NFTRH 721 took technical readings of the US stock market, describing the major trends but also a short-term battle for SPX between the daily SMA 50 (resistance) and lateral short-term support. Today SPX is taking out the SMA 50 to the upside after holding support. Parameters, baby.
We also added this view on the prospects for a sentiment bounce as well as a logical end point, time-wise, for the then would-be (now occurring) bounce. The end point has two data points pointing directly at it. As for the technicals bounce objectives, we’ll refine that in #721 this weekend but we have already defined what this probably is.
The trends after all, they be the trends.
<NFTRH 721 excerpt>
Sentimentrader’s Smart/Dumb money indicators agree [with the prospect the market needed to bounce from this area if it was going to bounce]. Smart money ate the market last week and dumb money puked it.
Check out how aggressively investment managers (NAAIM) barfed the market even before the week ended on its down note. Turns out they were once again good predictors of a down move to come. Indeed, NAAIM have jerked southward even more strongly than stock prices and this is another indicator advising that the market can bounce in the very short-term. But the trend is down and in that, NAAIM are not contrary indicators. It’s a view of bursts of enthusiasm and bouts of depression in a bear market.
Investors Intelligence (newsletter writer survey) and AAII (individual investor survey) each pulled back as well, with AAII spiking hard down similar to ‘dumb money’ and NAAIM above.
So now it’s bounce on. I would not get too comfy with it.
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