coolhand's Account Talk

[coolhand]

The market remained resilient today as price initially fell, but recovered as the trading day wore on. This is a sign of strength.



This chart is also a sign of strength. Cumulative breadth remains solidly bullish.

TRIN and TRINQ are neutral this evening (I see that as bullish in this market).

NAAIM came in solidly bullish once again.

I remain...bullish!

 

[coolhand]

The bulls had an off week last week, largely due to Friday's sell-off. The pundits are blaming the coronavirus epidemic that is mostly affecting China at this point (it would appear it is not contained). It is possible. I read a report that the virus is beginning to hit China's manufacturing sector now, which would not help the global economic situation. And then there's the Senate trial that's in progress. This is another potential narrative that may be leveraged for optics in the market. There are other more subtle situations in progress, which are not getting any attention outside the alternative media, but I am not going to address those. Suffice it to say there is kindling for more selling pressure available. The indicators suggest as much too.



Cumulative breadth, which is still positive, fell sharply on Friday. By itself, it is not a problem for the moment, but it could be an early warning of more selling to come.

The CBOE is decidedly bearish for Monday as is TRIN and TRINQ.

These are the indicators that are signaling potential short term trouble.

Sentiment is another matter. Remember that NAAIM was highly bullish just last Thursday (the day before the sell-off). I do not take this sentiment indicator lightly. They can on occasion be wrong, but it is normally just in the very short term. We won't get another reading until next Thursday, but for now I have to believe that any further selling will not last long, though it may be deeper than might make us comfortable. TSP Talk backed off on their collective bullishness, but they are still bullish by more than 2:1.

So, there is a lot going on to drive emotion as we head into a new trading week. Can the powers that be control that emotion so it doesn't drive the markets lower? Very possibly.

I am now neutral in the short term until we see whether Friday's selling was just a knee-jerk reaction, or the start of something more sustained. And if more selling manifests, whether it can be controlled and turned back. It is too soon to get bearish.

 

[JamesE]

Thank you sir!

 

[coolhand]

The market accelerated its selling on Monday, making it 2 trading days in a row to the downside.




The charts show us that price is still above their respective 50 dma's. Will it hold? Momentum has turned down. We are due some degree of a pullback (overdue). Is this it?



Cumulative breadth is technically still positive, but its close to crossing the 21 ema. By itself, that is not cause to be overly concerned (if it crosses) as it's happened many times in the past and the market eventually recovered to resume its upward bias. Still, we want to keep an eye on it.

This evening, the CBOE, TRIN and TRINQ are all bearish again. Futures are moderately higher as I type this.

We may bounce tomorrow, but I suspect a bottom is not in yet. I still don't think this weakness lasts, but we could see a 5% decline before it's over (give or take). All it would take to turn the market back up is another headline that the market takes as a positive. It can happen fast, just the decline on Friday into Monday.

I am bearish in the short term, but still bullish longer term. Hopefully, the bottom comes this week.

 

[coolhand]

We got the bounce. And it stuck. For now.




And while it was a nice bounce, we can see that's all it was. Price retraced less than half of its total losses off the top, so there's more work to do to get back to the previous high. That 50 dma did not get tested and it is entirely possible it still gets tested, so it's too soon (in the short term) to get too bullish just yet.

This evening, the CBOE has not posted, so I don't know how they are positioned.

TRIN and TRINQ both flipped bullish. Cumulative breadth moved higher and remains bullish.

Futures are flat as I type this.

I can see this go either way in the short term. I do have some bullish indicators, but that may only get us some measure of an intra-day rally followed by more downside. Maybe. I'm just not sure. But I still feel that the longer term is still bullish. I'm looking forward to that next NAAIM reading. Then, we'll see if the smart money has shifted any.

 

[coolhand]

Interesting trading day today. The market continued with its upside push from Tuesday, which was consistent with what I said yesterday. I said I thought the market could go either way, but that we may see some selling after an initial push. Well, that's what we got. What was interesting to me was that the bulls held the neutral line for the most part. That suggests a bottom "may" be in. We'll have to see over the next few trading days.

This evening, the CBOE, TRIN and TRINQ are neutral. Breadth remains positive.

We get a fresh NAAIM reading tomorrow. That will help shape what we might expect over the next few trading days. I am back to a neutral stance in the short term, but bullish beyond that.

 

[kb9nvh]

Thankyou

Sent from my ONEPLUS A6003 using TSP Talk Forums mobile app

 

[coolhand]

NAAIM saw an increase in bearish positions, but not nearly enough to change their overall sentiment, which remains bullish longer term. However, the reading does validate the selling pressure we are seeing. As I've been saying, and now NAAIM confirms it, we may get some selling in the short term, but there are still plenty of longs among these money managers.

 

[coolhand]

Once again, the market showed its resilience today. This time, coming from negative territory to finish the day above the neutral line. Gives you the impression someone wants this market to stay afloat, doesn't it? We'll, that's probably why NAAIM remains bullish overall (and myself).

The charts haven't changed much. They tracking a bit sideways at the moment.

The CBOE is leaning a bit bearish this evening. TRIN and TRINQ are neutral. Breadth remains positive, but it's not advancing. Like the averages, it's dancing sideways in positive territory.

I think the biggest data point is the fact that NAAIM remains bullish, though as I posted earlier today there some bears among them. Just not enough to swing the overall reading. Still, I think we can expect continued back and forth action in the short term. But if the right piece of news comes out, this market may move quickly. I'm anticipating it will be to the upside once the bulls regain their footing.

I remain neutral in the short term, but bullish beyond that.

 

[hotwings]

CH,
Where do you find the NAAIM reading? Is it free or does it require a subscription? Thanks always for your market analysis.

 

[Mcqlives]

Naaim.org

 

[hotwings]

Thanks much. I just noticed that I did have it bookmarked. My brain has been getting a little soft since retiring a couple years ago :smile:

 

[coolhand]

Thanks much. I just noticed that I did have it bookmarked. My brain has been getting a little soft since retiring a couple years ago :smile:

I just retired in December. Are you saying this is what I can now look forward to?

 

[coolhand]

Up until Friday, the S&P and DWCPF were holding their own. They were not down much. But Friday, the sellers came out in force and drove price lower. There was little opposition to the downside. Volume was elevated.




Price on the S&P tested the 50 dma, but did not break it. Price on the DWCPF did break, but only marginally.



Breadth broke through and closed below the 21 day EMA. It the relatively recent past, that has been a good area to expect a reversal, though not necessarily a quick one.

But we have a lot going on in terms of geopolitical and other types of events. Brexit is now official, but I seriously doubt the opposition will just go away. Perhaps the most serious challenge to the market is the coronavirus situation, which is getting a lot of attention. This has the potential to do more damage to the global economy. I stress "potential", because it may not be a serious as some would have us believe. It could begin to abate before we know it. That has happened with similar scares in the past.

But my point is that it may be challenging to pick a bottom right now. Bottom picking is challenging all by itself, but we have headwinds that are not typical at the moment.

And having said all that, it is also possible that the market turns around quickly on a given piece of news.

For Monday, the CBOE is leaning decidedly bearish. TRINQ is also leaning bearish. TRIN is neutral.

We saw NAAIM come in on Thursday's reading with an increase in bearish exposure, but there were still a lot of bulls in the survey. Unfortunately, the selling came the day after we got that reading, so some of those bulls may feel differently right now, but that is just speculation.

My current perspective in all of this is that I think more selling is on tap. I point to the CBOE and the increase in bears in NAAIM along with the TRINQ reading. That means price on the S&P is likely going to breadth the 50 dma.

I have said that my longer term perspective remains bullish and still does. I do not have reason to change my sentiment longer term. What I don't know, is where the bottom may occur. The 200 dma is still a long way away. I sure hope that isn't the target.

 

[coolhand]

After Friday's shot lower, Monday saw the market bounce. The bounce pushed price on the DWCPF back over its 50 dma. The S&P never fell under its 50 dma, but it too improved.

This evening, the CBOE is bearish. TRIN and TRINQ are neutral. Breadth moved higher and is now neutral.

I thought Monday would see downside follow through (based on the indicators), but that didn't happen (unless you included the intraday selling). But the market thought otherwise and closed for decent gains, though did not retrace all of Friday's losses.

The back and forth action remains with us (NAAIM reflected this). I remain neutral.

 

[coolhand]

That was some kind of upside follow through we had today, wasn't it? How many really saw it coming? Not that it was necessarily a surprise. In this market, upside surprises should be expected from time to time.




Price is really not all that far from its highs after today. Look at the DWCPF. It's already poking around resistance.

I note that the CBOE is bullish again this evening. TRIN and TRINQ are leaning bullish. Breadth flipped bullish again.

We might see some weakness tomorrow after such a big move higher, but I suspect it won't last. I feel more confident at this point that the market may be ready to resume its upside march. We'll know soon enough.

I am shifting from neutral back to bullish.

 

[kb9nvh]

How close I came to panic selling last Friday... But then I remembered... The very worst day to sell is panic selling day.. Or to buy back in on panic buying day.. Lol... I guess I'm not cut out for this..i rode it out and am glad i did.

Sent from my ONEPLUS A6003 using TSP Talk Forums mobile app

 

[coolhand]

How close I came to panic selling last Friday... But then I remembered... The very worst day to sell is panic selling day.. Or to buy back in on panic buying day.. Lol... I guess I'm not cut out for this..i rode it out and am glad i did.

Sent from my ONEPLUS A6003 using TSP Talk Forums mobile app

This is one of the reasons I follow NAAIM sentiment. That is my anchor. It is smart money. They are not emotional traders and therefore I can leverage their overall sentiment to frame my market expectations. The vast majority of the time it works very well. And it worked this time too. Some of those money managers got bearish recently, but most stayed bullish. These managers do not all trade the same and have different timelines (short, medium, longer term). To me, that makes it a valuable resource to get an idea of what to expect from week to week.

Glad you held on. :smile:

 

[kb9nvh]

2016 the panic drop happened and I sold and lost like 18k..taking me backward to about the same as if I had just stayed in the g fund .of course I never bought back in making the loss permanent and have been in g since a few months back.. The horror of 2016 was again upon me.. So I did opposite of my panic instinct.. Lol. Thanks to you and the rest of the group I didn't make the same mistake this time...

This is one of the reasons I follow NAAIM sentiment. That is my anchor. It is smart money. They are not emotional traders and therefore I can leverage their overall sentiment to frame my market expectations. The vast majority of the time it works very well. And it worked this time too. Some of those money managers got bearish recently, but most stayed bullish. These managers do not all trade the same and have different timelines (short, medium, longer term). To me, that makes it a valuable resource to get an idea of what to expect from week to week.

Glad you held on.

Sent from my ONEPLUS A6003 using TSP Talk Forums mobile app

 

[coolhand]

Have you forgotten about the selling yet? The market apparently has.




The S&P and DWCPF are now both attempting another upside breakout.



Breadth is rising quickly once again. Remember, I said that when the signal breaks the 21 day EMA, it usually bottoms not all that long after. In this case, it happened very quick indeed.

The CBOE is bullish once again. TRIN is neutral and TRINQ is leaning bearish.

I am wondering if the train is leaving the station again. The news headlines suggest as much. I remain bullish.