MARKET ENVIRONMENT: by Woody Dorsey. Sentiment came in today at @ 72% Bullish. The most recent Zero reading represented a new thrust down. As I noted: “The severe price moves and now near record short term oversold, qualifies this as a “crash like” signature. That infers that an extreme is close. Maybe the FOMC will be the catalyst for a temporary discounting and allow for another short-covering rally.” Yes. Structural Tightening may continue for Decades. This market is not what most everyone thinks should be happening. It is still dangerous.
NEAR TERM: Understand what has been said: “Volatility continues. Near term patterns remain uncertain and it remains wise to watch the game. You do not have to play.”
INTERIM TERM: The Interim profile suggests a durable low may not occur until the fourth quarter. Markets may keep toying with us all, both ways. Until then, be wary of trying to play games which assume getting the big moves right.
DORSEY MARKET SENTIMENT: Sentiment was overly optimistic for decades. This is a different era. Instances of these extreme sentiments ‘tell’ that a new Recognition occurred. Don’t invest in any market beliefs. The latest 0% bullish “told” of a potential ‘crash like’ set up. That is where we are?
MARKET SUMMARY: Repeat, and almost boring, but no one seems to really get it: “Equity Markets remain under secular corrective pressure. Central Bankers will be dealing with Inflation for a long time.” Volatility and Uncertainty in markets will continue. Wars never end well, nor will, 2022. Bounces are expected but not necessarily when you expect them.
TECHNICAL VIEW by Gary Dean: The one day wonder rallies continue and they have failed each and every time. But we do have long term support at 3630 and there isn’t many looking higher, only lower. That does set up for a face ripping short squeeze, but as I have said, fear is stronger than greed and everybody is fearing they will lose everything by the time Joe is thrown out office. So keep in mind of the support level at 3630, and maybe try a long scalp down there if you have the courage, but have a very tight leash on the trade. This market does have a crash like feeling to it.
200 week MA is at 3630. We have seen massive rallies from this spot. Can the bulls pull it off again? We will find out soon enough. Eventually that will give way to this mad selling, but I am expecting a bounce near those levels.
We still have bullish divergences on the 60’s But until the bulls get price back above 3800, the bears remain in control.
Summary: The safest way to trade this market is to short rallies-THAT HAS NOT CHANGED! There is support within 30 points below the spx current price. I am more on the side of CAUSIOULY looking for a low to buy the dip instead of jumping on the short band wagon at this stage. The weekly 200 dma is at 3630 and that has been a great buying opportunity in the past. Will it be again? I like trying the buy side anywhere from 3720 down to 3640 and placing a 2% stop loss. I do like the risk reward here. G
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Information is for paid customers and may not be copied or distributed Copyright 2022