stocks like there's no tomorrow...

Smart Money Confidence is at one of the lowest levels ever.

https://twitter.com/sentimentrader
 

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Published: 2020-11-16 at 09:00:00 CST
For the first time in half a year, there is more than a 50% probability that stocks will fall into a bear market in the coming months.

The Bear Market Probability Model climbed to a 50-year high in August 2018, then plunged to a 7-year low by May of this year. This is a model outlined by Goldman Sachs using five inputs covering fundamental, valuation, and price-based metrics.

The model will drop as conditions deteriorate until it reaches a trough during bear markets (usually). It will rise as conditions improve. This seems counter-intuitive, but a rising probability of a bear market tends to be a good thing, until it reaches a very high level.


https://www.sentimentrader.com/blog/what-this-model-is-saying-about-a-new-bear-market/
 
Daily data: Bulls/Bears/Put/Call ratios....

https://stockcharts.com/h-sc/ui?s=!...D&yr=0&mn=11&dy=0&id=p13451865745&a=841426717


Jason Goepfert
Published: 2020-11-17 at 09:00:00 CST

Among the smallest of traders, this is different than August

Even so, the smallest of options traders spent more of their volume on buying call options to open last week, once again among the highest levels since 2000. One modest difference is that they didn't completely abandon the protective allure of put options. They still spent more than 20% of their volume there, quite a bit above recent extremes.

As a result, our ROBO Put/Call Ratio, which stands for Retail-Only-Buy-to-Open, dropped below its extreme threshold again. It's still above the extremes from recent months, but we can see from the chart that the S&P 500's annualized return when the Ratio is below its lower threshold is miserly.

https://www.sentimentrader.com/blog...l&utm_term=0_1c93760246-707dc85fdc-1271291994
 
Definitely some chatter out there about a market crash, but nothing out there indicating such right now. No Hindenburg warnings either.

Next 5-10% move up or down will be virus cases and stimulus talk. Unfortunately, markets are more concerned with how much more than $1T the next stimulus will be worth than anything else.
 
"Next 5-10% move up or down will be virus cases and stimulus talk."

LOL.... or maybe just a tweet Brother! Crazy times indeed.....

I have over 10 warning indicators I use for Risk Management, and several are getting high. However, this has been a year of extremes so who can say. I already reduced my long position by 1/2 and might reduce some more.

Bottom Line: The trend remains up with additional warning signals showing up. Risk Management = reduce position size after a nice run....

https://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=6&dy=0&id=p26530494969&a=837083215

https://stockcharts.com/h-sc/ui?s=!...D&yr=0&mn=11&dy=0&id=p13451865745&a=841426717

Is the VIX about to make a higher low? We shall know soon Brother.....

https://stockcharts.com/h-sc/ui?s=$VIX&p=D&yr=0&mn=6&dy=0&id=p39805389223&a=818444086
 
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Well, the SPY/SPX remains in a breakout in the jaws pattern for now. That is why some Guru's are calling for the bubble phase to continue or a meltup. SPY is trending above the 3 ema, the 10,50,100, and 200 WMAs. Bullish until it's not using my trading system. However, it's not without ABOVE AVERAGE RISK!

Bottom Line: The uptrend continues on the weekly charts.......

Jaws daily:
 

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We shall see, because the dollar is still making higher lows for now..... The majority remains convinced the dollar is moving lower, and sometimes that is not a good thing. So I'm talking about in the ST not the LT.

https://stockcharts.com/h-sc/ui?s=UUP&p=W&yr=1&mn=6&dy=0&id=p44536261984&a=808428298

A Rising Tide…

The dollar has broken convincingly below its multi year trend line and is declining into its 3 year cycle low. And the sinking dollar is lifting all other boats.

https://likesmoneycycletrading.wordpress.com/2020/11/17/a-rising-tide/
 

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The Warning Signs Are Starting To Flash

The Warning Signs Are Starting To Flash
Jeff Clark | Nov 18, 2020 | Market Minute | 3 min read
The bulls are running wild again.

The S&P 500 hit a new high on Monday. The Dow Jones Industrial Average is within spitting distance of 30,000. The tech-heavy Nasdaq is leading the way again. And, we’ve just entered a strong seasonally bullish period for stocks.


On Monday, though, just as the VIX was approaching its lower BB, the NYMO closed above 67. It’s certainly possible this overbought condition might help fuel a stock market pullback in the coming days.

But, there’s no harm in being a little careful here. We’ll likely have a better chance to put fresh money to work in a week, or two.


https://www.jeffclarktrader.com/market-minute/the-warning-signs-are-starting-to-flash/
 

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Fundamentals don't matter until they do. Not sure when that will happen again.


Sven Henrich
@NorthmanTrader
16h
Not that fundamentals matter, but the Baltic Dry Index keeps dropping.
$SPX $BDI

https://twitter.com/NorthmanTrader
 

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