MARKET ENVIRONMENT: by Woody Dorsey. Sentiment came in today at @ 29% Bullish. The 0% sentiment reading on 6/14 represented a good trading low. This market remains dangerous even though it has turned sleepy. There are dates later on this for real lows if anyone cares but you don’t really need to know that yet.
NEAR TERM: This tactical recovery has lasted, as expected. It is now tiring but still has some small potential. There is an opportunity for another sharp drop setting up near the end of July into August.
INTERIM TERM: The Interim profile still suggests that a durable low may not occur until the fourth quarter. Remain wary. Be careful. Don’t Believe that you understand the Risks.
DORSEY MARKET SENTIMENT: Sentiment has been overly optimistic for decades. Again: “The 0% bullish “told” of a typical trading low. Sentiment is still at risk of eventually going back down again importantly later in the year.
MARKET SUMMARY: Repeat: “Equity Markets remain under secular corrective pressure. Wars never end well, nor will, 2022. Bounces are beginning to run out of steam. This is not an easy Summer. So you can still enjoy it by not getting too heavy in the markets
TECHNICAL VIEW by Gary Dean: There really isn’t that much to ad from a technical view from last week. Time has always been what I have watching, meaning I was looking for a bounce that lasted more than 2 days. We are burning off some of the oversold indicators on the longer term charts. So here we are 5 weeks from the lows and the pattern looks like a bear flag. I lowered my stop to 3790 to give the final 3rd of the position some wiggle room. If the bulls win this range battle, then I expect 4000-4100 to come into play. Maybe that happens towards the end of July?
There are currently no buy/sell signals, but if the bull can get above 3955, then expect 4000/4100 to come into play. The bears need to get price below 3830 for a reaction trade down to 3740.
There was some sell signals on the 15’s and the bears took for advantage of it and drove the spx down some 100 points. 3836 is the battle line. Don’t try and overthink this!! We are long, locked in profits and running with 1/3 position open, with a minimum 150 point gain if stopped. Patience is needed to short this market right now. We need more believers that the lows are in place before we turn lower again. I still like 4000/4100 as a target.
Summary: The safest way to trade this market is to short rallies-THAT HAS NOT CHANGED! There was a head fake breakout last week that was quickly reversed. But the bears have not been able to break below important support. I am leaving my stop at 3970 and simply letting the market do what it is going to do. G
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Information is for paid customers and may not be copied or distributed Copyright 2022