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MARKET COMMENTS by Woody Dorsey: The preferred “Hangover” profile for last week turned out to include a “Puke,” but it was only temporary. I remain Neutral in terms of trying to define any high Probability trading edge…until I see the trade into early next week. I reiterate that most Investors are seduced by being anchored on Big Picture stories. The Belief in Big Bull or Bear outcomes prevents one from clearly seeing the Market.
Yes, my generic view remains that Equities are skating near the edge of a Crevasse. One must be aware of that while maintaining a flexible trading Mind. Stocks can still offer opportunities on both sides of the market. An important decline will inevitably occur but it may be preceded by a serious Upside Spike or, even more Elongated Divergent Distribution. There are “Black Holes,” which I had forecast, in advance, for last October but I don’t have any “Black Holes” due in the very near future. As in many things, “You have to wait for it!” The Liquidity Gestalt still has an “Influence.”
MARKET ENERGY: I diagnose Market Energy which is different than Market Timing. Last week was due to have some underwhelming “Hangover” trade. The Abrupt Break on 3/25 was unexpected but, as we see, it appears to have been an aberration? I want to note that a Break like the one on 3/25 does not change my Market Energy profile. Thus, the original diagnosis remains intact for some sloppy, inconclusive, potentially Bouncing Trade into Month End, Quarter End, and the Week End Holidays. This may even persist into Dates are for premium members-SUBSCRIBE NOW before more defined negativity occurs.
MARKET TIMING: The breakdown last week may seem like a, “one off” but it does heighten the awareness of the age and vulnerability of the S&P market. A Recovery was expected and continues but is not deemed to be important since there is an incipient period of weakness coming as we get further into Dates are for premium members-SUBSCRIBE NOW Thus, it may have been part of a compound decline. If so, it makes recent bounces a feint of strength. So, I would not expect any lasting rallies.
The Market Calendar is comprised of both Market Timing and Market Energy factors. Those are now aligning for a drop into a Low due Dates are for premium members-SUBSCRIBE NOW. The question is, how they might set up for that over the next 3-5 Trading Sessions?
MARKET “TELLS”: There doesn’t seem to be much of a “Tell” here as Holiday Trade is a bit inconclusive. I do note that the DAX has stayed strong but may also have a tactical sell off over the next few weeks. Relative strength, as expected, continues in the EEM. All in all, there are no Tells of any major changes in the markets.
SENTIMENT INTERPRETATION: The 2040 level remains Key support. I would still advise using the DORSEY Market Sentiment extremes, in alignment with Price Behavior to identify Key Support and Resistance levels. Thus, the 2116ish is Resistance and 2040 is Support.
Moreover, price plunge on 3/25 registered a notable 1% Bullish in the DORSEY Market Sentiment. My Diagnosis of that was: “It typically leads to some follow through but could also be close to marking a price low. It argues against getting Short for today.” Thus the 2045ish level becomes additional support. Note, that after 30 years, I am naming my proprietary Sentiment as the DORSEY Market Sentiment. I find that investors sometimes confuse it with other market measures. Of course, as I have pointed out many times, the MOST IMPORTANT thing is to DIAGNOSE the Sentiment. We live in a world where Data is thought to be more important than Meaning. Data, is of course very easy to come by, while Meaning is much harder to get.
INTERMEDIATE TERM: The DORSEY Market Sentiment, when measured on an Intermediate Term basis, is pretty much NEUTRAL. I allowed that it could stall or flatten out if Stocks just continued Sideways. There could be some severe divergence forming. However, Sideways is still just Sideways! Optimism is maturing for sure but it can certainly continue to do so.
MARKET SUMMARY: Stocks still have some upside potential but are giving a few signs of Instability and Vulnerability. The Trading Profile has been developing some clarity. I want to see the resolution of this minor recovery attempt over the next few days. The Degree of Downside into Dates are for premium members-SUBSCRIBE NOW will tell us all how vulnerable Stocks really are.
TECHNICAL VIEW by Gary Dean: The SPX found support above the previous lows and has had a nice rally. It made it right up into the first resistance zone and was stopped at the 62% retracement line. There is some support at 2072 which the bulls may try and defend. Below that support line, we could see 2062 come into play-and fill yesterday’s gap. Below 2054 opens the door for the previous lows to be tested and even broken. There is an open gap at 2099 which may get filled before any meaningful drop hits. But there is also the possibility of a large triangle being formed. We will need more time to see if that develops or not-but the black lines would be the formation.
Resistance Levels-2088-2100 and then 2115-2119 zone
Support Levels: 2072-2067 and then 2062-2054 zone
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