MARKET ENVIRONMENT: by Woody Dorsey. Sentiment came in today at @ 93% Bullish. The see saw continues. The 0% sentiment reading on 6/14 turned out to be a good trading low. Interesting how well a simple 0% works. But that was always going to just lead to bounces. And so it goes. This timing pattern still allows for serious hiccups next week. Be prepared for the full force of Uncertainty. Good news is suspicious in this environment.
NEAR TERM: big pops on a 93% bullish are suspect. There is an opportunity for another sharp drop near, the end of July into August. We are just about there. Take care.
INTERIM TERM: The Interim profile still suggests that the best low of the year may not occur until the fourth quarter. Remain wary. Don’t Believe that you understand all the Risks in these markets.
DORSEY MARKET SENTIMENT: Bullish Sentiment for equities has been overly optimistic for a decade. The 0% on 6/14 bullish “told” of a typical trading low. But, Sentiment has now rallied back towards questionable levels of optimism. Down. There is the possible risk of a severe sentiment declines over the next few weeks.
MARKET SUMMARY: Repeat: “Equity Markets remain under secular corrective pressure. Wars never end well, nor will, 2022. This is still a Market War. Bounces don’t Change that. It will not be an easy Summer from here. This is not a Market to believe in.
TECHNICAL VIEW by Gary Dean: The call was to move into trade mode, which means we aren’t really worried about time, but more about price targets. 3930/3900 was suggested as a support zone to scale out of the short side. It fit our 100 point spx trade expectations and anybody who was jumping on the short side on the breakdown, are trapped again. I am seeing a short side set up coming, but I am going to be very patient for this entry. 4175 would make sense as a potential top.
I am not seeing any short term sell signals, which is suggesting we still have more room to run higher before we see a tradable top is in place. 4075 looks like a magnet and don’t discount 4185 before all is said and done. The bears need to get price 3995 to get any attention and below 3913 to see momentum pick up. Until then, the bulls will continue to try and press higher.
There is a bearish rising wedge forming here and it is the first warning sign I am seeing for the bulls. It may not pay out, but something to keep an eye on. The downside target is around 3750.
Summary: The safest way to trade this market is to short rallies-THAT HAS NOT CHANGED! The choppy/sloppy tape continues and anybody jumping on the long/side for a swing trade, are finding themselves chasing their tales. Stay open minded, patient and lets see what the next trade is. I am thinking it will be on the short side. G
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