coolhand's Account Talk

[Epic]

Yes there are.

I would also agree. I believe we're just knee deep into phase 4 of this cycle. There may be a small rally into the Fall Season, but overall I believe it's going to get worse.
I have no charting skilz, but you get the picture.........:nuts:
​Thanks Coolhand for your analysis and commentary.

 

[WorkFE]

The point is only that there are clouds gathering and they do appear to be storm clouds.

Yes there are.

 

[coolhand]

The latest NAAIM reading shows the mean average rising a little more than 8 pts this week. This keeps the reading in a neutral condition. The numbers show the bears remaining fully short and leveraged and the bulls maintaining their usual status of fully long and leveraged. Overall, the numbers just show some shuffling of positions.

As I said last week, the bears have been very committed to the short side and this is the 7th week in a row that they have been pressing the short side. And 5 of those weeks they were fully leveraged (currently it's 4 in a row). They are obviously expecting some downside action and are determined to not be easily chased from their positions as they once were. That kind of commitment suggests something is coming, but what and when? Or, will their expectations be eventually dashed as has happened so often in the past?

I am hearing that a Government shutdown is being talked about again (it's that time of year), but that this time the shutdown is much more likely to happen. We have another pandemic being jawboned and the UAW is talking about striking. There is much more too, but I am not going to try and list them. The point is only that there are clouds gathering and they do appear to be storm clouds.

 

[coolhand]

Today's NAAIM reading saw the mean average fall about 12 pts, which keeps it neutral, but not far from turning bearish. The reading also shows the bulls remain fully long and leveraged, but there was a small dip in their numbers. The bears remain fully short and leveraged and their numbers stayed close to the same overall. I note that over the past 6 weeks, the bears have been fully short and leveraged 4 out of those 6 weeks and the other 2 weeks they have been been just fully short (no leverage). We have not seen this kind of tenacity from the bears in a long time. They are not taking huge risks, but they are more committed to their short positions than they have been. While the bears have not had much luck on the short side, that could change at some point. Watch for a change in market character. It could come at any time (not necessarily imminent).

 

[coolhand]

The latest NAAIM reading shows the mean average jumping more than 26 pts, which puts it back in a neutral condition. I said last week that the large drop in the mean average typically triggers a rally, but that if we got it it likely would not last long. Well, we got the rally and then some. And it has been substantial enough to back the bears off. This is not surprising as we have seen this before. It's why the bears rarely get satisfaction. Even for smart money.

Looking at the numbers the bears do remain fully short and leveraged, but there are fewer of them. The bulls remain fully long and leveraged and they added some bulls to their numbers. Having said that, the reading is only neutral and there are some bears that are hanging in there with fully leveraged short exposure. That is interesting, because it suggests that they see something that they see as worth the risk. It's still hard to get excited about this reading, but I suspect we may very well see a reversal soon. The current rally seeks to thin out the short positions first. And with the holiday in front of us, that is another reason to look for another possible turn.

 

[nasa1974]

This week's NAAIM reading took a nose dive, falling more than 25 pts. That takes the reading from neutral to bearish. The bears are now fully short and leveraged. The bulls remain long and leveraged, but there are fewer of them. Generally, this is a prescription for a rally given the size of the move, but with smart money any contrarian move by the market can reverse not long after. That means we could see a rally and then a reversal in the direction of the smart money positioning. This is a common outcome, but the market as always has the final say on where it goes and when.

As always. Very informative.

 

[coolhand]

This week's NAAIM reading took a nose dive, falling more than 25 pts. That takes the reading from neutral to bearish. The bears are now fully short and leveraged. The bulls remain long and leveraged, but there are fewer of them. Generally, this is a prescription for a rally given the size of the move, but with smart money any contrarian move by the market can reverse not long after. That means we could see a rally and then a reversal in the direction of the smart money positioning. This is a common outcome, but the market as always has the final say on where it goes and when.

 

[coolhand]

The latest NAAIM reading saw the mean average drop close to 6 pts this week. The reading is now in the middle range of neutral. The bears remain short, but not leveraged and bulls remain long and leveraged. Being this is a neutral reading, it doesn't give us much to go on. As for myself, given how far this market has gone until recently, we could be seeing early signs of a bigger breakdown yet to come. That's just an opinion. I can't (or won't) predict that because the market likes to play with us. Since NAAIM is collectively straddling the fence, it may not be a bad idea to reduce market risk to your personal risk tolerance level (taking into consideration your TSP transfer limitations). That's just something to consider. I am not qualified to give market advice.

 

[coolhand]

It was posted late today, but NAAIM finally got around to posting this week's survey. It shows the mean average falling another 13 pts, which puts it into the upper range of a neutral stance. The bears took off their leveraged shorts and are now just fully short. The bulls remain fully long and leveraged. So, given the bears backed off their leveraged shorts and the bulls remain committed to the leveraged long side, I believe the downside may be getting near at least a short term bottom. But the reading is neutral overall, so this market could remain volatile and keep both sides guessing to some degree. I am wary of a change in market character that may not give us a lot of time to recognize it before a bigger move occurs (in either direction). I refer to what WorkFE said in the previous post.

 

[WorkFE]

So, I would say we see more weakness first, which is what we are seeing, but the selling may not last all that long. We do want to be on guard though, for a change in market behavior over the longer term.

News moves faster than we can read it and the market can flip twice as fast. Keep your guard up and some dry powder available at all times. No hitting below the belt.

 

[coolhand]

As I mentioned yesterday, I was looking for a portfolio adjustment from NAAIM in the bearish direction as a result of the Fitch downgrade on the US outlook; though I didn't know how much of a shift we might see. Well, the latest NAAIM reading shows the bears not only put on some shorts, but they went fully leveraged too. Having said that, the shift in sentiment, which saw the mean average fall about 23 pts, remains bullish overall. The bulls remain long and leveraged and in much bigger numbers than the bears (which is why the average remains bullish).

So, I would say we see more weakness first, which is what we are seeing, but the selling may not last all that long. We do want to be on guard though, for a change in market behavior over the longer term.

 

[coolhand]

Fitch's downgrade of the US is likely going to caused some measure of portfolio adjustments among the NAAIM money managers. Since they were pretty bulled up last reading, I suspect we'll see some measure of a defensive reaction. Not necessarily a big one, but I would expect their bullishness to drop at least a bit. It will be interesting to see what the reading is tomorrow and how they reacted to the downgrade.

 

[coolhand]

The latest NAAIM reading give us more of the same in recent weeks as the mean average rose almost 3 pts. It can get higher still, but not by a lot. The numbers show that they are heavily bulled up with leveraged long positions. There is a small short position shown in the readings this week, but that is likely some risk spreading happening there. So, this reading suggests more upside over the coming days.

 

[coolhand]

Hello FWM,

I have indicated in previous posts over the years that the NAAIM reading can see short term reversals, but generally it's when there is a big sentiment move in NAAIM and not a modest one like this week (and even then the reversal is often short lived). I use NAAIM as my only sentiment measure because they are smart money and I have long since developed a healthy respect for their uncanny ability to get it right a great deal of the time. They are smart money for good reason and it is usually because they are connected and they also know how this game is played (by the whales). They know how sentiment works too, so why should we second guess them?

When this was a bull market (not sure if we have one now or not anymore), the sentiment readings across many surveys were quite bullish for months on end. And still the market rallied.

Most of us have heard that the market can remain irrational far longer than we can remain solvent. I don't know that I'd say the market is irrational just yet, but remember that Alan Greenspan coined the term "irrational exuberance" back in the 1996 and it would be several years later before the market peaked. I can't imagine we'll see anything close to that kind of sustainment, but even if it's another few months it would be quite an upside run.

 

[FireWeatherMet]

NAAIM gave us yet another good sentiment indication last week as they got very bullish and the market followed suit by rallying some more.

This week, the mean average increased about another 6 pts., which makes for an even more bullish reading. Looking at the numbers, the bears have pretty much given up and joined the bull party. This reading, like last week's reading, seems to predict more upside yet to come in the week ahead.

This melt-up could go on for just a few more days, or it could be weeks to months. It is not very predictable, so remain vigilant and enjoy the rally while you can.

Just wondering if in the short term (3-7 days) that means TOO Bullish...and those last Bears heading to try joining the party, end up opening the "Exit Door" for those who've been in the party all along and now leaving for the exits...catching a cab for the safety of home...to catch a good nights sleep, then see what new party is scheduled tomorrow night.:fest30:

Without giving away any "decision parameters" regarding what our own TSPtalk Sentiment Survey says...the level of bullishness was VERY high...pretty much at a high for 2023 (below...survey polling was at the end of last week).

 

[coolhand]

NAAIM gave us yet another good sentiment indication last week as they got very bullish and the market followed suit by rallying some more.

This week, the mean average increased about another 6 pts., which makes for an even more bullish reading. Looking at the numbers, the bears have pretty much given up and joined the bull party. This reading, like last week's reading, seems to predict more upside yet to come in the week ahead.

This melt-up could go on for just a few more days, or it could be weeks to months. It is not very predictable, so remain vigilant and enjoy the rally while you can.

 

[dannyboy]

Last week, the NAAIM mean average ticked up to a bullish reading from modestly bullish the previous week. The day the reading was posted to the internet the market got whacked to the downside. At the time, many may have been questioning the validity of the NAAIM sentiment reading given the hard move down. Now, one week later the DWCPF is hitting highs it hasn't seen since last Summer, while the S&P continues ramping to the upside itself. So, once again the NAAIM reading was valid.

This week, the mean average rose a little more than 10 pts, which puts it in a very bullish posture. I note that the bears are not taking short positions at all and the bulls, who remain long and leveraged, have accumulated more bulls. This sure looks like a prescription for more upside (this is smart money) and it probably is, but as the bears continue to capitulate this market could run out of steam for at least a bit. Good luck guessing when that may happen.

Your insights are very valuable to me. I do hope that you will continue to post your insights.
db

 

[nasa1974]

I'll take as much upside that the bulls can hand out. :banana:

 

[coolhand]

Last week, the NAAIM mean average ticked up to a bullish reading from modestly bullish the previous week. The day the reading was posted to the internet the market got whacked to the downside. At the time, many may have been questioning the validity of the NAAIM sentiment reading given the hard move down. Now, one week later the DWCPF is hitting highs it hasn't seen since last Summer, while the S&P continues ramping to the upside itself. So, once again the NAAIM reading was valid.

This week, the mean average rose a little more than 10 pts, which puts it in a very bullish posture. I note that the bears are not taking short positions at all and the bulls, who remain long and leveraged, have accumulated more bulls. This sure looks like a prescription for more upside (this is smart money) and it probably is, but as the bears continue to capitulate this market could run out of steam for at least a bit. Good luck guessing when that may happen.

 

[nasa1974]

This week's NAAIM reading rose about 7 pts, which retraces the drop in the mean reading last week. This puts the reading back into a bullish condition (from modestly bullish). The bears had no change in their short positions and remain 50% short, but it looks like they picked up a few bears. The bulls remain 100% long and leveraged and they picked up some bulls, so some sideline money found its way into both the bull and bear camps this week with the bulls picking up the biggest gain, which is why the reading rose.

The market continues to make it difficult to pick your entry and exit spots, but the NAAIM smart money is still pointing higher.

Doesn't look like the market is listening today.