MARKET POINTS: by Woody Dorsey
- The 11/3 High continues to be revealed as cogent Resistance. The 0% Bullish on 12/21 alerted you that it was no time to get “Short.” The Sentiment Extremes continue to be amazing. The Diagnosis of Sentiment always has to be related to the context of Timing Profiles. The nominal price profile is bullish into 12/24 and stocks have recovered, albeit soberly and modestly. Given the Holiday season, this is not the time for big exposures either way.
MARKET TIMING: The Profile for surprising seasonal weakness in December occurred. There is still, “latent recovery potential into Xmas.” Stocks may then take another hit into the first week of January. The Technical configuration still argues for an abundance of caution. I repeat: “If you normally trade 1000 shares, maybe it is wiser, for now, to trade 200 shares.”
TIMING SUMMARY: There is nominal upside into 12/24ish, I do see the possibility for a decline from there into 1/5ish.
SENTIMENT INTERPRETATION: The DORSEY Market Sentiment registered a high of 93% Bullish on 12/2. That time and price extreme remains cogent. The enormous swings in Sentiment are “Symptomatic of an Unstable Market. Again, low risk exposures are warranted.” I would also note that the preponderance of Low sentiment in recent weeks is actually, Bearish! It may signal that the tone and Gestalt of the Stock Market has entered a new phase.
The DORSEY Intermediate Market Sentiment failed from range highs, retreated back to oversold levels and seems to be slowly bouncing back up again. The overall Sentiment Profile continues to infer that the Market has Changed.
SENTIMENT SUMMARY: The Sentiment extreme of 93% on 12/2 near the 2103ish level is critical Resistance. Sentiment bounces from extreme levels have not provided any overtly robust bounces. Still, stocks are in a Recovery form the rare 0% Bullish reading. There remain micro tells from the Sentiment History which infer that structural stock market weakness may continue to be slowly revealed.
OVERALL MARKET SUMMARY: “Don’t “Press shorts.” This is a dangerous market and is now clearly in the throes of Holiday Trade. Bounces after the 0% Bullish are not very convincing. Repeat: “Small positions and nimble behavior may be the best presents you can give yourself.” Have a Great Holiday!
TECHNICAL VIEW by Gary Dean: The SPX is trying to make some type of bottom, but as Woody stated above, it hasn’t reacted the way is typically does after the rare 0% sentiment. There doesn’t appear to be any sense of urgency to buy the dip this round. There was a clear 5 waves down, which would suggest a bounce back up to the 2041-2049 or even 2061. But the first resistance or challenge for the bulls comes at 2032. If they can push above-then watch the above levels.
Volume should really start to slow and in the past, that is when the bulls do their best work. Combine that with the lack of enthusiasm to buy the dip-maybe we see a fast move up to the 2049-2061? It is hard to say exactly how things will play out in the coming days-but expecting a push up to one of the resistance levels makes the most sense at this stage.
- Resistance Levels-2041-2049-outsider 2061
- Support Levels: 2020-2016 outsider 2005
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