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
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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 we compare the current capitalization-weighted SPX to the equal-weighted SPX, Russell 2000, NYSE New Highs Net Of New Lows Daily and Weekly, a Powerful Signal Has Emerged.
When a handful of names push the cap-weighted averages to new highs while equal-weighted averages push toward new lows, and when new highs are plummeting while new lows are spiking…. markets are very close to a sharp break.
History has demonstrated this again and again over the past century.
The array below shows this very extreme condition right now:
Top Pane- SPX as reported daily
Second Pane: SPX Equal-Weighted
Third Pane: Russell 2000 Small Caps ETF (IWM)
Fourth Pane: New Daily Highs Net Of New Daily Lows
Fifth Pane: Net New Highs Weekly
Sixth Pane: Net New Dail Highs 10-Day Average
One of the clearest recent examples of the vulnerability and danger of this massive internal weakness is shown side-by-side with that same setup in late July 2015- Displaying the same six metrics:
The following break in the market in August 2015 was the inevitable result of higher SPX readings throughout June and July as new highs were shrinking and new lows were mushrooming – while breadth measures and equal-weighted market measures were pushing toward new lows:
The conditions that set up that break were identical to what is occurring now. Yet, the internal conditions here are even weaker than in the 2015 example above, increasing the potential inevitability and severity of a substantial break ahead.
The Debt Agreement provides even better potential prices ahead for sellers.
Good Trading, All!
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*Let us never forget those who have risked or given their lives to ensure our freedom.*
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