coolhand's Account Talk

[coolhand]

Last week, the indicators were telling me to look for weakness (early in the week). But, as has been the case so many times, the bulls have challenged attempts to drive price lower. For the week, the C and S funds posted decent gains. By contrast, the I fund was hammered.




Friday, I thought the market would see some selling. I also said that bulls are not giving up much ground. Such remained the case as the C fund closed for a gain, while the S fund dipped modestly.

My intermediate term system remains negative (it flipped last week). Breadth actually hit a new high on Friday, but it's not that much higher than the top of its current trading channel.

The OEX is neutral for Monday. The CBOE is bearish. NAAIM is neutral, but they remain bullish overall. They are not shorting this market. TSP Talk came in less bullish, though still solidly bullish overall. TRIN closed on the low side Friday, which is bearish for Monday, though I can't read too much into that given the mixed close.

You've heard me say that the market is due some selling, but that the downside remains resilient. Nothing has changed in that regard. Such resilience is likely to give way to another up leg sooner or later. Follow NAAIM. They're long.

 

[coolhand]

The train may have left the station.




In spite of mediocre technical indicators, the market is rising. The S&P 500 is hitting new highs and the DWCPF is at the top of its trading channel. Will it follow the S&P 500 to fresh highs?

My intermediate term system remains negative (at odds with the market). Breadth hit another fresh high. That is a key indicator. The options are flat for Wednesday (neutral).

Still no change to my outlook. Follow the trend (long).

 

[coolhand]

It was a choppy up/down day today. The market closed mixed with relatively small price movement.




The charts remain in good shape; especially the S&P 500. The OEX is bearish this evening, while the CBOE is neutral. Breadth remains positive, but it has not been marching higher. That may not mean all that much.

So, no change in my outlook. The bias is still to the upside. NAAIM reports tomorrow.

 

[coolhand]

The market tried to make some upside headway today, but resistance kept it from gaining much ground.




My intermediate term system remains negative (go figure). Breadth is positive, but still flat. The options are neutral. NAAIM came in more bullish. I've said to follow their lead and that recommendation still stands. They are smart money.

So far, the market has some nice gains. Hopefully, the bulls can keep them to end the week.

 

[coolhand]

The market fell Friday (especially the EFA), causing some indexes closing negative for the week.




Momentum has turned down on the S&P 500. It's gone largely flat on the DWCPF. Both charts are still in good shape, though the DWCPF has not been able to punch through the 1460 area and hold it for about 2 months now.

My intermediate term system remains negative. TRIN and TRINQ closed at high levels on Friday, which favors the bulls on Monday. The OEX is bullish, while the CBOE is bearish. That makes the options market bullish overall. TSP Talk came in more bullish. It's high enough to be of some concern to the bulls, but we've been here before with no serious consequences. Breadth turned down on Friday, but remains positive overall.

It's the same old story. The bias remains to the upside (unless you're in the I fund). I don't provide much commentary on the EFA, though I do watch it. That index is bearish and I would definitely avoid it.

 

[coolhand]

I anticipated we would see a positive Monday based on Friday's closing indicators, but that was not to be. On the plus side, the damage is still very limited. However, the indicators tell me the downside may not be over.




The charts look okay for the most part, though momentum is falling. The OEX closed very bearish (that's smart money). The CBOE is neutral. TRIN closed very high, which is bullish for Tuesday, the TRINQ is neutral, so it's a mixed picture for this metric.

Breadth flipped negative and that's not a good sign for the bulls. The trend is still to the upside, but after several weeks of somewhat sideways action, are we peaking (or have peaked?). It's too soon to know, but the EFA is falling hard. Will we eventually follow?

I can't say I'm comfortable with the big picture, but I am in cash (G fund). Certainly, this market can turn right back up again and it very well might do just that (perhaps after a bit more downside). For now, the short term looks bearish to my eye.

 

[coolhand]

Monday I was looking higher and the market went lower. Tuesday I was looking lower and it went higher. Not a big deal, but interesting action.




So momentum is trying to turn back up. Breadth went back to positive after going negative for 1 day. The OEX and CBOE are both neutral. My other indicators are largely neutral as well.

So, my short term bearish disposition is now neutral. My longer term sentiment is bearish. The S&P 500 still looks like a chart that wants to hit fresh all-time highs. Since breadth flipped again, the bulls have the advantage.

 

[DreamboatAnnie]

Hi CoolHand, I noticed that you use different (non-default) MACD settings for the SPX. Is the non-default better than default for the C fund? I had started looking at 5,9,9 setting but looking at it for all funds. Thanks!

 

[coolhand]

Hi CoolHand, I noticed that you use different (non-default) MACD settings for the SPX. Is the non-default better than default for the C fund? I had started looking at 5,9,9 setting but looking at it for all funds. Thanks!

It's been a long time since I set those parameters. I used to follow a number of Wall Street professionals back in the day and I would note how they created their charts and what parameters were used in the process. I'm sure that's where I got them. If I was a day trader (like many of them were), I'd be more discerning as those parameters are generally set around the time frame one is trading (slow, medium or fast settings). You can also have multiple charts of the same index with different settings on each so as not to be limited with one time line. I guess the bottom line is that it depends on personal preference, which is dependent on the time frame you plan to trade. I think the settings you want to use are probably fine.

 

[coolhand]

After today's bearish action, I am beginning to suspect that the market "may" be in trouble. Yes, we were due some selling, but what I am seeing may indicate a bigger event (sell-off) might be triggered at some point.




The DWCPF fell under its rising 50 dma today, but price remains above the cloud, which keeps it bullish overall. Momentum has turned down. The S&P 500 is still trading above its 50 dma. It certainly remains a bullish chart.



What I am seeing on the EFA makes me a bit nervous. While it may not represent our domestic market, the EFA may be telling us something. With tariffs being levied more and more, the stock market could see a domino effect should some aspects of the global market begin to crack (many would argue those cracks have already been taking place). Price on the EFA has plunged over the past week and today it was on heavy volume. RSI is now oversold, which could mean a bounce is due, but price has also been trading under its 200 dma for most of the past 2.5 months or so. This is not a healthy picture and it is very much possible that a much bigger sell-off could be coming. A sell-off that might very well have global consequences.

The options are leaning a bit bullish this evening, but breadth has flipped negative again. TRIN and TRINQ closed on the high side, which favors a bounce.

For Thursday, I am looking for a bounce, but it may not amount to all that much. NAAIM reports late in the morning.

 

[coolhand]

We got the bounced I was looking for on Thursday and it was admittedly more robust than I expected.




Looking at the charts, we can see the bulls and bears are battling for control as price swings up and down. Momentum is trying to turn back up.

NAAIM came in less bullish, but with little shorting in evidence. These guys are still holding a fairly bullish position, so remaining long is still the way the go. The options are neutral. TRINQ closed at a very high level, which is bullish for Friday, but TRIN is neutral, so that's not much help. Breadth flipped back to positive again, but still in a sideways pattern

I am looking lower for Friday, but this market is likely going to remain resilient, so best to hold a long position for now.

 

[Boghie]

Tis the Summer...
Not a good time to be in the market if one is a trader...
Then again, not a bad time to be in the market if one is not a trader - nothing happens...

The danger is September/October. Those are very swingy months - and, they can be bad. But you have to ask: Why would the market dump? How much do we trade with Turkey? Me thinks issues with Europe, China, and Mexico will be resolved to a more fair balance. None of those regions/states really wants a protracted trade war - to include us. So, my money is a boom is coming!!! Everybody move to the market so I can Pump 'N Dump!!!

Hi Coolhand!

 

[coolhand]

Tis the Summer...
Not a good time to be in the market if one is a trader...
Then again, not a bad time to be in the market if one is not a trader - nothing happens...

The danger is September/October. Those are very swingy months - and, they can be bad. But you have to ask: Why would the market dump? How much do we trade with Turkey? Me thinks issues with Europe, China, and Mexico will be resolved to a more fair balance. None of those regions/states really wants a protracted trade war - to include us. So, my money is a boom is coming!!! Everybody move to the market so I can Pump 'N Dump!!!

Hi Coolhand!

Hello Boghie. How's the transition to North Carolina going? You sound like you're adjusted. :smile:

 

[coolhand]

The market managed to tack on moderate gains last weeks (unless you were in the I fund). But no new highs were hit. Maybe we'll see them this week given price is not far from the previous top.




My intermediate term system remains negative, but appears to be trying move in a more bullish direction. TRIN closed very high on Friday, which is bearish for Monday. TRINQ was neutral. Breadth hit another all-time high and may be starting another up leg after tracking sideways for weeks. That would be goods for the bulls if true.

The options are bullish for Monday. NAAIM is bullish overall (they've been largely bullish for quite some time now).

The indicators are leaning bullish for next week, so I am looking higher for now.

 

[coolhand]

As expected, Monday started out the week to the upside. Tuesday may not be as bullish.




Price on both charts are very close to breaking out to the upside again. In the past, the DWCPF has seen price rejection at this point. The S&P is hitting resistance as well.

The options are solidly bearish for Tuesday. The problem for the bears, however, is that breadth is breaking higher. So, we could see some selling on Tuesday, but it may not last long or go particularly deep.

 

[coolhand]

Yesterday, I said that the options were bearish and that suggested some selling on tap, but then I said that breadth was breaking out to the upside, which was not a good sign for the bears. And breadth often trumps many other signals. Tuesday saw breadth continue to soar and price followed; especially in the small cap space.




We can see that the DWCPF has finally broken to the upside and that even the S&P 500 managed to push higher as well; albeit modestly.



The breadth chart shows how breadth is rising quickly once again. The bears can't get much going when the chart looks like this. Question is, how much longer can rally?

The options are modestly bearish for Wednesday. My intermediate term system is close to flipping positive.

I have no change to my weekly outlook. I am still leaning bullish.

 

[coolhand]

It was a mixed day, Wednesday, but the upside bias remains regardless.




The S&P 500 appears fatigued (not a big deal), but the DWCPF continued probing higher.

The OEX is bearish for Thursday as is the CBOE. Given the mixed close and bearish options sentiment, I am looking for some degree of weakness on Thursday. NAAIM reports late in the morning.

 

[coolhand]

The market pulled modestly on Thursday. Friday's open is going to start out positive.




The charts remain bullish.

For today, the options are neutral. NAAIM came in relatively unchanged (bullish). Breadth is positive. My intermediate term system is very close to flipping positive.

Still no sign of the bulls losing control. It appears the week will end with gains.

 

[JamesE]

CH, when did your intermediate flip negative? Seems like it's been awhile now

 

[coolhand]

CH, when did your intermediate flip negative? Seems like it's been awhile now

It flipped on August 2nd. Because it's an intermediate term system, it doesn't react quickly to changes in trend. I find that often it's just one signal that holds it back for sometimes days at a time. Usually it's TRIN or TRINQ and sometimes BPCOMPQ. Right now, it's TRIN.