coolhand's Account Talk

[coolhand]

In my last post, I said that Monday may see some upside given the bullish OEX P/C. We got the upside, but it was anything but inspiring if you're a bull. I still think the lows may get retested too.



The S&P 500 traded in a tight range on Monday, just barely eking past the upper triangle line. That puts the index at an all-time high, but only by a bit. Any move lower to retest lows may not see much downside on this index, but the DWCPF is another story.



The DWCPF is made up of small and mid-cap stocks, which tend to get hit harder in a sell-off. So far, price has been able to close above its rising 50 dma, but that could be a bear flag that will break to the downside. Momentum is trying to turn up, but I'm not so sure it will get there without move lower again first.

The OEX P/C is now neutral. My intermediate term system remains positive, but only by a bit. Breadth is still positive, but tracking sideways. I am not particularly bearish, but I suspect we will turn down one more time before bottoming or retesting and making another run to the upside. It could take a few days.

 

[coolhand]

The market covered some ground above and below the neutral line on Tuesday.



The S&P 500 broke to the upside out of the triangle, but it could hold on and eventually sold back down for a modest loss. Momentum is negative, but not overly so.



The DWCPF was also running to the upside earlier in the trading session before succumbing to selling pressure that took it back down to close for a moderate loss, but price remains above the rising 50 dma (though it did get tested). Momentum is still biased lower.

The options are looking neutral to my eye this evening as we head into Wednesday. Cumulative breadth is deteriorating, but is still positive.

The intra-day reversal to the downside is not bullish, but this may be the retest I was looking for. Or not. But it's still the bears that have the most to fear in this market even if the short-term outlook is neutral. The indexes could turn quickly and leave many on the sidelines once more. I am expecting that upside move, but I am not so sure it's imminent. Breadth may need to get negative and the technical indicators stretched more than they are. I remain neutral, but I'm looking for an entry to get long into the S fund again. That will likely be the bigger move even if the market has more work to do on the downside first.

 

[coolhand]

Yesterday, I said that the indicators may have to get stretched to the downside and breadth flip negative before the next rally begins and both happened today. Was it enough to turn this market?



The S&P 500 still doesn't look like a chart on the brink, does it? It really isn't. But these are stocks that are considered safe harbors.



This harbor is not particularly safe. Diversified yes, but still not safe in the event of a big move lower. Price plunged below the 50 dma on Wednesday and closed well below the previous close. It's not a bullish picture. Momentum is falling off a cliff. But we still don't have a lower low in the major troughs. The early July low may yet get tested.

Certainly, the indicators are looking more bearish. Sentiment has not been a big help to me outside of NAAIM for some time now. They've been bullish, but what will tomorrow's read be? The OEX and CBOE P/C are both bearish for Thursday. That seems neutral, but I'd not bet against it being bearish. We may get some downside follow through. I am wondering if the NK situation is a contributing factor. It might be.

I am still on the sidelines in the G fund. This market can turn quick and maybe even soon as the technicals falter, but I am not as sure of the outcome under the circumstances as I've been in the past. Let's see how NAAIM is positioned tomorrow and whether anything else changes. I'm looking for a possible low tomorrow, but I won't play for it. I'm just not feeling very frisky.

 

[coolhand]

I am having some very strange computer issues today. I had a post completely finished and my computer froze when I tried to post it. Other odd things are happening too. It actually hasn't started today, but it seems to be getting worse and it's on more than one of my computers. Anyone noticing any deterioration in computer/internet functionality? I know there's cyber attacks everywhere now.



Price on the S&P 500 fell off a cliff today, testing and closing below the 50 dma (that was quick). Momentum has spiked lower. This could be a bottom.



The DWCPF is looking worse as price accelerates away from its 50 dma toward the 200 dma. RSI is near an oversold condition now.

NAAIM came in a bit less bullish this week, but still bullish. That's a plus for the bulls. But breadth and liquidity are falling hard and fast. In past months, the market has typically rallied under these conditions.

I said that if today was down I was not going to jump into the market. The difference between now and the other times is we seem to have a serious problem with NK and I'm pretty sure it's something the market is reacting to. Geopolitical tensions are high in many countries. Risk is rising because of the unpredictability of the situation. We have been conditioned over a long period of time to buy the market when things look bad and while that's true most of the time, I'm having trouble accepting this risk now.

We are due a bounce in any event. But if we get it, will it be sold? The bull is aged and the it can't last forever. Sentiment is not overly bearish either, but that has not mattered for a long time (generally speaking). Is it different this time?

I don't have a crystal ball, though most of the time I have some sense of what to expect. Admittedly, it's the political backdrop that is keeping me sidelined now, a bullish NAAIM notwithstanding. The OEX is still on the bearish side too. I'm going to sit tight for now, but I'm watching intently.

 

[coolhand]

As you know, I said that "technically" this market was at a point that typically sees a reversal; at least that's how it's been for quite some time now. I also said that it was the geopolitical backdrop that was making me hesitate. And now, it isn't just NK, but Venezuela that is also drawing attention. There are political undercurrents that are not receiving a great deal of attention that help temper the otherwise unsettling nature of these issues, but outcomes are still uncertain on some level. I do not intend to get into much detail here as I prefer not to engage in political commentary, but my concern for capital preservation under the circumstances was not unfounded as this link will show:

https://www.infowars.com/nuclear-nerves-wipe-1-trillion-off-world-stocks/

I said that I was watching things intently and I am. Friday's action was encouraging to my eye and while I did not make a move in TSP yet, I did buy some TNA. Let's see where things stand now.



The S&P 500 did manage a small gain on Friday, but I'd not call it a turn just yet. The fact that the selling has stopped for the moment is a plus for the bulls, but of course there's a chance a bear flag could form.



The DWCPF was more encouraging as price fell lower and rallied back for a gain. Momentum has not stopped falling, however, but RSI did tick higher.

These are signs that a bottom may be near or in for the time being, but not necessarily beyond a few days. A relief rally is very possible at this point.

Cumulative breadth is still in negative territory, but it stopped falling on Friday. Liquidity bounced. NAAIM is bullish. The options dumb money is still pretty bearish, which is bullish. The OEX P/C is neutral.

Taken as a whole, this market should be ready to rally very soon; perhaps as soon as Monday and that rally could go for a few days. That's my expectation and is why I took a position in TNA, though most other bull indexes should do well too, but the small caps tend to see bigger bounces from oversold conditions.

There are signs that the NK situation is being defused through back-channels and if that kind of news comes out this market could see some silly upside action. That's not a prediction, but it's a very real possibility. Remember, NAAIM is still bullish and these guys tend to know more than the rest of the market.

I may jump from G fund to the S fund on Monday.

 

[JamesE]

Much appreciated sir! My thinking is along very same lines. Let's see what Monday brings, I expect upside.

Best to you

 

[coolhand]

Right on cue, the market rallied once the indicators were looking overly bearish. NAAIM being bullish and the CBOE P/C being bullish didn't hurt. TSP Talk was bullish too.



It does not take much analysis to see the bullish nature of Monday's launch. Price is back above the 50 dma and momentum turned up.



The DWCPF rallied as well.

This turn back up should be good for another day or 2, maybe a bit more, but I am not complacent about another possible turn down after the upside corrective action is complete. That could mean a retest of the lows in the days ahead, but I don't want to get ahead of myself. It's the potential for volatile action that could be an issue.

I did not bail the G fund, but I really didn't have time and wasn't convinced before 1200 on Friday that I wanted to jump back into the S fund. That came later in the afternoon. When Monday rallied hard, I stood pat. However, I told you on Friday that I bought TNA and I bought it in 2 lots as I became more sure of the upside risk that was mounting. I turned 59.5 in June and rolled over the TSP into my brokerage account. Let me tell you, I make much more money there than I did in TSP. As many of you would agree, I was really not happy with 2 IFTs a month and a 1200 deadline to boot. That really limits our decision making ability. Getting out of TSP (I still make contributions) was a no-brain er for me.

So, the market should see some upside follow through. The CBOE P/C flipped bullish (bearish). The OEX P/C is showing no change, so I am questioning the validity of the chart right now. It shows a neutral reading, but that reading may not be accurate. Breadth has turned up, but not confirmed. I suspect it will confirm very soon.

Enjoy the upside for now, but don't get complacent. I'm going to be looking to take profits in another day or two. Not just to preserve gains, but to give my account time to settle before the next big turn (assuming it's sooner than normal).

 

[coolhand]

The past couple of days I've said that a rally was likely upon us and I thought it may last a few days or so before a retest of the lows. Tuesday's action has me now tempering my short-term outlook. In my previous post I said that I was not complacent about this market even as I was bullish short-term, but then I said I was concerned about the potential for some volatile action. While the S&P 500 hung around the neutral line for much of Tuesday, the DWCPF did not. I am now thinking we may have more short-term weakness on tap for Wednesday. Here's what I see:



The S&P 500 looks okay. Price did little retracing of Monday's gains.



The DWCPF took moderate losses and retraced a good portion of those Monday gains. Momentum has yet to turn decisively higher.

Tuesday's action turned breadth and liquidity back down, with breadth remaining in a negative condition. That's not bullish; though it may be temporary. The options are neutral for Wednesday.

I was really anticipating some upside follow through on Tuesday, though not necessarily a lot. Small and mid-caps got smacked as large caps held the line. We should turn back up soon, but that retest of the lows may come sooner than I thought (if we get it that is). I note that TRINQ closed very low on Tuesday and that's bearish. In any event, my concern about volatility is valid and this market is likely going to challenge bulls and bears alike.

I sold about 85% of my TNA position at the close on Monday, but bought another small position in TNA on Tuesday's pullback in the Russell 2000. I've reduced risk dramatically and will sell the rest of my TNA shares on solid strength before reassessing where this market may be headed. That could take 2 or 3 days at this point, but my very short-term outlook is always subject to change.

 

[coolhand]

I was looking for more weakness today, but the market held together pretty well overall.



The S&P 500 tried to climb, but could not get all that much traction, though still closing for a small gain.



The DWCPF also closed off its highs of the day for a small gain.

Not much changed. Breadth ticked higher, but is still looking shaky. The OEX P/C is a bit bearish for Thursday.

I can see this market going either way right now, so my sentiment is neutral. I would still say the bulls have the advantage, but I'd not be complacent about it. NAAIM reports tomorrow.

 

[coolhand]

Well, I didn't see that one coming, though I've had some uneasiness about this market since Tuesday. I'm not the only one who missed either. The fact is, there are a lot of undercurrents in the market right now and the political backdrop is likely the cause. That makes it harder to read the tea leaves. In hind sight, it was a good thing I dumped TNA on Monday for a 1-day gain, but jumped back in on a dip on Tuesday (much smaller position) thinking there would be more upside as the week unfolded, but there really wasn't much and Thursday's pounding not only retested the previous low, but decisively closed below it with price ending the trading session at the lows of the day. That does not bode well for bulls, but we'll see what happens on Friday, which is OPEX (which makes things more unpredictable).



Here's the S&P 500 in all of its ugliness as price fell through the 50 dma to make a lower low.



The DWCPF looks much the same and momentum is looking particularly troublesome here. But the 200 dma is not far off and maybe that provides support if we get more selling?

The OEX P/C is neutral heading into Friday, the CBOE P/C is bearish (bullish). NAAIM remained bullish today (really?). Seriously, they are not shorting this market. That's still bullish, but how long can this last? Can I still trust it? TRIN closed at a very low level today, which is bullish for the NYSE on Friday.

We are oversold in the short-term and due a bounce, but with Friday being OPEX, it's not an easy call. I don't think they'll let this market fall apart, but I would not bet heavily on it. My concern is that the political winds are starting to negatively affect this market and that makes the long side more risky in my opinion. Too much uncertainty and the market does not like that.

I am going to be reviewing some other sources later this evening to see if there's something I'm missing, but I am remaining neutral heading into Friday, though that may change if I learn anything new this evening.

 

[coolhand]

Upon further review, I am going to lean a bit bullish for Friday, but there is a chance that the bottom may not be in, though if not it should be close. The indicators support some upside.

 

[DreamboatAnnie]

That's encouraging! :smile: I'll keep my fingers crossed. Anything in particular that looks good?

 

[evilanne]

Re: Your comment about CBOE P/C, what exactly is "bearish (bullish)"?

 

[coolhand]

Re: Your comment about CBOE P/C, what exactly is "bearish (bullish)"?

The CBOE P/C is the options dumb money. When they are bearish, it should be viewed as bullish and vice versa.

 

[evilanne]

Thank you for the explanation :smile:

 

[kb9nvh]

So, I am inclined to sell today...that's the dumb money.. so I'm holding..

Sent from my SAMSUNG-SM-N910A using Tapatalk

 

[coolhand]

So, I am inclined to sell today...that's the dumb money.. so I'm holding..

Sent from my SAMSUNG-SM-N910A using Tapatalk

The problem is that no one indicator can predict market direction consistently. We are oversold, however, and other indicators do support a rally, so a bullish CBOE P/C does help the bull case.

I bought some TZA this morning to hedge my TNA position. My biggest concern remains the toxic political environment.

Today is OPEX. That makes it a crap shoot today of sorts. Any rally may not come till next week.

 

[FAAM]

The problem is that no one indicator can predict market direction consistently. We are oversold, however, and other indicators do support a rally, so a bullish CBOE P/C does help the bull case.

I bought some TZA this morning to hedge my TNA position. My biggest concern remains the toxic political environment.

Today is OPEX. That makes it a crap shoot today of sorts. Any rally may not come till next week.

Wow, you're overall comments and analyses the last week till now seem pretty good. As always thanks for sharing! ... BTW I appreciated your little side comment a couple days age about "turning 59 and moving your TSP to other Retirement Fund"... Congrats on your past Bday; and I'll be 59 in a year and thinking same thing. Did you move your funds to Self-Managed IRA or to a Managed Fund? Did you do Roth conversion, or perhaps saving that to later when your taxes may be lower? THX again!

 

[coolhand]

Wow, you're overall comments and analyses the last week till now seem pretty good. As always thanks for sharing! ... BTW I appreciated your little side comment a couple days age about "turning 59 and moving your TSP to other Retirement Fund"... Congrats on your past Bday; and I'll be 59 in a year and thinking same thing. Did you move your funds to Self-Managed IRA or to a Managed Fund? Did you do Roth conversion, or perhaps saving that to later when your taxes may be lower? THX again!

We are in somewhat uncharted waters right now. The indicators are all we have to go on, but politics and banking interests can wreak havoc if they get properly aligned to do so.

I moved my funds to a self-directed IRA. I will not convert to a ROTH. I see no advantage there. The tax structure may change significantly depending on how the political winds blow. Yeah, it's really all about politics these days. Sad, really.

 

[FAAM]

We are in somewhat uncharted waters right now. The indicators are all we have to go on, but politics and banking interests can wreak havoc if they get properly aligned to do so.

I moved my funds to a self-directed IRA. I will not convert to a ROTH. I see no advantage there. The tax structure may change significantly depending on how the political winds blow. Yeah, it's really all about politics these days. Sad, really.

Thanks for your reply. Curious what (and maybe a comment on "why them") self-directed IRA fund you chose? ... Just for my consideration if you care to share, as I'll be looking for one, haven't check-contrasted them recently, don't have experience with them (just invest some via "Robinhood" and not doing great in that since yesterday)... I have a low-fee "family plan" Directed (with input) IRA option that has done very well for some family members and I'd think about splitting mine between that and the Self-Directed IRA. Thx again!