coolhand's Account Talk

[coolhand]

Last week, the S&P 500 and the DWCPF were thrown for a weekly loss.




So far, support at the 50 dma is holding on the S&P 500, but closed under that level on the DWCPF on Friday. Volume has fallen off since the initial 2 days of the sell-off, which we might see as at least somewhat supportive for the bulls. Momentum is falling and the indexes are not oversold (not that they need to be for a potential reversal).



Breadth remains bearish, but it is holding steady at the moment.

The TSP Talk survey came in less bullish, but it's still bullish. On the other hand, NAAIM had a significant reduction in bullish positions and I now view the reading as bearish overall (maybe bullish in the very short term (1-2 days)). I warned that NAAIM may go bearish if the selling continued and went bearish myself before the reading was released. I said that the action was reminiscent of the action back in February and that NAAIM may not see a bearish reading as quick as we might like (for confirmation purposes).

But we got confirmation from the smart money, so that's a warning.

Yes, the worst may be over, but without confirmation (no, we don't have any yet imo) I cannot embrace that. I think risk is now to the downside until proven otherwise. I am not bearish because I want to be bearish, I am bearish because the smart money is bearish. That doesn't necessarily mean the market falls apart, but downside risk is elevated regardless. If the 50 dma doesn't hold, price may test the 200 and that's much lower. We'll just have to see how it goes.

I remain bearish unless the bulls can prove they still have control.

 

[Scout333]

Thanks Cool, You saved me a world of damage to my TSP account this year! I appreciate your posts and analysis! :smile:
Scout

 

[amoeba]

I disagree. The volume and volatility are simply not there, but rather peaked, and declining. The aaii likewise flipped strongly bearish (low 20s bulls), which is bullish. The 50 DMA/EMAs are so far supportive. I say today is/was the buy.

 

[coolhand]

The bulls tried to add to Wednesday's gains, but were eventually beaten back by selling, which took the indexes into negative territory in afternoon trade. Confirmation of the negative action came today in the form of a bearish NAAIM reading.




The 50 dma is the current battle area and is providing support to this point, but I suspect it will not hold.



Breadth remains bearish.

The latest NAAIM reading showed a significant shift from bullish sentiment to bearish sentiment. This tells me that the smart money does not expect a quick turn back higher, so I believe we are looking at overall negative action for more than just a few days. If support at the 50 dma fails, watch the 200 dma for support.

 

[flalaw97]

NAAIM dropped from 95 to 53. Last time it dropped that much was in March. I think you are right that we are in for a few more weeks in Bearish country.

 

[Beester15]

NAAIM came in bearish today. That confirms the bearish action and what we might expect for at least the next few days, but I suspect it may be longer than that; perhaps 2 or more weeks of overall negative action.

Wonderful...:worried:

 

[coolhand]

NAAIM came in bearish today. That confirms the bearish action and what we might expect for at least the next few days, but I suspect it may be longer than that; perhaps 2 or more weeks of overall negative action.

 

[coolhand]

After 3 days of hard selling in a row, the market bounced on Wednesday. The bounce comes in the area of the 50 dma. Will that act as support? Maybe, but I'm not betting on it.




We can see that the 200 dma is still well under the 50 dma. That may be a target area for the bears (assuming the 50 doesn't hold).



Breadth bounced, but remains bearish.

Considering the speed at which the market declined (from all-time highs) I think it is too soon to look for a bottom. The bears may be looking to trap any dip-buying bulls in here with this rally.

NAAIM reports tomorrow. Let's see what changes the smart money may have made since their last reading.

I remain bearish.

 

[flalaw97]

NAAIM dropped 12% from 8/26 to 9/2. I am guessing this Thursday it drops another 10% at least. Because of the week gap in between surveys, it wouldn't surprise me if they are already headed bearish - just haven't reported out yet.

 

[coolhand]

As I suspected since the selling started last Thursday, market character appears to have changed. How deep will this go? I have no idea, but support lines are already being tested.




Price closed under the 50 dma on the DWCPF, while price on the S&P 500 closed just above it. Volume remains elevated.



As I mentioned in my last post when breadth was still looking sideways I said that if the selling continued, breadth will begin to fall. And now it has. It is now bearish.

Because of the suspect nature of this decline, I am not leaning toward a quick recovery. I am also not expecting a gloom and doom final outcome. For market timers, an opportunity is likely at hand.

It isn't often I go against NAAIM, but I am flipping bearish. They were bullish at the beginning of the deep decline early in the year, but eventually went bearish. This action is similar enough to get defensive despite that last bullish sentiment reading.

 

[coolhand]

hey Cool, 2 days ago you mentioned the potential of some agenda being pushed, and hearing evidence of that being validated. What validated what agenda? I'm already at 80% G, but if another March is coming, let us in on it.

Sent from my SM-J320P using Tapatalk

I spend a lot of time listening to the alternative media, but I've been doing it for a long time and have come to be selective about what I pay attention to.

 

[tsptalk]

Might want to keep this conversation to PMs. Thanks.

 

[amoeba]

hey Cool, 2 days ago you mentioned the potential of some agenda being pushed, and hearing evidence of that being validated. What validated what agenda? I'm already at 80% G, but if another March is coming, let us in on it.

Sent from my SM-J320P using Tapatalk

 

[coolhand]

Re: Coolhand's Account Talk

Well, the bulls were moving right along until Thursday when significant selling pressure manifested. Like myself, some of you were noting that there really wasn't much to pin the selling pressure on (where did it come from?). It really doesn't have to have a narrative. The action was bearish and could be an indication of any number of things, but political pressure is probably near the top. I'm not going to unpack that and will let that statement stand on its own.

The fact is, we have to navigate the market regardless.




Friday's action saw price test the rising 50 dma on the DWCPF and bounce well off that support line. Price did not test the same support line on the S&P, but it might during this next week. Volume has been higher than normal since the selling started (another clue).



Interestingly, breadth is not falling apart, but is instead dancing sideways. I view this a neutral, but if the selling doesn't stop, this indicator is likely to begin falling into bearish territory.

NAAIM was less bulled up last Thursday, but they were still bullish. We only get one reading a week on this sentiment measure so we have to keep that in mind. This group of money managers can change their sentiment at any time, but we won't know it till the next reading is given. I note that TSP Talk sentiment got even more bullish. In the current context of this market, that may be problematic. Ordinarily, with NAAIM bulled up I'd not give the TSP Talk reading a second thought, but we may be in the beginning stage of a change in market character (stress "may be").

I am going neutral given the mixed picture, but also because the selling pressure does not appear to be organic. Caution is now warranted until we see some degree of stability return. I also want to see where NAAIM stands on the next reading, but that's toward the end of the week.

 

[shitepoke]

Cool...u da man. i cant do an evening w/o checking in with your stuff...definitely watch Bquat, but you don't get enough Cred N. I read what you have to say most definitely Nasa so keep doin' what you do...
EJJ

 

[nasa1974]

Thanks CH for your analysis. Always a nightly read.
I was 1% away from a bench mark and then I was going to sit in "G" for awhile. Since September usually isn't very good market wise. Loosing 3.5% today I'm not sure what I'll do, but I sure can't ride it down like I did in March.

Good luck to all.

 

[coolhand]

Everyday and evening I check my online sources for hints of change that may affect stocks, precious metals and crypto, but I don't incorporate that source information in my market analysis; mainly because it is not often I perceive potential warnings that may affect those assets.

In my last post, I did say that I don't like these 180 degree hard turns because they tend not to be organic. That means that an agenda may be getting pushed. This evening I have heard some information that validates that concern.

I do not know how things are going to play out from here because this a battle that appears ready to be made manifest. What I can say is to expect volatility and more selling than we've been seeing. But because I expect volatility, we should see attempts to keep the market from falling apart. Remember, I cannot predict how something like this plays out (assuming it does happen), but the hard sell-off we had today is a potential clue.

I know my concern has a bearish aspect to it, but it's really just giving you a heads up that market character may be about to change.

NAAIM is very bullish right now, but their bullishness may not last. That's what happened early in the year when the market was attacked and we had that big decline. NAAIM was bullish then too, but they reversed within a couple of weeks of the decline and got bearish.

Do not be complacent. Be willing to change your strategy and expectations should the action warrant such. I will continue to provide information along the way as I get it.

 

[coolhand]

It would be nice to have warnings before "they" decide to whack the market, but we don't get warnings (unless you include the ones we see every single day for years on end). Those are really helpful, aren't they? There's always those who are warning us of dire consequences and those who are telling us the exact opposite. That's the battle between bulls and bears (that's actually a superficial reference, but I don't want to go there).

Of course, if you're an insider (which we aren't)...

Such is life in the big casino. As George Carlin once said, "It's a big club and you ain't in it".

Now back to your regularly scheduled market analysis. :smile:




Okay, so they smacked the market today (along with precious metals are crypto), where does that put us? Has anything changed?

Yes, the sell-off erased the past week or so of gains. But look at the RSI. It fell significantly, so now we don't have to worry about being overbought (for now). Futures are pointing to more losses on Friday, but that may change by the open.



Breadth is now neutral as it continues to bob up and down.

The main indicator is that NAAIM, while not as bullish as last week, is still pretty bulled up. I can't ignore that, but the market might. We'll have to see.

I really don't like these hard 180 degree turns, because they generally are not organic. And they don't always mean a change in market direction that goes on for a few days. Technicians like to see harder evidence of a change for that very reason.

And since the smart money isn't flinching very much, I am going to remain bullish for now.

 

[coolhand]

Bullishness among the NAAIM money managers has slipped bit, but not a lot. Collectively, they are still very bulled up. In that context, today's weakness would appear to be a buying opportunity.

 

[coolhand]

The S&P 500 has really come alive the past month or so. The index gapped higher and closed for a significant gain near the high of the day. The DWCPF was not as impressive, but it did manage a moderate gain.




What can I say about these charts that I haven't already said. They are overbought, but also bullish with no overhead resistance.



Breadth ticked higher and remains bullish.

We get a fresh sentiment reading from NAAIM tomorrow.

I remain bullish.