coolhand's Account Talk

[coolhand]

For the week, the bulls were doing okay till Thursday (and our bullish TSP Talk sentiment was looking prescient) and then the bears launched an ambush. How fast things change.




The technical damage remains limited. The pullback still looks at least somewhat normal given volume remains normal. Price on the DWCPF is not far from testing its 50 dma.



Breadth remains bullish, but is under attack.

The good news for the bulls is that NAAIM reversed their bearishness and are now bullish. I need to point out that they are not overly levered in their bullishness, which is why the reading isn't as high as we've seen in the past. You can also look at this reading as a sign that a floor of sorts may be under the market (short term).

Our TSP Talk sentiment is currently showing a neutral reading (final reading is not complete) after last week's over-the-top bullish reading. We'll have to see how Friday's action completes the week. So far, NAAIM bearishness heading into this week did not result in much price damage (Thursday to Thursday). The action was more neutral taken as a whole.

With NAAIM now leaning bullish, I will remain modestly bullish.

 

[mmk119]

While I'm sure they look into the future as they best they can, the survey is weekly. Because they are "active" managers, I would not expect them to get defensive months in advance.

I see and that makes sense also why they would be a good indicator for current trade decisions. Thank you Coolhand!

 

[coolhand]

The bulls took advantage of a bullish Federal Reserve economic forecast and sent price quickly into positive territory and an eventual positive close.




The S&P posted another all-time closing high. The DWCPF continues to lag, but may eventually close the gap. Momentum continues to rise.



Breadth wasn't great, but it was positive. The signal remains bullish.

We get another NAAIM reading tomorrow. I remain modestly bullish.

 

[coolhand]

since they are forward looking; I wonder if the pullback NAAIM is looking for will be June/July timeframe. If memory serves me, that is when many commercial realestate loans will be due. are owners going to be able to pay when renters are not? will banks be forgiving and refy under current conditions? will the bailout fix all this or add another dimension to interest or value of dollar? I think those are the hanging questions that might have major impact around that time. or I could be totally off base - didn't sleep at a holiday inn last night.

While I'm sure they look into the future as they best they can, the survey is weekly. Because they are "active" managers, I would not expect them to get defensive months in advance.

 

[mmk119]

since they are forward looking; I wonder if the pullback NAAIM is looking for will be June/July timeframe. If memory serves me, that is when many commercial realestate loans will be due. are owners going to be able to pay when renters are not? will banks be forgiving and refy under current conditions? will the bailout fix all this or add another dimension to interest or value of dollar? I think those are the hanging questions that might have major impact around that time. or I could be totally off base - didn't sleep at a holiday inn last night.

 

[coolhand]

I said yesterday that the market was due a pullback and we got some measure of one the very next day.




Today's downside action appeared to be a normal pullback (average volume and limited technical impact). Momentum has paused in its short term up trend. Now we'll have to see how long it takes the bulls to push back.



Breadth dipped as would be expected, but like the index charts, it remains bullish.

There isn't much to be read into today's trading session. I am not expecting serious downside action, though I am mindful that NAAIM is looking for some degree of negative action and I doubt today's action was it; at least not by itself. It also remains to be seen which sentiment survey will win the week.

I remain modestly bullish.

 

[coolhand]

So, the bulls picked up where they left off last week with another gain. That's a good sign for those who are following the TSP sentiment survey, which was heavily bulled up for this week while NAAIM got more defensive.




The S&P hit a fresh closing all-time high. The DWCPF is very close to doing the same, but is not quite there yet. Momentum remains on the upswing.



Breadth continued to rise and remains bullish.

After several up-days in a row, we may see a pullback at any time. Even with a pullback (assuming it's minor) the indicators are still pointing up even as NAAIM is leaning bearish. I remain modestly bullish.

 

[coolhand]

Well, the bulls had a great week, last week. The C fund was up more than 2.6% and the S fund soared for almost 6%.




Price on the S&P is sitting at an all-time closing high, though not by much. Price on the DWCPF still has not tested its all-time high from almost a month ago and it was up more than double the S&P. I find that a bit troubling, but maybe it will play catch up with the S&P. Momentum is still rising (of course) and after its previous long move lower (momentum) maybe it has legs on this bounce.



Cumulative breadth rose again on Friday and the chart is looking bullish, though its due for a dip any time now.

We know that NAAIM is now leaning bearish heading into the new week. The TSP Talk sentiment came in very bullish. There were very few bears in the survey. I know I am calling us smart money, but that kind of lopsided reading has the chance to be problematic. We'll have to see how this plays out. The TSP survey won the last time NAAIM was leaning the other way.

I remain modestly bullish, but hardly complacent.

 

[coolhand]

Yesterday, I said that there were promising signs that the market was beginning to gather some bullish momentum (in so many words). I cautioned that resistance was still overhead, but there were indicators that were becoming more favorable to the bulls.




Price rose on both charts today. The S&P 500 closed at an all-time high, but also closed well off its high of the day. Price on the DWCPF also had a good, but is still well off its all-time high. Momentum continues to rise on both charts. Volume is about normal now.



Breadth is looking flat-out bullish once again. It's rising quickly.

All of this is looking pretty good for the bulls, but the smart money (NAAIM) got more defensive and is now leaning bearish. The preliminary TSP Talk Sentiment survey was very bulled, but the official reading has not been released as yet. Both readings are obviously at odds. Recently, I sided with NAAIM when both surveys were opposite another and TSP won.

I have to say that while I normally do not bet against NAAIM, I also know that they don't always get it right (just most of the time). Now, keep in mind that the TSP survey may come in over-the-top bullish and that may be a problem.

So, it's decision time. There are reasons to buy this market right now, but I'd not be complacent about it.

I am going from neutral to modestly bullish.

 

[coolhand]

TSP Talk Sentiment is really bulled up it looks like. 76% bullish so far!

And I don't consider us dumb money either. This should be interesting what happens over the next week.

 

[Happy_Trails]

TSP Talk Sentiment is really bulled up it looks like. 76% bullish so far!

 

[coolhand]

Well, NAAIM is now below 50. Sounds to me like they are getting more bearish. Am I reading that right?

They are on the bearish side now for sure. It looks like a warning to me. They aren't believing this rally.

 

[Cactus]

Well, NAAIM is now below 50. Sounds to me like they are getting more bearish. Am I reading that right?

 

[rangerray]

Choppy is how I would have described today’s action too, but I’d rather see that instead of a late afternoon sell-off.


Sent from my iPhone using TSP Talk Forums

 

[coolhand]

The market gapped higher at the open today and bulls fought to maintain the gains in a choppy trading session.




Overhead resistance remains an obstacle on both charts, but there are some promising signs for the bulls. Momentum has turned up after a lengthy decline. Volume has been slowly diminishing, which also speaks to the lessening of volatility. Price still has to cut through resistance and post fresh gains, but at least there are signs that the market is moving in that direction.



I find it very noteworthy that cumulative breadth hit a fresh all-time high today. Is this a early warning to the bears? We'll see.

NAAIM reports tomorrow. It will be interesting to see if they remain cautious. I remain neutral, but I may not be far off from going bullish. NAAIM may (or may not) convince me when we get the latest reading.

 

[nasa1974]

CH, Another great report. Thanks

 

[coolhand]

The bulls managed to reverse yesterday's loss, but they didn't make any statements.




Price on the DWCPF managed to close above its 50 dma, but not by a lot. It's a bit misleading to look at that chart and then realize that the DWCPF tacked on gains of about 2.5%. That certainly shows us how far from the top it remains. Price on the S&P bounced off its 50 dma (after closing right on it yesterday). The market did fade at the end of the day, but it was more pronounced on the DOW than either the DWCPF or the S&P. Volume has been steadily falling the past few trading days, but still remains a bit above average (imo). Momentum is trying to turn again.



Cumulative breadth, while certainly not off to the races, has been eking out gains, but has yet to break out of its range.

So, the market remains in no-mans land for the moment. The bulls appear to have the advantage (long term trend and price above the 50 dma), but that could change quickly. Volatility is settling out too and that may help the bullish case.

I still can't get bullish, however. I remain neutral.

 

[coolhand]

It looked like the bulls were going to have a good day today as the morning session saw nice gains in volatile action. But as noon approached the gains appeared limited. The DWCPF peaked early, while the S&P had more than one peak. Both indexes succumbed to selling pressure in the afternoon session.




Price closed for a loss on both charts. Interestingly, price closed pretty much on support at the 50 dma. The DWCPF managed to rise above its 50 dma early in the trading session, but was rejected and closed back under that key average, which now appears to be resistance for that index. Volume was elevated. Momentum fell.



Cumulative breadth actually remained elevated, but still in a sideways pattern.

So, it's still a mystery of sorts where this market is headed. The DWCPF is struggling more than the S&P, but not by a lot. Volatility remains elevated along with volume. It's still a neutral picture, which also reflects my sentiment.

 

[coolhand]

Friday's market action saw a big intraday reversal that saw price erase all or most of Thursday's losses. The week ended mixed with the S&P posting a decent gain of 0.85%, but the DWCPF falling for a loss of 2.12%.




The reversal on Friday shows long tails on the both charts, which may mark a low. Price on the S&P closed back over its 50 dma, while the DWCPF fell a bit short and remains under that key average. Volume was elevated, which may be a tell. Momentum stalled and may be ready to reverse. It's too soon to say in this market, however. It is becoming more deceptive of its intention.



Cumulative breadth got back over its 21 day EMA, but I'm calling it neutral rather than bullish.

The latest TSP Talk sentiment survey came in neutral for the 2nd week in a row. That isn't far from the NAAIM reading on Thursday, which I called bearish, but not overly so. Getting overly bearish has for years been a prescription for pain in a market bent on rising the majority of the time.

So, the Friday reversal looks promising for the bulls. I was bearish heading into Friday and the reversal has me wondering if the worst is over. I am certainly not ready to get bullish in this market, so I am moving back to a neutral stance until we see whether Friday's action put in a bottom or not.

 

[coolhand]

The bears broke through support today and price closed well under the 50 dma on both charts.




We can also see that price closed off the lows of the day. That may not mean much in the context of a bearish NAAIM reading. Momentum accelerated to the downside. Volume was up. I was asked if a switch has been flipped. I was not ready to embrace that notion the way I did over a year ago, but yields are now rising and so is inflation. Those can be switches all by themselves.



Cumulative breadth fell again and is in a slow downtrend. It hasn't gotten serious, but if the sellers jam the exits it could fall much quicker.

NAAIM came in bearish today; at least in the short term (a week). They are shorting more than they were so I don't think the downside is over.

I am now bearish along with the smart money. The bulls may mount another run to the upside, but momentum now favors the bears. I suspect the bottom is not in and could be several percentage points further down.