MARKET ENVIRONMENT: by Woody Dorsey. Sentiment came in today at @ 67% Bullish. The 0 % sentiment reading on 6/14 still represents a good trading low for now. This market isn’t what anyone understands it to be. It is dangerous. That does not mean that it can’t go up though. There are dates for real lows if anyone cares but you don’t really need to know that yet.
NEAR TERM: Again: “As quarter end looms, there may another bout of weakness.” Yep. Now, there is time for another recovery even into towards the end of July before the next cliff jump.
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. Don’t Believe that you understand the Risks.
DORSEY MARKET SENTIMENT: Sentiment has been overly optimistic for decades. But: “The 0% bullish “told” of Bounces. The big rally from there led to a 92% reading.” Then the market fell down again hard. Typical! Now it is going to bounce again. Sentiment is still at risk of eventually going down to a more real reality later in the year.
MARKET SUMMARY: Repeat: “Equity Markets remain under secular corrective pressure. Wars never end well, nor will, 2022. Bounces are expected from here for a couple few weeks B4 the next cliff.
TECHNICAL VIEW by Gary Dean: The battle of the range continues. The minute we see a big rally or reversal, the talking heads come out in full force to say the lows are in. Once the bulls run out of short squeeze gas, the selling starts up again. The only saving grace for the bulls right now, they are trying to defend support levels, something we have not seen in a while. I am on the fence here as to whether we saw the rally highs or not. The easiest trade would be for another rally high that takes us into next week. We can exit the last 1/3 off the long trade and start shorting. But Mr. Market hardly ever gives anyone the “easy trade” One can simply close the long trade here or leave stop at entry. It’s a tough call, as the bulls do look weak, but that could change tomorrow?
The 3995 top has held any break out in place. The 3740/3700 has been defended by the bulls. Until we break up/down from this range, it may very well be some sloppy trading. Below 3700, I THINK the bulls would be done and we take out the 3640 lows.
The smaller range in play is 3836 top and 3740 bottom. Waiting to see who wins this range battle is the safest way to trade. All momentum indicators are neutral, so I am getting no help from them.
Summary: The safest way to trade this market is to short rallies-THAT HAS NOT CHANGED! The small range we need to watch is 3836 top 3740 bottom. If the bears can get through 3740, 3700 should be hit in a fast manner. If the bulls can defend and get price above the 3836, then we should see 3900/3930 get tested. I would not be surprised to see some choppy/sloppy trading for the next week or so. Be patient and watch to see who wins this small range battle. G
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