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Joined Apr 1, 2010
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Updating the Market “Tells”

The following is just a small excerpt from my latest Weekly Strategy Session (please click on that hyperlink for details about trying it out) which I published for members and 12631 subscribers this past Sunday.

For perspective, consider the S&P 500 weekly chart.

You can see a fierce, if not remarkably benign and complacent, uptrend since late-2012, with last week’s selling bringing out calls from market players and observers for a “bottom,” which of course is barely seen as a blip on this weekly chart.

We can see just how truly warped this market has become, where any bout of selling off of all-time highs is seen as some type of true plunge; In reality, the S&P market has not seen a true plunge in roughly two years.

Regarding our market tells, the small market capitalization issues housed in the Russell 2000 Index remain under pressure and are leading to the downside. A close below 1,082 on the Russell almost assuredly presages a bear market for the small caps, while a close over 1,213 negates the bear thesis.

In addition, the German DAX bourse found stiff resistance at its prior support weekly chart trendline last week, which we had previously observed.

Our third tell was the liquid, marquee momentum darling Tesla Motors. We observed the weekly chart bearish “shooting star” reversal candlestick several weekends ago, which has since confirmed lower.

While Tesla is still clearly in an overall uptrend since last year, the stock is also in pullback mode, which should be respected until we see signs of strong buyers emerging–Momentum tends to cut both ways.

While not clear evidence of a new bear market, these above tells point towards a correction in equities well underway. Until further notice, bounces are to be sold.

So what new information did we glean from the market last week beyond our tells?

Observing the…

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