The Closing Print live trading and financial blog during market hours.

Bull or Bear?

The following commentary is a response to a friend this morning, are we bullish or bearish?

First some bullish facts:

  • Blocks keep coming in en masse below price action; this is immediate support. 283.30
  • Price is above the rising 9/20ema.
  • Breadth is positive (NYHL NYAD).
  • Institutional Sentiment: TICK Cumulative still rising.
  • Junk bonds are more bullish than bearish; JNK > 50ma with price above rising 20ma.

SPY blocks 283.30 bull or bear

Support at 283.30 and 279.60 is massive, so much so that those little blocks of 24 million, read sarcasm in my voice, seem diminutive by comparison. That represents a lot of volume support below. Thanks to @liquidassets in the trading room for the updated block chart.

Here is the key that traders often overlook. Until we see some lower highs and lower lows we cannot call a top, especially on one candle. We still have an uptrend.

SPY daily bull bear

TICK cumulative, real-time institutional sentiment, into December, went flat. We now know that was year-end tax-related selling and some rotation.

A global recovery is good for stock markets in most countries.

Second, the bearish facts:
  • Most sectors are at extremes in their recently up cycles.
  • XLU, XLP, and GOVT are gaining momentum.
  • We started a position in XLU, GOVT, and UUP recently.
Now some speculation:

XLF, XLU, XLE, and XLP could help with rotation, as tax reform continues to usher in better forward guidance and upgrades. We still haven’t seen or heard much from CEO’s.

Few utterances exclaiming “because of tax reform,” at least not as much as I would have anticipated. I find that amusing.

USD has been in a downtrend since the President mentioned, paraphrasing here, “a strong dollar is a problem”, resulting in a bearish trend in the dollar for the past 13 months. Yesterday, he said, and paraphrasing “the economy is strong and the dollar should or will respond in kind.” That prompted furious buying. We bought UUP.

In summary, until we see lower highs and lower lows we cannot call a top, especially on one candle. We still have an uptrend.

That said, we are scaling out of common and trading options with the profits. We are lowering our risk in the process and sleeping like a baby at night.

Happy Fry-Day,

Disclaimer:  Do your Own Research

Our content is intended to be used and must be used for informational purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on our Website and wish to rely upon, whether for the purpose of making an investment decision or otherwise.

Investment Warnings

We would like to draw your attention to the following important investment warnings. The value of shares and investments and the income derived from them can go down as well as up; Investors may not get back the amount they invested – losing one’s shirt is a real risk; past performance is not a guide to future performance.