JM: I only heard the first part of his show this weekend. I agree with Bob that bottoming is a process. I don't think that process has ended.
I have the benefit of hindsight now after that signal was issued. Bob could only make his best guess at that time. So, I have an advantage. Whatever happened last week was not the beginning of a cyclical bull move in my opinion but rather, perhaps, part of a potential bottoming process IMO. But that is my opinion and I am just an internet nobody so don't take my word for it.
I do not think this is a sustainable advance. Everything I look at suggests strongly that we topped today and we could have some serious downside the remainder of this week. I think this could be a significant top. The war does not play into my thinking. I agree with Bob that it has been discounted. I said a few weeks ago that we would have our war rally during opex we and here we are. It has gotten higher than I thought but nothing "in" the market has changed my mind yet. But what has been discounted is an easy victory and a return to the good times. So, surprises will be to the downside. It may be a "sell-the-war" event.
Yes, there was an oversold state and it could have developed into something further and maybe it will down the road -- and that is some real fear marked by panic selling and a Vix spike to 50. This bottom lacked those qualities. It did have a very high 10 dma trin that was striking. But that has been corrected and then some with the low trin readings this week. And a trin reading to that extent has often been the precursor to further selling in the weeks that follow except at significant bottom. Now if we did have some panic down the road and we did nothing much pricewise, then this would be a bullish hint.
There are some potentially bullish signs out there. The Nasdaq did not trade below its 50 dma low set last autumn along with the other averages on this latest sell-off. This is the first time it has not joined them. Is it a sign of relative strength or something yet to come for that average? We will have to see. But it did not come close to testing its prior lows this last round in the 1100s.
The dollar had an island reversal and is showing some strength. War rally has lowered the price of oil and that is good news.
If we use the SPX as a proxy, this is what I see:
stockcharts.com[r,a]dhlayiay[d20000115,20030318][pb50!b200!f][vc60][iLb14!La12,26,9!Lg!Li10,10!Lh5,5!Lp14,3,3!Ll14][J10963081,Y]&pref=G
This chart troubles me. You can see we rallied right back to my 50 dma neckline today and crossed the 50 dma. Bullish hint? Maybe, but bells are ringing as I write for a significant top here potentially and it would be bearish if today were a top. So maybe its a headfake for now or just a hint for a bottoming process. But if it goes down like other bear rallies before it, you are right back to square one.
If you want to follow Bob, he would probably say to buy on weakness to get positioned. This is not weakness IMO now. So I would exercise patience if that is your choice. |
