For those of you new to this site, prints below the 0.75 area show that traders are fearless, which is a contrarian indicator, thus, the readings in the 0.7's signal significant market tops where the broad indexes are on a pedestal about to roll over. Conversely, the green line and above shows where traders are worrying about the markets, they fear the markets will keep falling and they see their long positions losing value each day, day after day, traders are getting to the point where they simply want out of the markets, they can no longer take the beating, but, that is exactly when the markets recover and bounce higher, anywhere at 1.2 or higher. The two green circles show the late November market bottom and the mid-December market bottom where the SPX then launched and continues upwards until now.
Hang on tight, the broad indexes are going to take a big tumble in the days ahead. Assess all long positions and decide if you really want to own them since they will likely lose value. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your finanical advisor before making any investment decision.
KS, we've been expecting a pullback for a while now based on technical analysis but with central banks printing boatloads of money these days to manipulate the market, do you think that TA matters anymore? When was the last time that you saw markets behave this way?
ReplyDeleteSteve
Steve, I agree with you partly. From the TA point of view, that is what the market is supposed to behave without all the CBs intervention. But the action of the CBs is merely delaying what is inevitable. The market will drop, based on all the indicators, you can only stretch a rubber band that far before it snaps back with a vengeance. Patience is key, my 2cents
ReplyDeleteThanks for your reply curiousmind. As a person shorting this market, I feel cheated since I'm going against those world central banks which have unlimited supply of money. They can go on printing longer than I can remain solvent. Futures are flying again tonight after China's easing (feels like more printing). We'll probably open with a huge gap up on Tuesday. It's frustrating for the bears. I feel like my only savior now will be high gas prices and high food prices and inflation to stop all this printing. It's crazy!
DeleteI am with you there, brother. I am short this market too. Just didn't think this insanity can go on for this long. But I am holding my shorts and taking the beating. I believe we will be vindicated soon.
DeleteIt's not a good idea to be bullish or bearish! Everyone should be neutral, our goal is to make money in both trends. It's seems like the manipulators wants the market to be bullish this year for various reasons, so be it. Just invest according to the trend. As a day trader, consider your positions everyday and hour to hour. Brad
ReplyDeleteHello all, Brad has the wise words. It makes no difference which way the markets move, all that matters is that you are on the correct side of the trade.
ReplyDeleteTime frames have to be referenced in relation to any bullish, or bearish, call. Currently, the negative divergence on the minute and daily charts point to a pull back in the broad markets now, in the days ahead. Perhaps the new moon will create negativity and obviously, a weak Greece resolution will dissapoint traders overnight tonight.
The weekly chart is negatively diverged as well but in the one month time frame there is lots of momo showing for the bulls. Thus, the projection would be markets to sell off over the coming days, perhaps into the end of the month, as Greece plays out, and the second LTRO news plays out, but it would be likely that the broad markets will want to bounce back up, perhaps to thse current levels again, which would help burn off the recent momentum, then the markets should be negatively diverged across all timeframes, and roll over. Similar to July's action.
At that point, watch the CRB. If it drops and loses the 300 level, this tells you that disinflation and deflation is increasing. The ECB, BOE and likely the Fed's QE3 bazooka will thenm be fired so perhaps that will rally markets from March or April?? thru the summer. This strength early in the year may come at the expense of further stimulus measures--the markets already pricing in much of the upwside.
All this said, take the markets hour to hour like Brad said. Watch Keybot in the left margin on this site; when the algorithm goes short, the bears will be in good shape.