The End of the Bull Market? The Seven Day Scope (Snipers Only) Free Weekly Report

The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence. Charles Bukowski

It’s my birthday, but we need to talk about a few things. This market has been wild lately. Small caps moving big and then reversing, breadth widening and then the market falls. Is this the end? Probably not but we are getting closer to the end.

The story of market environments.

Market cycles always move in a similar fashion. Inflation puts too much pressure on the market. Then the Fed raises rates, as rates put too much pressure on everything else the market pivots from that inflationary posture to a disinflationary one. Things like utilities start to move and become the only place to make money besides bonds. Is this what we are seeing?

Possibly.

I would like to say that a vol spike was due (we will close the rest of our vix calls today) and that a 11 handle on the vix is not sustainable. However if the market can hold here, it does have the ammo to move up a little more. What I think is likely is the fact that we will be in a very choppy (but not boring) market until the election and then we will move a general direction. Until then, Like I have said all summer… summers suck!

For all that has happened the equal weight is only down 4.5%.

The bull/bear indicator is still in bullish territory.

The Dow is positive and the Nasdaq is down over 7% on a one month time frame.

This still screams rotation, but something we need to think about more.

The two biggest tech names are taking up a large part of the SPX these days. The questing we have to ask is… Can the market move higher if the Mag 7 is not moving higher?

Technology is still 30% of the SPX.

Another sign that we keep trading between two different regimes. Low volatility is right behind small caps. Safe havens and risk on small caps. This is also odd.

Here are some names in the gold mining space that are in an uptrend but the price is consolidating. Look to buy the next break out.

Broad ETF set ups. Obviously TLT has already moved and we already have a position.

The most important chart at the moment and it can have a bunch of different implications.

The Yen is also a big part of this puzzle.

We did a deep dive on this topic today, with Kashyap and Kevin.

If gold can catch a bid, we will see golds highest close ever.

Bonus

How to trade using the Ichimoku Cloud

The Ichimoku Cloud, or Kumo, is a powerful tool for identifying market trends. The cloud is formed by two lines: Leading Span A (green) and Leading Span B (red). The green line is the average of the Conversion Line and the Base Line, calculated over 9 and 26 periods, respectively. The red line is the average of the 52-day high and low. Just like moving averages, the shorter period (green line) reacts faster than the longer period (red line).

To use the cloud for trend identification, follow these two methods:

1. Trend Position Relative to the Cloud:

   • When prices are above the cloud, the trend is up.

   • When prices are below the cloud, the trend is down.

   • When prices are within the cloud, the trend is flat.

2. Cloud Color and Line Positions:

   • A green cloud forms when Leading Span A (green line) is above Leading Span B (red line), indicating a strong uptrend.

   • A red cloud forms when Leading Span A is below Leading Span B, signaling a strong downtrend.

Because the cloud is projected 26 days into the future, it provides a forecast of potential support or resistance levels.

Using Ichimoku Clouds for Identifying Trading Signals

The Ichimoku Cloud is not just for identifying trends; it's also a powerful tool for spotting trading signals. By observing the price, Conversion Line, and Base Line, you can catch faster and more frequent signals. Here's how it works:

1. Bullish and Bearish Signals:

   • Bullish Signals: When prices are above the cloud and the cloud is green, bullish signals are stronger and preferred. This means the larger trend is up, supporting a bullish bias.

   • Bearish Signals: When prices are below the cloud and the cloud is red, bearish signals are stronger. This indicates the larger trend is down, favoring a bearish outlook.

   Essentially, trading in the direction of the bigger trend (up when above the green cloud, down when below the red cloud) is more reliable. Signals against the prevailing trend, like a short-term bullish signal in a long-term downtrend, are considered weaker.

2. Conversion-Base Line Crosses:

   • Bullish Crossover: In an uptrend, a bullish signal occurs when the Conversion Line crosses above the Base Line.

   • Bearish Crossover: In a downtrend, a bearish signal is triggered when the Conversion Line crosses below the Base Line.
     
     
     Have a great weekend all!
     
     Against All Odds Research

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