The bears den

[Mecisteus]

You been using the same overbought / oversold levels to buy/sell and still talk about LHS / RHS.

I don't use TA.

Coolhead was the one who brought in RSI.

 

[Trader11]

I don't use TA.

Coolhead was the one who brought in RSI.

What do Mike uses to discipline himself to buy or sell?

 

[DukeCS33]

https://insight.factset.com/2nd-hig...suing-negative-eps-guidance-for-q2-since-2006

We have seen this before... Companies guiding expectations lower so that they can then outperform expectations. While this may keep the rally going, there is a limit to how long a company can continue playing this game. Earnings season is upon us and this, together with Fed rate expectations would be the biggest driver of how the stock market may perform. So far, this rally lacks the volume that typically accompanies strong bull rallies and one need to exercise caution playing the long game. I am expecting another correction from 2 potential catalysts:
1. The market got ahead of itself in pricing in 100bps of cuts. So far data may have slowed but it has not plunged to the extent that warrant so many cuts.
2. Corporate earnings - I am not making a case for plunging earnings but the guidance so far leaves very little confidence as this trend of guiding expectations lower to outperform it has gone on for another quarter and with a slow down in the economy expected, the outlook as dimmed somewhat.

On the bull's side, there is still a sloshing of liquidity in the system. And this is a powerful factor that powers stocks higher. However, with the index hitting new highs, it needs to be backed by fundamentals - earnings and rate cuts.

Have a look at this:

https://www.barchart.com/stocks/market-performance

The Consumer staples and Utilities sectors are the 2 sectors leading the index. This is symptomatic of a late stage cycle and does not bolster confidence at all.... Add the declining volume accompanying this rally and the scale is increasingly tilted towards the SP topping and rolling over.

 

[coolhead]

https://insight.factset.com/2nd-hig...suing-negative-eps-guidance-for-q2-since-2006

We have seen this before... Companies guiding expectations lower so that they can then outperform expectations. While this may keep the rally going, there is a limit to how long a company can continue playing this game. Earnings season is upon us and this, together with Fed rate expectations would be the biggest driver of how the stock market may perform. So far, this rally lacks the volume that typically accompanies strong bull rallies and one need to exercise caution playing the long game. I am expecting another correction from 2 potential catalysts:
1. The market got ahead of itself in pricing in 100bps of cuts. So far data may have slowed but it has not plunged to the extent that warrant so many cuts.
2. Corporate earnings - I am not making a case for plunging earnings but the guidance so far leaves very little confidence as this trend of guiding expectations lower to outperform it has gone on for another quarter and with a slow down in the economy expected, the outlook as dimmed somewhat.

On the bull's side, there is still a sloshing of liquidity in the system. And this is a powerful factor that powers stocks higher. However, with the index hitting new highs, it needs to be backed by fundamentals - earnings and rate cuts.

Have a look at this:

https://www.barchart.com/stocks/market-performance

The Consumer staples and Utilities sectors are the 2 sectors leading the index. This is symptomatic of a late stage cycle and does not bolster confidence at all.... Add the declining volume accompanying this rally and the scale is increasingly tilted towards the SP topping and rolling over.

Yesterday's economic data from US was actually very solid. Doubt there will be any rate cuts in July.

Sent from HMD Global TA-1004 using GAGT

 

[Merg91]

Bull this week?
Dead bear?

 

[DukeCS33]

Morgan Stanley Turns Bearish on Global Stocks as Challenges Grow:

https://www.bloomberg.com/news/arti...s-bearish-on-global-stocks-as-challenges-grow

 

[Trader11]

Morgan Stanley Turns Bearish on Global Stocks as Challenges Grow:

https://www.bloomberg.com/news/arti...s-bearish-on-global-stocks-as-challenges-grow

The question is whether we should listen to the barber

 

[DukeCS33]

The question is whether we should listen to the barber

I think there is reason to be cautious.... The rally has been without volume backing the move higher, the various surveys point to fund managers hoarding cash and the sectors leading the index higher are consumer staples and utilities.

 

[limster]

I think there is reason to be cautious.... The rally has been without volume backing the move higher, the various surveys point to fund managers hoarding cash and the sectors leading the index higher are consumer staples and utilities.

Is fund managers hoarding cash a reliable indicator of market crash? I thought fund managers often get it wrong?

 

[Trader11]

I think there is reason to be cautious.... The rally has been without volume backing the move higher, the various surveys point to fund managers hoarding cash and the sectors leading the index higher are consumer staples and utilities.

I am thinking where else to put your money besides equities? Other assets yield seems to go down trend. Even ECB and BOJ are planning to buy etf as a form of qe

 

[Trader11]

I am thinking where else to put your money besides equities? Other assets yield seems to go down trend. Even ECB and BOJ are planning to buy etf as a form of qe

The one to watch out is Australian markets. Their government and rba is planning a stimulus to boost the economy. So equities in asx might be nice ride

 

[DukeCS33]

Is fund managers hoarding cash a reliable indicator of market crash? I thought fund managers often get it wrong?

Well it depends on whether you see them as smart money or dumb money. But it does show the amount of caution out there. So is retail investor and passive funds buying that is driving this rally the smart money then?

 

[revhappy]

Well it depends on whether you see them as smart money or dumb money. But it does show the amount of caution out there. So is retail investor and passive funds buying that is driving this rally the smart money then?

We will never know. The large investment banks have huge clout and there is this dark pool of secret money. Few people at the very top, control these flows. People like treasury secretary Mnuchin, CEOs of these top investment banks etc.

For some reason, I feel the equity markets in the US is being given way too much importance realtive to the general economy, compared to other countries.

 

[limster]

Well it depends on whether you see them as smart money or dumb money. But it does show the amount of caution out there. So is retail investor and passive funds buying that is driving this rally the smart money then?

I'm referring to previous crashes. Did markets crash after fund managers starting hoarding cash, or did they start hoarding cash too late, after the markets crashed?

 

[coolhead]

gonna dabble into uvxy today.

 

[chrisloh65]

+4.X% today? Big profit for you? Congrats!

gonna dabble into uvxy today.

 

[coolhead]

+4.X% today? Big profit for you? Congrats!

Market seems pretty stagnant... I'll probably close position before I sleep.

 

[DukeCS33]

Market seems pretty stagnant... I'll probably close position before I sleep.

Lethargic price action and it looks like the Market is scaling back aggressive expectations of rate cuts by Fed. We would probably have more clues from Powell when he speaks tonight and tomorrow. I do not think he would crush the markets and may make comments ambiguous enough that gives bulls and bears enough points for their respective cases.

 

[coolhead]

Lethargic price action and it looks like the Market is scaling back aggressive expectations of rate cuts by Fed. We would probably have more clues from Powell when he speaks tonight and tomorrow. I do not think he would crush the markets and may make comments ambiguous enough that gives bulls and bears enough points for their respective cases.

Very lethargic indeed. Literally a flatline. From gold price, yes market is not expecting a rate cut in July. Probably they will delay to SEP 2019. But to have 2 rate cuts by eoy is tough indeed. It's so ironic that the price actions of the market hinges on the fed when rightfully, it should be on 2nd quarter earnings. Oh wait maybe market is waiting for that as well.

 

[DukeCS33]

Very lethargic indeed. Literally a flatline. From gold price, yes market is not expecting a rate cut in July. Probably they will delay to SEP 2019. But to have 2 rate cuts by eoy is tough indeed. It's so ironic that the price actions of the market hinges on the fed when rightfully, it should be on 2nd quarter earnings. Oh wait maybe market is waiting for that as well.

Well, I think the Market got ahead of itself in pricing in aggressive rate cuts and was expecting one in July - How else did we get this rally to a new high?

Earnings will be a key driver and if we get slowdown below even prior lowered guidance, the stock market may sell off. But this is a big "IF"