Back in Dec15 when the bear move started, it was pretty clear that the move was early and needed to be tested before this multi year bull market was truly toast. On the most recent wave of the risk rebound we needed to get to a rally point where the early bears would be throwing in the towel (or also called “puke point”) but without real confirmation of the bull market being sustained.
It seems to me we have now achieved an acute bear pain level, and a bit more, across global asset markets. The bears were heavily thwarted 2 weeks ago and the move since has been the classic ‘fast move from failed moves”. The beta instruments have rejoined the rally and the pay off has been sweet indeed for failed bears, like me, that executed the 180 shift in bets.
Now we are at important price levels across asset markets. This is therefore an excellent moment to take long trading profits across trading instruments and start to select trading short targets. I would personally not get aggressively short yet. Price will show the way and the entries will be clear. (Out of money put options could be a useful instrument especially on the Sp500 as volatility is so much lower than on beta instruments in the 5 or 6 weeks time frame).
We have a market again now as the bears have been forced to cover on mass. Now we have achieved a market equilibrium the real underlying direction can start once again in my opinion. So to the technical update.
Various commitments mean i have to update this release later today. In the mean time, as i realize we are important levels here across risk inc currency pairs, commodities and equities I provide the “Swiss teams” comments on markets and levels.
Updates to this release, as a v2, later today.
Here GS with a bullish equity risk weekly tech note from a couple of days ago:
And a fascinating tech note that i haven’t fully digested here:
Im sticking with my base case for now, until clearer evidence that this bear is done or not. Im looking for the tech trends to reassert their trends.. ie downwards. We have had a significant period of distribution and then confirmation of the start of a bear market. After confirmation we have a sharp corrective rally but without breaking any significant bear trends as yet. Lets see. If the bear is broken then the flood of money into the market will be immense as provide a wonderful trading environment.
And more reports coming as a v3
Let the games begin.
Rich