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"Anyway, this is where bears wanted to be, and patient bears who waited for the suggested targets were rewarded with reasonable entries. No guarantees that the market doesn't pull something funky, since, frankly, nothing surprises me from this nutzoid market anymore, but it's as promising a near-term setup as bears have seen in months, so we'll see if they can do anything with it."
http://www.pretzelcharts.com/
"Last update's call for the 1/A low in SPX and COMPQ was good, and both have rallied up to their respective target zones. COMPQ ran right to its 2/B label:"
"SPX ran a hair past its zone:"
"Interestingly, futures are down pretty solidly right now, presumably on the breaking news that cOmPUter mODels suggest that the Atlantic Ocean will ultimately close, which will devastate the East Coast tourist dollar and the local economies that depend on it. Can't go to the beach if it's closed!"
"Also, inflation seems to be picking up again, so futures probably don't like that, either. Core PPI was up 0.50% vs. the estimated 0.1% that was projected by people who have all their shopping done by servants.
Anyway, this is where bears wanted to be, and patient bears who waited for the suggested targets were rewarded with reasonable entries. No guarantees that the market doesn't pull something funky, since, frankly, nothing surprises me from this nutzoid market anymore, but it's as promising a near-term setup as bears have seen in months, so we'll see if they can do anything with it. Trade safe."
CyclesFan
SPX Thursday evening take
$SPX - The 10 day low on Tuesday is confirmed now. After a 2 day rally it's only 17 points below Monday's high and it looks like a new high may be made tomorrow, before the market enters into the 2nd half of February which has been historically bearish. pic.twitter.com/RKrXu8Karn
— CyclesFan (@CyclesFan) February 15, 2024
Tom McClellan Twitter post
I'm of the belief that a Top is in or his close, at least an Intermediate one lasting most of this year if not all of it
Latest data from Cass Freight https://t.co/scv4rHvEPR shows that both shipments and expenditures are still shrinking. Not a good time to be making monthly payments on a Peterbilt. pic.twitter.com/0EBNSM2Bf5
— Tom McClellan (@McClellanOsc) February 15, 2024
Thanks Glen
I know we are not going down but I think we have a top. This week is Monthly Option Expiration and so I can see prices hold through tomorrow but I do expect selling next week. Obviously I could be totally wrong and we take off next week to Higher Highs but I don't think so.
For me the tell is AAPL and TRAN they both are showing weakness yesterday and today. I think they are the Canaries in the Coal Mine
http://stockcharts.com/c-sc/sc?s=AAPL&p=D&b=5&g=0&i=t0252600497c&a=1599493471&r=1708019195180
http://stockcharts.com/c-sc/sc?s=%24TRAN&p=D&b=5&g=0&i=p86657076289&a=259614102&r=1708019219498
RCKS Thanks.. My one guru says we need to stay below 5018 Futs which is 4994 on Cash. Could run to 5085 to 5090...
I have no real targets right now. So just waiting and watching.
" While it seems reasonable to think we'll get at least one more wave down, it's too early to say if that will then go on to develop into a still-larger impulsive decline, but we'll keep an eye out as it develops."
http://www.pretzelcharts.com/
"On Friday, my last real update (pre-illness generated fever, that is), I wrote:
Last update discussed that the market likely needed a few more highs before it could enter an inflection
zone, and if the gap up in futures sticks, we'll be getting into that zone today.
We then ended up making one more high on Monday (before reversing all of Monday's gains), but I can't call it much better than that. By all rights, the decline does appear to be impulsive, so any intrepid bears now have a zone to act against (north of the all-time high would suggest that impulsive decline was the c-wave of an expanded flat).
Note on the chart below, I sketched in 2/B as a gap fill, but as a corrective wave, 2/B can run higher or lower than that. Its only hard rule is that it can't break the red 5 high."
"COMPQ ended up dying right at the median channel line, just as I'd predicted a week ago:"
"Finally, INDU reminds us of the most bearish potential here, but again, this is "only" that at this stage; it's far too early to say if it will be this bearish or only be a short-lived correction:"
"In conclusion, while the INDU chart shows the most bearish potential and the (iii) target label, which was added back on January 8, was ~reached, please keep in mind that the correction could always just be a simple ABC as shown on the COMPQ chart. While it seems reasonable to think we'll get at least one more wave down, it's too early to say if that will then go on to develop into a still-larger impulsive decline, but we'll keep an eye out as it develops. Trade safe."
CyclesFan Update
SPX: We got the reaction to CPI
$SPX - Based on the frequency of short term cycle lows since December, the next 10 day low should occur on Wednesday. If the rhythm doesn't change this time, the market should have a negative reaction to the CPI tomorrow and if it's a down day it will confirm a decline into Wed. pic.twitter.com/pWS8j1uVMA
— CyclesFan (@CyclesFan) February 12, 2024
By Lawrence G. McMillan
There is a developing divergence between Cumulative Volume Breadth (CVB) and $SPX. That is, $SPX is making new all-time highs, but CVB is not. CVB is merely the running daily total of “advancing volume minus declining volume.”
There are two uses for CVB: one is a positive signal – when CVB makes a new all-time high before $SPX does. Then $SPX normally follows. However, there is a negative signal as well. When $SPX is making new all-time highs and CVB is lagging behind, that is a warning sign for the stock market. However, it is important to understand that this negative divergence can sometimes last for a long time – it is not an immediate sell signal.
"......I do want to remind bears that it's entirely possible for the market to blow through this first inflection zone, so (as I've said many times before), awaiting an impulsive decline is not a bad strategy."
http://www.pretzelcharts.com/
"Yesterday, I came down with the aptly named Martian Death Flu (okay, that name is made up; but it's NOT Covid, likely just a bad sinus infection) -- the first time I've had a head cold in like 5 or 6 years. Now, I'm not telling you this for sympathy, I'm telling you this because I've been running a fever on and off and have been generally feeling like I was run over by dump truck, so today's update is just going to be a couple of updated charts with nothing in the way of new commentary (I feel like giving market reads with a fever is probably irresponsible). I debated "calling in" today and not doing an update at all, but that's not really my style.
COMPQ has run farther into its target zone:"
"INDU still has a shot at this pattern -- but again, keep in mind it could be much more bullish than this, if this is a traditional third wave:"
"So, not much to add -- but I do want to remind bears that it's entirely possible for the market to blow through this first inflection zone, so (as I've said many times before), awaiting an impulsive decline is not a bad strategy. Trade safe."
".......last update's call for multiple new highs was good, but we may not know for several sessions yet whether bears can do anything with this inflection zone."
http://www.pretzelcharts.com/
"Last update discussed that the market likely needed a few more highs before it could enter an inflection zone, and if the gap up in futures sticks, we'll be getting into that zone today.
That said, keep in mind that this is not a "guaranteed" reversal zone, merely a potential inflection zone. The market reserves the right to tack on extended fifths and the like if it so chooses. For that reason, cautious bears may want to await an impulsive decline before getting too aggressive."
"SPX hit the "5" target zone (from Wednesday's update) in the overnight session, but has since fallen back a bit:"
"Finally, INDU is now very close to the (iii) label from January. This shows one option that could give bulls a headache, were it to play out:"
"In conclusion, last update's call for multiple new highs was good, but we may not know for several sessions yet whether bears can do anything with this inflection zone. Trade safe."
"Not Just Yet, But Maybe Soon"
http://www.pretzelcharts.com/
"Gonna let the charts do the talking today, starting with COMPQ, which has done a good job keeping us on the right side of the trade for the past few weeks:"
"SPX in a similar position:"
"As I mentioned a month ago, INDU continues to be the thorn in bears' side. The first chart discusses the most bullish option:"
"The two options that offer bears some relief would be (1) the diagonal shown below, or (2) a large b-wave high that revisits the 2022 lows before heading back up:"
"In conclusion, the market still appears to have higher to run over the near term, but will soon be getting into a near-term inflection zone. We'll see how it handles that. Trade safe."
Thanks RCKS.. I do not propose that I am a market guru at all. I try and see what both sides see but I do have a bearish tendency to my view of the market. I think Da Boyz can manipulate the markets and do at times. And now us small traders are competing with the AI systems around so we have almost zero chance of being right all that often. And if I make a reply that sounds like I disagree with you I do not mean to. But guess I am just stubborn and think I'm right sometime too. But I do try and find guru's who have winning records...If you can find them anymore..I now read a couple one is mostly a very short term guy..Like hours and the other guy has some kind of system that sems to work except he get in a little early . But I appreciate all your posts and read them all.
Why This Latest Bull Market Advance Is So Bullish
FEBRUARY 04, 2024 AT 01:16 PM
Tom Bowley
Chief Market Strategist, EarningsBeats.com
http://stockcharts.com/articles/tradingplaces/2024/02/why-this-latest-bull-market-ad-997.html
"I've been bullish for nearly two years now. Bullish rotation and Wall Street manipulation started the latest leg of this SECULAR bull market back in June 2022. If you follow my research and work, then I'm sure you remember these two headlines on YouTube:"
http://d.stockcharts.com/img/articles/2024/02/04/f2293d4b-5b40-4c62-98ee-1e95bd1037d9.jpg
"You can see that these two calls were in mid-June 2022 and late-September 2022. They weren't the exact bottom, which occurred on October 13, 2022, but I'd say I was pretty darn close. And very few agreed with me at the time. That's okay though, because my research is most important to me when I see things differently from everyone else. History has proven me correct and that's what's most important to me.
The bears don't give in easily, however, as it's always in style to think bearish thoughts. Pessimism runs wild in humans. It's this pessimism that absolutely fuels bull markets.
Sentiment
Folks, the pessimism is just beginning to top and roll over. The 1-year (or 253-day) moving average of the equity-only put call ratio ($CPCE) has been unbelievably accurate in calling MAJOR bull market advances. It's been calling for one again and it's right again:"
http://d.stockcharts.com/img/articles/2024/02/04/664549b0-0bdd-43f2-8841-ff9f833e0459.jpg
"Sentiment plays a HUGE role in long-term stock market direction. The current secular bull market is likely safe for months, if not years, simply because the options world remains do pessimistic. Those same options traders were incredibly bullish at the end of 2021, just before our nasty 2022 cyclical bear market. Simply "put", there were no more buyers. Everyone that wanted in was already in!
I can see a 5-6% pullback at some point in 2024, possibly even a 10% correction over the summer, but I'm confident we'll end 2024 at all-time highs. The above CPCE chart is one big reason why.
Bullish Rotation
The bears have tried just about every excuse since mid 2022. Inflation and "Don't fight the Fed" were two of my favorites back then. Then the bears morphed into "rallies are too narrow", "breadth is weak", and, of course, "it's only the Magnificent 7!" Let me just say that the Magnificent 7 is the largest part of the SPY and QQQ, so if I could hand pick which 7 stocks I'd want to perform well, it would be those EXACT 7!
But I'd agree the best bull market is one in which we see wide participation. At EarningsBeats.com, we absolutely prefer seeing the rising tide lifting ALL boats. The rally since October 27th is the rising tide lifting ALL boats!
I've broken down the key S&P 500 rallies since the October 2022 cyclical bear market low. Check them out:"
http://d.stockcharts.com/img/articles/2024/02/04/9749ae7d-7b41-4521-9b24-43609f81edce.jpg
"The red-shading shows the narrow strength in our 3 key aggressive sectors - XLK, XLY, and XLC. The green-shaded area highlights the WIDE participation in the rally off the October 2023 low. The red-shaded rally had leadership from 4 of the 5 aggressive sectors. The only one missing was financials (XLF). The green-shaded rally, however, shows ALL 5 aggressive sectors leading AND several other sectors not far behind. That's the rising tide lifting ALL boats.
Top 20 Best Performers
Many of us (maybe all of us?) suffer from some form of recency bias. It's easy to look at last week's rally led by Meta Platform's (META) blowout quarterly earnings report and believe it's simply the Magnificent 7 doing their thing again. Last week was more than that, though. If we look at the stocks in the S&P 500 and NASDAQ 100, yes, META was the best performer and certainly did its share in lifting our major indices. But if you look at the Top 20 stocks (in the S&P 500 or NASDAQ 100) last week, you'll see it was much more than META:"
http://d.stockcharts.com/img/articles/2024/02/04/e56323bf-1cbb-4ad8-8582-fc8b5e0754ce.jpg
"There's a wide variety of sectors and industry groups represented on this Top 20 list. They won't get equal air time on CNBC, though. You'll hear how META and AMZN drove the market higher. That's not a false story, but it's an incomplete one.
I mentioned on several occasions last week how I believed that META and AMZN were going to report blowout numbers and they both came through. Check out their charts, especially their relative performance vs. their industry peers:
META:"
http://d.stockcharts.com/img/articles/2024/02/04/c36b76b1-ae1a-449d-b00f-4e245a1603dd.jpg
AMZN:
http://d.stockcharts.com/img/articles/2024/02/04/24ee79ab-e106-4f6e-a6b0-86ff9c02f3a7.jpg
"I believe there's a huge advantage heading into earnings IF a company is a leading stock within a leading industry group. I expect solid news from these companies and then it simply comes down to whether those strong results are already built into the stock price at the time of release. If not, we many times will see the type of reaction we saw on both META and AMZN.
I'm going to feature a company that reports this week in tomorrow's FREE EB Digest newsletter. I wouldn't be shocked to see a HUGE advance after earnings are released. I certainly expect numbers to come in ahead of Wall Street consensus estimates. If you'd like to take a look at this strong company, CLICK HERE to enter your name and email address, if you're not already a FREE subscriber. There is no credit card required and you may unsubscribe at any time."
Happy trading!
Tom
"....if a Chinese recession created major discontent among its youth, could all of that lead to desperation on China's part -- i.e.- could it ultimately become a catalyst for war?"
http://www.pretzelcharts.com/
"Today, I want to depart a bit from the usual topics of discussion and talk about something entirely different: China. (Or, as Trump might call it: "Chy-naa.")
As many readers probably know, Evergrande, the most indebted real-estate developer in the immediate Solar System, and possibly in the entire Milky Way Galaxy, defaulted on its debt in 2021, but was back in the news again last week when a Hong Kong court ordered its liquidation. Evergrande has $300 billion in liabilities and (theoretically -- who knows in practice with an insolvent entity) $240 billion in assets.
While this is not unexpected and likely already "priced in" (whatever that means, as if investors could possibly know how to "price in" an event like this), the liquidation process could impact investor confidence, not only in China's property sector but also more broadly in emerging markets.
China's real estate weakness, partially stemming from Evergrande's collapse (and, if Peter Zeihan is correct, China's larger demographics problem) and partially stemming from massive overbuilding, has been a significant headwind for China's growth. The has contributed to a decline in consumer and investor confidence, affecting China's economy.
The resolution of Evergrande's debts could, in the long run, help restore access to capital markets for Chinese firms, but the immediate effects might include further pressure on already fragile markets.
Parallel with that, the Chinese yuan has been experiencing a decline in value due its stuttering economy, widening yield differentials with other major currencies, and geopolitical tensions. The strength of the US dollar, driven by hawkish Fed policy, has also played a significant role in the yuan's weakness. China's central bank has taken measures to support the yuan, such as setting the yuan midpoint firmer than market projections and cutting the foreign exchange reserve requirement ratio (RRR) for financial institutions.
So here's where it all starts to get interesting: In the event the yuan ultimately continues to fall, the global playing field of the past many years begins to change: A weaker yuan can boost Chinese exports by making them more competitive internationally, which could potentially lead to trade imbalances with other countries. However, it also raises the cost of imports in China, which could impact global commodity markets and multinational companies with significant operations in China. Additionally, a depreciating yuan might lead to capital outflows from China, affecting emerging markets and global financial stability. It's also worth noting that the yuan's performance against a trade-weighted basket of currencies is an important indicator of stability for emerging markets, and a stable yuan can serve as an anchor of stability for these markets.
The slowing of China's economy has raised concerns about the possibility of a recession and its subsequent global impact. Several factors contribute to the economic slowdown, including the bursting of the property bubble, which has significantly impacted household wealth, primarily invested in real estate. With 70% of Chinese household wealth tied up in real estate, a major slowdown in the sector affects other parts of the economy.
We all know how things went when the U.S. housing bubble burst in 2006-2008 -- and it's worth remembering that it didn't happen overnight, even though many of us saw it coming.
The collapse of U.S. financial markets was gradual... then all at once.
China could be the same way.
Additionally, China faces challenges such as high levels of municipal debt and subdued household spending, which is among the lowest in the world as a percentage of GDP. These issues point to structural imbalances within the Chinese economy, heavily reliant on debt-fueled investment??. For many in China, particularly young graduates facing a record-high unemployment crisis, the economic downturn feels like a recession. The high youth unemployment rates, coupled with deflationary pressures and diminishing household wealth due to declining property values, contribute to a crisis of confidence that deters consumer spending and business investment.
In other words, this situation could potentially spiral into a self-feeding mechanism that erodes China's long-term economic potential??, and a recession in China would almost certainly have significant implications for global financial markets. As the world's second-largest economy, any major economic shifts in China can affect global supply chains, commodity prices, and overall market sentiment.
Emerging markets, in particular, might feel the impact more acutely due to their economic ties with China. A decrease in Chinese demand for imports can lead to lower export revenues for these countries, while a decline in Chinese outbound investment can reduce capital flows into emerging markets. Additionally, global investors might become more risk-averse, leading to increased market volatility and shifts in currency values.
The good news for the U.S. is that a recession in China would likely help end U.S. inflation (and may already be doing so) and, since China is The World's WalMart, might even be deflationary.
The bad news is that a Chinese recession could lead to a host of problems, such as supply chain disruption (since China makes most of the world's widget parts), falling commodity prices (since China is a major consumer of commodities), reduced demand for U.S. exports to China, slowing global growth, currency fluctuations and general instability.
All of which would almost certainly, in turn, negatively impact investor sentiment and could lead to a "risk-off" mentality. And the contagion potentials are almost certainly legion.
So, all that to say, it's worth watching heading forward. My thoughts about China this weekend led me to rethink my long-term TLT chart. Could a recession in China be the catalyst that ultimately leads to deflationary pressures that force the Fed to reverse course? It's worth remembering that last time we looked at TLT's chart, I noted that it had reached a major inflection point for a potentially-complete C-wave correction down. Could China make that complete correction a reality and lead to a final wave up in TLT -- before everything comes crashing down globally?"
And, beyond all that, if a Chinese recession created major discontent among its youth, could all of that lead to desperation on China's part -- i.e.- could it ultimately become a catalyst for war? Historically, that's the pattern many other countries have followed.
It's certainly food for thought. Trade safe.
Stock Market Commentary 02/02/24
By Lawrence G. McMillan
"After roaring ahead after breaking out to new all-time highs a week ago, $SPX finally had a setback of sorts. Poor earnings from some of the high-fliers (AMD, GOOG, MSFT) and of course the FOMC meeting conclusion combined to produce a sharp 80-point selloff on Wednesday. Most of it was regained on Thursday, though. But the market is still battling its way through news-related cross-currents: on Friday, it was positive earnings from AMZN and META, but an Unemployment Report that was "too strong" (thereby dampening hopes of a rate cut). Throughout this, the $SPX chart is bullish. There is support at 4800, which extends down to 4680, and as long as that area holds, the $SPX chart is positive.
Equity-only put-call ratios are technically still on sell signals, according to the computer programs that we use to analyze these charts. However, this appears to be a neutral reading to me. It won't really be bearish until it is clearly rising. So, these put-call ratios are not giving a strong signal at this time.
Market breadth had been fairly strong since January 18th, so the breadth oscillators were on buy signals. However, the negative action this week briefly knocked the breadth oscillator back down to sell signals. So, I'd say breadth isn't giving a clear signal at this time, but another day or two of negative breadth will produce sell signals.
Meanwhile, $VIX continues to hover at low levels. It didn't even have much of a reaction to the 80-point down day by $SPX. As a result, the trend of $VIX buy signal remains in place. As we've stated many times before: a low $VIX is not a problem in and of itself. It's only when $VIX begins to rise sharply that the problem arises.
Overall, we are still maintaining a "core" bullish position as long as the $SPX chart is positive -- that is, as long as $SPX is above 4800. We will trade other confirmed signals around that "core," and we may be seeing sell signals soon from MVB, equity-only put-call ratios, or breadth. But right now, those are not confirmed."
http://www.optionstrategist.com/sites/default/files/SPX.JPG?v=1706901720458
http://www.optionstrategist.com/sites/default/files/PC21.JPG?v=1706901720458
http://www.optionstrategist.com/sites/default/files/PC21_W.JPG?v=1706901720458
http://www.optionstrategist.com/sites/default/files/VIX.JPG?v=1706901720458
Thanks RCKS..Sure is a surprise to me to see SPX this close to 5K. Makes you wonder who will be the last sucker..LOL
"Just in: NFP was up significantly, well beyond estimates, so bulls will have to find some other excuse to spend money like Imelda Marcos in a Nike store."
http://www.pretzelcharts.com/
"Today is, of course, Groundhog Day, which means that if nonfarm payrolls are up significantly, we get six more weeks without rate cuts. Especially given that, on Wednesday, Fed Chairdude Powell, having lost a bet, was forced to give his press conference wearing an "Audit the Fed!" t-shirt while walking back some of his previous imminent-rate-cut nonsense.
Just in: NFP was up significantly, well beyond estimates, so bulls will have to find some other excuse to spend money like Imelda Marcos in a Nike store.
Chart-wise, SPX did test the red support line and it held, so far:"
"Near-term, SPX seems to have widened its uptrend channel. Bears would need to sustain a breakdown there to start things moving in their direction:"
"Beyond that, not much to add to Wednesday's update. Trade safe."
"........SPX has captured its next upside targets and could thus embark on a correction if it so desires."
http://www.pretzelcharts.com/
"The past few updates prognosticated that the market still had farther to run on the upside, which has proved out -- but the next upside target (from Jan. 23) was captured, so it's "wait and see" for a minute now:"
"I want to keep the bigger picture in the forefront of our memories unless and until bulls can demonstrate that they have the firepower to keep this (I want to say "charade" -- is that wrong and can you blame me?) going."
"INDU can run higher, and very well may, but worth knowing that it's now done what it needed to do for the rally to complete any time it's ready:"
"Same with BKX:"
"In conclusion, SPX has captured its next upside targets and could thus embark on a correction if it so desires. Not a lot in the way of targets yet as any correction may or may not be short-lived, but the long-term red line is probably worth watching. Trade safe."
Ski posting CyclesFan on SI
https://www.siliconinvestor.com/readmsg.aspx?msgid=34551844
I like it that he pays attention to momentum divergences. There is also a divergence compared to the top last July. There is one on the longer term monthly chart as well.
There is nothing certain, but in majority of cases those divergences turn out right.
$NDX - Got close to the 2.0 extension of the July-October correction at 17806 which is likely to cap the rally out of the October low. Weekly RSI has a negative divergence vs. the December high. If next week is a down week there's a high probability for an intermediate term high. pic.twitter.com/HKSIMYbMoQ
— CyclesFan (@CyclesFan) January 28, 2024
CyclesFan Update:
SPX
$SPX - The next 62-63 day cycle high is imminent. Based on the length of the last cycle the ideal date for the top is tomorrow, but given there's an FOMC on Wednesday the cycle may extend by a day this time. A potential target is the 2.618 extension of the last pullback at 4972. pic.twitter.com/BDvM4izVfP
— CyclesFan (@CyclesFan) January 29, 2024
CyclesFan Update:
NDX first, which I believe is the key to the next two days and new highs in NDX, SPX tied to the Big earnings starting after Mkt tomorrow
$NDX - The next short term high which may turn out to be a multi week high as well should happen tomorrow or on Wednesday as indicated by a 20-23 day cycle high and the negative divergence that RSI(5) currently has, similar to the divergence that existed at the December high. pic.twitter.com/kNyNNIw0KM
— CyclesFan (@CyclesFan) January 29, 2024
Thanks RCKS..Amazing how this market just keeps going up.When we get this kind of move, the indicators do not help much. At least the ones I use.
".........bulls still appear to have more new highs on the horizon one way or another, but whether all this is going to be a (relatively) short-lived celebration remains to be seen."
http://www.pretzelcharts.com/
"Last update noted that it was "still bulls' ball" and SPX made another new high since then, but appears to have done so in three waves so far. This means that even if it drops a bit immediately, it will probably need to head back up and resolve that imperfect high shortly thereafter:"
"COMPQ continues to have the same appearance in that regard, but at a slightly larger scale:"
"Last update showed data indicating that the "bull market" since 2022 has been very narrow, largely being driven by only 7 stocks (AMZN, TSLA, NVDA, MSFT, GOOGL, AAPL, and META), and a look at the chart of, for example, BKX confirms that bank stocks still remain heavily depressed from the 2022 highs. This chart also serves as a reminder that it's still quite possible for this party to be relatively short-lived."
"Another interesting bit of data shows that while mortgage delinquencies remain very low (in keeping with my April 2022 thesis that the fundamentals do not support a "housing crash" anytime soon), delinquencies on credit cards and auto loans have been rising steadily since 2022."
"In conclusion, bulls still appear to have more new highs on the horizon one way or another, but whether all this is going to be a (relatively) short-lived celebration remains to be seen. Trade safe."
Stock Market Commentary 01/26/24
By Lawrence G. McMillan
"New all-time highs (both intraday and closing) were registered on Friday, January 19th, by $SPX. Since then, $SPX has added onto those gains every day, setting new all-time closing highs each day. It seems that a large chunk of the buying impetus came from short covering and "chasing" by longs who weren't fully invested. But there isn't the euphoria that one might normally expect to see, since many stocks are in far worse shape than the major indices.
Since $SPX had spent nearly a month building a base while trading in the 4680 4800 trading range, there should be strong support in that area. A close below 4680 would be very negative, but that doesn't seem likely to happen anytime soon. As for resistance, there is none in the technical sense, since $SPX is at all- time highs.
Equity-only put-call ratios remain on sell signals (for stocks). Even though they've both curled downward over the past few days, the computer analysis programs are still grading them as bearish. As long as they are rising, that's a bad sign for stocks.
Breadth improved just as $SPX was breaking out to new all- time highs, and the breadth oscillators rolled over to buy signals at that time. They remain on those buy signals, and now they have just reached the beginning of overbought territory. It is a positive thing to see these oscillators get overbought when $SPX is breaking
Meanwhile, $VIX has remained subdued and that is also bullish for stocks. Yes, $VIX is low, but that is not a problem for the stock market. The problem would come if $VIX were to rise sharply. It has not done that yet. So, the trend of $VIX buy signal remains in place and will continue to do so until $VIX closes above its declining 200-day Moving Average (which is currently at 15.30).
So, we continue to maintain our "core" bullish position because of the positive nature of the $SPX chart. We are trading other confirmed signals around that, and we are rolling long call options higher as they become deeply in-the-money. One might have figured that a number of sell signals would be appearing by now, but the few that did are all stopped out, so the bulls have it their way right now. Even so, we expect to see more sell signals appear if the market begins to top out. February has been an ugly month a few times in recent memory: 2018 and 2020, especially, but the last two years saw declining Februaries as well."
http://www.optionstrategist.com/sites/default/files/SPX.JPG?v=1706322683511
http://www.optionstrategist.com/sites/default/files/PC21.JPG?v=1706322683511
http://www.optionstrategist.com/sites/default/files/PC21_W.JPG?v=1706322683511
http://www.optionstrategist.com/sites/default/files/VIX.JPG?v=1706322683511
Value Stocks Continued Strength Might Depend On One Area Of Transports
JANUARY 26, 2024 AT 01:39 PM
Tom Bowley
Chief Market Strategist, EarningsBeats.com
https://stockcharts.com/articles/tradingplaces/2024/01/value-stocks-continued-strengt-778.html
"I know all the talk continues to surround technology stocks (XLK), particularly semiconductors ($DJUSSC) and software ($DJUSSW). And why wouldn't it? These groups have been absolutely on fire since the end of the 2022 cyclical bear market. Rates remain low and many of these companies are seeing double digit profit growth. As I've said often, this is NIRVANA for growth stocks. But there comes a time, if we use perspective, that these stocks simply get ahead of themselves in terms of valuations. I don't believe that these areas will simply fall apart as conditions remain conducive for further growth. The economy remains resilient (think soft landing), however, and other areas are showing improvement and strong EPS growth. Bull markets are known for periodic rotation to keep things humming along, so ruling out value areas would be a mistake in my mind.
Financials
Many banks ($DJUSBK) are posting EPS ahead of expectations and the group looks better technically than it has in more than 2 years. As an example, let's check out the weekly chart of regional banks (KRE):"
http://d.stockcharts.com/img/articles/2024/01/26/93a4fdb8-df1b-491f-98f5-b26be20b2566.jpg
"The weekly PPO has turned higher and bullish momentum appears to be accelerating. After significant deterioration in relative strength in March and April, we've seen the KRE trend higher in terms of its relative performance vs. the benchmark S&P 500.
As the Fed lowers the fed funds rate in 2024, we'll see a reversing of the inverted yield curve. No area of the market is hit harder by an inverted yield curve than banks. The reversal will provide tailwinds for the group and I believe those tailwinds are already being felt.
On Monday, I'm featuring a financial stock that reported EPS well above its consensus estimate and appears poised for much further price appreciation in 2024. It pays a very nice dividend, so it's likely to be a stock that satisfies investors looking for both capital appreciation AND income. To register for our FREE EB Digest newsletter, simply CLICK HERE to provide your name and email address. There's no credit card required and you can unsubscribe at any time.
Industrials
While financials, and particularly banks, have shown steady improvement in the second half of 2023 and into 2024, many areas of industrials continue to struggle. One key area will be transportation stocks ($TRAN). The TRAN just hit significant long-term relative support as you can see here:"
http://d.stockcharts.com/img/articles/2024/01/26/63a13e39-4db6-44de-b916-0a3c3771de10.jpg
"That relative strength line just hit major relative support and is beginning to turn higher. If it's going to keep pushing higher, then a critical area to watch is railroads ($DJUSRR). I think they could hold the key for all of transportation in 2024. The chart below shows that railroads were strengthening in Q4, but weakened on a relative basis as the group consolidated in a potential cup with handle pattern. Should this break to the upside, I see the DJUSRR providing renewed leadership and allowing transportation to push much higher in 2024. Check out railroads:"
http://d.stockcharts.com/img/articles/2024/01/26/88c34134-1871-409b-a0c5-f96d4a9e1f4d.jpg
"Railroads are testing the lower channel line in its relative uptrend channel (red circle). It's typical for stocks or industry groups to lose relative strength while they consolidate in an uptrending market. The cause is rotation as traders await another breakout to return to the group. Should railroads breakout above 3425 or so, I'd look for it to be the catalyst to further strength in transports. Ultimately, this would lead to relative strength in the industrials sector."
Happy trading!
Tom
He has been using Ewave for many years. He is actually pretty good I think. But you are an ewave "expert" so you would know. I can do the 4 up and 5 down or vice versa but wow there is a lot more to it than that. Or at least all the Ewavers have a million different move that can be made.
Thanks for the info.
"....if we were to remove AAPL, AMZN, META, MSFT, GOOGL, NVDA, and TSLA from SPX, then SPX would still be in a bear market. That's pretty incredible, as it suggests that most buy-and-hold investors are still in the hole vs. the 2022 highs. This has, so far, been a pretty narrow "bull" market."
http://www.pretzelcharts.com/
"As I mentioned a few days ago, COMPQ continues to look pretty good for bulls to keep the ball over the near-term:"
"SPX met noted resistance and broke down briefly but is threatening to regain its melt-up channel. Bears will need to sustain a breakdown there to get anything going for the near-term:"
"Here's (or "here ARE," as some Latin purists might argue) some interesting data from JP Morgan:"
"As we can see above, if we were to remove AAPL, AMZN, META, MSFT, GOOGL, NVDA, and TSLA from SPX, then SPX would still be in a bear market. That's pretty incredible, as it suggests that most buy-and-hold investors are still in the hole vs. the 2022 highs. This has, so far, been a pretty narrow "bull" market.
That's about it for today. Trade safe."
Glen
Here is Pokersam's take at the moment............
To: Bull RidaH who wrote (3671) 1/24/2024 3:41:32 PM
From: POKERSAM Read Replies (2)
3672
of 3674
I have 4840 then bounce to 4950. That should end it.
Thanks RCKS..Guess there is nothing to add..JUst going to go untill everyone get loaded up then they will turn against them..Usual stuff
"SPX is in a melt-up channel..........."
http://www.pretzelcharts.com/
"Last update discussed that, due to the apparent three waves up in COMPQ, it appeared that bulls would continue to control the ball one way or another, and so far, they have."
"SPX is in a melt-up channel, as long as that persists, bears are out of luck."
"There's just not much to add to the last few updates. Trade safe."
CycleFan follow up to previous SPX post:
SPX
It should not be inferred from the post below that I expect $SPX to have a 10% correction in February. At the September 2020 top SPX was extremely overbought, being 16% above the 200 day MA. It would have to be at 5108 to be as overbought as in 2020. https://t.co/4JR34UNvVT pic.twitter.com/gJ2scMdViq
— CyclesFan (@CyclesFan) January 22, 2024
RCKS, Thanks.. I agree with him..but us bears are stubborn..I just can;t believe this market is fairly priced..
"So, I was wrong about the BIG bear beginning in 2022, and while 2022 was a good year to be a bear -- and in 2023 I made some pretty solid near-term calls -- overall, that belief led me to lean the wrong way during a few key points of the rally of 2023. For that error, I apologize."
http://www.pretzelcharts.com/
"The big news from Friday is that SPX made a new all-time high, thereby resetting the long-term bear counts to zero and proving my long-term lean from early 2022 (which was for a big bear market -- I was right on the timing of the top and about "a" bear market, but not about it being "the" bear market) to be premature.
While it would not be unreasonable for the rally to continue a while longer, given that the rally from the bear market low is shaping up to look like five waves, I'm not sure the new all-time high will, in distant hindsight, be anything for bulls to cheer about."
"COMPQ does suggest that, while a correction here isn't out of the question, there's probably at least a bit more upside left before bears can get a new intermediate trend going:"
"So, I was wrong about the BIG bear beginning in 2022, and while 2022 was a good year to be a bear -- and in 2023 I made some pretty solid near-term calls -- overall, that belief led me to lean the wrong way during a few key points of the rally of 2023. For that error, I apologize.
The good news is that now those counts are completely reset, so I can look at the charts "fresh" each day, so to speak. Trade safe."
CycleFan Update
SPX
The $SPX McClellan oscillator is at -35. The last time it was negative while SPX was making new all time highs after a long pause was in late August 2020 when it broke above the pre Covid high. That was followed by a 10% correction in September 2020. pic.twitter.com/wAMQPqcHaQ
— CyclesFan (@CyclesFan) January 21, 2024
Stock Market Commentary 01/19/24
By Lawrence G. McMillan
"Despite more deterioration in the internal indicators (put-call ratios, breadth, New Highs vs. New Lows), $SPX has not weakened much and remains near all-time highs. Both the NASDAQ-100 ($NDX) and the Dow ($DJX) have already made new all-time highs, but they are dealing with resistance at current levels as well. A clear upside breakout over 4800 by $SPX would be very bullish. Meanwhile, there is support just below 4700 (the early January lows), with stronger support at 4600. A close below 4550 (December's lows) would be very negative, though, and might indicate the start of another bear market should it occur.
Equity-only put-call ratios (Figures 2 and 3) continue to rise, and that is a bearish sign for stocks. They will remain bearish until they roll over and being to decline. Since they were just at the lows on their charts, it doesn't seem logical that they would roll over yet. So, these sell signals may be a drag on the market for a while.
Market breadth has continued to be mostly poor. The breadth oscillators are on sell signals, and this week they descended into deeply oversold territory -- especially the "stocks only" oscillator. Readers might recall that these oscillators were overbought in late December, so they have gone from that overbought state to the current oversold state, even though $SPX has not declined much at all. This might be an example, of the market having an internal correction, which is not particularly evident in Index prices, but will eventually be a bullish factor when buy signals are confirmed at a later date.
$VIX remains subdued, but not quite as subdued as it has been. This week, $VIX probed up to nearly touch its declining 200- day Moving Average, but then quickly fell back again. Thus, the trend of $VIX buy signal remains in place.
In addition, it would be somewhat negative for stocks if $VIX were to enter "spiking" mode. When $VIX is in spiking mode, stocks can fall sharply, but eventually a "spike peak" buy signal will occur.
Seasonality is still a factor, too. There is a general negative seasonality from the 8th to the 18th trading day of January, and then a strong positive seasonality commences on the 18th trading day and continues into early February.
In summary, we are continuing to maintain a "core" bullish position because of the generally positive nature of the $SPX chart. We are trading other confirmed signals around that core."
http://www.optionstrategist.com/sites/default/files/SPX.JPG?v=1705858741948
http://www.optionstrategist.com/sites/default/files/PC21.JPG?v=1705858741948
http://www.optionstrategist.com/sites/default/files/PC21_W.JPG?v=1705858741948
http://www.optionstrategist.com/sites/default/files/VIX.JPG?v=1705858741948
Weimer 2.0
http://www.pretzelcharts.com/
"Throughout the course of history, governments that use fiat currency have overspent and eventually gotten themselves into dire situations with debt. Their response has never been to correct their errors and return to fiscal discipline, it has instead universally been to attempt to inflate their way out of trouble.
I bring this up because I've been trying to give honest consideration to some version of an actual bull case, and one version of that case involves completely ignoring the economic fundamentals and instead focusing on the Fed firing up the QE presses again anytime they feel they need to. We already know the Fed has been providing a ton of "back door" liquidity to the banking system, which likely staved off a broader collapse nearly a year ago when SVB (et al) failed.
So maybe they can keep kicking this can even farther down the road than any of us want to imagine. We can see on the chart below that the Fed has managed to trim about $1.2 trillion off their public balance sheet, so far with minimal visible damage to the market, though, granted, this is a drop in the bucket vs what's been added. But maybe this chart ends up looking like a staircase before it's all said and done: A trillion off here, then 4 trillion back on there, and so on."
"If that, and/or similar things, were to happen, then they could inflate the market higher longer than seems reasonable. Though the long-term costs would be devastating to the American public, the short-term option of "not during my term in office!" has historically been too tempting to avoid.
I discussed this possibility on the forum more than a year ago, but I guess deep-down I keep hoping for a return to something approximating an actual free market, whether the Fed/government does so voluntarily or has their hand forced by circumstance. But maybe that hope is still premature and this game needs longer to play out.
I think that's the bull case.
Because the market has already priced in the "soft-landing" outcome and is now further banking on no recession, even though one might say those hopes are also premature, since recessions typically don't show up until 7-16 quarters after the first rate-hike -- and we're just barely at the lowest end of that timing range now."
"Chart-wise, I drew up another longer-term chart illustrating one bull option that I'd only discussed verbally in prior updates:"
"And futures are indicating that SPX was indeed a b-wave high:"
"I'm about out of time for today. Trade safe."
"....bears do finally have some opportunities again......."
http://www.pretzelcharts.com/
"SPX has been rejected again by the very long term resistance line we've been watching for months:"
"This comes on the heels of reaching "enough waves up" for a reversal if it wants (i.e.- not enough in the charts to say with any certainty, but enough in the charts to open it up as an option):"
"If SPX does choose to continue lower, one possible target/inflection zone will be a bit south of 4687, but bears should also be careful around the 4730-40 zone (plus or minus, no exact targets for that zone), as that's another area that could act as an inflection for a smaller expanded flat."
"Finally, NYA has continued lower since reaching its inflection zone back in December:"
"In conclusion, not a lot to add to the past few updates. As noted previously, bears do finally have some opportunities again, but it's still up to them to make the most of those and not immediately let bulls back in the driver's seat. Trade safe."
CycleFan's SPX update
$SPX - The new bull market high that it made today at 4802 confirms that it made a daily cycle low on January 5 but the market looks tired. It needs a catalyst in order to make a new all time high. The red candle on an up day indicates that Tuesday is likely to be a down day. pic.twitter.com/z9KF4AEj5v
— CyclesFan (@CyclesFan) January 12, 2024
This is a telling chart from Tom McClellan on the Nasdaq Comp
And here is what it looks like on a cumulative daily basis. This sort of divergence is quite irregular. https://t.co/chBHF1Srae pic.twitter.com/wOu2SSgFAI
— Tom McClellan (@McClellanOsc) January 13, 2024
This statement from below, jumps out at me and I want to emphasize it.....
:There is an old rule of thumb (citing Trader's Almanac), that if $SPX violates the December lows during the ensuing first quarter of the next year, a bear market is in place."
Stock Market Commentary 01/12/24
By Lawrence G. McMillan
"New 2024 highs have been registered this week for $SPX. The all-time highs for $SPX were set in January 2022. The intraday high was 4818, and the closing high was 4796. Most recently, $SPX has not bettered either of those numbers, but it's not far away. A two-day close above 4800 would be enough confirmation that the next leg of the bull market is ready to take place.
There is support just below 4700 (last week's lows), and there is stronger support near 4600. The important area is 4550 the December lows. If $SPX closes below there, then a much more bearish scenario is likely to play out. There is an old rule of thumb (citing Trader's Almanac), that if $SPX violates the December lows during the ensuing first quarter of the next year, a bear market is in place.
Equity-only put-call ratios are shown in Figures 2 and 3. They have both rolled over and begun to rise. The rise is more pronounced on the standard ratio chart (Figure 2), but as long as these ratios are rising, it is a bearish signal for stocks. The computer analysis programs that we utilize agree that these are on sell signal. These signals are emanating from very low levels on the charts meaning that they are starting from very overbought conditions.
Breadth has not been good. Since just before the end of 2023, there have been a lot of days with strongly negative breadth, and only one day with strongly positive breadth. As a result, the breadth oscillators are on sell signals, and those signals have been confirmed.
$VIX has remained low, and that is a bullish sign for stocks. A low $VIX may be an overbought condition, but it is not a sell signal. The sell signals will come from $VIX when it begins to rise (sharply). Currently, the trend of $VIX buy signal remains in place. It would be stopped out if $VIX were to rise and close above its declining 200-day Moving Average (currently at 15.70).
We continue to maintain a "core" bullish position because of the positive nature of the $SPX chart. We are trading other confirmed signals around that "core.""
http://www.optionstrategist.com/sites/default/files/SPX.JPG?v=1705171957573
http://www.optionstrategist.com/sites/default/files/PC21.JPG?v=1705171957573
http://www.optionstrategist.com/sites/default/files/PC21_W.JPG?v=1705171957573
http://www.optionstrategist.com/sites/default/files/VIX.JPG?v=1705171957573
http://www.pretzelcharts.com/
"Last update discussed the possibility that the high at 4793 was a b-wave, and SPX has since resolved that question in the affirmative. I've added some new discussion of zones to watch to that short-term SPX chart:"
"Bigger picture, SPX is still contending with the very-long-term resistance line that we've been watching and discussing for the past half a year:"
"In conclusion, the complex flat discussed on the first chart might be one way for bears to get some near-term action and for bulls to stretch this into a larger fourth wave while they try to build momentum to clear the VLT trend line above. Of course, if that complex flat were to occur, then it would also open the book to more bearish options -- but first things first, and let's see how all this resolves. Trade safe."
That 4840 is the SPX Cash.. He has 4880 for Futs.
CyclesFan Update
CycleFan is suggesting a target area for SPX of 4917 to 5100............
$SPX - The daily cycle low on January 5 was almost confirmed today when it hit 4791, just 2 points from the December high. A breakout to a new all time high should lead SPX to somewhere between the 1.618 extension to the 2.0 extension of the July-October decline at 4917-5110. pic.twitter.com/0pQobQ9aD5
— CyclesFan (@CyclesFan) January 10, 2024
"Not much to add........"
http://www.pretzelcharts.com/
"At this point, there isn't a lot to say in follow up to Monday's update, but I did include a chart discussion regarding the near-term:"
"Not much to add beyond that, for now. Trade safe."
CyclesFan Update:
SPX
Friday was a Cycle Low
$SPX - Potentially made a daily cycle low last Friday on day 47 of the daily cycle. I was expecting lower lows this week which still possible if it turns down tomorrow. A breakout above 4793 would confirm the low is in and lead to at least 4950 by late January. pic.twitter.com/rwlQSMdy7N
— CyclesFan (@CyclesFan) January 9, 2024
".....It's too early to say if these reactions will be short-lived or will turn into a full-on resumption of the bear market, but that possibility is at least on the table (and fun to consider, since I suspect it would catch almost everyone by surprise)......"
http://www.pretzelcharts.com/
"Since capturing its June "bull count" target, SPX has remained in a near-term downtrend. Let's look at a few charts."
"This jives with the very long term trend line that we've been watching since July:"
"COMPQ has also stalled at its inflection zone:"
"As has NYA:"
"For bears, the one monkey in the works is probably INDU:"
"In conclusion, multiple markets have reached and reacted to their inflection zones, so score one for inflection zones, if nothing else. It's too early to say if these reactions will be short-lived or will turn into a full-on resumption of the bear market, but that possibility is at least on the table (and fun to consider, since I suspect it would catch almost everyone by surprise). Even the more bullish case could see a meaningful correction develop, though there are no concrete targets for such a move yet. Trade safe."
CyclesFan updates SPX and NDX
$SPX - Monday has been the most bullish day of the week in 2023. If it doesn't change in 2024 we're going to have an up day on Monday. Then we roll over and head lower to test the July high around 4600 on January 11/12. Reminder: The August and October lows occurred on Friday. pic.twitter.com/33QWoDDv2v
— CyclesFan (@CyclesFan) January 5, 2024
$NDX - Ended a 5 day down streak but not the correction. I expect an up day on Monday, then another leg down to test the July high at 15930. The low is likely to occur on January 11/12, the next 26/27 day cycle low. pic.twitter.com/nvYbyiK9O4
— CyclesFan (@CyclesFan) January 5, 2024
Stock Market Commentary 01/05/24
By Lawrence G. McMillan
"Heavy selling hit the market this week. Part of that was due to the fact that traders didn't want to sell in 2023, because of the taxes that would be owed. So, they sold in 2024, deferring the tax bill for a year. But there is more to the story than that, as overbought conditions had built up to the point where sell signals are now appearing in numerous places although not in the implied volatility ($VIX) complex.
There is now resistance just below 4800 (the December highs). Of course, this is very near to the all-time highs set in January 2022.
There is support on the $SPX chart at 4600 (horizontal red line on the chart in Figure 1). A pullback to there, while not necessarily pleasant, would still keep the chart bullish overall. However, a decline below 4600 and especially a decline below the December lows at 4550 would be a game-changer as to the trend of the $SPX chart. As it is, the chart is still bullish as long as support holds at 4600, and a "core" bullish position can be maintained.
That's the positive news. There is a lot of negative news surrounding the internals of the market.
Equity-only put-call ratios have curled upward, and these are now on confirmed sell signals, according to the computer programs that we use to analyze these charts. These sell signals are coming from the low levels on their charts (i.e., from overbought conditions).
Market breadth had been tremendously strong at the end of 2024, but now it has turned heavily negative. As a result, both breadth oscillators rolled over to sell signals on January 3rd.
The implied volatility complex is much more bullish on the market than just about everything else. Recall that we have often pointed out the fact that a low $VIX is not a sell signal in and of itself; $VIX only generates sell signals for stocks if it starts to rise sharply. That has not happened (yet). $VIX has yawned at the selling that took place this week. It barely rose above 14.
Overall, we are still carrying a "core" bullish position, and we are adding new confirmed sell signals around that. In addition, some of the previous bullish signals have expired or are being stopped out."
http://www.optionstrategist.com/sites/default/files/SPX.JPG?v=1704562981397
http://www.optionstrategist.com/sites/default/files/PC21.JPG?v=1704562981397
http://www.optionstrategist.com/sites/default/files/PC21_W.JPG?v=1704562981397
http://www.optionstrategist.com/sites/default/files/VIX.JPG?v=1704562981397
"....the market has moved surprisingly little in absolute terms since last update..."
http://www.pretzelcharts.com/
"I said I'd "likely return on the 3rd," so here I am -- though I still have relatives in town for a few more days and have weird "drive us to the airport" hours to contend with on Friday/Saturday, so the next update after this will be on Monday.
Despite my holiday break, the market has moved surprisingly little in absolute terms since last update, so we're just going to look at one chart today, because it's probably the most relevant chart going right now:"
"In conclusion, SPX has captured its old June "bull count" target, which does open up options from here. It's a bit early to say whether bears will actually capitalize on those options yet or not, but at least they finally have some again.
I wish everyone a safe and prosperous New Year. Trade safe."
CyclesFan Update:
SPX
$SPX closed below the 10 day MA which may or may not be bearish. The last time it did that on December 6 it wasn't. A daily cycle high will be confirmed only if it closes below the 20 day MA. If it closes below the 20 DMA later this week we'll likely have a 2 week pullback. pic.twitter.com/UfuLPyF5Rw
— CyclesFan (@CyclesFan) January 2, 2024
Pretzel :
(1) Pretzel presents both a Bull and Bear case.
(2) Pretzel gives both Triggers and Targets
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