coolhand's Account Talk

[bleeck]

Check out the stocks of the S Fund
most of these are 2020 flyers
from TSP S Fund

Small cap stock Index investment fund
Top ten holdings As of 12/31/2020

1. SQ Square, Inc. Class A
2. UBER Uber Technologies, Inc.
3. ZM Zoom Video Communications Inc Class A
4. TWLO Twilio Inc Class A
5. SNAP Snap Inc Class A
6. NXPI NXP Semiconductors NV
7. BX Blackstone Group, Inc. Class A
8. WDAY Workday, Inc. Class A
9. DOCU DocuSign, Inc.
10. LULU Lululemon Athletica, Inc.

 

[coolhand]

Friday's market action saw the bulls come out swinging and they were able to hold significant gains all the way into the close. The action helped the S&P close with a decent weekly gain, but the DWCPF was still thrown for a sizable loss despite Friday's rally. Friday's market action did give us some things to watch moving forward.




Looking at the charts, we can see the S&P broke out higher and closed with a fresh all-time high. Momentum has yet to turn up, but if the index can get some follow through we should see momentum rise. Price on the DWCPF did manage to retake its 50 dma. That's a start, but this index has been very frustrating for those looking for new highs. Momentum has not turned up here either. The good news is that there seems to be a floor under this index (for now). But the length of this sideways dance is not bullish in my opinion. Still, it can go either way longer term.



Another thing of note is the sharp rise in cumulative breadth on Friday. That often spells follow through in the coming days. The signal was already bullish and this spike on Friday could be a marker for more gains this week.

Our TSP sentiment survey came in neutral. So, we have a bullish NAAIM reading and now a neutral TSP Talk reading. Both readings were taken before Friday's rally, so that could affect its interpretation to some extent. The surveys may have been more bullish if the readings were taken at the end of the week (my opinion). But it doesn't matter that much as were taking about neutral to bullish sentiment.

So, as I mentioned above, Friday may have been the start of a new up-leg (at least for the S&P). We'll know soon enough. But the smart money remains bullish, so there is little reason to doubt the bulls ability to continue driving this market.

I remain bullish on the S&P. I am going to go bullish on the DWCPF for the short term, but still neutral longer term.

 

[coolhand]

So, maybe the Friday rally was a head fake? Monday's open was less than inspiring and it got worse in afternoon trading as both the S&P and DWCPF were beaten back for sharp losses on the day.




The pullback did not do a whole lot of damage to the S&P chart, but it did push price back into the upper end of the S&P's recent trading range. Momentum dipped. The DWCPF failed to hold its 50 dma and closed at a fresh multi-week low. Momentum continues to fall on this index.



Cumulative breadth fell sharply on the NYSE, but the signal remains bullish.

So, Friday it looked like we might see some upside follow through given the strength of the rally and Monday opens flat to negative and gets worse from there. The market has yet to fall apart (not that it will), but we have 2 charts that are telling us a different story. The S&P remains a bullish chart, but the DWCPF is neutral. If inflation really takes hold, I'd expect to the see the DWCPF sell off. Are we seeing the early stages of this over the past few months? Is the big money slowly preparing for such a scenario? Money has to flow somewhere, and the S&P has held up pretty well; pullbacks notwithstanding.

I remain bullish, but cautious on the S&P. I was bullish for the short term on the DWCPF, but I am going back to an overall neutral perspective on that index.

 

[mmk119]

Great analysis. thank you Coolhand

 

[coolhand]

Great analysis. thank you Coolhand

You bet. I've said in the past on occasion that we should not marry our sentiment and be prepared to change it if the market behaves counter to our expectations. We may be in a transitory phase with this market right now. I can't be sure, but the DWCPF is certainly giving us reason to not get complacent. The market likes to ambush traders when they don't expect it. Timing such events are notoriously difficult.

 

[coolhand]

Where do I start? Have you seen all the headlines the past few days? Gas shortages, missiles flying, etc. Then you have some cryptos doing well of late and there's talk they will be doing better down the road. I don't normally get into headlines, but the market is seeing some action that should make one take pause.

In my last post I said the market likes to ambush traders when they don't expect it. Today felt like one of those days. The S&P took a good loss, but somehow the DWCPF fought back to about the neutral line (did the PPT step in?).




Price gapped lower on both charts at the open. The S&P did recover significant losses, but certainly not all the losses. The DWCPF closed for a modest loss, but price remains below the 50 dma on that chart, so closing neutral is a somewhat hollow victory. Momentum continued to fall today.



Cumulative breadth took a good hit today. It's still positive, but is it headed lower?

Both index charts are now showing action that may be preludes to something bigger down the road. It isn't ugly yet, but I would not want to be in the market should ugly show up. The idea is to grab gains when they present themselves and avoid losses as best you can. We've been in a bull market a long time and we all know it doesn't last forever. Yes, I may be getting ahead of myself, but what if trouble is near? Yes, NAAIM was bullish a few days ago, but what about right now? Our own survey was neutral and I'd say we were closer to reality this time than NAAIM was (to this point).

I am not sure what to expect. The market is having to digest a lot of information and much of it is negative. However, the market does have a perverse way of shrugging off bad news, but how long can it remain resilient if things go from bad to worse? From what I am hearing, this gas shortage can do some significant damage to the economy. Think about what would happen if gas become scarce. Think about how that would affect trucking, mail delivery and dining to name a few. I am just throwing this out there as food for thought.

Given the troubling action (not just today, but the sideways movement in the DWCPF and to a lesser extent the S&P) I am going neutral overall on both charts. There is now too much uncertainty at the moment for me to be bullish. It may be time to take a step back and watch what happens in relative safety.

 

[coolhand]

Yesterday, I said that both index charts were showing action that may be preludes to something bigger down the road. I said the action (up to that point) wasn't ugly yet, but that I would not want to be in the market should ugly show up.

We'll, I don't know if ugly showed up, but his little Brother might have. Ugly may be next.




Priced gapped lower on both charts at the open today and drove lower for the remainder of the trading day, closing near the low of the day. Price on the S&P closed short of testing support at the 50 dma. Of course, price is already below the 50 dma on the DWCPF, which is now testing horizontal support around the 2055 area.



Selling was widespread as cumulative breadth fell hard and is now bearish.

While we've seen this kind of selling on occasion in the past, I am not so sure the market will be recovering quickly this time. I could be wrong, but let's not forget how long the DWCPF remained in a trading range. It seemed to be telling us for weeks something was coming, so this may be just the beginning.

NAAIM reports tomorrow.

While the market may find support soon (I am not convinced), I am moving from a neutral sentiment to a bearish sentiment as I suspect market character has changed. I may be ahead of the market, but then again I may not.

 

[coolhand]

NAAIM came in bearish today. I suspected we'd see that, which is why I didn't wait to go bearish myself.

 

[coolhand]

The bulls bounced the market on Thursday, but it wasn't without some degree of challenge from the bears.




Price on the S&P remained above its 50 dma, but the retrace was limited given the extent of the selling. The market often bounces after some hard selling, but for right now it's only a bounce. Price on the DWCPF also bounced, but it did probe lower around mid-day. Momentum remains bearish.



Cumulative breadth also bounced, but remains bearish for now.

NAAIM wasted no time getting bearish in this week's reading, which plunged hard. I expected to see a bearish reading, which was one of the reasons I went bearish without waiting for confirmation from this group of money managers.

For the moment, price on both charts is showing support is holding at the 50 dma on the S&P and horizontal support on the DWCPF. My personal feeling is that support will fail. I don't know that, but with a fresh bearish reading from NAAIM and lots of market concerning news floating around, I'm not sure the teflon is going to hold up. We could continue to see a push by the bulls to drive price back up, but it may not be successful. The pressure really didn't start the past few days, it started months ago on the DWCPF. The big money needs to time to get out of the way in as quiet a way as possible (they don't want to alarm you). Don't expect them to be holding the bag if this market decides to head South again.

It's too soon to consider getting bullish again, in my opinion. We are also in the weaker part of the yearly cycle (go away in May). I am going to watch from the sidelines for now. I remain bearish.

 

[coolhand]

Friday's trading session saw the bulls rally the market hard, which erased a good deal of the earlier losses, but not all of the losses. The S&P and DWCPF both fell more than 1% on the week. Not bad, considering.




We can see that price on the S&P bounced near its 50 dma and retraced more than half of its losses earlier in the week. It's back in its trading range again. Momentum is trying to turn up. The chart itself does not look all that bad from a technical standpoint. Price on the DWCPF also erased more than half of its losses, but this index is a little different because price remains below its 50 dma. This index remains a possible warning of bigger problems for the market down the road if it doesn't recapture a bullish stance; and it's a long way from doing that without some serious rally time. Momentum is trying to turn back up on this chart too.



Cumulative breadth bounced hard and is back to a bullish configuration.

Our TSP Talk sentiment came in neutral overall. I said that the previous one was neutral, but after looking at last week's reading again I'd say it was more like modestly bullish. That doesn't change anything, I just want to update my perception of the reading.

NAAIM came in decidedly bearish and that cannot be taken lightly. Yes, they may flip bullish again quickly if the action in the market dictates such, but it's a guessing game of sorts what they are thinking in between readings.

So, we have a mixed picture. The S&P rallied smartly off support at its 50 dma, but the DWCPF remains below that key average. I keep wondering if this a canary in the coalmine. We do have a bullish breadth reading again, which is usually a solid indicator.

You can get bullish on this picture and justify it, but you can get bearing and justify that too. It is not unusual for a snap back rally to occur after a hard sell-off. But this is also still a bull market. The question is, is this bull market running on empty?

I cannot get bullish yet on this collective data. The snap back rally may or may not hold. At best I can only be neutral right now because of the struggling DWCPF and a bearish NAAIM. The market could steady itself and appear to be doing at least somewhat well in the short term, but that doesn't mean all is well. Remember, the big money doesn't usually get caught on the wrong side of the market and their pockets are deeper than ours. They can rally this market to trap the bulls and then send it lower (not saying they will).

I am going to remain bearish for now, but that could change early next week depending on how the market trades.

 

[coolhand]

Friday's big rally did not carry over to Monday as price fell back somewhat modestly.




Not much was proven by Monday's action so we'll have to see how the balance of the week unfolds.



Cumulative breadth had an up-tick and remains bullish.

I don't have much to say after Monday's action. It is still a guessing game what price is going to do in the short term. I remain guardedly bearish for now.

 

[coolhand]

The S&P struggled most of the day to hold its neutral line before succumbing to selling pressure as the market was nearing the close. The DWCPF showed relative strength trading well above its own neutral line until that same late day selling pressure pushed price into negative territory at the end of the trading day. Both indexes lost ground, but the action did not make the future any easier to discern.




Weakness over the past 2 days has stalled a rally that started late last week. That rally (last week) was a response to significant selling pressure earlier in the week that saw the smart money go bearish last Thursday. Yes, support is holding at the 50 dma for the S&P and at horizontal support for the DWCPF, which is good, but momentum remains negative on both charts. RSI is also weak to neutral.



Cumulative breadth, which has been bullish the past few trading days, dipped on today's negative action, but does still remain technically bullish. But has the signal stalled? Is it rolling over right now? It might be and it might not.

So, the action is beginning to put into question the voracity of the end-of-week rally last week. NAAIM being bearish should certainly be cause for some concern if you are a bull.

The bottom line is that it remains a mixed picture and you can latch onto the bullish aspects of the action or the bearish aspects depending on how you want to interpret the signals. But don't forget the sideways trading pattern on the DWCPF that has gone on for months. It may yet prove to be the proverbial canary in the coalmine.

I remain guardedly bearish (guardedly because I can change my mind if the action warrants such).

 

[cedarpine]

Sent from my iPhone using TSP Talk Forums

 

[coolhand]

View attachment 49273


Sent from my iPhone using TSP Talk Forums

Certainly adds more credence to the bearish case. Thanks for posting.

 

[nasa1974]

So where do we go from here? "G" fund, "F" fund, do some splits. I'm so confused. :1244:

 

[coolhand]

So where do we go from here? "G" fund, "F" fund, do some splits. I'm so confused. :1244:

The answer is different for each person. If one is bearish, you want to have limited (maybe none for some folks) stock exposure. G fund is safer than F fund, but safe is a relative term. Even the G fund can be risky under certain circumstances. A global financial meltdown could easily have a negative impact on just about everything (not so sure about precious metals (real money)).

 

[coolhand]

Well, Wednesday's market trading didn't do much for the bullish argument. The market didn't fall apart, it just felt like it for a little while. But while it didn't fall apart, it did close out with moderate losses.




Price on the S&P tested its 50 dma again and bounced back to close over that key average. Price on the DWCPF fell as well and remains within its trading range (the lower part of it), but also below its 50 dma. That index seems to be gearing up for another test of horizontal support. Momentum remains negative.



Cumulative breadth fell and flipped modestly bearish today.

So, the market continues to get hit with weakness, but also continues to dance more or less in a sideways pattern. It sure is beginning to feel like a top may be in, but it's still a bit early to make that call (price will almost certainly be lower before that call might be made).

I remain bearish.

 

[coolhand]

The bulls pushed the market higher on Thursday, but I don't think we have any more clarity about the days and weeks ahead.




Both the S&P and DWCPF posted good gains. Price remained above the 50 dma on the S&P, but has yet to retest resistance at that level on the DWCPF. Momentum is trying to turn up, but it's been a struggle. RSI is near neutral on both charts.



Cumulative breadth poked back over the 21 day EMA, which technically puts it back to a bullish condition, but it's been almost 2 weeks since this signal hit a fresh peak, so I can't get overly excited about further upside potential just yet.

NAAIM came in largely unchanged, which means they remain bearish. You might think they would be shorting the market with this reading, but they are not positioning themselves for bearish action with any conviction, so they seem to be taking a wait and see approach without taking unnecessary risk.

So, both charts continue to paint a different picture. While the S&P remains technically bullish, the DWCPF remains neutral. It can go either way, but the smart money is not leaning toward a bullish outcome. They are also not confident enough in their sentiment to bet on it.

Like NAAIM, I remain bearish, but not with significant conviction.

 

[coolhand]

Forgot to post last week's action. Quickly, the market saw the S&P close out the week with a somewhat modest (weekly) loss, while the DWCPF had a moderate gain. The charts didn't change much, but price on the DWCPF is testing resistance at its 50 dma. Momentum may be starting to turn up.

Cumulative breadth rose on Friday and is bullish.

We know that NAAIM is bearish, but the latest TSP Talk survey shows us bulled up moderately.

I remain bearish (modestly), but I have a feeling we may see some upside in the short term.

 

[coolhand]

Monday's action certainly had a bullish feel to it. But can it continue? Let's look at the charts.




Price on the S&P closed in an area of resistance. There is more resistance above, but how stiff I cannot say. Price on the DWCPF poked above the 50 dma, but closed under it once more. As long as price has been under that key average, getting above it may not be an easy task for the bulls. But we're about to find out very soon whether they can pull it off or not. Momentum is turning up, but I can't get excited about that just yet.



Cumulative breadth hit a fresh all-time high. It's a bullish chart right now and that does have some weight of sorts.

Which makes me wonder what the smart money is thinking right now. They were bearish 2 weeks in a row and it is safe to say that the 2 charts above are not as yet giving the all's clear. The late day swoon, while not overly significant, could be a tell for Tuesday's action so we'll have to see if that's the case.

I am going to remain bearish (I really don't like being bearish) until this market, and especially the DWCPF, can prove that price can be driven higher. It may not be long now before we know the answer to that question.