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Last week, I said that the seasonal cycle was positive and the Bulls do get their Christmas, but that we had "Weird Wolly Wednesday" coming (usually a hard down day before Op-Ex week). We also had a "Best Fade" Sell signal and an Options Oscillator Sell and the tag end of a FL/FS Sell, too. We thought that this was the Bears best chance to get a pullback, but only enough to make Bulls afraid to get or stay long for Christmas. Well, WWW came on Thursday, and as we thought, the weakness was not long lived. This week is options expiration. We're likely to get some selling, but it's just not likely to amount to much. We have an Options Oscillator Sell again and they've been getting their action on Day 2, sooooo, I'm thinking that Tuesday might be our day for some selling. Momentum is negative in here, but the chart pattern looks just too tempting for the Bulls. I think that they're going to break out of this pattern to the upside. Am I confident? No. We're still in a Bear Market, but the market finds a way to rally into Christmas and I think this time is no exception. I'm open to chop and maybe a fake out break out, too. Still, though, I think it resolves higher. My call for the week is for a rally on Monday--this may fail at resistance but I think it doesn't. I think it blows through and gets above the 200-day. Then we pause on Tuesday and then trade down Wednesday, rally on Thursday and chop on Friday.
Last time, I said that I predicted yesterday would be very likely lower and I was right. Looks like Weird Wolly Wednesday came on Thursday. It happens. I'm looking for the Options Oscillator Buy to get right today. I was surprised by the lack of pessimism in most of the options, but honestly, the decline seems contrived and in some way related to or associated with "Weird Wolly Wednesday". I must be honest, a lot of technical damage was done on Thursday but not enough to turn the trend down. My gut tells me that it's all part of the typical pre-options expiration ruse. Give your longs time to work out and give the Bulls a little benefit of the doubt.
Last time, I said that with "Weird Wolly Wednesday" and an Options Oscillator Sell, you don't get much better than that for a sell off. We got one, but it wasn't much and it was reversed. Technically a "win" but mostly on a technicality. Now, the "Best Fade" Sell is still in force, but running out of time. So is the Options Oscillator Sell and FL/FS 2X Sell (if they didn't fulfill yesterday). I predicted yesterday and today would be very likely lower and I still do. Today is a mess of conflicting indicators. The CBOE:SPX turned down and momentum is still negative. That's a ST Sell. The trend is up, however, and we now have a strong Options Oscillator Buy. I'm thinking we're down early and then up later or on Friday. Remember, we are inclined to buy the weakness and since Naz advisors got more short, we probably want to focus buying there.
Last time, I said that the odds of a pullback were increasing
yesterday and today, and they still are. The first signs of weakness showed up with a momentum sell. Today is "Weird Wolly Wednesday" and we have an Options Oscillator Sell. You don't get much better than that, save to have a "Best Fade" Sell. That signal is running out of time. They almost always get right at least for a bit, too. I'm going to say, today and tomorrow are very likely lower and today has a good chance of being a lot lower. I do expect normal TA to be less useful today. Trading by the seat of the pants right now is OK. Remember, we are inclined to buy the weakness and since Naz advisors got more short, we probably want to focus there.
Last time, I said that given that we have "Weird Wolly Wednesday" coming, a "Best Fade" Sell signal and an Options Oscillator Sell, this week was the Bears best chance to get a pullback. I thought and think that we will only get enough to make Bulls afraid to get or stay long for Christmas. We're still looking at the same scenario and the odds of a pullback are increasing today and tomorrow. I'm certainly not very Bearish, but the probabilities suggests that we'll see some selling. If we do, I'm inclined to buy the weakness. Bigger picture, that Naz advisors got more short implies that we'll want to be buying the Naz the next chance we get.
Last week, I said that while the market was still solidly in a Bear and the IT trend was down, I was looking for some hard to buy strength. I stressed that the CBOE turned positive, and we had a ST Buy from the NAAIM readings and the FL/FS was on a Buy too. We got our rally. It was a good one. Now what? Well, again, the seasonal cycle is positive in here and the Bulls do get their Christmas, but this week we have "Weird Wolly Wednesday" -- the Wednesday prior to expiration week that often brings some volatility. We've also got a "Best Fade" Sell signal. To make things a bit worse, we also have an Options Oscillator Sell and are on the tag end of a FL/FS Sell, too. This is the Bears best chance to get a pullback. I predict that we will only get enough to make Bulls afraid to get or stay long for Christmas. I'm inclined to buy weakness. My call for the week is for chop lower on Monday then hard down into Wednesday, a reversal and up into Friday.
Last time, I said that I was not immediately very Bearish, despite some sells, though I was sure that the signals might give traders 10-15 points. And they did...just barely. I noted that the nesting of the FL/FS Sell signals suggested that we'd get a larger scale pullback, and I still do. I also suspected that it would come from higher than most imagine. This morning we are up 10 and we were up 17 or so, probably more than most would have thought after that run. Still, we're going to have to rest this thing. The Options Oscillator Buy is supporting the market today and I'd not be surprised by even more strength, but I think we'll pull back a bit. Basically, chop looks like it for today. The more interesting development is the "Best Fade" Sell from the MACD. We know that when everything turns up, it's about time for a pull back and that suggests that next week may be it. Also, don't forget that Wednesday is "Weird Wolly Wednesday"--a great time for some wild action. I'd keep shorts small at first and add as things turn over and I'd not look for a resumption of the down trend. Just a correction.
Last time, I said that it looked like they were/are pumping money globally, which will end badly, but not before much of that money finds its way into the stock market. In fact, I think that is part of the plan. The Powers-That-Be want any unneeded liquidity to flow into the stock market and NOT the commodities. That's our paradigm right now. The FL/FS 2X Sell yesterday is joined by a repeat signal today on top of the Strong Sell we already have. I'm not immediately very Bearish, though I'm sure these signals may give traders 10-15 points. The market is strong and a lot of folks are under exposed. So, weakness will likely be followed by buying quickly. Now the nesting of these signals does suggest that we'll get a larger scale pullback, but I suspect that it will be from higher than most imagine. Near term, I think we get a reaction from just above yesterday's close.
Last time, I said that while we could expect some near-term weakness, we had to remember that the CBOE:SPX turned positive last week, and momentum had just turned up too and confirmed, Market Dynamics turned up from a good Buy zone too and, the seasonal cycle was most positive, too. I also sent out a special addendum to emphasize the advisor sentiment, which had gotten too Bearish too quickly. We expected chop and then move higher. I was Bullish and I said that we only needed to use care because the Bear Market is still intact. Well, the market is up another 3% in the pre open and our Bullishness was vindicated. The news is coming out and now it looks like they're pumping money globally. That'll end badly, but not before much of that money finds its way into the stock market. The FL/FS 2X Sell may give traders 10-15 points, but from where, I know not. The Options Oscillator Buy (which we advised Premium Subs of last night) is more important in context.
Last time, I said that I suspected we were in for a nice rally though things were NOT perfect with the market still solidly in a Bear and the IT trend down. Well, we got a nice rally. Is that it? I think not. A lot is supporting this market now. Near term, the FL/FS shows a ton of Bullishness and the Options Oscillator is also overdone as are the rest of the options readings. So, we can expect some near-term selling, BUT we have to remember that the CBOE:SPX turned positive last week, despite the weakness and momentum just turned up too and confirmed. Market Dynamics turned up from a good Buy zone too. Also, the seasonal cycle is mostly positive in here too. So, we will chop today or tomorrow and then move higher, I think. A lot can happen in here. There is a lot of distrust out there and a lot of nay-saying on retail. I'm thinking that they're wrong. Things may actually be looking up here and that could limit the down side and support a pretty good rally. We only need to use care because the Bear Market is still intact.
Last week, I said that buying was a leap of faith, but I posited that investors are always fighting the last battle and that perhaps they were worried about sovereign debt when such wasn't the mis-priced risk they thought it was, I figured they should be heartened by signs of a strengthening economy. I said I was going to be doing some buying this week even as I was going to keep powder dry. Well, we did, and it appeared to be a bit early, but I suspect we're in for a nice rally. Things are NOT perfect. The market is still solidly in a Bear and the IT trend is down. BUT the CBOE turned positive last week, despite the weakness and better, we have a ST Buy from the NAAIM readings. The FL/FS is still on a Buy too. The seasonal cycle is most positive in here too. I'm inclined to look for strength; hard to buy strength. My call for the week is for a strong rally Monday and Tuesday, into Wednesday, a reversal and down into Thursday and yet another reversal higher on Friday.
Last time, I said that while things look very dicey, we know that we almost ALWAYS find ourselves wishing that we were more long as we move from Thanksgiving to Christmas. That's still with me. I was starting to like the sentiment, especially the Advisor sentiment, but the Options Oscillator makes me nervous. Still, we've got a FL/FS Buy helps a lot. I am generally concerned about the options data, but I have to minimize that concern because any sort of options related adjustment may cause odd readings. I'm doing a bit of buying and I'm going to try some short-term buying too. Because we're in a Bear Market, we have to keep powder dry, but we have to get in the game.
I had a 20% S fund exposure before today's trading, but I added another 30% today with my last IFT. I think 50% stocks is about as much risk as I'm willing to take right now. Wednesday and Friday are traditionally positive days for the market, so hopefully we bottom soon and chop our way higher through the holidays.
There are definitely reasons to believe a year-end rally will be forthcoming, although this is one heck of a wall of worry to ignore.
But I can still see it as a real possibility.
Last week, I said that I was concerned that we had rallied too far, too fast, and that we needed to sell off a bit, especially with problems with the Eurozone. I figured that indeed, the Bears would "get their Thanksgiving" and at this juncture such appears to be the case. Now is where things get tricky. I have been looking for a decline to buy around Thanksgiving. That's great. The problem is, we're still in a Bear market and now we've turned the daily trend and intermediate trend down and confirmed. Prudence dictates a very careful approach here. On the other hand, we know that we almost ALWAYS find ourselves wishing that we were more long as we move from Thanksgiving to Christmas. I am seeing signs in the sentiment that we're going to make a low this week. Either Monday or Tuesday, in all probability. The FL/FS Buy helps a lot. So does the weekly poll. The options are constructive, but we won't have really good data on them until Tuesday. I have to say buying here is a leap of faith, but I would posit this--investors are always fighting the last battle. Last Bear market, things got very ugly because banks were overly exposed to mis-priced risk. Well, while a lot of banks are exposed to sovereign debt, almost none of our banks would view sovereign debt as anything but risky and complex. This is a gamble, but I'm going to be doing some buying this week. I'm going to keep powder dry, but I'm going to buy a bit. My call for the week is for a decline on Monday into a low on Tuesday, and a rally on Wednesday and Friday.
That's quite the slam. Thanks for sharing PJ.
I you folks follow me on TSPTalk then you'll know that the Seven Sentinels issued a sell signal two days ago. I sometimes forget to post that here as well. This market is getting dicey again.
Last time, I said that while yesterday may have made a low, but I suspected that it will be tested next week. I was and am open to some selling on bad news at any time but as I said, I'm a buyer on weakness. This morning, they are trying to rally it but I'm not seeing much resilience. This is dangerous. All the technicals are now fairly Bearish and we are still in a Bear market. If they can't mount a rally and hold it, the boyz could reverse, buy the puts and sell it down hard. The good news here is that we have an Options Oscillator Buy, but given the day, that may not work out. I'm looking to nibble long on weakness into next week regardless of trend or technicals. It's a reliable seasonal play, if you don't over-do it.
Last time, I said that the Options Oscillator Buy had to play out and that yesterday was the day, despite the weakness in Globex. Not a bad call. We were more comfortable with it because this is Options Expiration this week and they always try to support the market. That said, I was expecting market players to chop the market lower into next week. This morning, we are well on our way. That's great news. The technicals in here are an absolute mess. Our Best Trend indicator gave a Sell last night, but the short-term momentum turned back up, joining the longer-term momentum. Fast breadth is positive, slow breadth is negative. It's just a mess. So, what do you do? Well, you step back and look at what is most reliable. The seasonal is positive and historically, if you buy around Thanksgiving, you look pretty darned good by Christmas. I have to think that we need to view the current weakness in a positive light. We should nibble long where we can and if we see much more weakness get a bit more aggressive. I think that this Christmas is going to see a lot of economic activity and earnings are going to show it.
Last week, I said that there was the potential for "disastrous" news at any time out of Europe and as such we could definitely get tapped, BUT almost all the market participants are aware of our delicacy of our economic expansion. I noted that we were seeing signs of hidden health in the economy that was not yet discounted. That lead me to believe that while we were (and are) still technically in a "Bear Market Condition", we were no longer actually in a Bear Market. I said that I thought that we had to be constructive in the event of another leg down. Well, get got a hard decline and the market was surprisingly resilient. Now, I'm concerned that we've come too far, too fast, and perhaps need to sell off a bit, especially with the uncertainty and the near guarantee of additional problems with the Eurozone. I'm not all that Bearish, since the technicals look pretty good and the CBOE:SPX turned marginally higher, but I do think that the Options Oscillator Sell from Friday needs to play out--despite the new Buy. All the options this week are going to be less reliable due to Options Expiration. The old saw, "The Bears get their Thanksgiving" is probably going to have some effect on the market. I just want to be a bit careful in here. The daily trend is up. The market is still in a Bear market condition but another week of strength will likely change that. My call for the week is for a decline on Monday into a low on Tuesday, a rally on Wednesday, with decline on Thursday and bounce on Friday.
Last time, I said that we ought to experience "Chop-City". That was a bit of an exaggeration as we really chopped only a bit and ground higher for a decent gain. The rally was not a real surprise, but the lack of volatility was. Still, I'm thinking that there will be a "risk discount" put into the market today, in case something dumb happens over the weekend. I'm just going to be careful about taking that action, as I might not be the only one thinking that way (can they orchestrate a squeeze?). A couple things are clear. They didn't undo the damage done on Wednesday and we have a clear Options Oscillator Sell. We ought to see some selling from resistance. How much is anyone's guess. It could be just modest or a nasty, panicky decline. I'd love to see the latter, as that will tend to generate the most pessimism.
Last time, I said that near term, we would look for weakness and we sure got it. I also said that we can carefully look to get more long if we get a reset on some of our indicators and a bit more Bearishness. We got some more Bearishness but not lots, which is surprising on a day like yesterday. Only the OEX $-weighted P/C flashed a Buy. No buy from the options oscillator and only while we got buys from the nominals, they were largely modest. The message board isn't particularly Beared up, and II and AAII both reported before the full affect of the decline was in the data. I'm thinking that today is chop-City. There's enough pessimism to bounce the market but unless there's a real solution to the European problems, there will be a "risk discount" put into the market on Friday in case something dumb happens over the weekend. So, every rally will probably be sold through tomorrow.
Last time, I said that I thought that we could get tapped at any time this week, most probably Tuesday and Wednesday, though I didn't have much negative besides the SPX:CBOE. Well, now I've got more. The $-weighted P/C's were Bearish, especially with all the indices P/C's low, save the SPX. That's a smart money short/dumb money long indicator. Also, the 10-day OEX was pretty Bearish too. That actually implies a decline of intermediate duration. That's at odds with our general inclination to buy pullbacks. I'm going to play this one by ear. As we stated, it was/is almost a lock that there will be at least one or two more problems in Europe before it's over and maybe more so we can have some market trouble, but we've also not got a ton of Bulls and we also know that it's also almost a lock that the "crisis" will be resolved and when it is, the market will rally. And the economy is looking like it might be better than expected. So, near term, look for weakness, but we can carefully look to get more long if we get a reset on some of our indicators and a bit more Bearishness.
Last week, I said that since the daily momentum had turned down from Sell territory, and some longer term indicators like the Weekly VIX and the Weekly RSI were suggesting a couple weeks of weakness, plus the fact that we had a Fully Long/Fully Short 2X Sell on the heels of a solid Sell and an Options Oscillator Sell AND a ST sell from NAAIM, we were looking for some tough chop and perhaps some short term panicky selling. That's exactly what we got, then we got a bounce which was also what we were looking for. Monday is something of a toss up. We've got momentum negative but there are no strong short-term signals here. I'm still worried about more weakness and we didn't see any shorting in the SH. There's the potential for "disastrous" news at any time out of Europe. We can definitely get tapped tomorrow or any time this week. But here's the rub, almost all the market participants are aware of our delicacy of our economic expansion. Everyone knows earnings are fragile. We're used to lame growth and high unemployment and money managers have come to expect it and have discounted such. BUT, anecdotally, we're seeing some interesting bits that we'd not expect to see. First, shipping volumes are fairly robust. That's a nice sign of strength. Also, people were surprised to find that some states and cities tax revenues are coming in significantly above projections. In some areas, advertising sales are increasing. This HINTS that there may be more strength in the economy than has been discounted by the market. This leads me to believe that while we are technically in a "Bear Market Condition", we are no longer actually in a Bear Market. I think we have to be constructive in the event of another leg down. My call for the week is for a rally on Monday into a top and weakness Tuesday and Wednesday, with a bounce on Thursday and pullback on Friday.
Last time, I said that I was starting to get a bit more concerned about this market due to the hedgers in the SH taking off hedges, as well as the 10-day OEX P/C rising into LT Bearish territory. Then I was also worried that our longer-term and swing indicators were suggesting that we had more selling too. Not a whole lot has changed. There are plenty of Bears in the Message Board polls, but if the market is topping right now, that's EXACTLY what we'd expect. They're almost ALWAYS positioned right at turns. The very short-term sentiment is only marginally negative and the Options Oscillator is flashing a Buy, BUT we are still on a ST Sell too. I suspect that we see some chop today but that the Bears win in the end as there's any manner of drama likely to come from Europe over the weekend. I do think that when this uncertainty is done, this market is going to ramp right along. I think that barring disaster, the data is going to start looking a bit better for the economy.
Last time, I said that the thanks to the Bullish $-weighted and nominals P/C ratios as well as a FL/FS Buy, AND the 21-day SMA, I was pretty sure we'd bounce. We did and we are. That said, I was and am starting to get a bit more concerned about this market. The hedgers in the SH are taking off hedges--which isn't exactly actionable but it's a concern. Also, the 10-day OEX P/C is quite Bearish. That has longer-term Bearish implications. Then our longer-term and swing indicators are suggesting that we have more selling to to. Remember, the Bears get their Thanksgiving and the Bulls get their Christmas. A bit more weakness over the next week or so makes a lot of sense. It could be healthy, too. I just think we need to be extra careful in here and see how the sentiment stacks up. Chances are, we'll make a good low in the coming days, and then we'll see a good rally, but technically we are still in a Bear Market.
Last time, I said that the daily momentum had turned down from Sell territory and some longer term indicators like the Weekly VIX and the Weekly RSI were suggesting that we had a couple weeks of weakness in store. We also had a Fully Long/Fully Short Sell and 2X Sell, both of which are Fulfilled as of this morning as is the Options Oscillator Sell. We had a really good set up for a sell off thanks to all of the Amateur Bulls and the ST Sell from NAAIM and we thought that we might see some short term panicky selling. Um, yeah... This morning, we've got nothing but trouble in the markets and the sentiment is only mixed. The Options Oscillator is flashing a Buy as are the $-weighteds, BUT the FL/FS is neutral and TickerSense as well as Hulbert's guys are all Bulled up. I'm going to look for a bounce but it may not come until tomorrow. I'm starting to get a bit more concerned about this market. Technically, the CBOE:SPX has turned down as has momentum. Of course, we could get a bunch of shorts on today's action which would be good news but for now, we want to be very careful.
Last week, I said that we had only seen MORE new shorts in the SH and while NAAIM showed more Bulls, it was nothing crazy. I was looking for a technical pull back but that was all. We got it, but frankly, it didn't last as long as we had expected and was followed by an impressive and probably unsustainable rally on Thursday. The CBOE:SPX is positive after turning down again. The Long-term Stochastic turned down but turned back up. The daily momentum, however, has turned down from Sell territory. Also, some longer term indicators like the Weekly VIX and the Weekly RSI are suggesting that we may have a couple weeks of weakness in store. The Fully Long/Fully Short is flashing another 2X Sell on the heels of a solid Sell and the Options are generally looking Bearish. The Options Oscillator is flashing a Sell too. All of the Amateur traders that we have surveyed are Bullish. NAAIM reported a big jump in long exposure and that's a very reliable ST Sell. I find myself more willing to buy than sell myself, despite the set up. This tells me that psychologically, we've capitulated. That's what it takes to bring on some selling. Now, there are still plenty of shorts in the SH even though they covered about $300MM worth. Thus, we shouldn't get too Bearish on any pullback. It's just likely to be some tough chop and perhaps some short term panicky selling due to some news. Meanwhile, we're seeing some reliable indicators of economic strength--strength that is not fully discounted by the market. My call for the week is for a decline on Monday and Tuesday, a low on Wednesday and rally into Thursday and a flat day Friday. We may let the the QLD go and look to re-buy. Only because we are really setting up a good pullback.
I didn't take offense. I'm only saying that his comments have to be taken in context. He really does make a lot of good calls. But he gets it wrong sometimes too. Everyone does. But I've learned a lot from him on how to use sentiment as a tool. It took me awhile, because context didn't come to me quickly. It took months of reading his analysis and getting to understand the playing field.
I'm only posting his conclusion too. There's a lot more info contained in his daily commentary, but I leave it up to him to interpret it for me. I've got a real job after all. ;o)
If you're looking for a black and white answer as to what the market is going to do on a day to day basis, you may have a hard time interpreting what he's saying. He's reading the landscape as it pertains to sentiment and risk. He's right quite often, but his commentary is slanted towards short time frames (daily to weekly) for the most part. I myself use his comments as a supplement to other indicators and points of view.
Having said all that, most folks are missing this rally due to the extreme volatility and headline risk we've been getting for some time now. And folks that have been shorting the market are getting absolutely hammered. While I'm flat, I'm darn sure not doing any shorting. That's been a high risk play for awhile.
Last time, I said that the only short-term indicator that was really negative was the CBOE:SPX -- the rest were neutral or positive. Bigger picture, we were looking for a sell off due to the Weekly MACD cross-over, the long term Stochastic, and the Weekly RSI. Near term, we were open to selling but said that the first dip would almost assuredly be bought. We got more dip and then the buyers came in. They are still in. As of last night, not a lot had changed. We don't have a compelling sell from the options, but the same things that were negative yesterday are negative today. The message board polls show a ton of Bulls and that suggests that we can get some selling tomorrow or even today. We're already up a lot in GLOBEX, but I woudn't get out in front of this market. There may be more folks who need to cover today. Only short a loss of momentum. After this bounce is spent, I fear we're in for a week of chop. NAAIM reports shortly.
Last time, I said that the Fully Long/Fully Short 2X Sell, options, as well as the trend lines on the charts, supported a pause, and we got it and then some. Not a lot of damage has been done, however. The only short-term indicator that's really negative is the CBOE:SPX. The rest are neutral or positive. Bigger picture, however, the Weekly MACD cross-over and the long term Stochastic as well as the Weekly RSI all suggest that we may be due for a decline that lasts longer than a day. The first dip will be bought, almost assuredly and the Options Oscillator Buy supports that. After a bounce, hwoever, I fear we're in for a week of chop. This would set up more rally.
Last week, I said that while we had been expecting a little bit of weakness, we had also been expecting Bullishness to rise, but it hasn't much. We had noted that the SH shows more than $1.5Billion in new shorts since the top, and since then we've only seen MORE new shorts now around $1.6Billion. NAAIM shows more Bulls, but nothing crazy. Now, we've seen a bit of correction but not no real weakness developed. The CBOE:SPX turned down, but turned back up on Friday's Barn-Burner of a rally. The technicals and longer term sentiment are Bullish for the months ahead. Now, near term, we've again got a bit of a set up for a pullback. The Fully Long/Fully Short is flashing a 2X Sell and the Options are generally looking kind of Bearish. We could use a pullback to work off the overbought condition and to reset some of the technicals. My call for the week is for a decline on Monday, a bounce on Tuesday, a decline into Thursday and a rally Friday. We managed to get long the QLD at 84 and will add as we can.
Last time, I said that there was a need for some pullback for the boyz to reload, and that might get it. We did. We may get more. We noted that there was some covering in the more speculative ETF's and that may mean that there's more room to drop the market. We didn't see much Bearishness in the options data, either. The long-term momentum turned down, marginally yesterday and short-term momentum has been negative for days. AAII and II are both pretty flat, AAII a bit out of Buy territory and II a bit in. Constructive, to be sure. I'm thinking we can get some more decline today, but I'm not going to look for too much. Just enough to spike the VIX. Ideally, though, we can get the daily momentum down in Buy territory. The CBOE:SPX nearly turned down.
Last time, I said that I was looking for more pull back, but not much. We got a bit but it was mostly in GLOBEX. I noted that we were getting just what the Bulls would want to see: an Options Oscillator Buy and a Buy from ISEE and the FL/FS. Better yet, there was no covering by the new shorts in the SH, implying much more rally. Well, yesterday's rally was sure consistent with that. That said, there's a need for some pullback for the boyze to reload on. We might get it today. The volatility yesterday is enough to make folks nervous. Short-term, the $-weighted P/C's imply some selling too. That's fine but if we get much more selling do some buying. The number of SH hedges keeps increasing, with $58MM added yesterday.
Last week, I said that we must allow that the low may be in, and given that we are in the positive part of the seasonal cycle and all the accumulated shorts in the SH Right, there was fuel for more rally and no place to put cash in order to beat inflation. We said that the perceived risk in equities were to drop even a bit, we could get a short-squeeze rally like we haven't seen in a long, time. Well, we may be in the midst of one. As we noted on Friday, in addition to Google's improved earnings and decent retail sales, Ky's tax revenues are unexpectedly up 10%. There's more strength to the economy than has been priced into the market. Frankly, even as we've been quite Bullish, we've been expecting a little bit of weakness. Of course, we've been expecting for Bullishness to rise, too. It really hasn't much. The SH still shows more than $1.5Billion in new shorts since the top--just barely off the high. NAAIM shows Bulls pulling in their horns, too. Hulbert's Nasdaq advisors have gotten heavily short. Meanwhile, all the technicals are pretty Bullish, save the overbought/oversold oscillators. Now, near term, we've got a bit of a set up for a pullback, as we have an Options Oscillator Sell and we're quite over-bought but the likelihood of seeing significantly lower prices at this juncture are fairly low. We are looking for any pullback to buy. My call for the week is for a decline on Monday or Tuesday, a rally through Thursday and a pullback Friday.
FYI, the Seven Sentinels went to a buy condition this past Wednesday. I think there's anough shorting going on in this market to keep upward pressure on prices. But keep an eye on sentiment. If it changes too much to the bullish side, we could go back down in a hurry. That may take some time however.
Last time, I said that there was some covering in the SH shorts, but that there were still $1.5 Billion in new shorts since the top. Well, they more than reversed the cover and that's very Bullish for the market. NAAIM reported a modest Bullish shift, but the most aggressive Bulls sold half their longs and the most aggressive Bears are maximally short. The Bears are too invested in their position and the news is starting to look better. In addition to Google's earnings and retail sales, Ky's tax revenues are unexpectedly up 10%. There's more strength to the economy than has been priced into the market. There's a long way to go before we top. TSP is still not buying into the rally either. The Options Oscillator Buy is about spent as of the open, though it could go further, but now we have a Sell. We need to get long and will buy on any weakness and then keep adding if we correct further. Pick your spot.
Last time, I said that we had even more SH shorts, and that we should take every opportunity to buy and that we hoped that the MACD cross-over "Best Fade" Sell signal would deliver. It hasn't yet, but the market does look tired. There was some covering in the SH shorts, but there are still $1.5Billion in new shorts since the top. There's a long way to go. Investor's Intel also showed a lot more Bears, even as AAII showed major Bear capitulation. This Amateur shift could bring some Selling, but it won't likely amount to much. The rest of the data is so supportive. The Options Oscillator Sell is just about spent, though the signal might bring some selling this morning. The problem with that is that we have an Options Oscillator Buy now. We need to get a little bit long and then keep adding. Pick your spot. Keep a bit of powder dry in case we get a surprise sell off but be Bullish.
Last time, I said that the big Bearish shift among Nasdaq advisors was more fuel for the market to add to the SH shorts. Well, we have even more SH shorts today. It boggles the mind. Those folks are heavily, heavily short. We should take every opportunity to buy and hopefully the MACD cross-over "Best Fade" Sell signal will deliver. The Options Oscillator Sell helps and in fact, if statistics are to be believed, we have a near 90% likelihood of selling today or early tomorrow morning. Both ought to bring selling and that selling ought to be just enough to keep Bulls out and Bears in. Don't be fooled. Almost every bit of bad news you can reasonably envision has already been envisioned by the market. If we get any good surprises, the market is going to rally. If it doesn't fall apart, short covering will take it up. Also, the seasonal cycle has turned Bullish. We need to get a little bit long and then keep adding. Pick your spot. Keep a bit of powder dry in case we get a surprise sell off but be Bullish.