Market gets the whip hand

3 weeks ago, general market signals - mostly short term - were mildly bullish. As of 9/2 Friday, the signals have flipped back to -13 bearish…

a real crack of the whip (saw).

FC

8 Likes

Interesting that the NH-NL signal, famed for its whipsaws, has been bearish continually since November 22 last year.
(depending a bit on what smoothing and data source you use)
This popular version of the signal missed going bullish by a hair last month, so it remains bearish.
https://stockcharts.com/h-sc/ui?s=$NAHL&p=D&yr=0&…

Pretty good signal, too. It triggered only 4 days after (and only 0.62% below) the Nasdaq high.
Since close that day,
QQQ total return (not annualized ) -25.7%
QQQE total return (not annualized ) -23.0%

It is a general rule that a bad-breadth signal like this, very near a market high, is a particularly bad omen.
(even up to ten days either way, for example)
It means that the rally has become concentrated in just a few issues. Such market narrowing is typical of the last stages of a bull market.

Jim

26 Likes

[Mish’s Daily] Trading Plan for the Week with the Economic Modern Family

Only 5% of Americans have adjusted their portfolios in 2022 in their 401(k)s and 403 (b)s.

Our biggest concern is at what point does the pain get too hard to deal with and we see massive liquidation?

Well, we’d rather be prepared and have a plan. Nonetheless, there are pockets of the market and within the family that are doing better than the others.

Only 5% of Americans have adjusted their portfolios in 2022 in their 401(k)s and 403 (b)s.

I doubt that more than 5% of Americans will ever make adjustments to their company sponsored retirement plans in any given year. Most people just set it and forget it. They typically have very few investment options to begin with. They either select a bond fund, or a stock fund, or some weighted combination, and they never change it until they retire or quit.

In other words, the observation that “only” 5% have adjusted those portfolios this year is meaningless.

Elan

9 Likes

Why, with most agreeing that the majority of US stocks are extremely richly valued (especially in light of a finally changed interest rate environment) and sooo many signs pointing to the last months just having been a bull trap, the final stage before it REALLY goes down, nobody here seems to be interested in buying S&P puts, to profit from what seems likely to come, or at least hedging the portfolio against it (judging from the lack of talk about it)?

2 Likes

In other words, the observation that “only” 5% have adjusted those portfolios this year is meaningless.

True enough.

If she had included other retirement portfolios like IRA’s the observation may have been different.

If my guesstimate is correct many have already mostly pulled out and are waiting for the fall before getting back in. I personally have only held about 20% equities since 2020.

GD_

1 Like

If my guesstimate is correct many have already mostly pulled out and are waiting for the fall before getting back in. I personally have only held about 20% equities since 2020.

If the market continues to fall then surely more people are selling than buying.

Elan

1 Like

If the market continues to fall then surely more people are selling than buying.

Not possible to determine # of sellers or # of
buyers.

But number of shares sold must = number of shares bought.
Impossible to sell more shares than the number of shares bought.

What can be said, however, is that the sellers are willing to agree
to lower selling prices, and the buyers are willing to agree to
lower purchasing prices. Otherwise sales/purchases would not occur
in falling markets.

vez

7 Likes

If the market continues to fall then surely more people are selling than buying.

Not possible to determine # of sellers or # of
buyers.

But number of shares sold must = number of shares bought.
Impossible to sell more shares than the number of shares bought.

What can be said, however, is that the sellers are willing to agree
to lower selling prices, and the buyers are willing to agree to
lower purchasing prices. Otherwise sales/purchases would not occur
in falling markets.

True. I wasn’t precise with my language.
If current supply exceeds current demand, the price will fall.
The OP talked about the number of people sitting on the sidelines waiting for the market bottom, so I followed that terminology.

Elan

1 Like