Stay bearish on stocks — and watch the trend rather than trying to pick the market bottom

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OPINION: Bears’ aggressiveness has produced and/or exacerbated oversold conditions. Those oversold conditions have stoked what rally attempts we’ve seen so far, but eventually there will be a stronger oversold rally.

This past week, the stock market fell again. The bulls tried to engineer another rally attempt but once again, it was thrown back in their face, as the bears pushed the S&P 500 index to new relative closing lows .

Realized volatility has increased considerably. The S&P’s 20-day historical volatility is now up to a whopping 36%. That is higher than VIX, although VIX has been such a laggard. This increase in HV20 has caused the “modified Bollinger Bands” to expand, and as a result, SPX has not closed below the -4σ Band. That will be a prerequisite to a new MVB buy signal.

New 52-week lows continue to outnumber new 52-week highs, although the absolute number of new lows has shrunk in the past week. That is a modestly positive sign, but it is not a buy signal. That won’t occur until new highs outnumber new lows on the NYSE for at least two consecutive days, and the number of new highs is greater than 100 on each of those days.

The term structure of the VIX futures slopes slightly downward right now, which is modestly negative for stocks, but again is not a full sell signal. If the trade is established, then stop yourself out if new lows outnumber new highs for two consecutive days.

 

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For an oversold rally you need buyers. Who's buyin? Not me 🤔

Tell us the percentage of Americans who own stock in the stock market.

“Assess public sentiment & try to take a blindfolded opposing shot based purely on “contrarianism” and/or ➡️ FartInTheWind

Narrative is changing 😂 man Bears screwed up

“Well that’s just great, Ron: Bears.”

This bear is full and hibernating. Wake me up when something materially changes to be bullish for more than a trade.

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