Market Sentiment Analysis: Broad Market Review

 Market Sentiment Analysis

Market Sentiment Analysis: Buy The Fear

Updated Feb 2023

One has to understand the difference between the forest (broad market outlook) and the tree perspective. Too many traders subscribe to the day traders mindset, confusing the two perspectives and stating that our commentary is confusing.

The markets are projected to rally until Sept/Oct timelines (Forest perspective). The longer or Broad Market Outlook

The SPX will run into resistance in the 3960 to 4000 ranges and shed some weight (the tree perspective). The shorter-term perspective

Nobody should be confused with the above statements. If things had changed, we would clearly state that the markets are no longer projected to rally until the Sept/Oct period. Do not confuse timelines; if anything has changed, we will clearly state so.

Decoding the Market Outlook: Projected Rally, Resistance, and Signals

So how should one interpret the above statements? Overall the market is still projected to rally until Sept/Oct. It will run into resistance in the 3960-4000 ranges in the interim. It should be more than evident by now that no market trades in one direction.

Another mistake many subscribers make is mixing commentary from our different services. Don’t do that unless you want to confuse yourself and lose money; market commentaries are service specific.

The Dow triggered another Minor buy signal. A much more robust and potent will be triggered if the Dow can end the week above 31,900 or the SPX ends the week at or above 3960. Either one of these developments should lead to a fast and furious rally. One of the indices might spike to new highs while the others put in lower highs.

Aggressive players can use all pullbacks ranging in the 380 to 510 ranges to open additional longs or swing trade via leveraged ETFs such as TQQQ, UWM, XBI, etc.

The momentum is shifting to the upside, and the markets should generally trend upward for the next two weeks. Interim Market Update July 18, 2022 (posted in the forum https://tacticalinvestor.com/mu-forum/viewtopic.php?t=53)

Market Sentiment Analysis: Potent buy Signal In The Works

A Secondary and more potent buy signal has been triggered. However, a new buy signal on the longer timelines is almost always accompanied by a minor sell signal in the short term.

The SP500 is running into a zone of resistance on the daily charts. This is another clear example of the tree and forest view. We don’t usually look at the daily charts, but when a market attempts to break out occasionally, we tend to pay some attention to them. The daily timeline equates to the Tree perspective.

The SP500 could test the 3870-3900 ranges, and, barring a black swan event, this would represent another buying opportunity. After that, it is projected to blast through resistance in the 4130 to 4150 ranges, which will/should trigger a robust rally. It will likely test the 4500 to 4600 range before topping out. One of the Indices, Dow, Nasdaq, SPX, Russell, etc., could surge to new highs, but most are projected to put in lower highs.

We are now at the Push stage; the market usually runs into some resistance here. The market will release steam and trend sideways for 3 to 9 trading days.

When the markets get past the “push stage”, this phase is usually short, fast and furious, especially if the upward move is only part of an overall downward cycle. In other words, the corrective cycle has not run its course. The markets are still projected to rally to the Sept/Oct period; October would be the ideal time for a top.

The plunge stage is expected to be severe. The Dow will likely take out 29K during the next corrective phase. (The second corrective wave is expected to commence around October)

Kick—-Fall—–Base—-Push—-Thrust—-Plateau——Plunge

Conclusion

One should never fixate on short-term gyrations. Think of them as aberrations created to throw you off track. Instead, one should focus on the longer-term or broad market outlook, where the real opportunity lies. Those focusing on the short term are not investors; they are speculators whose purpose for inception is to serve as cannon fodder. If you want to win, then change the way you think.

The markets are in a short-term corrective phase; barring a black swan event, the rally is expected to gather momentum. Aggressive traders can use pulls backs in the 350 to 550 ranges in the Dow to deploy additional sums into longs. As the number of individuals in the Neutral and Bearish camps adds up to 74, it indicates that most investors are still too nervous to bite.

Hence once this corrective phase is over, we will experience a period akin to 2009 to 2020. In simple terms, a period of mind-boggling returns. Market Update July 12, 2022

This will happen, and those who ran away will rue that day for many decades. The next opportunity will likely generate mind-boggling returns for one simple reason. The amount of hot money has increased by a factor of almost 10X. This is based on official figures, but the unofficial statistics indicate that the money supply could have increased by 30X since 2008.

 

FAQ

Q: What is the difference between the forest and tree perspectives concerning the market outlook?
A: The forest perspective refers to the broad market outlook, projecting a rally until September/October. On the other hand, the tree perspective is the shorter-term outlook indicating that the SPX (S&P 500 Index) may encounter resistance in the 3960 to 4000 range and experience a decline.

Q: Should the above statements be confusing?
A: No, the statements should not be confusing. If there were any changes in the market projections, it would be clearly stated. The overall interpretation is that the market is still expected to rally until September/October, but in the meantime, it may face resistance in the 3960-4000 range.

Q: Is it advisable to mix commentary from different services?
A: Mix commentary from different services is not recommended, as market commentaries are specific to each service. Doing so may lead to confusion and potential financial losses.

Q: Are there any buy signals triggered in the market?
A: Yes, the Dow has triggered a minor buy signal. A more robust and potent buy signal would be triggered if the Dow ends the week above 31,900 or the SPX ends at or above 3960. Such developments could lead to a fast and vigorous rally, with different indices possibly reaching either new or lower highs.

Q: How can aggressive players take advantage of market movements?

A: Aggressive players can consider using pullbacks within the 380 to 510 range to open additional long positions or engage in swing trading using leveraged ETFs like TQQQ, UWM, XBI, etc.

Q: What is the current momentum of the market?
A: The momentum is shifting upwards, and the market is expected to generally trend upwards for the next two weeks, as mentioned in the Interim Market Update posted on July 18, 2022.

Q: Has a powerful buy signal been identified?
A: A secondary and more potent buy signal has been triggered. However, it is typical for a new buy signal on longer timelines to be accompanied by a minor sell signal in the short term.

Q: What are the projected price ranges for the SP500 and its potential impact?
A: The SP500 could test the 3870-3900 ranges, presenting a buying opportunity unless a black swan event occurs. Afterwards, it is projected to break through resistance in the 4130 to 4150 ranges, triggering a robust rally. The market may then test the 4500 to 4600 range before reaching a peak. Some indices, such as Dow, Nasdaq, SPX, Russell, etc., may surge to new highs, while most are expected to form lower highs.

Q: What are the different stages of the market cycle?

A: The stages of the market cycle are Kick, Fall, Base, Push, Thrust, Plateau, and Plunge.

Q: How should one approach short-term market fluctuations?
A: Short-term gyrations should not be fixated upon, as they can be considered aberrations aimed at distracting investors. Instead, focus on the longer-term or broad market outlook where the real opportunities lie. Short-term speculators often serve as cannon fodder, whereas investors who adapt their thinking have a better chance of success.

Q: What is the current sentiment of investors?
A: The Neutral and Bearish camps adding up to 74, indicate that most investors are still too nervous about investing, presenting an opportunity for aggressive traders once the corrective phase is over.

Q: What can be expected after the current corrective phase?
A: Following the corrective phase, a period similar to

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