coolhand's Account Talk

[coolhand]

Has that proverbial 'switch' been flipped?

In February of last year, the selling was more intense. Volume has not been all that robust so far and the bulls have countered much of the selling, but they appear to be losing ground. Right now, the bears appear to have some measure of an advantage, but will the bulls reverse today's selling? There seems to be an attempt right now to bottom the market, but for how long and how much? I can't say a switch has been flipped. However, the NAAIM reading would certainly appear to support more downside pressure in the days ahead. Maybe the switch gets flipped then? Maybe.

I am now short term bearish (from neutral).

 

[Whipsaw]

Has that proverbial 'switch' been flipped?

 

[coolhand]

NAAIM is now bearish in the short term. Neutral beyond the next few days unless something changes. I say this because they aren't heavily beared up. But they did get defensive now for the 2nd week in a row. They are now putting on short positions.

 

[coolhand]

The bears made it 2 in a row on Wednesday as price fell back once again.




Support at the 50 dma continues to hold. This is more or less the 3 test of support in this area. Momentum is falling. Volume was on the average side.



Cumulative breadth, while negative today, wasn't overly negative. The signal did not move lower by much, which is interesting. It's a neutral signal at this point. The 21 EMA is now flat.

Which way will price eventually break? Well, you should generally go with the trend, which means the break is likely to be up.

NAAIM reports tomorrow. I remain neutral.

 

[coolhand]

The back and forth action (and volatility) continued today. Price diving into the close certainly doesn't make me bullish for Wednesday.




Not much to say about the charts. Price is in a range now between rising support and overhead resistance. I tend to think the action favors the bulls beyond the short term; mainly because it is a bull market and the bears have not been able to do more than moderate short-term damage.



It's much the same with breadth. It's technically bullish, but moving sideways.

The late day swoon into the close has me thinking we may see another test of the 50 dma soon, though not necessarily. The selling has been more persistent than we've seen in some time, but the bulls have countered much of it to a relative standstill. I'm guessing we will see more of the same tomorrow. I remain neutral.

 

[coolhand]

And just like that price is back to resistance, so the volatility remains.




Momentum may be starting to turn. Price certainly bounced hard, but volume was only so-so.



Cumulative breadth bounced back into positive territory. While it may be technically bullish again, it is still in a sideways pattern, so like the stock indexes, it has yet to break out again.

So, we still do not have confirmation of where this market wants to go in the short term. It is still a bull market and the pattern has been fresh highs sooner or later, so maybe that pattern will continue. In the meantime, I remain neutral.

 

[James48843]

I think it's entirely possible that the market takes off again, but I can't be absolutely sure of it. At least not just yet. I've been watching for "it's different this time", which of course is why I watch the smart money. If price soars to fresh highs we could see another crazy run to the upside.

What propelled November and December was the anticipation, and then the fruition, of the last Covid relief bill passing in December.

What will propel this March climb will be the same- IF the Covid relief bill that passed the House is adopted in the Senate, then we should have a remarkable March and into April.

But if it stalls out, the goose that laid the Golden egg could end up being a cooked goose instead.

Let us hope Congress is able to reach a deal.


Sent from my iPhone using TSP Talk Forums

 

[coolhand]

View attachment 48541 View attachment 48542

How much does the February 2021 chart look like October 2020 chart? Hoping we have the same kind of rebound as we did in November of 2020

I think it's entirely possible that the market takes off again, but I can't be absolutely sure of it. At least not just yet. I've been watching for "it's different this time", which of course is why I watch the smart money. If price soars to fresh highs we could see another crazy run to the upside.

 

[flalaw97]

How much does the February 2021 chart look like October 2020 chart? Hoping we have the same kind of rebound as we did in November of 2020

 

[coolhand]

Before I get into my usual post, I want to address something I said last week because I find it interesting and perhaps even instructive. When the TSP Talk survey was released last week, I said the following:

"The TSP Talk sentiment survey came in bearish this week. That's diametrically opposed to NAAIM. We don't do that often. In fact, as I've stated in past posts, I don't treat our sentiment survey as dumb money. Not when we are collectively aligned to the NAAIM reading as often as we are. But I trust NAAIM more than TSP Talk sentiment reading. Prove me wrong."

Well now, given how the bears trampled the bulls last week, I have to say that it appears I was proven wrong on who I should trust more. Or at least give equal weight.

I did say I consider us smart money as far as the survey goes, but as infrequently as we are misaligned with NAAIM, my default is NAAIM, which is why I remained bullish for the week. It's still a judgement call when you are looking at signals that are not in alignment, but in the future I would give more credence to where we stand collectively on TSP Talk.

Now back to your regularly scheduled program.

The market gave us what for all the world looked like a pretty good set-up for fresh highs after back-to-back rallies on Tuesday and Wednesday. But then Thursday we got selling in spades and that called into question where this market was really headed. Friday's action was mixed and still a bit volatile. The week saw both the C and S funds shed 2.41% on C and 4.39% on the S fund.




That puts price back at or near the 50 dma on both charts. Support held (so far). So, we now have a 2nd test. Will it hold? I don't know. Momentum is falling hard. The DWCPF did bounce off its 50 dma, but I can't hang my hat on a bottom with it. More or less the same for the C fund, but price is sitting right on support on that index.



Cumulative breadth has now gone bearish, but we've seen this before too, so we can't assume the market is ready to roll over.

This week's TSP Talk survey is pretty neutral. Although NAAIM was bullish with their reading on Thursday (cautiously so), the action that day may have changed that reading. I warned that the fact the bullishness fell as much as it did, even if they weren't embracing the bearish case, was a potential warning.

So, all things considered above I am moving from bullish to neutral. The bears haven't proven anything yet (other than they haven't gone away) and we're still in a bull market. But I would not be surprised if this market goes in either direction next week (or both). The volatility may continue. There are games being played (gamestop, etc.), brokerage outages, banking glitches, etc. happening, which gives me pause as well. Both NAAIM and TSP Talk are either neutral or at least showing respect for potential downside. I don't think this is quite the same market right now and I think I have company with that line of thinking.

 

[Tsunami]

What would that imply with the brokerages I wonder? Sorry still learning.

Since the emergence of Robinhood and all brokerages going to zero commission trading there has been a massive increase in new accounts and people trading like crazy.
It's overwhelming the brokerages and has resulted in lots of problems with most of them. From what I've read Interactive Brokers and TD Ameritrade have had the fewest problems.
If we ever get an all-out crash type of market like we had a year ago it will be more of a problem this time since there are so many new accounts compared to a year ago.

 

[joblin20]

What would that imply with the brokerages I wonder? Sorry still learning.

 

[coolhand]

I am not liking this reversal much. There have been outages among the brokerages too. Coincidence?

I'm going to be away from my computer till the weekend, so no update this evening. Watch the 50 dma. If it fails the market may be in trouble.

 

[coolhand]

NAAIM came in less bullish this week, but they are still bullish. Still, the shift is not insignificant. I note that they are not shorting much, so it appears they are tempering levered long positions. The volatility and its underlying causes are likely factors in the reduction of long exposure.

I would say we want to be vigilant about being long right now. In other words, don't get complacent if you're heavy on stocks. There are reasons for this market to head south if the powers that be want it to. Yes, the market may still hit fresh highs, but whether it does or doesn't we want to be ready to take cover. Consider how much risk you are willing to take.

 

[coolhand]

After today's upside follow through of Tuesday big reversal (bottom), the odds just went up that fresh highs may be coming in the days ahead.




Both charts show price poised to challenge previous all-time highs. Momentum looks like it may be getting ready to turn back up. Strength has certainly turned higher and volume was on the robust side. It sure looks like a bottom is in. Now price has to test overhead resistance.



Cumulative breadth turned back and is looking more bullish after its sideways dance.

I think the bulls have retaken control. We'll get a fresh NAAIM reading tomorrow.

I remain bullish.

 

[coolhand]

The bears got an early jump on the bulls again today, taking price lower at the open, but the bulls didn't wait long to bottom out the selling pressure and slowly push price higher.




By the end of the day, the S&P 500 had erased all losses (on the day) and actually closed modestly positive. The DWCPF came close to doing the same thing, but closed moderately lower. Both indexes show price coming near the 50 dma before reversing. It looks like a bottom may be in given the action, but we could see a second test of that key average. We'll have to see. Momentum is still falling. Volume has been rising of late, but it's still not significantly elevated.



Breadth, while not rising, isn't falling apart either. The signal is still technically bullish given it remains above the 2 tracking EMAs, but we can also look at it as neutral overall over the past couple of weeks or so.

We'll have to see if a bottom is indeed in or not. If price heads back to the 50 dma area then we may be in for another test. A failure in the short term may be a head fake for the bears. But if the selling doesn't stop after the initial failure, we may have something else going on. It could take several days before we know, but it could happen sooner too.

I remain bullish, but wary.

 

[coolhand]

The bears hit the gates running today, but the bulls countered with buying pressure by late morning into early afternoon. It was not enough. Buying pressure peaked in mid-afternoon and price fell all the way into the close.




The selling is still out of the ordinary. The charts are showing a short term (to this point) dip after a multi-day rally starting at the beginning of the month. The 50 dma is still below and may be a target for a turn. Volume was a bit more elevated from previous days.



Cumulative breadth barely dipped and is moving sideways.

So the market is continuing to consolidate gains after the recent run-up in price. The selling may not be over and we'll have to keep an eye on the 50 dma should price fall that far.

I remain bullish overall.

 

[mmk119]

hopefully a buying opportunity today and i'm not jinxing things. was already 15%I and 50 S. moved my remaining from G to C.

 

[coolhand]

The bears won the weekly price war last week. The S&P and DWCPF both closed for losses on the week (less than 1% on the C and S funds). That's not bad at all and actually bolsters the possibility that this is yet another buying opportunity (DWCPF bounced on Friday). It also doesn't hurt that NAAIM remains bulled up.




With the recent weakness the charts don't look any different than what we saw with previous dips. Volume is normal. There doesn't appear to be any serious moves toward the exits right now. That's today. Tomorrow or next week could change the picture, or not.



Cumulative breadth bounced on Friday and remains bullish.

The TSP Talk sentiment survey came in bearish this week. That's diametrically opposed to NAAIM. We don't do that often. In fact, as I've stated in past posts, I don't treat our sentiment survey as dumb money. Not when we are collectively aligned to the NAAIM reading as often as we are. But I trust NAAIM more than TSP Talk sentiment reading. Prove me wrong.

Of course, NAAIM remains heavily bulled up for the new week.

How can I get bearish on these readings? I can't. Although I understand the angst about a market that seems to be move in just one direction. Eventually, it will be different this time. Is it this time? Maybe. But I have to go with the balance of evidence and that means I remain bullish.

 

[coolhand]

Profit taking continued today. It really isn't a surprise given how much the indexes had risen over the past 2 weeks or so. Of course, the question is whether it's just another buying opportunity or is it different this time. Last year at this time it was different. But unlike last year, I haven't sensed any switches being flipped (as yet).




The charts show us dips along the way as price has steadily climbed. So now we have another dip forming. Volume has been average, so that's not a flag. Momentum has turned down. The selling may not be over; especially if the 50 dma is a target for this bout of weakness.



Breadth took an ugly turn lower today. It's still technically bullish, but it's in danger of getting flipped negative if price keeps falling.

The big news is that NAAIM did not change much from last week. They are still pretty bulled up. That usually bodes well for the bulls, but last year at this time they were bulled up when we got that big decline, so we want to pay close attention to the action given how high this market has risen.

I remain bullish for now.