DrStool Posted August 18, 2023 Report Share Posted August 18, 2023 The S&P 500 has now dropped more than 5% in the past 3 weeks. If this keeps up, I'll have to do post mortem thinking, WTF did I miss? Accepting failure is part of this business. The important thing is to manage it so that it doesn't kill you. I leaned toward the long side in my chart picks last week, depsite there being more sell signals. I liked the buy side patterns better. Ugh. I had some shorts, but not enough. Now the trick is to manage a situation that's less than ideal. To wait for the bounce, or not to wait, that is the question, for in that waiting what dreams may come, must give us pause. To sell, to buy? Perchance to hold and hope? Aye there's the rub for in that holding and hoping what dreams may come may lead to death... Uh... Whatever... 😄😄😄 For now, the ES, 24 hour S&P fucutures, have hit another revised 5 day cycle projection of 4360. A 5 day cycle low is ideally due at 8 AM NY time. This is also a trend spport level. So that should be it for this move on the hourly chart. Except that if it isn't, and they take out that trendline, we're looking at the possibility of seeing 4250 on Tuesday. The Calm Before the Storm Meanwhile, pity the poor bondholders. The first target was hit, but watch out if this breaks the low. The repercussions will not just be in the bond market. One Banking Indicator Is Flashing Bright Red for Stocks For moron the markets, see: Gold and Miners Set Up Ugly August 17, 2023 One Banking Indicator Is Flashing Bright Red for Stocks August 16, 2023 I Liked the Buys Better Than the Sells August 14, 2023 The Calm Before the Storm August 14, 2023 Gold Sets Up August 8, 2023 All We Need is a Few Good Shorts August 7, 2023 Under the Big Top August 7, 2023 More Supply is Just a Lie But Withholding Weakens August 4, 2023 Let the Scary Pictures On Primary Dealer Financing Do the Talking July 31, 2023 Correlations Don’t Matter Until They Do, Like Now July 23, 2023 If you are a new visitor to the Stool, please register and join in! To post your observations and charts, and snide, but good-natured, comments, click here to register. Be sure to respond to the confirmation email which is sent instantly. If not in your inbox, check your spam folder. Link to comment Share on other sites More sharing options...
SiP Posted August 18, 2023 Report Share Posted August 18, 2023 I dont think you missed anything. The trend changed on august the second (02.08.2023 or 08.02.2023 if you are from US). We clearly have sell signals when you look at 13 week avg on weekly intervals or 50, 55, 200. IF you are trend following then you will never pick a top or bottom. you can earn like 50-70% of the move. Link to comment Share on other sites More sharing options...
SiP Posted August 18, 2023 Report Share Posted August 18, 2023 and keep in mind that the huurraaa we had in june-july was massive short covering with a soft landing story. So whoever wanted to close the losing short position, already did. Link to comment Share on other sites More sharing options...
SiP Posted August 18, 2023 Report Share Posted August 18, 2023 Bears need to take out 400 on nvidia to really seal the top on this one. Link to comment Share on other sites More sharing options...
BreakOut Posted August 18, 2023 Report Share Posted August 18, 2023 Something is rotten in the state of … Link to comment Share on other sites More sharing options...
DrStool Posted August 18, 2023 Author Report Share Posted August 18, 2023 Whoa Nellie. No more 2-3 day or 5 day cycle projections. Stretching a bit, I have one at 4300 for a 10 day period. Link to comment Share on other sites More sharing options...
TurdButter Posted August 18, 2023 Report Share Posted August 18, 2023 THE dominant trend in financial markets and assets is a long term trend of rising interest rates-globally. This affects all other asset price trends. May be countertrend moves of months, even years, but that is the most important trend in investing. 1 Link to comment Share on other sites More sharing options...
DrStool Posted August 18, 2023 Author Report Share Posted August 18, 2023 No comment needed. You can see the trend resistance. Link to comment Share on other sites More sharing options...
WTF Posted August 18, 2023 Report Share Posted August 18, 2023 5 hours ago, SiP said: Bears need to take out 400 on nvidia to really seal the top on this one. 400 is the key... then it's all air down to the gap fill at 315... but... back to the breakout (BTTB) of 275 will be where the first real bounce will be... it will be strong (possibly back to 400), but it will not hold... there will be several more violent rallies along the way to its bottom at 75... happy AI-ing!!! Link to comment Share on other sites More sharing options...
Jimbo Posted August 18, 2023 Report Share Posted August 18, 2023 THE DOCTOR'S BIG SHORT Well Dr Burry has put on the big short. Usually he is too early. But this time around I think his timing is not bad at all. Link to comment Share on other sites More sharing options...
fxfox Posted August 18, 2023 Report Share Posted August 18, 2023 We will see how much of that downmove was Opex related. Lots of talk about gamma hedging by market makers. But: That is nothing new. They do this since there are index options available for trading, like 30/40 years… Only difference is that in the past there was not much talk about that. The market maker takes always the opposite position of you, that‘s their business model. Link to comment Share on other sites More sharing options...
fxfox Posted August 18, 2023 Report Share Posted August 18, 2023 Bullish doji reversal candle on the daily in Dow, S&P and Nasdaq. VIX brutally negated at the EMA200 daily. Link to comment Share on other sites More sharing options...
DrStool Posted August 18, 2023 Author Report Share Posted August 18, 2023 Rising interest rates are a correlate, not a cause of falling asset prices. Tight monetary policy causes interest rates to rise, and asset prices to fall. Interest rates are the mirror image of the price of discount paper such as T-bills. So another way of looking at rising interest rates is falling prices of discount paper. Likewise bonds trend lower under tight monetary policy and and stocks should also trend lower under tight monetary policy. Sometimes the public acts in ways that counter tight policy, creating money by borrowing against collateral. In those times, private money creation can outrun central bank policy. When the Treasury issues T-bills, if purchased with repo money, that also results in private money creation outstripping central bank tightening. Those private processes are of limited duration as long as the central bank maintains tight policy. QT is constant policy tightening. It will be interesting to see who blinks first. In other words, to see if Rule Number One, the First Commandment of investing can be successfully broken. Link to comment Share on other sites More sharing options...
DrStool Posted August 18, 2023 Author Report Share Posted August 18, 2023 4 minutes ago, fxfox said: Bullish doji reversal candle on the daily in Dow, S&P and Nasdaq. Are you sure? Link to comment Share on other sites More sharing options...
fxfox Posted August 18, 2023 Report Share Posted August 18, 2023 18 minutes ago, DrStool said: Rising interest rates are a correlate, or an effect, not a cause of falling asset prices. Tight monetary policy causes interest rates to rise, and asset prices to fall. Interest rates are the mirror image of the price of discount paper such as T-bills. So another way of looking at rising interest rates is falling prices of discount paper. Likewise bonds trend lower under tight monetary policy and and stocks should also trend lower under tight monetary policy. Sometimes the public acts in ways that counter tight policy, creating money by borrowing against collateral. In those times, private money creation can outrun central bank policy. When the Treasury issues T-bills, if purchased with repo money, that also results in private money creation outstripping central bank tightening. Those private processes are of limited duration as long as the central bank maintains tight policy. QT is constant policy tightening. It will be interesting to see who blinks first. In other words, to see if Rule Number One, the First Commandment of investing can be successfully broken. We probably get the answer next week in - how would the French say? - Jaqueson Owl 😂 Link to comment Share on other sites More sharing options...
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