MARKET ENVIRONMENT: by Woody Dorsey. Sentiment came in at @ 28% Bullish. Melt downs are sweet but are special. Not every day. Look for more upside stabs this week. None of what is happening is a real surprise other than the speed of it: “We understand that Structural Tightening in Financial culture will continue for years. Hyperinflation is a Real Risk. It is prudent to be cautious. Most investors have only seen Bears in zoos! This is the real animal. This market profile may be on the scale of decades. The surprise may remain how virulent and persistent declines are into Q4.
NEAR TERM: Fears of the FOMC nominally discounted? This is a Market War so, stay Wary. There is not much road map in this terrain. Stay off road in 4 wheel drive. Take each day as it comes. Some recoveries quite possible.
INTERIM TERM: The Interim profile still suggests a better low late in the fourth quarter. There is nothing bullish about this market. As I see how we are unfolding, there may not be much in the way of easy Summer rallies to sell into. It may all happen quickly.
DORSEY MARKET SENTIMENT: Sentiment was overly optimistic for many years, even decades. That has changed. This is a different era. Recent clusters of very low sentiment is ‘telling’ that a significant Recognition in the investor psyche has occurred. It is too early to look for sentiment trades.
MARKET SUMMARY: Repeat: “Equity Markets remain under secular pressure. Central Bankers will be grappling with Hyperinflation for longer than anyone thinks.” Volatility and Uncertainty aren’t going away. There will be another leg down into year end. War never ends well, nor will, 2022.
TECHNICAL VIEW by Gary Dean: As long as we have volatility, our predictive analytics model will work wonderfully. Buy/Sell signals work and then combine that with sentiment, we can make a lot of money. As scary as it was to buy, the extreme bearish sentiment reading with buy signals on all time frames had us using any weakness to build long positions. The expectation was for another massive short squeeze to hit any time. The important 3870 support was defended nicely and we are now some 200 points off of those lows. I still like the 414150/4200 as upside targets, but the 15 minute charts are showing sell signals, so be patient!
The bullish divergences remained in place, even with the bull slaughter move lower. After a couple of head fake moves up that failed, it looked and felt like the master planners were setting up the bears. The bulls need to get price above 4067 for a reaction trade up to target 1 at 4160. Start layering out of your long position if we do reach that level.
The bulls need to get price above the 4070 resistance for a reaction trade up to 4160. The bears need to get price below the 3960 to pull themselves out of harms way. The 15’s are showing sell signals, so don’t force a trade.
Summary: The safest way to trade this market is to short rallies-THAT HAS NOT CHANGED! The bulls are at important resistance 4070 and if they can push above, the 4160 upside target should come into play. I think there is still more time to press higher. G
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