SPX and its US index fellows are in rough shape. That’s a Captain Obvious statement, but we’ve been tracking the degrading situation by weekly charts like the one at the end of the post for several weeks now.
Last week the Powell jawbone followed the Brainard and Bullard jawbones, and the whole lot of them came later than they should have considering that the 3 month T-bill has been demanding hard action for months now. Never mind the 2yr yield, which started making its demands in 2021.
It is amazing how the Powell jawbone came out last week on the day that the indexes were putting on a rally. It was the high wick of the second to last candle on the weekly chart. It popped right up to the limiting moving average and then the main bearish theme kicked right back in, with a little shove by Powell.
I did not short anything because a) in a feat of great timing I was in the air with a promise to my wife not to get caught up in the markets on vacation, b) I am not an accomplished short seller and c) I hate to make decisive market moves because of some big mouth in the media moving markets.
Ongoing risk management – which for me means cash management – is fine enough. I have a ton of it percentage-wise and look forward to deploying it out ahead. I also look forward to shorting in line with this chart that has gone from suspect to bearish, to bounce, to failure to bearish again so far in 2022.
That failure at the moving averages and said down-crossed MAs do not look good at all. Throw in negative weekly RSI and MACD and you don’t need me to tell you it’s not a pretty picture. This, in my opinion, is the only way the Fed can stop the inflation it created. That would be to have the greedy, inflation-stoked herds thinking more about self preservation than profits. That would put ’em in Treasury bonds, bills and notes. That would put ’em into US dollars. That would tamp down the inflation for this cycle and put ’em in a deflationary state of mind. In deflationary phases, people should have cash. Cash to deploy into the next inflation… until the whole mess wheezes and rolls over of too much inflationary or perhaps deflationary pressure one day.
So looking at this chart I want to be short it. But I wait for a setup. Will it come? The market keeps trying to bounce into a would-be setup, but it keeps flopping again. There I am, unaccomplished (and frankly chicken shit) short seller, fresh off a vacation that somehow turned out to be just what I needed with the Mrs. despite these ill-timed events (a subscriber calls it the new Tanashian Indicator, an exceedingly rare and very accurate bearish indicator triggered to the day, only when I go on vacation).
But jeez I’d like to find a spot to short something due to the vulnerability implied here.
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