Memorial Day, May 29, 2023

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“What has been will be again. There is nothing new under the sun.” Ecclesiastes 1:91

“What happens today has happened before and will happen again.” Livermore

“Rather than love, money, or fame, give me the truth.” Henry David Thoreau

“Excesses in one direction will lead to an opposite excess in the other direction.” Robert Farrell

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Answering The $Billion Question

The Opportunity of a Lifetime

Tipping Point for the Ages

Sudden Psychology Shift Signals Grave Danger/Spectacular Opportunity

Intermediate-Term: ~ Downtrend

LOLR Trend: ~ Downtrend

Open Positions: 5% TZA, 5% UVIX, 3% SQQQ, 3% SPXU, 84% Cash

Stops: TZA 28.92, UVIX 8.44, SQQQ 21.9, SPXU 12.38

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Friday 4:00

Daily     LOLR     STS

Down    Down   Up

1/6        2/5        4/3

Breadth: 1131/1136

NYMO: -15.05 Rising/NYSI Falling

NAMO: +0.73 Rising/NASI Falling

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As a word to the wise, we highlight today a situation that has emerged in the financial markets this month. Few have noted it; most will ignore it. We fully understand and expect that.

To gain insight into the current state of affairs, it is essential to compare the capitalization-weighted SPX, which has been reaching new highs, with the internal dynamics of the market as indicated by the equal-weighted SPX, Russell 2000, NYSE New Highs Net Of New Lows Daily and Weekly.

The following array does just that:

By examining decades of historical data over a century of market history, it becomes evident that the significant internal weakness observed in the market reliably led to significant vulnerability and danger.

A notable historical instance of this vulnerability can be observed by juxtaposing the current situation with a similar setup in late July 2015.

It is worth noting that the subsequent market decline in August 2015 was the inevitable outcome of the sustained increase in SPX readings during June and July, accompanied by a decrease in new highs and a surge in new lows.

The above is just one example we choose because it is clear on the charts. We could show dozens more because the ultimate result every time this setup has persisted has been the same for as long as data is available for study.

Good Trading, All! All

*Let Us Not Forget Those Who Risk Or Have Given Their Very Lives To Keep Us Free*

 

 

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