MARKET ENVIRONMENT: by Woody Dorsey. Sentiment is coming in @ 5% Bullish. The torque on 1/31 signaled that a tactical low had occurred and a ‘February Fling’ ensued. Now, it’s back to Ping Pong while the War Games are being waged, on TV? There is a risk of Hyperinflation. Does Climate ever Change? Is water liquid? Does the Sun Shine? Is Reality always easily Denied? Yes. Always. It seems like we are in some sort of a hiatus for now.
NEAR TERM: Excess Liquidity is letting market players play both ways whenever they want. The ‘February Fling.’ Profile has already flung? Stocks may continue to thrash. Hard to read the wriggles.
INTERIM TERM: Expected: “An Interim low occurred. It is not definitive as a more complex bottom may occur later on. Another price catharsis may occur near the March Rate hike. That is coming up soon.
DORSEY MARKET SENTIMENT: Bullish Sentiment had been overly optimistic for a long time. It may still take considerable time to regain a psychological neutrality. Sentiment got low enough a few weeks ago to allow a decent price recovery. The ‘February Fling,’ brought back optimism but became nominally frothy? Markets are thrashing again.
MARKET SUMMARY: Equity Markets nominally discounted some negatives and had some upside fun. As noted: “Inflation is Rising and Rates are Rising. Everyone knows that. But do they really? Jerome doesn’t really.” I said: “Allow stocks to recover. Enjoy the February Fling.” Hyperinflation could still get really interesting. Enjoy it.
Trading Instrument (Gary Uses) My Trading Instruments are all based off of SPX numbers, but for long side trades I use (SSO) the 2x leveraged etf that follows the S&P 500 and when expecting the market to move lower, I use (SDS) the 2x leveraged etf that follows the S&P 500, it moves higher when spx moves lower.
TECHNICAL VIEW by Gary Dean: The fractal pattern I was showing near the 4600 did a great job predicting price movement. The pattern was looking for a drop once that top was made and that is exactly what happened. Once the 4450 was taken out, all floors below crumbled quickly. But the important 4225 wasn’t tested and we have since seen the bulls step in. It is a massive chop and unless you are TRADING, it is best to stay away and watch. When you have an open mind with direction, you make much better trading decisions then trying to get in a trade every day.
No real changes on the daily chart. Momentum is neutral and we have been stuck within a tight range with big moves in both directions for a while. Until the bulls can clear 4600-ish, the bears will continue to try and push the tape down. The larger range is in place with 4815 top and 4225 bottom. The 50 dma found buyers after a brief breach and now if the bulls can continue, 4600 would be the next stop. But there are hurdles along the way to 4600, which I go over on the shorter term charts.
The fractal pattern was looking up and then down (as you can see with the green arrows) That happened, but the move was very fast and only took 2 1/2 days to wipe out over 200 points. There still isn’t any defined buy/sell signals, which has me open minded and watching the traders battel each day. I will wait for a signal where we can go long/short and hold it for a few hundred points/ The bulls need to get price above 4480 for a reaction trade up to 4530.
The bears need to get price back below 4430 to get some short term control back. There are no sell signals as I type, but once we see them, we should see some backing and filling. 4480-ish is the important level the bears need to defend.
Summary: The warp speed moves up/down continue and good/bad news has the algos going bunkers. It is NOT safe to look for a swing trade yet. I need to see some buy/sell signals before I want to test the waters. Let’s see how the important support/resistance levels do in the coming hours. Don’t be too quick to try and short this market. That is what everyone is doing now. G
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