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Strategies & Market Trends : ajtj's Post-Lobotomy Market Charts and Thoughts
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To: The Ox who wrote (74753)12/15/2022 9:44:37 AM
From: Sun Tzu5 Recommendations

Recommended By
ajtj99
Jacob Snyder
skier31
The Ox
towerdog

   of 98009
 
I have two sets of indicators - time based and price based. They are both bearish right now. While the the indexes were making new highs, the time based one was bearish.

Generally speaking once a sell signal is initiated on the time signal (see below) it continues until it gets to the oversold region, which is why I had confidence holding a short position before the price trend pointed down (see the charts below).

But what the market is telling you is that they are more worried about the earnings than inflation and the interest rates. To see this clearly, observe that today the stocks are falling, even though the interest rates are also falling. This is a clear "We see recession ahead" signal.

In a recession, earnings typically take a 20% hit. Best case scenario is a mild recession with a 5% - 10% EPS hit. Use those numbers and match the earnings yield to the 2yr yield and you will have a handle on where the bottom will be - subject to the usual bands and revisions.

I think SPX should see a clear lower low. I am not as confident that tech will go much lower than the November lows. If you see a pair of divergences where SOX holds its bottom better than NDX and NDX holds better than SPX, then that will be good indication for the bear market bottom.

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The intermediate signals in these charts are a work in progress. But what is not in question s that if you sell on weakness when they are near the red/orange line on top and buy on strength when they are below the green line at the bottom, you are likely to come out well ahead of most people.

Time based



.
Price based

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