coolhand's Account Talk

[coolhand]

No argument here.

I just wanted to make sure that anyone reading these posts understands the risks of being long in this market. Being long is going against the trend. However, while the trend is still down the market may track largely sideways within a trading range that affords both bulls and bears opportunities. But some of those opportunities have seen volatility, which makes trading them difficult. With only 2 IFTs in TSP, taking short term shots at the market is especially challenging under these conditions. My main concern is a much bigger decline that seems to come out of nowhere. We trade in sideways fashion long enough and some bulls may get comfortable that support is solid only to get hit with another leg lower. That would be my concern if I was trading this market.

 

[Mcqlives]

Exactly my fear!

But now that you wrote it down I am hearing the "Land of the Lost" theme song in my head! Or at least the water fall part.

 

[coolhand]

The market traded in choppy fashion today and ended lower overall. Technical damage remains contained, but the charts remain bearish.




While price on the S&P 500 was lower today, it did not test the lows. The DWCPF did test them and closed at a fresh low. Talk about a controlled decline. Controlled or not, it's still no bullish action when small caps are losing ground.

The option are neutral. NAAIM did not change a whole lot, but I noted that they are not shorting the market much, which suggests that downside risk may have abated for the time being. Overall though, they remain a cautious group.

My intermediate term system shows is deteriorating (it's already negative). Breadth turned back down and is at its lows.

It seems like support is holding, but with the DWCPF inching closer and closer to a retest of its intra-day low on Monday, I'd not be comfortable going long without having my finger on the eject button if that support doesn't hold. Especially if we head lower on volume. But with NAAIM backing down on their shorts, I'm not looking for any significant selling in the short term.

I'm neutral for Friday.

 

[coolhand]

Friday saw the market break some significant support lines as the downward trend continued. Small caps led the way lower for week.




Price on the S&P 500 closed at a fresh low on Friday. The intra-day low set on Monday is still holding, but that's not the case with the DWCPF as price also established a new closing low on that index. Momentum has turned lower. There is nothing bullish about these charts.

So, NAAIM remains cautious as we head into a new week. They aren't falling over themselves shorting the market, but they aren't overly bulled up either. The OEX is neutral. The CBOE is bullish. What I'd be worried about if I was a bull was the how quickly TSP Talk got bullish. I suspect many were expecting support to hold as price danced around the lower end of its trading range prior to that survey being taken. I said on Thursday that since NAAIM was not embracing the short side that downside risk may have abated in the short term (but the upside was and is limited too). It wasn't a bad idea to take a shot at the long side under the circumstance, but I also pointed out that the trend is down, which means that support can fail at some point. That failure came Friday.

My intermediate term system is negative. Breadth hit a fresh closing low. A-D Line volume on the NYSE is falling and hit a new low on Friday. Volume on the Nasdaq A-D Line is moving sideways and is better shape than the NYSE.

There are plenty of other bearish indicators out there besides the ones I've already mentioned.

I remain bearish and very much expect this downward trend to continue for some time yet.

 

[coolhand]

Late last week I warned that many bulls may get complacent near what appears to be good support, only to get pulled into the next down leg. I also pointed out (it was obvious, actually) that the trend was down. I said to go in the direction of the trend to reduce risk.

The problem for those of us in TSP is that we can't short the market. We can't make any serious money in the G fund either. Under these conditions, we may develop a bullish bias because we want to believe that there is money to be made on the long side if we can just time it right. Otherwise, our account moves largely sideways (in the G fund). In a bull that's long in the tooth (we are no longer in a bull, by the way) trying to time those upside moves with 2 IFTs is very challenging to say the least. And it can be costly in a bear market (we're in a bear now). Patience is something that should be considered. With our restrictions, our accounts are better served in bulls markets. In bear markets we can potentially see years of gains wiped away in just a few weeks.

I am not saying that's what is happening now, but it might. I am simply saying to ask yourself if you're assessing risk accurately. Trading markets takes discipline.

Just something to think about.




Monday's action was pretty dismal for the bulls. It would certainly seem the next down leg may be in progress. Momentum is falling hard. Volume is up. Breadth is falling off a cliff from an already bearish stance. I note that RSI is at or very near an oversold condition on both charts, but they can get a lot more oversold, just as overbought can get a lot more overbought.

The OEX is somewhat bearish this evening. The CBOE is in very bearish territory, but that's bullish from a contrarian point of view. I'd be careful in a bear market with bullish indicators. Since NAAIM is cautious and the OEX is at least modestly bearish, I'd not put too much stock in a bullish CBOE reading.

I'd like to say that we're near a bottom, but I'm not feeling it. Is seasonality going to kick in? It's a slam dunk most years, but not all. This market is transitioning, so even seasonality may betray us this year. Rallies are getting sold. Sentiment has not been seriously beared up, which means capitulation has not occurred. Our own survey showed a lot of complacency this past week. It looks like it was a warning this time.

I remain bearish.

 

[sniper]

Good points, and I will have to say that I think it'll take a good degree of luck to nail upside moves in this market with the TSP. Patience is definitely the way to win especially with IFT delays. Heck, even trading upside in this market has been where I've gotten mostly all of my trading losses since Oct. Most of these moves up are gap ups that are quickly sold, making me think majority of these quick moves up are just short squeezes that have sellers jumping back in again when the price is right. In any case, right now, trading moves to the upside has been difficult whereas shorting has been easy money the last few months. I'm now just treating it as a bull market for the bears, and stopped being aggressive when it comes to picking bottoms.

 

[hotwings]

I think Wednesday's Fed Speak will be a pivotal day for the market. We are either going to start heading back up or fall even harder. I’m still in it for the long haul even though I have 50% invested in the “G” Fund and will maintain that allocation. The economy still seems to be chugging along pretty good while the media seems to say just the opposite. Hang in there everyone!

 

[coolhand]

The CBOE's bullish stance seems to have been a good indicator for Tuesday, but only if you're a day-trader. Those of us in TSP would not have been able to take advantage of the early gains, which largely evaporated by the close.




Rallies continue to be sold. Price didn't deviate much from its previous close. Momentum did not turn up. Breadth ticked modestly lower. The A/D Line on the NYSE is plunging. The A/D Line on the Naz is not far from breaking its sideways action to the downside.

This evening, the OEX is modestly bullish. The CBOE is now neutral.

I don't have a clear read on the daily action for Wednesday, but we might get some upside from the OEX. The problem is, the headwinds for the bulls are significant and reversals are becoming more likely. The picture remains bearish on longer timeframes.

 

[coolhand]

Yesterday, I said that I was not sure what Wednesday would bring, but that we might get some upside from the OEX. I went on to that the even if we got some upside, the headwinds for the bulls are significant and reversals were becoming more likely.

So what did the market do? It rallied, peaked and then tanked.




These charts aren't getting any less bearish. Fresh lows, falling momentum, oversold RSI and bearish crosses of the 50 dma through the 200 dma.

This evening, the OEX is bullish as is the CBOE. Breadth is falling off a cliff. The A/D Line on the Nazdaq is now bearish.

NAAIM reports tomorrow.

So, sentiment suggests we bounce on Thursday. That's the very short term. Yes, seasonality has yet to kick in. But it doesn't have to and I would not be surprised by more selling instead.

 

[coolhand]

By now, if you've been following me you know I'm largely bearish for the foreseeable future. And the market is pretty much acting as I've expected. Thursday's action was more of the same for the bulls.




Fresh lows. Falling momentum. Oversold RSI.

The options have not posted this evening. NAAIM came in pretty bearish. In a normal market, I'd consider that bullish over the next few days, but not in the current market context. I anticipate more selling, short term bounces notwithstanding. Breadth is falling almost vertically as is the A-D Lines on the NYSE and Nasdaq. Some pundits believe once we have capitulation we should rally hard once more. I would not take that bet. If you've been listening to the X22 report, you'll know why.

I remain bearish.

 

[shitepoke]

Bearish..even notwithstanding short term bounce (several day santa rally?}...Wow...where do I/we look for things like breadth /A-D line / X22 report ??
thanx for what you do...EJJ

 

[coolhand]

The selling action we are witnessing is not unexpected. I have been warning all year that this was coming. I just couldn't pinpoint a surgical timeline. No one can.

And I am convinced it's going to get much worse.




What is interesting, is the controlled way this market is declining. I think that's by design. But it's declining nonetheless. The charts have not changed, they're just more bearish as price continues to fall.





If you haven't figured out that something has changed, these charts should do it. Both the NYSE and Nasdaq show volume is overwhelmingly to the downside. Breadth is also falling like a rock. The red line is now almost vertical in its downward trajectory. Contrast that to the previous months/years.

The OEX is modestly bullish for Monday. The CBOE is very bearish, which is bullish in a normal market (we are not in a normal market). NAAIM got beared up late last week (do not ignore this). At this time, TSP Talk has not posted their sentiment, but I suspect it will not be bulled up like last week.

Be careful with sentiment right now. There is an agenda playing out that is not overly dependent on sentiment. I pay more attention to NAAIM than the other sentiment indicators because they are closer to the inside of what's happening. Just as they were very bullish for a very long time (and the market continued rising) they are now bearish, so I'd be following their lead once again.

My intermediate term system remains negative. The indicators are stretched to the downside and oversold, but they can and probably will get a lot more stretched and oversold. I believe we have an unwinding taking place. The rate hikes are designed to tank the market. Yes, they are designed to elicit what we are witnessing. This market is much, much higher than it was in 2008 and so it has the potential to fall a lot more (percentage wise) than it did back then.

For Monday, I'd normally be bullish based on sentiment and oversold indicators, but I think the overwhelming evidence of downside indicators is telling us that risk is still to the downside. Even if we do rally, it many not last the day as we've seen a number of times in the recent past. A Santa rally is not a given.

I remain bearish.

 

[coolhand]

I hope everyone had a wonderful and safe Christmas. And I hope you have a prosperous New Year filled with blessings from our Lord Jesus Christ!

So, here's where we stand as we stand as we head into Wednesday. Monday's action picked up where last week left off as the markets plunged once more.




The indicators continue to get stretched to the downside.


The options are neutral. Breadth continues to plunge deeper into bearish territory. TRIN and TRINQ are bullish for Wednesday.

Futures are up a bit this Christmas evening. That hasn't meant much of late as rallies are getting sold. I remain bearish even though we are overdue a bounce.

 

[coolhand]

Yesterday, I said I remained bearish (with some bullish 1-day indicators) largely because rallies had been getting sold. There are various stories out there explaining why the markets rallied (and held their gains).

Most of those stories are pure BS (to put it bluntly).

After seeing a decline of historic proportions (despite the most seasonally positive time of year), the market finally turned back up and held gains with a historic rally (largest 1-day rally in the Dow ever). This action is not normal market behavior (how many times have you heard me say that?), but a battle between powerful forces. Today's reversal was a message from one force to another that they have control.

So, who has control? Check out this story and note the timestamp. It was released on Christmas day, 1 day before the rally.

https://www.bloomberg.com/news/articles/2018-12-25/trump-urges-buying-the-dip-after-stocks-sink-on-d-c-dysfunction

The President stated his position that now was a great time to buy stocks (on the dip). This statement is not likely to be made if he didn't know ahead of time how the markets would react. In other words, he has control.

I would not bring this up except that now I have to temper my bearish expectations (for the moment) until I see where the market goes from here.

We could continue to look at this from purely a technical perspective, but where has that gotten most technicians of late? Very few saw this decline coming (at least not this deep) or believed it would last. Without some measure of understanding of the inside game being played, simply following sentiment and technical indicators may not be enough.




We can see that price made up some significant ground on Wednesday, though hardly enough to get overly bullish beyond the short term (a few days maybe).

I note that TRIN and TRINQ closed very low, which is bearish for Thursday. The OEX is neutral and the CBOE is bearish. Breadth turned up, but remains negative (bearish). Volume was decidedly bullish.

Futures are pointing lower this evening, which leads me to believe the market may give something back. NAAIM reports on Thursday.

For now, I am going to be neutral until I see how NAAIM comes in. Today's reversal may have legs (short term weakness notwithstanding), but I tend to view this reversal as a selling opportunity for those who were caught in the decline. A 1-day rally is hardly evidence of a long term bottom, but we may have a bottom for more than a day or three. Let's see where NAAIM stands tomorrow.

 

[pmaloney]

Glad for today's Explosive Bear Market Counter Trend Rally.
This is from Charles Payne's Morning Commentary entitled. "It's 1987 All Over Again".
"I believe the current market swoon is the same as 1987 in the sense that much is being driven by market psychology that is swayed by an omnipotent and overwhelmingly negative media, and Wall Street elites, who are willing to take losses to derail parts of the White House agenda."

For me, I hope this is like October 13 2014 when after many days of losses I sold in the early market decline and then boarded a train to NYC and the S&P climbed all day and the rest of the month but I was out of IFTs.​

:smile:[SUB][SUP][/SUP][/SUB]

 

[coolhand]

Just a heads up. NAAIM came in pretty bearish today. That's not good news for the bulls. Countertrend rally may not happen.

 

[hotwings]

I wonder how much of today's and tomorrow's (and possibly Monday's) selling is due to tax loss selling?

 

[coolhand]

I wonder how much of today's and tomorrow's (and possibly Monday's) selling is due to tax loss selling?

When the pros are running for cover, the answer is usually much deeper. We don't necessarily know what that answer is (specifically), but do we need to with this kind of circumstantial evidence? Not to mention the historical significance of the volatility. No, there's a battle raging for sure.

 

[WorkFE]

No, there's a battle raging for sure.

Yes there is.
Stay thirsty my friend.

 

[pmaloney]

Looks like the Bulls fired off a Hypersonic ICBM to win at the end of day. What a close! :smile: