S&P 500’s Moment of Truth is at Hand

We expected a holiday bounce, and it finally arrived after much hysteria.

So why get hysterical now that it is playing out exactly according to plan? Personally, I want this pig to find resistance and drop anew to a) make me right in my preferred view and b) allow me to plan profitably and provide sensible analysis for NFTRH moving forward.

But this is the stock market with inputs including a lunatic president on Twitter, a suddenly less stern Fed chief (according to reports), a bunch of Fed speakers talking out of their respective orifices and the men, women, machines, black boxes, substance abusers, casino patrons and Ma & Pa that make up “the market”.

The technicals are working perfectly so far. But the main bugaboo I have is how bad sentiment got into the Christmas Eve massacre and the breadth thrust coming out of it. So yeah, SPX is going 100% to plan, I’ve been taking some bounce profits and establishing some shorts in anticipation.

But I have also seen this movie before, where you get braver than the frightened bulls, you buy, you abort the bullish view due to a technical limit like on the chart below, and in 6 months once again brave bulls are chasing bears around giving them wedgies. At some point you’ve rejoined the bull team but in some ways you feel soiled, running with that crowd after a perfectly good bearish setup gets blown up.

So I am going to stay balanced here at the pivot area and have an open mind. My psychological weakness is after all being short a market that stays bullish against my wishes. Balance, balance, balance… for now.

spx

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