0.0 MARKET OUTLOOK:
TS: 7:45am pst
Risk on sentiment apparent in broader markets today-but looks like a dead cat bounce, volume is light and so conviction is absent.
I am still wary, but still see a slow grind up from here. Reason? Bargains galore with huge cash hordes on sidelines seeking a place to go....and FOMO is almost as strong a "thing" as gravity.
Ms. Market may be flattening out here===>largest caps back up to neutral trend (see chart at item 5.5 below), and wee wee hour fire sales abating.
1.0 MARKET UP FACTORS:
Bubble "Gone" (stuff is on relative sale-so 'price up!' probability is de facto higher)
Huge amount of cash on the sidelines seeking a place to go to work.
The 8000lb Gorilla Event In The Room (the Fed Speaky), is O-V-E-R.....markets are still adjusting.
Broader Markets Weakened-relevant correlations (SPX & VIX) support price up (\see chart at item 5.1)*
VIX Moving Sideways (continuing rounding bottom pattern), nothing scary in view
VIX of VIX doing ditto, nothing scary in view
Wee Wee Hour Fire Sales Remain Mild (=market continues stabilizing)
Seasonality (markets usually grind up on avg into year end-so far this pattern appears fading here)
DOW THEORY Signal 100% Positive (general 'risk on' orientation ok)-but w/secondary reaction warning
Covid Fears Stable-Lockdown Damage Potential Stable (low political will here in the world landscape)
Hedge Fund Positioning Trend Reversal Just Emerging (=slight market up signal, see item 5.2 chart)
2.0 MARKET DOWN FACTORS:
1hr Trends In Many Staple Industrial Coins Remaining Negative (this is the tide-respect the tide!)
FED Taper to be more aggressive than thought & interest rates to rise (this is a "surprise black swan")
Tax Loss Selling Wary (section 475 trader big money=market down and nervous)
Hedge Funds Are Heavy Short (=market down/nervous, see item 5.2 chart)
Holidays Reduce Liquidity (aids market manipulation by pumper/dumpers & whales, BS Liqs, etc)
Covid Fear Based Volatility Potential = High, and now increasing (yields 'risk off' anti FOMO sentiment)
Sentiment is 'risk off', see chart at item 5.3, and this piece: https://www.reddit.com/r/DorothysDirtyDitch/comments/rk719b/the_80000_lb_gorilla_ever_in_any_market_room/
Santa Rally narrative fading. Negative "surprises" stacking up....sleeper rally may kick in 12/26-12/31, but looks as though the FED "surprise" has knocked the Santa Sentiment right out of the room here.
3.0 MY SCALP TRADE POSITIONING: (unchanged-and working very well)
Long Bias, few to no reversal shorts on long exits.
Shorts-"duck hunt"* shorts sought actively, (*ie: "over priced" shorts on wild pumper action).
No Meme Coin Longs (hopium has flagged and may stay weak/risk off in this sector)
Small Range/Shorter Parry Advisable (tight market not likely to run far here, more drop pops in cards)
4.0 TARGETS I PREFER: (unchanged & working well, but may need to switch out some horses!)
4.1) Solid Industrial FAAMNG type value stuff that has not run way up recently, (or if it has, dips huge\*);*
ADA, ALGO, AVAX**, ATOM, BNB, DOT, FIL, LUNA**, SOL, UNI, ===>(all long)
4.2) Solid project small cap stuff that has been beaten down;
AKT, AUDIO, DVPN, CAKE, KCS, CELO, CTK, FTM, HBAR, SRM, VGX, ===>(all long)
4.3) META & Exchange Buzz small cap stuff with some cap mojo that is being FOMO bid and "influenced";
CRO, MANA, SAND....(long & short, TA signal dependent)
4.4) Duck Hunts (short targets)
AAVE, AVAX, CELO, LUNA, YFI
5.0 RANDOM CHARTS OF INTEREST TO NOTE
5.1 Broader Market Correlations
Strongest Correlation=Fear (the VIX): Presently-Short Term SPX Fear = Crypto Prices Up!
And for those special people that think Bitcoin has a positive price correlation with "the stock market", here is how that magical correlation (which doesn't exist), matched yesterday's sell off:
- Bitcoin's Divergent Moves to Other Assets & Markets 12/20/2021 -
Markets down & Bitcoin up is a negative correlation, not a positive one as per the (incorrect) narrative. As can be seen there is no solid correlation-sometimes those stars align, and sometimes they do not. Correlation, when it does occur, seems almost anecdotal (of limited rear view mirror value), or worst yet-incidental. Likely there is something more indirect driving any ephemeral correlations that occur-such as the VIX is hinting here (fear), Inflation, Interest Rates-et etc.
5.2 Fast $ vs Slow $ Positioning
Slight Trend Reversals-I believe this will continue and the gap thus closes further...
5.3 The "Are We Having Fun"-O-Meter
\"Fear\" little changed (yawn)
Oh, and be sure to note that "27" is "Fear", but "25" (a whopping 8% difference!), is somehow "Extreme Fear". Hmmmmm, what is "23" then? Double super secret incredible fear? :) And "20"?
Well, you get the idea. This is subjective narrative stuff, not actionable data. I provide it here because people treat this narrative crap as actionable data, indicative of something valuable. The only thing I have ever been able to correlate to these "false prophets" is: when Fear is huge-buy what the other side is selling. And when Greed is huge-sell what the other side is buying. So this "Fun-O-Meter" is, at best, a contrarian indicator. At worst-just more narrative eye candy crap to ignore 24/7/365. Note to Golum et al: there is no one chart that rules them all my Precious. Things are FAR more complex than that.
5.4 Volume
Volume improved-some dip buyers returned....
5.5 Largest Cap Trend
Trends Continue To YoYo Change Each Day? (um, no....see the note***)
***If you follow these posts you know that the Trends (Bullish-Neutral-Bearish), have been flipping about all of a sudden. Why? Can a "Trend" change 180 degrees in a day? No. It can be challenged, it can diverge, it can do nothing....but Trend doesn't flip about like a dying fish. See extensive notes here:
https://www.reddit.com/r/DorothysDirtyDitch/comments/rjhsru/12182021_market_update/
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