Market Bottom: Unless a Black Swan Crashes the Party

[SOL]

It seems that the markets have reached a bottom, especially when considering the most recent bearish sentiment reading, which we've just calculated, registering at 52.00. Unless an unforeseen black swan event disrupts the status quo, the path of least resistance is now pointed upward.

The weekly charts show that the markets are in an extremely oversold condition, aligning with sentiment analysis. Ideally, we would have preferred the bearish sentiment to surge to 55, but as the saying goes, you don't always get what you want. This situation highlights the wisdom of buying when fear is prevalent in the market. We got into many great plays during the market's sell-off, and many of them have already yielded substantial gains. Examples of these successful plays include stocks like PXD, ASML, UPW, CLF, and more.

Unless an unexpected black swan event occurs, it's advisable to view pullbacks as opportunities akin to reuniting with a lost lover.

Regarding the update, it will be divided into two parts. The first part will be sent out over the weekend, along with the latest "Plunder from Down Under" issue. The delay in sending out the update was my desire to gather and analyze the sentiment data as swiftly as humanly possible

[MarkD]

I can't state with any certainty but this indicator is one I follow (and won't disclose) and it's still unclear if a bottom is in (or a ST top has formed and market still has to decline). But indicators don't always confirm at market turns and there are others confirming the bottom has likely formed.

https://ibb.co/ykYyJ2Y

FWIW I have been buying positions daily. And continue to buy as quickly as possible within trade ranges listed by Sol and company. Would love one more big dump as I still have sufficient capital to deploy. I added two MFs (non-TI, small cap and commodity funds) on today's close.

[Mindie333]

Hello! Would you consider PALL the MOAB now? Thank you!

[jonnyfrank]

Great question on PALL! I am thinking it is the indeed the very fertile mother of all buys based on its recent drop.

[SOL]

Hello! Would you consider PALL the MOAB now? Thank you!

We're not at that point yet; the MOAB relies on a set of triggers. A specific number of these triggers must be activated to spark a signal. Meanwhile, Palladium has fallen into the "screaming buy category". I've adjusted my spending habits, moving more items from necessities to wants. The money saved from this adjustment is then directed toward strategic investments in opportunities like PALL, Lithium, and others.

By redirecting funds from non-essential items or likely unnecessary expenses, I can increase my exposure to specific sectors.

[SOL]

Bullish sentiment spiked rapidly, and bearish sentiment dropped just as swiftly. Last week's readings were at 52; this week, they stand at 29. This suggests that the recent surge was driven by the robotically programmed (masses, lemmings, etc.) "buy the dip" crowd, indicating that another selling wave is needed. The NDX could test the 13,800 range or thereabouts.

Last week's strong rally saw two days with nearly 90% upside volume, signalling a positive long-term trend. Unless a major unexpected event (like a black swan), any pullback should be seen as an opportunity, not a worry. The high upside volume indicates ongoing market strength.

The positive divergence signal on the weekly chart of the Dow utilities remains valid, and there's a notable development with copper, which is on the verge of triggering a similar signal on the weekly charts. A bullish signal from copper is historically a positive indicator for the stock market, suggesting higher prices.

[Expert]

Bullish sentiment spiked rapidly, and bearish sentiment dropped just as swiftly. Last week's readings were at 52; this week, they stand at 29. This suggests that the recent surge was driven by the robotically programmed (masses, lemmings, etc.) "buy the dip" crowd, indicating that another selling wave is needed. The NDX could test the 13,800 range or thereabouts.

Last week's strong rally saw two days with nearly 90% upside volume, signalling a positive long-term trend. Unless a major unexpected event (like a black swan), any pullback should be seen as an opportunity, not a worry. The high upside volume indicates ongoing market strength.

The positive divergence signal on the weekly chart of the Dow utilities remains valid, and there's a notable development with copper, which is on the verge of triggering a similar signal on the weekly charts. A bullish signal from copper is historically a positive indicator for the stock market, suggesting higher prices.

Thanks for the update. Does this mean that the market will continue to experience a selling wave or go lower until the bearish sentiment increases back to 50+ and bullish sentiment decreases back down?

[SOL]

The rapid surge in bullish sentiment suggests excessive confidence in the "buy the dip" strategy within the crowd. This should lead to a selling wave to shake this overconfidence.

Ideally, indices should be restricted to gradual upward movements rather than the rocket-burst moves witnessed last week. Rapid moves should be reserved for individual stocks. Over the long run, there's nothing inherently bearish about this development.

In straightforward terms, the crowd got bullish too fast, so they might need another kick in the gut—a bit of a setback to bring them back to reality.

[stefk]

Could a black swan come from vulcanus.?? It would not be the first time.


https://www.npr.org/2023/11/13/12126152 ... nd-volcano

...................................

https://www.youtube.com/watch?v=g7jj_0dZgQs

[SOL]

Could a black swan come from vulcanus.?? It would not be the first time.


https://www.npr.org/2023/11/13/12126152 ... nd-volcano

...................................

https://www.youtube.com/watch?v=g7jj_0dZgQs

It could be; Nature and animals tend to react in advance to strange developments. Time will tell

[SOL]

If you have not noticed, there's a new approach to organizing monthly updates. All interim updates for a given month will now be placed in the same thread, minimizing clutter. In the update scheduled for tomorrow, we'll briefly revisit bonds, copper, and utilities, having covered them recently. Anticipate two new plays in the main trend portfolio, each replacing an old one.

Furthermore, in the B&B portfolio, we may introduce a new play. Notably, no new plays will be added unless we remove an existing one, maintaining a focused and balanced portfolio strategy.

The following content is directly excerpted from the upcoming issue.


General Market Commentary

Before the recent market breakout, which took place in November, the path of least resistance had shifted, with the past of least resistance being up. If the markets experience a pullback, it should be seen as an opportunity rather than a cause for concern. The markets have rallied too fast, and sentiment has shifted towards bullish. This is not bad in the long term, as the crowd is not euphoric. Still, it would be positive if the markets took a breather here before rallying higher. Market update Nov 16, 2023


When bearish sentiment surpassed 50, we promptly indicated that the likely direction was upward. Subsequently, as bullish sentiment increased, especially after a rapid market surge, we suggested it would be beneficial for the markets to ease off a bit. This perspective was shared in our last update as well. However, this doesn't necessarily imply a significant pullback has to occur. Remember, bullish sentiment stayed unusually low for over 18 months.
While it would be ideal for the markets to experience a moderate correction to push bullish sentiment below 40, it's important to recognize that as long as the crowd doesn't turn euphoric, the prevailing trend will remain upward. This perspective underscores why we currently have numerous pending plays, and it also explains our regular updates and additions to them. Given the prolonged period during which bullish sentiment traded below its historical average, we anticipate the first signs of euphoria to surface only when bullish sentiment approaches the 55 range.

Over the past three weeks, bullish sentiment has consistently exceeded 40, with the current reading of 47 being the highest in weeks. Despite this relatively high reading, it doesn't suggest euphoria. The optimal scenario, in our assessment, involves the markets releasing some pressure. Specifically, referencing the SPX, it would enhance the overall outlook if it experienced a drop to the 4350 to 4420 range before making a move beyond 4600. keep in mind that when the trend is up, a robust correction presents a better opportunity. So, if there's a sudden downward move, view it as a free bonus—a chance to capitalize on a more favourable entry point potentially.
If the market continues to trend upwards without taking a breather, investors should be prepared for heightened volatility. In the "chase the market" phase (AKA mini FOMO), investors tend to be less forgiving towards companies that fall short of expectations.

The monthly chart indicates there is ample room for the SPX to trend higher. However, given the recent rapid upward movement, it's best for the markets to release some steam. For instance, a positive development would be if the SPX retraced to the 4300 to 4350 range before attempting to challenge 4700. An even more favourable scenario would involve a drop to the 4250 to 4300 range before making a move to 4700. While ideal setups may not always materialise, embracing all pullbacks is crucial, as emphasised previously. Market update Nov 16, 2023

In essence, until bullish sentiment reaches at least 55, the SPX (S&P 500) stands a solid chance of testing 4700, as we previously highlighted in the last update. Monitoring sentiment levels becomes a key factor in assessing the potential trajectory of the market.


Now let’s look at some targets for the Russell 2000 and NDX

The NDX could potentially trade in the 16,150 to 16,400 range. Until the trend changes, all pullbacks must be embraced. Market update Nov 16, 2023

In just two weeks since we discussed this, the NDX is very close to hitting the lower end of the expected range—only about 70 points away. The current momentum suggests a strong likelihood of reaching new highs, especially for this index. If, by the end of the month, the NDX closes at or above 16197, preferably 16203, it could signal a move towards the range of 16710 to 16791. The quick progress highlights how dynamic the market is, emphasizing the importance of staying alert and adaptable to these changes.


Russell 2000 (RUT); the laggard


According to the TI theory that suggests every dog will have its day in the sun, there's potential for significant movement in this Index, especially in terms of percentage gains. Looking at the monthly chart, if the RUT (Russell 2000) can close at or above 1896, it would signal a path toward testing the 1990 and 2004 range. However, the situation could become particularly intriguing if it manages to close at or above 2004 on a monthly basis. If this happens, it would open the door for a move to the 22,800 to 23,370 range. However, it's important not to get ahead of ourselves until the 2004 level is breached. I mentioned the second target to highlight that, in terms of percentage gains, the RUT has significant potential for price appreciation.


Palladium and Now Lithium are Great long-term opportunities

Reiterating my previous point, the optimal time to make a long-term investment is often when the asset is significantly undervalued. In the case of palladium, despite its demand not plummeting to zero, the chart indicates a notable decrease from a high of over 3400 in March 2022 to just above 1000. It seems improbable that in less than 20 months, demand for this metal has wholly vanished, akin to when oil dropped to zero during the COVID crisis.

From our perspective, palladium is presenting a screaming buying opportunity, especially at any price below 1050. It's crucial, however, to approach this with patience and discipline. Our last significant venture into this market resulted in gains exceeding 600%.

As for lithium, it hasn't reached the status of a "screaming buy" yet, but it's teetering dangerously close to that zone.

[bobdylan]

Sol - you had mentioned previously that you were evaluating reallocation of funds from LIT to URA if the situation warranted. How is that looking in context of the latest update?

[Expert]

Sol - you had mentioned previously that you were evaluating reallocation of funds from LIT to URA if the situation warranted. How is that looking in context of the latest update?

Are you referring to the interim update? Or market update? Has a market update been sent out yet? I am waiting for it but haven't gotten it.

[SOL]

Sol - you had mentioned previously that you were evaluating reallocation of funds from LIT to URA if the situation warranted. How is that looking in context of the latest update?

Are you referring to the interim update? Or market update? Has a market update been sent out yet? I am waiting for it but haven't gotten it.

I had to take a quick trip, which interrupted my progress. I had completed 90% of the task, and all that was left was to pick two stocks from a list of 9 and then remove some of the pending plays from our list to make room for them. However, some markets that we were, and still are, bullish on experienced stronger pattern changes over the past few days. So, I may need an additional 24 to 48 hours to complete the task, but it will be done before Monday, and hopefully, sooner.

Regarding the LIT and URA development, things have not taken a negative turn for LIT, and there is no need to move the funds into URA (at least not yet). However, we plan to increase our investment in Uranium soon, as soon as it pulls back on the weekly chart. A "pullback" does not necessarily mean that the price has to decrease sharply; it just means that our indicators have to pull back. For example, sideways movement over an extended period can be as good as a rapid short correction.

Trends are accelerating rapidly. Uranium is in a confirmed super trend cycle, which will be discussed in the upcoming issue.

[Expert]

In the latest interim update, it was noted that TLT is now expected to rally because the pattern is complete...and palladium will soon complete the same pattern and then it will soar.
It mentioned that the last entry into the palladium market yielded gains of 600%.
Now, I was just wondering...does all of this apply to PALL ETF and palladium bullion? Or will there be new, additional plays in palladium stocks, especially once it bottoms out?