This is a market that refuses to buckle. The "capitulation crew" -- all those lurking around for another stock wipeout -- is starting to get frustrated, no doubt.
It's been my feeling for a while now that such a wipeout ending to this latest leg down is too pat, too choreographed by prior bear market lows, and this time the market will take a different route in its effort to fool the maximum number of people.
We've seen an initial rise off the low on Feb. 13th at SPX 806, and now we've also had the requisite pullback. This is all typical market behavior pointing to continuation of the initial move, but it's not getting much respect this time around.
Admittedly the market is having a hard time rounding into a continuation buy signal, but it's getting mighty close. If we get a decisive break to the upside today -- and the futures look strong coming off the weekend's developments -- then more people will have to take this uptrend more seriously.
The VIX has moved down to an interesting level. It has paused yet again near 34, which is the level that has rebuffed recent attempts to truly shift the momentum of sentiment towards rising bullishness. A move below this level would equate to a confirmed mid-term uptrend for the markets.
I continue to think the markets need to move up to at least tickle the underside of the recent breakdown, around SPX 870. That's been my story, and I'm sticking to it.
While this hasn't been the lightning quick snap-back that we're used to in a bear market, that's not necessarily a bad thing. Those super quick moves don't end up working out too well in the end. This type of grinding move higher can actually last longer, and sustain itself a little better by allowing doubt to perpetuate and refresh itself.
I try to always look at the markets as objectively as possible. That involves trying to shut out extraneous noise, in an attempt to listen only to what price and sentiment indicators are saying. Right now the background noise is reaching cacophonous levels, making it very hard to listen to what the market itself is trying to say.
It looks to me like the market is trying to tell us that too many people are on the bearish side, and it wants to go higher to work off this surplus negative sentiment.
Sentiment Dashboard
by Adam Oliensis
SENTIMENT TANK: The tank fell 3 points and broke below its recent consolidation range dropping to 71%. That looks like some of the extra risk premium might be getting ready to drain out of the market, which would be a positive for stocks. Of course the risk of catastrophic events remains high, but the market is ripe to get a tad more optimistic.
SHORT-TERM: The hourly gauge is in an advance phase. The advance phase weakened on Friday afternoon. That could have been the effects of traders exiting for the weekend, or we may be ready to roll over for an hourly decline phase.
MID-TERM: The mid-term gauge progressed 3 points to 15% in its advance phase. That's looking like a buy signal, as the oscillator crossed its trigger line. Our Confidence Diffusion Index (CDI) clicked up a point to 3 (out of 7).
LONG-TERM: The weekly gauge moved into a neutral position on Friday. During the week it had progressed as far as 51% in its decline phase. It since has pulled back 9 points from its high, and ended the week even with the prior week. That puts the oscillator in a flat orientation (neutral) roughly the middle of the range in which it can move.
If the oscillator were in this position and moving down it would have a reading of 42%. If it were moving up it would read 58%. That is, if it were moving from overbought to oversold we would be measuring what percentage of the way it had moved in its downward journey, and if it were moving from oversold toward overbought we would record what percentage of the way it had gone in its upward journey. As the oscillator is in the rare state of moving virtually precisely sidewise it has the dual 58/42 reading in a neutral yellow. The weekly CDI confirms the gauge's neutrality by giving us a neutral reading of zero.
Se não receio o erro é porque estou sempre pronto a corrigi-lo
There's no bull side and no bear side. JUST THE RIGHT SIDE!
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