The excerpt below is the brief Opening Notes segment from last Sunday’s NFTRH 579. We’ve been compelled by the market to obey the bullish trends and have a bullish view most intently since SPX went through the bull turnstile but really, well before that as it held the up trending SMA 200 in August and on another drop, again in September. The trends have been up all along and only broken trends would have made a broken market (I know, duh…).
Subsequent to #579’s bullish observation the market was tested this week on more trade war bullshit. And that’s of course what it is… financial media wax on/wax off to titillate or torment you with.
We noted in this post how a man was staring at a chart and claiming SPX had lost major support, which was not actually so. It was bullshit.
We noted how miraculously the market recovered the next day as “investors took cheer” because Trump reversed himself. Of course he did. It was not bullshit; it happened.
These posts came after an NFTRH update to subscribers began in the real time of Tuesday’s tank job thusly…
What is different between now and last summer? Well, on the headline driven stock market, not much. Therefore, until there is technical damage I am not going to let media headlines change my view. Indeed, it is possible that this week’s negativity could actually fuel the scenario we have in play, which is a potential stock blow off scenario. Remember, the market fuels itself in the short-term by resetting sentiment.
All of these dramatics followed NFTRH 579’s opening segment…
Closer to a Christmas Eve Close-Out Sale?
It’s just a rough working plan but ever since SPX went through the bull turnstile (following its daily chart ascending triangle and breaking above the top line of its weekly chart reverse symmetrical triangle on the 2nd try) the prospect of a close-out to 2018’s year-end bear climax has been possible.
This is not analysis so much as it is gut feel. So please understand that. My gut has kept me playing a bullish game here amid the high risk, and in playing that game I am not advising everybody do that. I am simply doing what I am doing and trying to be as descriptive as possible about what I think is in play.
What I do not think is in play is a sustainable and healthy bull situation. As bullish as things have been, I think what is happening is the frothing of bull spirits possibly into ending dynamics.
Now, the best measurement for such dynamics is as we noted a few weeks ago, at a ridiculous upside as measured from the 2018 high to the December 2018 low (shaded green) above 3500. But what if for argument’s sake the January 2018 high was the sentiment blow off as I suspect it was? Investors Intelligence, AAII and other sentiment indicators have not approached those extremes over the last 2 years despite higher market prices. What if this market is cooked and just doesn’t know it yet?
If the theme of a close-out to the 2018 Christmas Eve massacre is a good one the yellow highlights show that downside excess from the norm (blue) along with today’s upside excess. The measurement would be to around 3200, and the eye test tells us that this punch drunk party is just about there, if an opposite upside to December 2018’s downside is indeed what is in play. The bottom line is that the market is bullish… and at risk.