coolhand's Account Talk

[coolhand]

Today's NAAIM reading was a bit of a surprise for me. Not a big one, but it was not what I would have expected. The reading jumped close to 16 points, which is more significant than what we have seen of late. The average is now modestly bullish. The bears had no shorts last week and they are still not shorting this week. The bulls, who have been leveraged long for some time now, remain leveraged long and added to those longs since last week.

Now, I know this is the bullish holiday season, but to not see any shorting at all given the current market action is what is surprising me the most. Granted, they are not heavily bulled up, just leaning decidedly bullish, so there does remain some caution. Is it the bears sitting in neutral or cash positions keeping the mean average down? Still looking for an opportunity to short with both hands, but taking a wait and see approach? Perhaps. Maybe the end-of-year rally happens again after an early swoon, but what if it's more selling instead?

Of course, the next couple of weeks and into early January will be interesting to say the least.

 

[coolhand]

The latest NAAIM reading shows that the mean average has dropped almost 9 points. This drop still keeps the reading in the neutral area, though on the lower end. Looking at the numbers I see that the bears are not shorting the market at this time. They only had modest short exposure last week. The bulls remain leveraged long. The overall reading suggests more up/down action with some measure of a floor under the market. Positive seasonality may be the reason for the caution on the short side.

 

[coolhand]

The latest NAAIM reading shows a modest rise in the mean average. The reading remains neutral, but I note that short exposure was reduced 75%, while long exposure remained leveraged at near the same levels. This suggests that the downside remains limited and we may even see another attempt to drive price higher. The fact that these managers remain tempered in their collective market stance suggests that the long side remains a reasonable play (based on current positioning), but for how long? And we are heading into the historically strongest time of year for stocks. Will this year keep with the norm? We'll know later this month, but the smart money is so far not showing a strong inclination to throw caution to the wind.

 

[coolhand]

NAAIM didn't post last week's survey till yesterday. That reading showed a modest dip in the mean average. I note that full short positions remain in place for the 4th week in a row, while leveraged long positions also remain in place (for many weeks now). Overall, the numbers didn't change much. The overall reading is neutral.

 

[coolhand]

The latest NAAIM reading rose almost 12 points this week, which isn't a big jump, but it sure does seem to suggest the downside will remain limited. I see this number as still neutral, but I think we can also see it as modestly bullish given the upward direction of the reading. Keep in mind that this group of money managers were very bullish for years (months at a time) during the bull market. The mean average was often over 90 and occasionally even higher than 105. So, a reading of 64.96 like we have this week, is not a buy signal in my book. There is still plenty of caution being shown by these money managers. However, having exposure to stocks on some level is a reasonable consideration. Obviously, how much exposure is dependent on your own research and risk tolerance.

 

[coolhand]

NAAIM continues to report that they are having trouble uploading data, but they did post the numbers as text. The number dipped slightly to 53.33, which is a bit more than 1 point lower. It is not meaningful. Overall, they are collectively riding the fence with leveraged long positions and non-leveraged short positions. The reading remains neutral.

 

[coolhand]

NAAIM has posted that they are having trouble posting their weekly reading. However, they did give their mean average which is about 1.31 higher than last week. That is not enough of a change to be meaningful. So, without being able to look at the numbers I would say that they probably didn't change much from last week either. The reading remains neutral. These money managers continue to spread out their risk in both directions.

 

[coolhand]

The latest NAAIM reading shows the mean average rising moderately to what I would call a fairly neutral reading. This is the highest reading since late August, but like I said, it's only neutral even if it has been moving in a bullish direction the past 2 weeks. The numbers show a similar spread as last week with the bears short exposure very near what it was last week, while the bulls have taken a bit more bullish long exposure. What does this latest reading really mean? It certainly appears that the short side is limited for the moment, but there are some big events on the horizon and we don't know how that might affect the market. Maybe that is why NAAIM is only neutral. They don't appear to be trying to hit any homeruns in either direction. Caution is still the name of the game.

 

[coolhand]

NAAIM had a big jump in its mean average this week. The reading is up more than 23 points. Looking at the numbers, the bears (who were not leveraged short) have cut their short exposure by 60%. Bullish leverage rose a fair amount as a result. Having said all this, the reading itself is still not bullish. I would call it modestly bearish. It would appear that a lot of money is sitting in cash given the overall numbers. These numbers would suggest that they are wary of both the long and short side. No surprise there.

 

[coolhand]

It's that time of the week again. This week's NAAIM reading dipped to a more bearish posture. These money managers really do seem to expect this market to drop significantly sooner or later. In this case, it's later as we've been watching this sideways dance for a awhile now. But support has currently been breached on the major averages. The question is whether support will become resistance over the days ahead.

Looking at the numbers, the bears increased their shorts modestly and they are now fully short (not leveraged). There is still no leveraged shorts shown in the readings. Bullish longs remain in place for risk management. So, again the reading is quite bearish.

 

[coolhand]

The market is testing support once again. At some point I expect it to fail. Is it this time? NAAIM hasn't been buying the bullish argument (aside from adding longs for risk management).

 

[coolhand]

Today's NAAIM reading shows the bears backing away from their recent leveraged short positions (not a surprise). The overall reading rose a fair amount, but it only went from very bearish to just bearish. I very much suspect that these managers are not going to get bullish in this market environment easily. Leveraged long positions remain in place (risk management) and the bears are now sitting back again waiting for another potential opportunity to get leveraged short again. Nothing much has changed. It's a waiting game that could go on for some weeks yet and it will be interesting to see how things unfold as we get closer to the holiday period at the end of the year.

 

[coolhand]

I would think at least some of you have noticed that over the past weeks and even months, it seems that when the NAAIM money managers start leaning a bit with some leveraged short positions, the market has typically rewarded them with a snap back rally; often a big one too. This is how the dumb money is usually rewarded, but even the smart money is not getting any leveraged traction on short positions (generally speaking). This can't go on forever, but good luck trying to discern when it's "different this time".

 

[coolhand]

This week's NAAIM reading took a sizeable dip from last week's reading. This group of money managers are very bearish now. There are few bulls left. Leveraged long positions are still in evidence, but I think that is more about balancing a portfolio than actual bullishness. The bears have moved from simply short to taking some leveraged short positions. They would seem to be smelling blood in the water, but they have not thrown caution to the wind (they are not fully leveraged short, only half).

I would take this week's numbers serious. Geopolitical jawboning and events are highly suggestive of turbulence (war) over the weeks ahead.

 

[coolhand]

The latest NAAIM reading shows only modest changes from last week. The reading dipped and the numbers show a modest increase in bearish sentiment and a modest decrease in bullish sentiment. As has been the case for many weeks now, the bulls remain fully leveraged long, while the bears are short, but not leveraged. The previous 2 weeks did show a somewhat modest position in leveraged short positions, but that is not the case this week. The overall reading remains bearish.

 

[coolhand]

Not too much change for this week's NAAIM reading. The mean/average drifted higher, but not enough to be meaningful. Looks like some relatively modest reshuffling of positions in the numbers, but overall it's the same bearish picture for these money managers. The reading remains bearish.

 

[coolhand]

Things are starting to get more interesting. This week's NAAIM reading got a bit more bearish overall. I note that the bulls remain leveraged long, but their numbers were down a bit. The bears, on the other hand, are starting to take some leveraged short positions, but they are only nibbling at leveraged positions and remain cautious on the leveraged short side. Reading between the lines of this current NAAIM picture seems like this market may be getting ready to take another leg down. We'll see how it goes, but if I was a bull I would be rather nervous right now.

 

[nasa1974]

In my opinion, this market will be heading lower longer term, but perhaps not without punishing bears on the way down.

Back in the 6 digit loss category. It looks like I'm going to have to live with that. Can't afford to ride this train much longer.

 

[coolhand]

This week's NAAIM reading took a plunge lower from neutral to bearish. The bears remain fully short, but not leveraged short and the bulls remain leveraged long, but there a fewer of them. This reading, which dropped more than 22 points, is now bearish. With this sizable shift a bottom may be near, but because this is smart money it may or may not hold. Watch for technical indicators of support to see whether they hold or not. In my opinion, this market will be heading lower longer term, but perhaps not without punishing bears on the way down.

 

[nasa1974]

CH, Thank you as always for your insight.