I can't remember a more confusing weekend. I have many different chart setups for the same indexes that usually give me a good read on the next week or at least the overall trend. Not this weekend though.
My slow Bollinger band trend charts that show trends and reversals are mixed.
The DOW is sitting on the bottom of mid range bands. (Wide bands with price outside is major reversal, pinched minor reversal within overall trend etc). Where it is could go either way. I have weekly buy signals on it so it "should" bounce however if it fails, it would likely be a rapid fall. Looking at the R2K, Midcaps, UTEs, banks, insurance, small tech etc. Has to give pause that we could waterfall with their lead. I had said a few weeks ago that the DOW was safe because my EMA ribbon charts had gone from total inversion to normal which usually is a new bull mid to long term. It has reversed back down to partial inversion which it usually only does in 2000, 2008 type markets.
The NDX upper band has curled up but lower band is still flat. There was no expansion or pinching before the move. I have weekly sell signals on it. The semis are in the fib retrace zone for the whole move from the 2022 peak to bottom. (I forgot to check the NDX itself). The EMA Ribbon charts are still fully inverted which is bearish.
The SPX is in the middle of the bands, EMAs are flat, no weekly signals since my sells at the Feb top. Of course this is the index I play daily. I'm currently long SPY from a daily signal where I bought Thursday's close but sold calls short as a partial hedge that expire on Mondays close. I'm up on the stock but even on the calls after theta erosion despite gamma increase. I'd like to hold everything until near end of day Monday and end around 398ish.
I'm seeing a lot of hard drops in almost everything that was strong last year. It was pure luck but for some unknown reason I decided to sell all my insurance stocks a couple weeks ago. At the time, I just figured I could match their dividends with treasuries for less risk and they had had a good run so why not. Most of them are down 30% since then. I sold my oily stuff too early last year for much the same reasons. They are now all below my sell price. My div plays that I sold a few weeks ago with the intent to leg back into are showing no signs of strength and keep making lower lows. I'm finding it harder and harder to sit on my hands as they are well below where I intended to buy them back but they just keep dropping. Some of them are my bird dogs and tend to lead the market.
FA wise, I could argue either way but I can argue the bearish case better. Bull wise, we've been at these interest rates in the past and moved up. Valuations are still a bit high but closer than we've been in a while to normal but that assumes earnings climb as analyst rosy projections actually happen. (Fat chance).
Bearish - high rates with higher for longer due to sticky inflation that hasn't peaked despite goods inflation returning to normal. Market breadth is horrible. RSP/SPX & QQQJ/ONEQ/QQQ ratios are plummeting. 5 stocks have been holding the indexes up for weeks. Leading sectors like banks, trannies falling, some waterfall style. Banks tightening lending which is going to impact Small tech, biotech, housing, autos. Can already see it in my business loans charts. Auto repos and delinquencies are already climbing. Already seeing climbing taxes both new and Federal tax cut phase outs. This squeezes consumer and I read that once we reach 18%, the market ALWAYS tanks. We're almost there already. I could go on but I'm probably near the 15 minute post making limit. |
