Bull or Bear? BTFD or STFR? TA look at Market direction

[KW]

Are we there yet?  Markets don't like to get too far away from their long term trend lines, hence the periodic corrections to bring them back.  Have we unwound the complete insanity of the Covid period?  Not by a long shot.  

The S&P500
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[Raven]

You may well be right. The MMTH Chart though paints a slightly less pessimistic view... sort of   

[KW]

In the down phase of a bear market cycle, selling from retail investors is a precondition for hitting the Panic and Capitulation phases.  It hasnt happened yet, but looks to be starting.  The reason it hasnt happened yet is because the mega-cap stocks have been holding up the indices, and pretty much everyone from hedge funds to retail have been invested in the mega-caps, so while there has been absolute destruction in the smaller cap stocks over the last 18 months, particularly the expensive "growthy" ones, the index falls have been pretty mild so far.  But last week Apple broke, and where Apple goes, so goeth retail .....

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[KW]

I concur. 

"The action coming from individual stocks is dismal, the indexes are dominated by distribution days and our risk models remain bearish. There is nothing more to be said...  for now, cash is king!"
https://twitter.com/markminervini/status/1579487273821040642

[BlackPeter]

I concur.

"The action coming from individual stocks is dismal, the indexes are dominated by distribution days and our risk models remain bearish. There is nothing more to be said...  for now, cash is king!"
https://twitter.com/markminervini/status/1579487273821040642

You might be right .... but lets not forget ... holding cash costs you not just the opportunity costs for missing rises, but as well the price of inflation. And to add insult to injury you have to pay taxes for interest rates which are below inflation.

[Shareguy]

Gosh Dow up 700. Apple up $11. This will be the fourth week of gains for the Dow. False rally or start of upswing?

[KW]

This is a very good video explanation of the reverse bullwhip effect that is currently playing out globally.  Well worth watching
https://www.youtube.com/watch?v=5cqc5dQaiGg

[KW]

This is one of my favourite charts (new high/new low) - as you can see, the change from bull to bear was pretty obvious in November 2021.  And despite a few bear market rallies since then, we are still in the bear market.  

Patience, grasshoppers!

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[KW]

The hi/lo chart has finally gone positive.  Whether its another bear market rally or the beginning of a new bull, only time will tell. However, it does mean that its probably time to dip one's toes back in the water, and buy stocks in uptrends. As always, have stops in place in case this turns out to be a temporary rally  You cannot view this attachment.

[KW]

Hi/Lo chart still in the Buy zone.  This chart is remarkably prescient.

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[KW]

We are still in the buy zone according to the Hi/Lo chart.  Another chart that has been pretty good at indicating market sentiment is bitcoin.  Who knew that its real raison d'être was as an equity market indicator 
When looking for trends you should look for multiple confirmations from multiple sources.  Think outside the box and don't just rely on major market indices.  Indices are lagging indicators - by the time they move the move may already be 80% over.  This is because they are too heavily weighted to a small number of mega cap stocks (like the Nasdaq), or they have highly cyclical stocks that take over when normal equities start declining (like the miners in the ASX200 and energy in the Dow).  So where you really want to look is "under the bonnet" so to speak. 

Bitcoin has turned out to be highly correlated with the "everything" bubble, and without any fundamentals to support it, it is really a pure play technical indicator, measuring market participant sentiment and funds flow into and out of, a high risk asset.  Without any fundamentals like earnings surprises or any megacap stock to influence it, it should be a more responsive risk indicator than the Nasdaq. 

Bitcoin is  approaching a major level of resistance - if it breaks down here this may signal the end of the bear market rally, if it goes higher still that's a signal that its still go for risk assets like tech/fintech/biotech/high growth stocks.

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[KW]

The Hi/Lo chart has now had 3 negative days, and Bitcoin has hit that resistance level and turned down.  Time to be alert but not [yet] alarmed.  Act on invididual stock signals.
 
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[KW]

Not looking good folks.  The Dow, S&P500 and Nasdaq have all dropped below their 50 and 200 day moving averages.  Bitcoin is tanking.  VIX is up 18% today.
 Time to bank profits and reduce risk.  6% interest on cash in the bank is starting to look good.  Unless your bank is Silvergate, Silicon Valley, Credit Suisse or JP Morgan lol.  Is this the start of the systemic bear market meltdown and financial contagion?  Who knows, but why stick around to find out?

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[Breezy]

Not looking good folks.  The Dow, S&P500 and Nasdaq have all dropped below their 50 and 200 day moving averages.  Bitcoin is tanking.  VIX is up 18% today.
 Time to bank profits and reduce risk.  6% interest on cash in the bank is starting to look good.  Unless your bank is Silvergate, Silicon Valley, Credit Suisse or JP Morgan lol.  Is this the start of the systemic bear market meltdown and financial contagion?  Who knows, but why stick around to find out?

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Most long term investors will be unfazed, why sell any stocks in fundamentally sound companies for any substantial loss when you don't have or need to. Remember no where is safe if a nuke button is pressed or something else similar comes along.

[KW]

Most long term investors will be unfazed, why sell any stocks in fundamentally sound companies for any substantial loss when you don't have or need to. Remember no where is safe if a nuke button is pressed or something else similar comes along.

I'm selling so I can bank my profits before they all disappear into thin air.  They were hard earned this year.  Then I will wait for the bear market to be over, or for another bear market rally to kick off.