Market in Transition? Posted by 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?).

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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.

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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.
 
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