coolhand's Account Talk

[coolhand]

Weakness continued on Friday, which pretty much wiped out the rally at the beginning of the week.




Price on the S&P 500 closed right at its 200 dma to end the week. Price on the DWCPF is not far from its previous low. Momentum has turned slightly to the downside. It's the DWCPF I'm more interested in as it's representative of a much larger portion of the market overall and if it's not doing well (and it's not) that speaks volumes for the health of the market overall.

Breadth has turned back down. The OEX is neutral. The CBOE is showing a very bearish reading, which is technically bullish. But in this market, that may or may not be the case. NAAIM is neutral as is TSP Talk.

Futures have opened up decidedly lower this evening. That could dissipate by morning (or go even more red).

We could bounce once more, but that won't change my bearish disposition. Another shot lower that holds will not be bullish and may serve to entice more money to seek shelter as support levels break once again. But I'm getting ahead of myself. Let's see how Monday goes first. I'm bearish.

 

[coolhand]

It was another back and forth day, but one which ended up on the negative side for some of the indexes.




Nothing dramatic today, but price on the S&P 500 broke the 200 dma support line again. The good news was that price did not test the lows, so maybe the index is forming a higher low? Price on the DWCPF is knocking on the door of its previous low. If it doesn't hold, it won't bode well for the market overall. That index is still well below its 200 dma.

The OEX is bullish this evening, but the CBOE is too, which is bearish. Breadth fell again today.

The slope is getting more slippery for the bulls, but they can still mount a comeback at this point. It better be soon, or that slope may get more vertical.

 

[coolhand]

It was an interesting day Tuesday. Stocks plummeted out the gate for some heavy losses (more than 2%). As the trading day played out, price caught a bid and fought back to near even before falling into the close for moderate losses on the day. It could have been much worse for the bulls.

I don't think it was an organic retrace either. This was a battle to keep the market from total meltdown. The PPT comes to mind. I haven't mentioned that element of the market in years. So, I think it would be premature to assume a bottom is in given the continued deterioration in some of the indicators.




Price on the S&P 500 hit fresh lows, but bounced back enough to close higher than its low from last week. Yeah, that's bullish at face value. But look at the DWCPF. Price closed at a fresh low. This index represents a much larger segment of the market. The bounce in this index may be bullish to some, but that doesn't explain breadth's continued plunge. We saw for many months and even years how breadth was in synch with market action. Now, it's falling instead of rising. That's not an indicator to be ignored. It doesn't guarantee a larger sell-off, but it supports the possibility of one.

The options look neutral to modestly bullish for Wednesday.

Yes, anytime you have this much selling pressure and large retracement, you generally can expect more upside follow through. The question is, if we get it will it hold? I remain bearish.

 

[coolhand]

Today's market debacle should have gotten the bull's attention. I have been saying for some time that it's not a question of "if" the market sells down, but when and how deep. It's not rocket science, but predicting exactly when it will occur is not generally gleaned from charts. Oh, there are those that will say you can see it, but most of the time it's after the market has already declined by 5% and perhaps much more. The market goes up on an escalator but comes down in an elevator. This is what Central Banks do. They are not designed to go up indefinitely, but to implode (again, by design) and at some point to allow them to reload once more. They are the ones that generally make the money, not us. If you understand how they operate, you can better understand how risk goes up the longer a bull market goes.

But it won't matter this time, because I am betting the banks are going to be put out business permanently in the months ahead. I don't have a timeline on that either, but I'm thinking in a year or so. A lot of truth will be coming out about the banks and many other topics down the road. Things are going to change and probably in dramatic fashion. Stay tuned.

Let's get back to my regular post.




Yeah, that one left a mark. We have long, red candlesticks with the low coming near or at the close. Momentum is plunging. Both charts are oversold, but are likely going to be much more oversold in the weeks ahead. Pops to the upside are likely to occur, but I'm now fairly sure the risk is to the downside overall.

The OEX and CBOE are both bearish this evening. Breadth is plunging. NAAIM reports tomorrow. Germany's Deutsche Bank plunged today as well. That's a significant global bank, so that's more confirmation that the dominoes may be starting to fall.

Buying dips at this point is risky to say the least and TSP is not the best place to make short term bets in a volatile market. It's a shame we can't make money on the downside, only preserve capital in the G fund.

For Thursday, we can bounce, but it may not hold. They may want to entice bulls back into the market with some upside action and make you think the low is in or keep you in the market with that "deer in the headlight look" thinking we must be at a bottom by now and I just need to hold on for the turn. I can't predict that's how it plays out, but it's not a remote possibility. Risk is very high right now.

 

[coolhand]

Yesterday, I said that pops to the upside are likely and we got one today that held, though price closed well off its highs of the day.




The bounce was decent, but did not retrace all of Wednesday's losses. In fact, the DWCPF only retraced about half. That's the index I continue to watch over the S&P 500. I am anticipating that today's rally was a bearish upthrust, though I will tell you there are plenty of pros out there telling folks to buy the dip and that a huge rally is just a matter of time. Really? Does anyone remember 2008? They were pounding the table back then too. Sure, it could happen, but I just don't see it as a high probability. I am see quite the opposite.

The options are neutral this evening. NAAIM came in bearish and I am seeing even some of the longer-term bulls beginning to waver. This group is giving me some degree of confirmation that this market may be in trouble (in case you didn't already think so).

Breadth ticked to the upside today, but remains bearish.

There could be more upside coming, but price is a long, long way from the top. Based on the indicators, I would not bet on a bottom being in at this point. I am neutral for Friday and remain bearish longer term.

 

[sniper]

not the time to collect wallflowers at golden prices?

 

[coolhand]

On Friday, I said I was neutral and that I did not think a bottom was near (short term). Friday was down all day as the major averages took out Wednesday's lows intraday, but price bounced back to end the day with significant losses once more.




Wednesday's low was tested and so far it's held, but we could see another test. The averages are oversold. Momentum is falling.


My intermediate term system is negative. TRINQ is bullish for Monday. The OEX is neutral, but the CBOE is bullish. Interestingly, TSP Talk is almost an even split (neutral). NAAIM is a bit bearish for new week. Breadth turned back down and remains negative.


If this bull market wasn't so long in the tooth, I'd be inclined to start building a long position, but the bull is on the old side and that raises the downside risk. If you remember 2008, then you know the market has the potential to fall much further (interim rallies notwithstanding). Seasonality turns positive next week and much more so after Thanksgiving, but it is not a lock that following seasonality will be rewarded.

For next week, the market remains prone to more selling. Significant technical damage has been done and sentiment is not all that bearish. I remain on the sidelines (G fund).

 

[coolhand]

It was another wild day for the market. Just as it looked like the bulls might turn this around with significant early gains, the sellers stepped in and sent prices even lower.




Are you seeing a theme here? Price on the DWCPF hit a fresh intra-day low, but bounced enough to close near last Wednesday's close. Price on the S&P 500 closed for a lower low, however. There are long tails on the candlesticks, which generally means a low may be forming. But in this market it may not.

The OEX is leaning bearish for Tuesday, while the CBOE is modestly bullish. Breadth hit a fresh low on its current downward trajectory. TRINQ is bullish again, which may mean a repeat of Monday's performance, meaning the market starts out higher and the sellers step in bring it back down? Dips are not being bought so much as rallies are being sold right now.

I am willing to entertain that a low may be forming (intermediate term), given the up/down action, but the path of least resistance right now is down.

 

[coolhand]

The bulls finally got a bounce that didn't fall apart today.




Price is now somewhat rangebound and looking to either breakout or breakdown. Momentum turned up. Breadth turned back up, but is still in a downtrend.

Looking at sentiment, the OEX is neutral. The CBOE has not yet been posted.

Today's rally has not changed the trend, but the longer price bounces around in its current range, the better the odds of a breakout to the upside. Any breakout does not necessarily mean the market heads back towards its August highs. There is a lot of resistance to cut through first. I tend to think the bull market has peaked and any rally will fizzle well before those August highs.

I am neutral heading into Wednesday.

 

[coolhand]

The bulls managed to string together 2 consecutive days of upside in a row. Is this the start of a sustained move higher? It's too early to tell, but I'm not a believer to this point.




The gap higher at the open is a bit suspicious. Price closed off the highs of the day too. Momentum has turned up, however. Can the S&P 500 test its 200 dma? That's significant resistance at this point, so we'll have to wait and see if it makes a run at it.

Breadth was not impressive today despite the rally, though it did turn up (still negative overall). The options are looking neutral for Thursday. NAAIM reports in the morning.

The market still has some work to do to convince me the bulls can retake control of market direction. I remain skeptical longer term (bearish), but neutral in the short term.

 

[coolhand]

So, the bulls are making a run back toward the 200 dma on both charts.





Momentum is rising. Breadth is rising (still negative). My intermediate term system is negative, but improving.


The OEX is neutral this evening, but the CBOE is very bullish, which is bearish for Friday. NAAIM came in less bearish, but they are not jumping on this rally. The caution flag appears to be remain out for that crew.


I am looking for price to test resistance at the 200 dma. I am leaning bearish for Friday, but for now it looks like a bottom is in. The question is, how much upside can we expect from here?

 

[coolhand]

Last week, the bulls managed to find support near the 1280 area on the DWCPF and 2625 on the S&P 500. Price retraced a sizeable portion of previous losses, but the 200 dma has not been tested as yet. Friday closed on a down note heading into the new week and it promises to be a possible big one with the mid-term elections on tap for Tuesday.




Momentum is still rising, but paused on Friday. Breadth is still negative, but fighting to turn back up. My intermediate term system remains negative, but improving.


NAAIM came in neutral last week. This group is looking more tentative the past 2 or 3 weeks. The options are looking neutral heading into Monday. TSP Talk got bulled up after last week's rally and that may be a problem for the market given NAAIM's caution.


The mid-term elections make next week difficult to assess because the market is likely to react to the results come Wednesday. I am neutral as a result. Even though the bulls have turned the market up in recent days, the market remains very vulnerable to the downside.

 

[coolhand]

Just a quick post this evening. Today's action had little effect on the current technical picture. The options have not yet posted and it's much later than usual for that post. Tomorrow's action may be similar to today. I am interested to see how the market reacts to the mid-term results, which will be Wednesday. I remain neutral short-term, but bearish longer term.

 

[coolhand]

The market was up and down again today, but mostly on the green side of the neutral line. The end of day ramp higher was interesting. Will we see carry over on Wednesday?




Momentum is still rising, but that 200 dma remains untouched. Breadth went neutral from negative. The OEX is bearish for Wednesday, while the CBOE is neutral.

I am leaning bearish for Wednesday, largely because the OEX is bearish. I don't want to read too much more into the market. Mid-terms are upon us. We'll see how it goes in the morning.

 

[coolhand]

Yesterday, I said I was leaning bearish largely because the OEX was leaning that way. But I also said I didn't want to read too much into the market because of mid-terms as the results could influence market action.




Yeah, they did that. The major averages soared for some impressive gains. Momentum went more vertical. Breadth flipped positive. Price on the S&P 500 shot and closed well past its 200 dma. The 50 dma is now in range. The DWCPF has yet to test its 200 dma despite decent gains.

This kind of one-sided action usually means more of the same in the days following. I suspect the 50 dma will get tested on the S&P 500 and the DWCPF will eventually test its 200 dma.

The OEX is neutral. The CBOE is bullish, which is bearish. I would not read too much into the options right now. NAAIM reports tomorrow.

Now, from a technical perspective this market looks primed for more gains. And maybe that's exactly what we'll see. But it's very interesting that the Attorney General resigned right after the mid-terms. This is not an insignificant event given the rancor in political circles. While I can't predict political outcomes, we could still see some volatility as these uncertain events unfold.

I am bullish for now, but not a comfortable bull.

 

[coolhand]

After Wednesday's rocket shot, Thursday's action saw a moderate pullback. That's not unusual after a big rally and actually helps maintain the bullish case for now.





Breadth dipped a bit, but remains bullish. TRIN and TRINQ closed on the higher side, which is bullish for Friday. The options are neutral. NAAIM is also neutral. They are not falling over themselves to get long, but they aren't bearing up either. Caution remains in play for this group of smart money managers. That means we shouldn't get complacent.


Futures are pointing lower this evening, but that could change by morning. I am neutral for Friday.

 

[coolhand]

Friday saw a weak ending in a week that saw gains of over 2% in the C fund, but only 0.17% and 0.23% in the S and I funds. That's not a sign of a strong market.
Remember, I said that NAAIM was not taking big risks on the long side (or short).




Price on the S&P 500 tagged its 200 dma and bounced. The DWCPF has yet to close back over its 200 dma. One chart seems at least tentatively bullish, but the other is still bearish. Both appear to be making a reverse head and shoulders pattern.

The options are bullish for Monday. NAAIM is neutral. TSP Talk is overly bullish and I'm taking that as bearish given NAAIM's caution. Breadth is back to neutral.

For the new week, I'm neutral to modestly bearish. There are plenty of signs that this market is struggling. An upside surprise can happen in market's like this one, however.

 

[coolhand]

Bullish options weren't enough to keep the market afloat on Monday as price fell hard across the major averages.





Price on the S&P 500 fell through its 200 dma with no hint of support. Momentum is falling. Breadth is now negative again. The options remain bullish, but only modestly. TRIN and TRINQ closed at high levels, which is bullish for Tuesday.


Based on the indicators, the odds favor a bounce Tuesday. But this market is in trouble again. Another drop means a test of the lows becomes more likely.

 

[coolhand]

As I anticipated yesterday, the market bounced. The problem for the bulls however, was that the gains evaporated by the close.




Losses were contained, but it was not bullish action. Breadth remains negative. The options are now neutral.


The bulls are in trouble if they can't mount an upside attack to recapture at least the 200 dma. The 50 dma is almost ready to have a negative cross through the 200 dma on the DWCPF. Certainly, the technical picture is getting more bearish. NAAIM (smart money) was showing cautious respect of this market while the TSP Talk survey (dumb money) was bulled up. Maybe sentiment matters again? Bulls have been trained for years now to buy the dip. Just sayin'.

I'm neutral for Wednesday.

 

[coolhand]

The bulls continued their slide on Wednesday. It sure looked early on like they might get some losses back, but rallies are getting sold right now.




Price crept a bit closer to a possible retest of the previous lows. Momentum is still falling. Breadth remains negative and falling.


The OEX is neutral this evening. The CBOE is bearish, which is bullish for Thursday. TRIN is neutral, but TRINQ closed very low which is bearish for Thursday.


I have mixed indicators for market direction on Thursday, but the short term trend is down. NAAIM reports late in the morning.