MARKET ENVIRONMENT: by Woody Dorsey. Sentiment came in at @ 9% Bullish. This is a melt down. None of what is happening is a surprise other than the speed of it: “Yes, we understand that Structural Tightening in Financial culture will continue for years. Hyperinflation remains a Real Risk. It is prudent to be cautious. Some less mature investors have only seen Bears in zoos! This is the real animal. This market action is a harbinger and a tell of things yet to come.
NEAR TERM: Fears of the FOMC remain dominant. This is a Market War so, stay Wary. Potential for short term highs and lows abound but there is no road map in this terrain. Take each day as it comes.
INTERIM TERM: The Interim profile still suggests a better low late in the fourth quarter. There is nothing bullish about this market. Big Bears typically take their time toying with everyone. It can all happen quick, too. That seems to be the game.
DORSEY MARKET SENTIMENT: The main point is that Sentiment was overly optimistic for many years, even decades. That has changed. This is a different sentiment era. The recent cluster of very low sentiments is ‘telling’ of a significant Recognition. It signals an alteration in the investor psyche.
MARKET SUMMARY: Repeat: “Equity Markets remain under secular pressure. This is SECULAR. It is prudent to be cautious.” Central Bankers will be grappling with Hyperinflation for a long time… Longer than anyone thinks.” Volatility and Uncertainty aren’t going away. Embrace them. Enjoy any bounces. You know the real story. It looks like the Summer could have more potholes! There will be another leg down into year end.
TECHNICAL VIEW by Gary Dean: This market and the bulls have had a rough 2022! But the Rut is leading today, which is suggesting we are seeing some risk appetite to be buying down here. I sent out an email saying I am taking 1/2 a position and will add with weakness and use today’s lows as my stop. The risk reward is there for this set up. Obviously, when we are in a bear market trend, nothing is certain, but taking a long position with tight stops makes sense here. I am seeing buy signals on all time frames and as Woody’s Sentiment data is showing, nobody is bullish on this market right now. That does set up a face ripping short squeeze in the near future. Today?
The bullish divergences remained in place, even with the bull slaughter move lower. The spx touch the breakdown target 3870 and we did see buyers waiting. If using history as our guide, everyone who missed the last move down will be too eager to get short on any strength. The will be the fuel for the short squeeze. The safest trade remains, sell the massive short squeezes when they hit. But for now, I like higher before lower. The bulls need to get above 3960 and if they succeed, a reaction trade up to 4060 would be in play. I like 4160 as an upside target!
The bulls need to get price above the 3977 resistance for a reaction trade up to 4060/4070. The 15’s are showing buy signals as well.
Summary: The safest way to trade this market is to short rallies-THAT HAS NOT CHANGED! The bears pushed the spx down too the lower end of my range 3870 and buyers were waiting. Whether the squeeze starts today or tomorrow or next week, I do believe it is close. G
Information is for paid subscribers & may not be copied or distributed. © Copyright 2022. The information contained herein was provided by Sentiment Timing and/or its publishers does not make any representation or warrant with regard hereto, including but not limited to those of accuracy, completeness, reliability, timeliness and/or infringement on the rights of third parties. This Publication expresses a view on the markets but is not intended to provide any specific recommendation to buy or sell any security. Investing is Uncertain and always carries Risk. Of Losses. Subscribers should always assess Market Risk parameters with their broker or financial adviser.
Information is for paid customers and may not be copied or distributed Copyright 2022