Interim Update Feb 25, 2023

[SOL]

The trend has changed: the tides of the trend have shifted from bullish to neutral. However, there is no need to despair, for this may actually prove to be a positive turn of events. When markets are trading in an extremely oversold range on monthly charts, such as is presently the case, it tends to bode well for long-term prospects. As long as the trend does not worsen, it could trigger a second major catalyst for a FOAB. It is difficult to imagine the trend worsening when the markets are trading in such an excessively oversold range on monthly charts. Additionally, this trend shift could serve as secondary support/validation for our hypothesis that the markets will trade within a wide range for up to 36 months. All things considered, we view this as a positive development.

Yodean, the resident doc, provided me with some old text, which we attempted to replicate as indicated below. As per its design, it should have signalled a buy in 2023. However, it seems that the signal has not yet materialized.

Upon examining the data from the indicator, it appears to align with the notion of rangebound action. Furthermore, the absence of a buy signal somewhat reinforces our hypothesis that the markets may experience one more corrective wave before reaching the bottom.



The tool/indicator in question is known as the George Tricht indicator, and the image above is one rendition of it. It is worth noting that we are also working on a second rendition of the same indicator.

Conclusion

Please note that we are not attaching undue importance to this tool/indicator. We simply wish to highlight that it may serve as a potential secondary confirmation of our standing hypothesis. As we previously mentioned, the indicator has yet to generate a buy signal in 2023, and upon examining the data, it appears to support the notion of rangebound action. This indicator reinforces our hypothesis that the markets may undergo one more corrective wave before reaching the bottom.

Long-term traders and those with a low to medium risk threshold ought to have utilized rallies to accumulate cash, as we have advocated for almost three months.


Lastly, we consider the shift in trend from bullish to neutral as a bullish development, especially given the current backdrop of events. Bullish sentiment has been persistently below its historical average for 15 months, causing investors to feel nervous. Meanwhile, hi-tech companies are downsizing, geopolitical tensions are brewing, and other concerns abound. However, from a Mass Psychology (MP) perspective, these factors present excellent long-term opportunities. Worry and fear lay a strong foundation for the next bull market.

[jonnyfrank]

The trend has changed: the tides of the trend have shifted from bullish to neutral. However, there is no need to despair, for this may actually prove to be a positive turn of events. When markets are trading in an extremely oversold range on monthly charts, such as is presently the case, it tends to bode well for long-term prospects. As long as the trend does not worsen, it could trigger a second major catalyst for a FOAB. It is difficult to imagine the trend worsening when the markets are trading in such an excessively oversold range on monthly charts. Additionally, this trend shift could serve as secondary support/validation for our hypothesis that the markets will trade within a wide range for up to 36 months. All things considered, we view this as a positive development.

Yodean, the resident doc, provided me with some old text, which we attempted to replicate as indicated below. As per its design, it should have signalled a buy in 2023. However, it seems that the signal has not yet materialized.

Upon examining the data from the indicator, it appears to align with the notion of rangebound action. Furthermore, the absence of a buy signal somewhat reinforces our hypothesis that the markets may experience one more corrective wave before reaching the bottom.



The tool/indicator in question is known as the George Tricht indicator, and the image above is one rendition of it. It is worth noting that we are also working on a second rendition of the same indicator.

Conclusion

Please note that we are not attaching undue importance to this tool/indicator. We simply wish to highlight that it may serve as a potential secondary confirmation of our standing hypothesis. As we previously mentioned, the indicator has yet to generate a buy signal in 2023, and upon examining the data, it appears to support the notion of rangebound action. This indicator reinforces our hypothesis that the markets may undergo one more corrective wave before reaching the bottom.

Long-term traders and those with a low to medium risk threshold ought to have utilized rallies to accumulate cash, as we have advocated for almost three months.


Lastly, we consider the shift in trend from bullish to neutral as a bullish development, especially given the current backdrop of events. Bullish sentiment has been persistently below its historical average for 15 months, causing investors to feel nervous. Meanwhile, hi-tech companies are downsizing, geopolitical tensions are brewing, and other concerns abound. However, from a Mass Psychology (MP) perspective, these factors present excellent long-term opportunities. Worry and fear lay a strong foundation for the next bull market.

So, is there still a possibility or probability of a March rally? Some are probably like me with their riskier portfolios, and have some positions that are postured to take advantage of that if it is still on the table. It sure would be nice to know heading into this week. I would be fine selling now if that idea is off the table. Please advise.....

[MarkD]

Seems like a good time to take a relaxing afternoon with the Blues Trio from KC.

https://www.youtube.com/watch?v=_pvBIyW9xCY

[deep1nSand]

So, is there still a possibility or probability of a March rally? Some are probably like me with their riskier portfolios, and have some positions that are postured to take advantage of that if it is still on the table. It sure would be nice to know heading into this week. I would be fine selling now if that idea is off the table. Please advise.....

I have the same question - does this mean the short term targets provided in the interim update of Feb 14 are no longer valid? If that’s the case, should we sell whatever was bought on the recent pullback and wait for the deeper correction?

[chippermon]

So, is there still a possibility or probability of a March rally? Some are probably like me with their riskier portfolios, and have some positions that are postured to take advantage of that if it is still on the table. It sure would be nice to know heading into this week. I would be fine selling now if that idea is off the table. Please advise.....

Who knows.
My 2c. I don't see equities and DXY decoupling yet.

From the Market Update Short Term Outlook

The Dollar Index (https://cutt.ly/JBIKyxY ) For the dollar to surpass 108.00, it must achieve a weekly close at or above 104.10. The dollar is currently striving to reach the 105-105.50 range, and if it manages to get there, it cannot close below 104.10. If it does, the Jan lows will come into play. However, the dollar appears to be on track to rally for several weeks.

I see 109.349 as a strong possibility. Buy calls on UUP. Go short on EURUSD. Long USDCAD. Mostly on up days for SPX.

Bonds (TLT) (https://cutt.ly/2BIKcqC ) It's putting in a topping formation on the weekly charts and is having a hard time taking out its Dec 2022 high of 109.68. Failure to stay at or above 105 on a weekly basis is likely to result in a test of the 96 to 99 range. Market Update January 30, 2023

TLT has been struggling to make any significant progress, and it's essentially moving sideways. Additionally, it's currently trading in the highly overbought range on the weekly charts. A weekly close at or below 105 would likely trigger a sharp pullback, which could lead to a test of the 100 to 101 range, with a possibility of overshooting to 96.00.

I see 96.63 and possible 93.17. US10Y 4.064% easy.

As for the indexes, I don't see the rally the MU team sees, although, ES1 is at a very important point at the moment. 3937 is my magic number. Sustained bounce off of that then everything I wrote above is crap. For now. Delayed only. Below this number then next stop 3772 then 3661. NQ1 11582. YM1 31154

That's what I see anyway. Don't forget. Financial commentary is only worth what you pay for it.

[SOL]

The short-term outlook is challenging, but most ask for the very short-term, which is infinitely more complex. Very short-term is based purely on non-logical events; in other words, it is based on how the masses react to pieces of data. Emotional reactions exacerbate short-term volatility.

First of all, what was stated in the Jan 30 update is coming to play, albeit it took a bit longer.

It rallied as projected, and it traded within the suggested targets. Currently, the Dow is trading in the insanely overbought ranges on the daily charts, so the odds favour a sharp pullback. A test of 32,500 to 32,700 is likely, with a possible overshoot to 32,100. Market Update January 30, 2023

If the Dow can maintain a weekly close above 32,500, there is a reasonable chance that it may test the 34,000 range, though reaching 34,700 at this stage may be challenging. It's more likely that the range of 33,800 to 34,200 will be the target, with a possible overshoot to 34,4K

The NDX (Nasdaq 100) is currently demonstrating a stronger performance than the Nasdaq, making it an important index to watch in the short term. To maintain a bullish outlook, the NDX needs to close at or above 12,060, ideally sooner rather than later.

At TI, we've been following the long-term outlook, which advises investors with low to medium-risk profiles to build cash in their portfolios over the past few weeks. Our strategy is to allocate only a small portion of our portfolio to high-risk trades, while the majority is reserved for long-term investments.

We've provided extra warnings and divided our outlook into short-term and long-term perspectives to ensure that investors are aware of the risks involved. Short-term trades can yield higher gains, but it's important to note that short-term trading comes with significantly more risk. As the timeline gets shorter, the element of gambling increases and investors should be prepared for higher levels of volatility and uncertainty.

It is crucial to pay close attention to the information shared on Jan 30th and in the last update on Feb 14th. In case you decide to deviate from our playbook, ensure that you have a plan in place to handle various outcomes. Our team has already invested a significant amount of extra effort into segmenting the sections into long and short-term.

As per the guidelines provided on Jan 30th and Feb 14th, risk-takers should have waited for the Dow to release some pressure before opening new long positions. Personally, I would have waited for the Dow to trade in the 32.5K to 32.7K range before considering new investments, and that's precisely what it has been doing so far. Therefore, it's essential to focus on the risk-to-reward ratio and not succumb to FOMO (fear of missing out) when making investment decisions.

[jonnyfrank]

The short-term outlook is challenging, but most ask for the very short-term, which is infinitely more complex. Very short-term is based purely on non-logical events; in other words, it is based on how the masses react to pieces of data. Emotional reactions exacerbate short-term volatility.

First of all, what was stated in the Jan 30 update is coming to play, albeit it took a bit longer.

It rallied as projected, and it traded within the suggested targets. Currently, the Dow is trading in the insanely overbought ranges on the daily charts, so the odds favour a sharp pullback. A test of 32,500 to 32,700 is likely, with a possible overshoot to 32,100. Market Update January 30, 2023

If the Dow can maintain a weekly close above 32,500, there is a reasonable chance that it may test the 34,000 range, though reaching 34,700 at this stage may be challenging. It's more likely that the range of 33,800 to 34,200 will be the target, with a possible overshoot to 34,4K

The NDX (Nasdaq 100) is currently demonstrating a stronger performance than the Nasdaq, making it an important index to watch in the short term. To maintain a bullish outlook, the NDX needs to close at or above 12,060, ideally sooner rather than later.

At TI, we've been following the long-term outlook, which advises investors with low to medium-risk profiles to build cash in their portfolios over the past few weeks. Our strategy is to allocate only a small portion of our portfolio to high-risk trades, while the majority is reserved for long-term investments.

We've provided extra warnings and divided our outlook into short-term and long-term perspectives to ensure that investors are aware of the risks involved. Short-term trades can yield higher gains, but it's important to note that short-term trading comes with significantly more risk. As the timeline gets shorter, the element of gambling increases and investors should be prepared for higher levels of volatility and uncertainty.

It is crucial to pay close attention to the information shared on Jan 30th and in the last update on Feb 14th. In case you decide to deviate from our playbook, ensure that you have a plan in place to handle various outcomes. Our team has already invested a significant amount of extra effort into segmenting the sections into long and short-term.

As per the guidelines provided on Jan 30th and Feb 14th, risk-takers should have waited for the Dow to release some pressure before opening new long positions. Personally, I would have waited for the Dow to trade in the 32.5K to 32.7K range before considering new investments, and that's precisely what it has been doing so far. Therefore, it's essential to focus on the risk-to-reward ratio and not succumb to FOMO (fear of missing out) when making investment decisions.

SOL,

Thank you for that tidbit. While I realize you are not a fan of shorting, what sector do you think might be due for the biggest short term pullback over the next few months?

I have a short term portfolio that I decided to use your pullback information in, so I am going to open a few long positions in it based on the ranges you have stated. It is a small portion of my overall position, but I am willing to take some risk and indeed gamble with that small portion, hence the questions. I know the focus here is LT, but since you bring up pullbacks I decide to play them (or not).

[Yodean]

****

It's hackneyed and cliche, yes, but still true, over the long-term: time in the markets beats timing the markets.

75% of years end positive when it comes to equities, and it's quite seldom that there are two down years consecutively.

Don't do something, just sit there! When it comes to investing, often profitable.