10/25/22 Sentiment Timing Report

MARKET ENVIRONMENTby Woody Dorsey. The pattern was projected to be lower into October. Indeed. Panic Attacks have resulted in a new nadir as expected. Surprisingly, for the mainstream takers, a positive week did occur. As I said: “Lows in Financial Culture have likely happened.” As expected, no one knows what to expect from day to day. Sentiment came in today @ 88% Bullish. A tactical rally continues but is now tiring. Still, Let it play on a bit longer.  Isn’t all the Fed Talk still boring! Aren’t all of the Global Negatives boring? Has the market already discounted much that? Probably. I do not love stocks but I do not hate them either. I accept their awkward bottoming process. “Churning and Opining was good way to be rid of all those dire opinions that the Talking heads like to talk about so much. The Fall bottoming game is working on its game.” It is still all about Rates. Political crisis may be new viral. Interest rates and fiscal responsibility are the key factors. Britain has always had the best theatre. Eventually, the best shows come here. Look for political drama to show up here.

The 0% reading on 8/29 signaled a new and final? wave of negativity for this cycle. Yes, The “Caving’ of the Bank of England was a near perfect tell a bottom. There is no reason for Fear here. Caution is not Fear.” The profile looks like this will still be a welcome bullish week. It has been.

NEAR TERM: Recent action has been part of a near perfect “psychological Catharsis in Financial Culture. Is anything new really happening? It is time for some normalcy. This strength may end, as these tactics  morph and mature.

INTERIM TERM: No change for months: “A potential low is coming due now with the passing of October. Yes, stocks may eventually ‘bottom’ on some future Rate Rise by the Fed or, more likely on the discounting of that rise.  Early 2023 High in stocks?

DORSEY MARKET SENTIMENT: The 0% reading on 8/28 represented a new sentiment impulse down. The profile suggested that a negative nadir might occur in October. Sentiment deteriorated enough for that. Bounces here are not surprising; You could smell that a sentiment extreme was brewing. Yes, there is still some time for churning and worrying and second guessing into elections before an absolute durable extreme is recognized by market participants. That is what is happening. Having some trouble with the Sentiment graphs right now. Sentiment is easy. ‘A bottom occurred. This price recovery was expected but has not achieved ebullience. Thus, the market, as noted. looked rocky higher. It may stay that way for a few weeks. Do not be afraid of it.’ Sentiment and markets are in a sideways sentiment profile.

MARKET SUMMARY: Repeat: “This is not a Market Environment to Market beliefs. Hard bounces can occur at any time.” Plunges are still possible. Markets have already passed the expected zone for the best panic extremes. Do not be afraid. Roll with the punches. Stocks are in a messy process of being subtly bid after their great declines. Heroics are on hold. Don’t play that game.

TECHNICAL VIEW by Gary Dean: The preferred pattern has been for some backing from the 3770 highs  down to the 3700/3666, to buy the dip.  Yesterday we hit target 1 which has always been 3800. We have traded above that and now the bulls are bouncing off the 3837, which was the resistance I mentioned this morning. If they can get above 3737, we should get a reaction trade up to the 2nd target 3900. Do not rule out 4000/4100 before all is said and one. But it will NOT be straight up. In bear markets, volatility plays a big rule in our trades.  3868 may be a magnet to the upside and where I would even take another 1/3 off?

(From Thursday) The bulls need to get price above the 3750 resistance before the bears get below 3643. The bulls won that battle and now we are trading at the 3837 resistance. If the bulls can get above, then I am expecting 3868/3900 to come into play. I am NOT really seeing any major sell signals./ That is suggestion some choppy tape in the coming hours/days before another push higher.

There sell signals as we approach the heavy resistance zone between 3867/3900. I am expecting the bears to at the least try and hold off the bulls in that resistance zone. 3900 then down to 3800? Maybe, just maybe. Manage open trades!

Summary:   The bulls have been breaking through resistance like it wasn’t there. 3868 is the first MAJOR resistance if the bulls can stay above the 3837 line. Stay in buy the dip mode, but don’t chase up here. G

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