MARKET ENVIRONMENT: by Woody Dorsey. Sentiment is coming in today @ 83% Bullish. Note the tendency for very low sentiment (1% ish) has been followed by huge rallies for a day or so only to fail again. This is Bear Market behavior. War will be waged for some time. This fits with the previously profiled risk of a Hyperinflation. I had been looking, some weeks ago, at the 3/12ish time area for a potential trading low. Now, as noted, I am even seeing 4/4ish as a final trading time target. So, give it more time. Let the Hyperinflation keep Hyperinflating. Wars never end well and they never end on anyone’s expected time frame.
NEAR TERM: As expected: “This is a Risk Off market. March may bring a catharsis. Spastic and erratic weakness is still possible near term.” Stocks need further formation before believable upside.
INTERIM TERM: An initial Interim low is nearing but not yet definitive. This period of weakness may get mopped up over the next few weeks. That would allow for an expected April rally or maybe later. There are some Summer Time targets. Wars never end well and 2022 will not end well. The degree of price weakness which has already occurred, signals that a larger corrective process may last for some time (years.)
DORSEY MARKET SENTIMENT: Bullish Sentiment had been overly optimistic for a long, long, too long, time. Sentiment is trying to discover what degree of sentiment is required to achieve a definite interim low. This sentiment low will still take some time to clarify.
MARKET SUMMARY: Equity Markets remain under real pressure. Jerome didn’t know it was going to turn into a Hyperinflation. He has admitted he made a mistake. But is he still making the same one? Don’t Deny Hyperinflation. Volatility remains in charge. Enjoy it. War never ends well and 2022 won’t either.
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: We have seen some massive moves in both directions and as crazy as seeing 120 point back to back to back days, my support resistance range really has not changed since Tuesday. Dead Cat bounces can be ferocious and why we always have to determine where we are within these mini cycles, so you don’t get caught shorting at the lows based on emotions. The bulls are at critical support levels here and if lost, we could see a fast move down to 4100-4050 level. The bullish divergences did produce a 200 point rally, but that was all the bulls could muster. New lows will most likely extend these buy signals on the daily-so look both ways.
From Tuesday’s report: If one took the “risky” long trade at 4160 for 1/2 position, place stop at entry and look to take profit near 4300/4400 if it gets up there. Careful shorting too early, as these short squeezes can be violent! 4300 came into play yesterday and now the bears are trying to press price back down to the 4160 again. I would be careful trying the long side here-if 4160 is lost, 4110 will be here in a flash. Waiting for bounces to short is the safest trade for now, but as we have seen, we can make a quick 200-300 points on the long side–FAST! There are no buy/sell signals-so stay neutral for now and manage open long position from 4160.
There were small bearish divergences in place on the 15’s as the 4300 resistance came into play and that was all the bears needed to drive prices lower today. Don’t become complacent on either side!
Summary: Mr. Market has given both the bulls/bears a chance to make some quick cash this week. News is bad-economy is bad-fed is raising rates, would lead to anyone just looking lower. Don’t do that! It is when the master planners try and squeeze their way out of harms way. 4160 may be a magnet, but the point I am making–look both ways and stay open minded. This market is moving fast! G
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