coolhand's Account Talk

[coolhand]

Well, the bulls had a great week, last week. The C fund was up more than 2.6% and the S fund soared for almost 6%.




Price on the S&P is sitting at an all-time closing high, though not by much. Price on the DWCPF still has not tested its all-time high from almost a month ago and it was up more than double the S&P. I find that a bit troubling, but maybe it will play catch up with the S&P. Momentum is still rising (of course) and after its previous long move lower (momentum) maybe it has legs on this bounce.



Cumulative breadth rose again on Friday and the chart is looking bullish, though its due for a dip any time now.

We know that NAAIM is now leaning bearish heading into the new week. The TSP Talk sentiment came in very bullish. There were very few bears in the survey. I know I am calling us smart money, but that kind of lopsided reading has the chance to be problematic. We'll have to see how this plays out. The TSP survey won the last time NAAIM was leaning the other way.

I remain modestly bullish, but hardly complacent.

 

[coolhand]

So, the bulls picked up where they left off last week with another gain. That's a good sign for those who are following the TSP sentiment survey, which was heavily bulled up for this week while NAAIM got more defensive.




The S&P hit a fresh closing all-time high. The DWCPF is very close to doing the same, but is not quite there yet. Momentum remains on the upswing.



Breadth continued to rise and remains bullish.

After several up-days in a row, we may see a pullback at any time. Even with a pullback (assuming it's minor) the indicators are still pointing up even as NAAIM is leaning bearish. I remain modestly bullish.

 

[coolhand]

I said yesterday that the market was due a pullback and we got some measure of one the very next day.




Today's downside action appeared to be a normal pullback (average volume and limited technical impact). Momentum has paused in its short term up trend. Now we'll have to see how long it takes the bulls to push back.



Breadth dipped as would be expected, but like the index charts, it remains bullish.

There isn't much to be read into today's trading session. I am not expecting serious downside action, though I am mindful that NAAIM is looking for some degree of negative action and I doubt today's action was it; at least not by itself. It also remains to be seen which sentiment survey will win the week.

I remain modestly bullish.

 

[mmk119]

since they are forward looking; I wonder if the pullback NAAIM is looking for will be June/July timeframe. If memory serves me, that is when many commercial realestate loans will be due. are owners going to be able to pay when renters are not? will banks be forgiving and refy under current conditions? will the bailout fix all this or add another dimension to interest or value of dollar? I think those are the hanging questions that might have major impact around that time. or I could be totally off base - didn't sleep at a holiday inn last night.

 

[coolhand]

since they are forward looking; I wonder if the pullback NAAIM is looking for will be June/July timeframe. If memory serves me, that is when many commercial realestate loans will be due. are owners going to be able to pay when renters are not? will banks be forgiving and refy under current conditions? will the bailout fix all this or add another dimension to interest or value of dollar? I think those are the hanging questions that might have major impact around that time. or I could be totally off base - didn't sleep at a holiday inn last night.

While I'm sure they look into the future as they best they can, the survey is weekly. Because they are "active" managers, I would not expect them to get defensive months in advance.

 

[coolhand]

The bulls took advantage of a bullish Federal Reserve economic forecast and sent price quickly into positive territory and an eventual positive close.




The S&P posted another all-time closing high. The DWCPF continues to lag, but may eventually close the gap. Momentum continues to rise.



Breadth wasn't great, but it was positive. The signal remains bullish.

We get another NAAIM reading tomorrow. I remain modestly bullish.

 

[mmk119]

While I'm sure they look into the future as they best they can, the survey is weekly. Because they are "active" managers, I would not expect them to get defensive months in advance.

I see and that makes sense also why they would be a good indicator for current trade decisions. Thank you Coolhand!

 

[coolhand]

For the week, the bulls were doing okay till Thursday (and our bullish TSP Talk sentiment was looking prescient) and then the bears launched an ambush. How fast things change.




The technical damage remains limited. The pullback still looks at least somewhat normal given volume remains normal. Price on the DWCPF is not far from testing its 50 dma.



Breadth remains bullish, but is under attack.

The good news for the bulls is that NAAIM reversed their bearishness and are now bullish. I need to point out that they are not overly levered in their bullishness, which is why the reading isn't as high as we've seen in the past. You can also look at this reading as a sign that a floor of sorts may be under the market (short term).

Our TSP Talk sentiment is currently showing a neutral reading (final reading is not complete) after last week's over-the-top bullish reading. We'll have to see how Friday's action completes the week. So far, NAAIM bearishness heading into this week did not result in much price damage (Thursday to Thursday). The action was more neutral taken as a whole.

With NAAIM now leaning bullish, I will remain modestly bullish.

 

[coolhand]

Friday's mixed action capped a week that started out on the bullish side, but ended with a weekly loss for both the S&P and the DWCPF. The weekly losses were limited, which may be an indication that a bottom is near. This is also possible given the latest NAAIM reading.




Price on both charts remain above its 50 dma. The DWCPF in particular saw price test that key average (successfully). We'll have to see now if support continues to hold. Momentum is falling, but not quickly.



Breadth ticked up a bit and remains bullish, but under pressure.

As anticipated, our TSP Talk sentiment survey came in neutral. Thursday we got a bullish NAAIM reading, though not wildly so.

As the indicators stand currently, I don't see anything of major concern. Apparently, NAAIM doesn't either. For these reasons, I am maintaining a modestly bullish sentiment.

 

[coolhand]

The week started out mixed, with the S&P 500 advancing moderately and the DWCPF dipping modestly.




Price on the S&P appears to be back on the upswing, but the DWCPF remains just above its 50 dma.



Cumulative breadth pulled back a tad and while it is still technically bullish, its very close to neutral.

There is not much to read into today's market activity. We'll have to see what the rest of the week brings. I am not looking for any downside surprises, but it's possible the market goes sideways with perhaps a modest upside bias.

I remain modestly bullish.

 

[coolhand]

In yesterday's post, I said that there wasn't much to read into the mixed action to start the week. I felt that the indicators as they were yesterday did not appear to be particularly bearish and that I though we might go sideways with an upside bias as the week progressed. Then Tuesday happened.




I am sure it has not escaped anyone's attention that the DWCPF is struggling. It appeared that price had successfully tested support and that since the S&P actually advanced on Monday, I was not expecting support to fail. Not with NAAIM leaning bullish. But anything is possible in this market. It would appear the DWCPF had a small bear flag in play. Price has now closed below support at the 50 dma. The S&P is not having the problems the DWCPF is having. While it did close lower, it didn't lose nearly as much and price remains above the 50 dma. And this index only a week ago posted a new all-time high. Momentum is turned down on both charts.



Cumulative breadth fell and is now bearish. That has usually meant a turn higher is not far off.

While bears got the better of the bulls today, I still have no reason to get particularly bearish (all things considered). Obviously, small caps are under attack, while larger caps are generally holding up. Perhaps small caps (S fund) is providing a buying opportunity for those who are positioned to take advantage, but that doesn't answer the question of how long small caps will remain under pressure. I am not sure of the answer given current market dynamics. However, if inflation takes hold, it would stand to reason that small caps would feel the heat. It may be time to think about diversification until the playing field gets a bit more clear.

I remain modestly bullish, but am watching carefully.

 

[coolhand]

The selling continued on Wednesday with small caps helping to lead the way.




Price on the DWCPF closed at or near the previous low from early March; and it closed pretty much at the low of the day. Volume was average (for the S&P). Price on the S&P also closed at the low of the day, but it has yet to test support at the 50 dma. Momentum continues to fall on both charts, but is more pronounced on the DWCPF.



Cumulative breadth dipped, but not as much as one might expect given the overall negative action. Still, it's a bearish signal.

So, the charts are showing some technical damage; especially the DWCPF with support broken at the 50 dma. We also have a bearish cumulative breadth on the NYSE. Now, things are exactly falling apart as yet, but there has been talk of inflation and I personally think we may already be seeing the early stages of it. This is a problem that will only get worse if it continues on its current course. Remember, this bullish ship has gone a long, long way and it won't stop on a dime. The money is going to continue to play as it has until it becomes painfully obvious that something really is changing. I'm making an assumption here regarding inflation. This has yet to be proven, but it needs to be watched.

Tomorrow, we get a fresh read from NAAIM. Keep in mind that they were bullish last week, but not overly bullish. We have no idea how these managers are positioned aside from their sentiment (where are they allocating their money?). I'm talking about heat maps (where money is flowing to and from). It's still too soon to get overly bearish, but our antennas should be up.

I am going neutral from modestly bullish.

 

[coolhand]

NAAIM went back to neutral today. They are not shorting much, so there is respect for the bullish case.

 

[coolhand]

The situation at the Suez Canal is not simply unfortunate. It would anticipate that it will have a negative impact (fairly quickly) on global trade and quite possibly the financial markets. Definitely something to watch.

https://www.zerohedge.com/energy/might-take-weeks-suez-canal-still-closed-enormous-beached-whale-ship-remains-stuck

 

[coolhand]

The bears had their way for the morning session, but the bulls got back in the game in the afternoon to close out the day with moderate gains.




It remains a mixed picture with price on the DWCPF still under the 50 dma and above that key average on the S&P. Momentum has yet to turn back up. Volume has been average. Since the market turned today, it may be ready for the upswing. We'll have to see.



Breadth turned up and is now in a neutral condition.

NAAIM came in neutral today. They are not shorting much, but there's reason for the neutrality. The obvious one is inflation, but now we also have a very touchy situation in the Suez Canal. This is a big deal, but how the market reacts to it (over time) remains to be seen. I suspect it may not be cleared for a little while. I've no doubt there is more under the surface of this situation than the ship's bilge and it's something I'll be keeping an eye on.

I remain neutral.

 

[Cactus]

NAAIM came in neutral today. They are not shorting much, but there's reason for the neutrality. The obvious one is inflation, but now we also have a very touchy situation in the Suez Canal. This is a big deal, but how the market reacts to it (over time) remains to be seen. I suspect it may not be cleared for a little while. I've no doubt there is more under the surface of this situation than the ship's bilge and it's something I'll be keeping an eye on.

Do you think the blockage was deliberate? Egypt or someone else flexing their muscle maybe?

If you control the world's trade you are a power to be reckoned with.

 

[coolhand]

If you control the world's trade you are a power to be reckoned with.

Battles over control are never absent from the global landscape. Those battles are always present, even if we don't see direct evidence of the battle (vice accident).

 

[coolhand]

More on the Suez:

https://www.zerohedge.com/markets/suez-canal-crisis-morphs-global-supply-chain-wrecking-ball

 

[coolhand]

Friday saw a wild rally into the close, which capped a positive day overall, but depending on which fund you were exposed to you either had a good week or a not so good week as the C fund posted a solid gain, but the S fund was thrown for a hefty loss.




The good news is that the S&P is rallying hard off a successful test of support of its 50 dma. The S&P is also testing resistance at its all-time high. On the other hand, price on the DWCPF remains under its own 50 dma. Upward momentum is turning up, but it's not clear if it can be sustained; especially on the DWCPF.



Breadth advanced on Friday and is bullish.

Our TSP Talk sentiment came in neutral, so that matches the NAAIM reading in terms of sentiment. Given how much is happening around the world and its potential impact on the global markets, it's not surprising to see the bulls take a wait and see approach.

So, the picture remains mixed. We can see that small cap stocks on the whole are not particularly favored over larger cap stocks and that remains something to take in consideration when deciding on which funds to hold and how much. Rallies can be explosive and would likely favor small caps if perceived threats to the economic picture are diminished. But that remains to be seen.

I remain neutral overall, but I'm going to lean modestly bullish on the S&P 500.

 

[coolhand]

Today's action changed little in terms of market character. In particular, small caps got hit early in the trading session and never recovered. The S&P also got hit early, but it bounced back to close near the neutral line.




On the S&P chart, we can see that price failed to push past resistance, but it didn't give up much ground either. Price on the DWCPF gave back all of Friday's gains and bit more. Support is not far below and I suspect price may test it again; maybe soon. Momentum is now rising on the S&P, but falling on the DWCPF.



Breadth dipped and is back to a neutral condition.

This week is the end of the quarter, which could mean some measure of volatility over the next day or 2. Just something to note.

I remain neutral overall and modestly bullish on the S&P, but that index needs to push through resistance or it could go the other way again.