MARKET ENVIRONMENT: by Woody Dorsey. Sentiment came in today at @ 51% Bullish. The sentiment on 6/27 after the heavy pop was 92% which showed that a lot of short covering was happening. The 0 % sentiment reading on 6/14 represented a good trading low but that is all. This market may is not what anyone thinks. It is still dangerous. That does not mean that it can’t go up though. July may have a real melt down. But you already knew that. There are dates for real lows if anyone cares but you don’t really need to know that yet.
NEAR TERM: Again: “Volatility continues. Near term patterns remain uncertain. As quarter end looms, there may another bout of weakness.” Here you are. Nasty into next week.
INTERIM TERM: The Interim profile still suggests that a durable low may not occur until the fourth quarter. Markets will keep toying with us until then. Remain wary.
DORSEY MARKET SENTIMENT: Sentiment has been overly optimistic for decades. I had said: “The 0% bullish “told” of Bounces. The big rally from there led to a 92% reading. Beware.” Sentiment is still at risk of eventually going down to reality.
MARKET SUMMARY: Repeat: “Equity Markets remain under secular corrective pressure. Wars never end well, nor will, 2022. Bounces are expected but not necessarily exactly when you expect them.
TECHNICAL VIEW by Gary Dean: The buy trigger at the 200 week MA worked for 2/3 of the position. But over the past week, we have seen the bears grip in their claws. Important support at 3740 did hold and we have seen the spx rally some 40 points off those lows. I am NOT going to try and overthink this trade. I already closed 2/3 with nice profits and I am leaving my stop at 3640 with zero risk. The only pattern I see for the bulls here, is we just made the wave B down and the wave C up started at 3740. I am NOT 100% sure this is the pattern, but it would fit the pattern and make it easier to trade the short side.
The bearish divergences as the spx was touching the 3950 resistance was enough for the bears to shed some 200 points off the highs. The 3740 did hold, which does give the bulls a chance. But if they lose that line, we may have already made the top for this rally. 3826 is important for the bulls to get above. Until then, the bears will continue to try and press the tape lower.
There is a small buy signal on the 15’s as the 3740 support was tested. But until the bulls can get price back above the 3826, the bears are in control.
Summary: The safest way to trade this market is to short rallies-THAT HAS NOT CHANGED! The bearish divergences on the 60’s with today’s highs was enough for the bears to press the tape lower. The only pattern I see for the bulls is the abc pattern, with b completing today and wave c up is starting now. That is my preferred pattern, but I am not banking on it working. Stay tuned. G
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