coolhand's Account Talk

[coolhand]

The S&P 500 and DWCPF both had great weeks last week, but the DWCPF far exceeded the gains of the S&P. Friday's action was another mixed bag with the S&P pulling back moderately and the DWCPF posting a modest gain.

We now enter a new week with bullish seasonality and bullish smart money.




Nothing new to talk about with these charts. The S&P is trending higher, but at a slower pace than the DWCPF.



Cumulative breadth remains bullish after a modest pullback on Friday.

TSP Talk sentiment came in very heavily bulled up. We are now more aligned with the NAAIM sentiment and have seasonality in our favor. I'm sure it makes some of you nervous just the same (if you're long).

I remain bullish.

 

[coolhand]

Coolhand, I look forward to your daily posts as the day gets light here in the dark morning of Alaska...what do you do with a quadruple witching day and index balancing if anything? or is it too short of timeframe?Also do you do anything with the Bollinger bands on various indexes and stochastics senn in Ira Epsteins videos that nnut posts? thanks

There are many indicators that I no longer use. I used to use Bollinger Bands, but not anymore. There isn't anything wrong with them, but they are somewhat subjective like many indicators because a stretched market is stretched by many technical measures. As many of us realize, the market doesn't always conform to our expectations. Remember that I warned a few weeks ago about the DWCPF being overbought, but not to get bearish on this because it wasn't a particularly visible index and the S&P (a very visible index) was well away from being overbought itself. So I used observations from outside the DWCPF to make a judgement call on how to handle that index's (DWCPF) overbought RSI. We now see that this index has been overbought for just about a month.

Quadruple witching days simply mean that volatility is possible. Or a big move in either direction is possible. It's not a normal trading day. For us in TSP, it's not something we can generally use in any meaningful way unless there are other indicators supporting a given scenario.

I know I am always mentioning NAAIM, but we need to stop and think what smart money really means. It means a number of things; not just smart traders. When you follow a group like NAAIM we need to recognize that their collective positioning is based on many different kinds of technical analysis as well as inside information. These are proven performers or they wouldn't be in their money management positions. I don't think many less experienced (or even more experienced) traders realize how much of an advantage you can have by giving a group like NAAIM more than just token respect. I learned about this group from a Wall Street Pro who understood this very thing. Let the smart money do some of the heavy technical lifting.

 

[shitepoke]

Coolhand, I look forward to your daily posts as the day gets light here in the dark morning of Alaska...what do you do with a quadruple witching day and index balancing if anything? or is it too short of timeframe?Also do you do anything with the Bollinger bands on various indexes and stochastics senn in Ira Epsteins videos that nnut posts? thanks

 

[flalaw97]

I think you recently said the next step after sillier is insane. I think we are there but it may take a little while for them to roundup the crazies and restore order to the asylum, so I am going to run around crazy with them until that happens. Good luck to all.

Aside from being extended, these charts are bullish. I said more than a month ago that this market had a good chance of getting silly to the upside. Was I wrong?

NAAIM is not my only indicator. It's just one that I trust more than most. And they are bulled up again.

I remain bullish.

 

[coolhand]

What other overbought indicators do most investors use that’s effective? I am still learning, thank you.

I'm not sure I fully understand what you are asking. Overbought is a condition that can be determined in many ways. Bollinger Bands are good. RSI (relative strength indicator), which I use on my charts is also popular. There are others. If you haven't been to stockcharts yet, here is a link to their education area.

https://school.stockcharts.com/doku.php

You can explore many topics related to technical analysis here. It can be overwhelming. The reality is that you don't need a ton of indicators. Many pros use only a handful, but analysis often goes beyond the technical indicators themselves. It also helps to get familiar with sentiment. I also read the Creature From Jekyll Island, which explains how the central banking system really operates. That book is not light reading and it isn't pleasant (after you get about halfway into it). What it does do, is give you perspective that can't be learned in most education programs. There's "how we are told things work", and then there's "how things really work." That's what this book helps the reader understand.

 

[joblin20]

Isn't it interesting that a market that supposedly has zero sideline money keeps finding a way to power higher? And that the smart money has been aligned with this? NAAIM is not a contrarian indicator. I've said this several times. No, like all indicators it isn't perfect, but the last time I checked on Ebay there were no crystal balls for sale (functional). NAAIM tends to be right much more often than not. Especially on timelines longer than a week.

Also, the central bank is not limited to the amount of fiat creation ever since Nixon took the dollar off the gold standard. That means very few of us around today have participated in a market that was at least somewhat sound up until that time. That change was enacted in August 1971. FDR also took us off the standard for a time back in June of 1933. A bank that can print to infinity does not run out of money unless they desire such.

I was asked yesterday if the S&P would make a new high by next week and I said that it was highly likely if NAAIM remained bullish that it would do so perhaps even sooner. And just 24 hours later we have a new high on that index.

View attachment 48005
View attachment 48004

Aside from being extended, these charts are bullish. I said more than a month ago that this market had a good chance of getting silly to the upside. Was I wrong?

View attachment 48006

Here's another silly chart getting even sillier.

NAAIM is not my only indicator. It's just one that I trust more than most. And they are bulled up again.

I remain bullish.

What other overbought indicators do most investors use that’s effective? I am still learning, thank you.

 

[Lbear34]

Isn't it interesting that a market that supposedly has zero sideline money keeps finding a way to power higher? And that the smart money has been aligned with this? NAAIM is not a contrarian indicator. I've said this several times. No, like all indicators it isn't perfect, but the last time I checked on Ebay there were no crystal balls for sale (functional). NAAIM tends to be right much more often than not. Especially on timelines longer than a week.

Also, the central bank is not limited to the amount of fiat creation ever since Nixon took the dollar off the gold standard. That means very few of us around today have participated in a market that was at least somewhat sound up until that time. That change was enacted in August 1971. FDR also took us off the standard for a time back in June of 1933. A bank that can print to infinity does not run out of money unless they desire such.

I was asked yesterday if the S&P would make a new high by next week and I said that it was highly likely if NAAIM remained bullish that it would do so perhaps even sooner. And just 24 hours later we have a new high on that index.

View attachment 48005
View attachment 48004

Aside from being extended, these charts are bullish. I said more than a month ago that this market had a good chance of getting silly to the upside. Was I wrong?

View attachment 48006

Here's another silly chart getting even sillier.

NAAIM is not my only indicator. It's just one that I trust more than most. And they are bulled up again.

I remain bullish.

Appreciate your daily posts very much coolhand! Thank you! Happy holidays!

Sent from my SM-G955U using Tapatalk

 

[coolhand]

Isn't it interesting that a market that supposedly has zero sideline money keeps finding a way to power higher? And that the smart money has been aligned with this? NAAIM is not a contrarian indicator. I've said this several times. No, like all indicators it isn't perfect, but the last time I checked on Ebay there were no crystal balls for sale (functional). NAAIM tends to be right much more often than not. Especially on timelines longer than a week.

Also, the central bank is not limited to the amount of fiat creation ever since Nixon took the dollar off the gold standard. That means very few of us around today have participated in a market that was at least somewhat sound up until that time. That change was enacted in August 1971. FDR also took us off the standard for a time back in June of 1933. A bank that can print to infinity does not run out of money unless they desire such.

I was asked yesterday if the S&P would make a new high by next week and I said that it was highly likely if NAAIM remained bullish that it would do so perhaps even sooner. And just 24 hours later we have a new high on that index.




Aside from being extended, these charts are bullish. I said more than a month ago that this market had a good chance of getting silly to the upside. Was I wrong?



Here's another silly chart getting even sillier.

NAAIM is not my only indicator. It's just one that I trust more than most. And they are bulled up again.

I remain bullish.

 

[Bullitt]

And the NAAIM came in bullish again so they are seeing the same things, I think.

NAAIM was below 25 for five weeks in March - April and turned out to be the buying opportunity everyone missed.

It's been over 100 for the past five weeks which means there is zero money on the sidelines to cushion the next inevitable drop.

 

[joblin20]

And the NAAIM came in bullish again so they are seeing the same things, I think.

Seeing levels this high is very concerning. Talk about the rubber band stretching to historical limits.

 

[flalaw97]

And the NAAIM came in bullish again so they are seeing the same things, I think.

 

[coolhand]

With respect to my last post, I should also add that this is another reason I prefer to follow NAAIM, because they appear to understand this landscape fairly well.

 

[coolhand]

We are witnessing a global financial shift, the likes of which has not been seen before. I am wary of using too many indicators that are based on historical "norms". I know how to use many of them, but I've seen too many "back-tested" systems fail over the past few years to remain comfortable with them. That is a general comment and not directed to any system in particular. However, the Seven Sentinels system that I posted on for quite some time in the past are one of those systems that worked very well in its day, but then became more of a liability later on. I've learned from Wall Street pros, many of whom did not recognize how much HFT and algorithms were steadily reshaping the markets. The market is more than 70% computerized now. Much of it is now controlled by AI. It's a shifting landscape over time.

There are geopolitical reasons for what we are seeing too, but I can't go into that because it will ruffle feathers.

 

[joblin20]

Watch the Bollinger band on a DAILY basis for CLOSING; retrospectively before the rug was pulled out we broke above the Bollinger band on a daily basis a selloff occurred soon thereafter it is the canary in the coal mine. Actually, if you look back before the COVID selloff, we closed above it. Most recently, look back at September 02 and October 12, 2020 you will see where it broke above and closed above the Bollinger Band on those dates and you can see the subsequent selloff. Does it work every time, no, but it is a strong indicator to watch for to protect capital.

Very good insight, thank you.

 

[grimmjsg123]

Watch the Bollinger band on a DAILY basis for CLOSING; retrospectively before the rug was pulled out we broke above the Bollinger band on a daily basis a selloff occurred soon thereafter it is the canary in the coal mine. Actually, if you look back before the COVID selloff, we closed above it. Most recently, look back at September 02 and October 12, 2020 you will see where it broke above and closed above the Bollinger Band on those dates and you can see the subsequent selloff. Does it work every time, no, but it is a strong indicator to watch for to protect capital.

 

[joblin20]

I agree and with the addition of Tesla we are poised for a breakout, we are embedded on a weekly basis in spy, we are embedding on the daily basis; all signals go for a breakout.

Next question would be when they pull the rug on this. Start of 2021 maybe

 

[grimmjsg123]

I agree and with the addition of Tesla we are poised for a breakout, we are embedded on a weekly basis in spy, we are embedding on the daily basis; all signals go for a breakout.

 

[coolhand]

Will sp500 make break out by next week? Rhetorical question.

It's poised to break out to the upside once again. Given that the DWCPF keeps hitting fresh all-time highs, I strongly suspect that the S&P 500 will continue to follow. Let's see where NAAIM stands tomorrow. If they remain bulled up, we are likely to see the S&P hit a fresh high by next week or sooner.

 

[joblin20]

Will sp500 make break out by next week? Rhetorical question.

 

[coolhand]

Another mixed close, but price didn't move far from the neutral line on either the S&P or the DWCPF.




No change to the charts. They remain bullish, though the S&P needs to push past its high from last week.



Cumulative breadth dipped modestly, but remains bullish.

Not much else to add this evening. NAAIM reports tomorrow.

I remain bullish.