V-Bottoms. How wonderful they are when expected, and how exasperating they are when they occur and we aren’t ready for them. You can watch sentiment shift in Price for weeks, and then a crisis comes around that drains that sentiment of its power, and causes a reversal. It is uncertain that a long lasting change of sentiment has occurred. The stock market’s reaction so far has some similarities to 2 recent crises–Fukushima and the November 2016 US elections. In both cases, the market approached these points within a downturn.

I call these both crises, because the initial reaction of the market to these events were similar in the pre-market of those two events, not because they are similar in any other way. In both cases, the pre-market futures prices were down by over 100 points, if memory serves me correctly. In any event, this differs distinctly from the market’s path prior to the Russian invasion of the Crimea in 2014:

Is this new situation going to resolve with Price changing direction and moving directly higher? Will there be Price exhaustion from the 6% gyration we have had from Thursday morning’s Regular Trading Hours Low?

Two weeks ago, I suggested that we were closer to the 2018 cirle on this chart than the 2019 circle.

That potential shift is still to be proven, when looked at on the present chart. It will only be resolved should we reach resistance at 4508, which is the present mid-Keltner on the daily chart. And that is 3% higher than where we are today. In fact, the down-trending line off the highs from January of 2022 has still not been broken, although we are now much closer. MFI has been stabilizing rather than growing over the last 2 days, while RSI is still shy of the 50 RSI line that has been resistance.

The Hourly Companion Chart has moved above 4345, which is the mid-Keltner band. It has reached an area where rallies have failed over the past few months. We should know within the next few days if we will have the strength to continue on to resistance on the Daily Companion Chart.

At this point, there is no T to invest in. But I believe we are getting closer to a point in Time when there will be.

As Price has progressed over the last 13 years (since the March 2009 market bottom), the amount of points required to move the market one percent has increased seven fold. What a 6 point move was in 2009 now requires a 44 point move. This is an environment in which staying safe may mean missing out on a few 3% moves. But this site is dedicated to the ‘old and slow’, and making decisions without confirmation is not what I do with investment funds. Your situation may be different.

The NYSE McClellan Volume Oscillator (!VMCOSINYA) is showing a trend of higher lows and (with one exception) lower highs that may lead to a point at the end of March where we will have an inflection point, which may be the formation of a new T. The last two inflection points were at the end of November and January 21. These resulted in considerable moves.

Since a marked Bullish Percentage Chart is available in the Menu, I am posting the unmarked one here:

While we bounced off the support line posted in the marked chart (in the menu), we need to at least pass through 37.5, which was the previous low before we consider this move in a positive manner.

The Simple Chart has started to turn up from an area of lows where rallies have started before.

If you look at the Weekly SPX chart in the menu, you will see that we hit the lower Keltner Band this week, and rallied. But what I have as the lower Keltner, Terry Laundry would just call the mid-Keltner. The following chart is copied from the Public List of Terry’s maintained by Paula Burke.

A reminder, Terry’s charts can be found here:

https://stockcharts.com/public/1172710

The Confidence Index bounced off the mid line, and still is showing a reluctance to increase corporate rates in comparison to Treasuries.

Gold has done what it has done before during recent global crises–it has risen, then failed to follow through. In this case it appears that traders increased the discount on NAV on Thursday’s move. In my opinion, that may cause a reversal or stabilization of Price when RSI reaches the 50 level.

Gold Price fell during the last Crimean Crisis that occurred between the end of February through mid-March 2014, as shown below.

The weekly chart of TLT shows a loss of $1.35 this week, and was basically unchanged for the week before that. It’s my belief that this will continue lower, but on a slow basis. It is below its Optimum Moving Average, and may stay there. The Daily Chart shows we had that bounce off lows, and that is all we may get for a while.

Stay safe.

Charts don’t lie, but sometimes they just don’t tell you directly what will happen. In terms of my view of T-Theory, Price rules, followed by Volume, and both move through Time. I could put a fundamental spin on what I see in the market, but Price and Volume show the reaction to fundamentals, and offer more possibilities for understanding future moves.

This is not the same market that we’ve had for the last few years. There are a combination of changes reflected in the reaction of Price. Let’s take a look first at how Price is reacting within the T-Theory Keltner bands as set up by Terry Laundry:

We have discussed the importance of Optimum Moving Averages. This is the Moving Average that has the most “touches”. We have been in a market where price continually bounced off that moving average and moved higher, sometimes pausing for a quick reversal, and sometimes remaining near that OMA for a few weeks before resuming its move above it. That is a sign of a positive market. Unfortunately, the last two attempts to move above that OMA have failed. It seems fair to assume further failure to advance until the lower Keltner band is tapped again.

Adding the Volume Oscillators to the above chart show the following:

Both the Volume Oscillator and the McOscillator have not given a sign that Volume expects a bearish outcome. The VO will be adjusted Monday, with a possibly higher reading than shown above, and the McOsci has only reached the zero line after potentially creating a T that would be very short–it reached a higher peak than the last reading before it went below the zero line (approximately +45). But this is only one of the two Volume Oscillators that I follow, and is not conclusive on its own. This does not guarantee a failure to reverse should we hit the lower Price Keltner band.

The Daily Companion Chart reflects that Price has indeed broken down. RSI has been stopped at the mid-point when Price hit the mid-Keltner line. Money Flow (MFI) is neither overbought or oversold, and in fact has been rising while Price has failed to break above the mid-Keltner line. This may just be lemmings waiting for what has usually been a bullish outcome, but that is a simple statement created by flawed logic. I believe this is an indication that the market still wants a positive outcome. By itself, though, it is not likely to get what it wants.

As stated in the above chart, “In a strong market, we may not get a lower than 50 reading” on MFI and RSI. They are fighting each other now, and we may not be in a “strong market” any longer.

As noted, there are alternative paths to how this plays out. Looking a chart of Price for the end of 2018 and mid-2019 explains this:

Right now, my interpretation is that this we are closer to late 2018, based on the technicals of MFI and RSI. Right now, both MFI and RSI do not support this as a panic low having been created. And that is an additional problem for interpreting this market’s future direction.

Looking at this chart on a shorter term basis, we can see the failure of Price to break through not only the mid-Keltner, but also the creation of a resistance line of in the form of a descending trendline. My personal view is that support around 4325 should hold if it is approached quickly, as that is the present support line on a chart that has support moving lower (because the Keltner bands are expanding, and pointing lower).

The Hourly Chart is getting into an area where it could have a short term bounce. Support for tomorrow is 4390. Below that the daily support takes over at 4337.

The Bullish Percentage Chart created a false positive by breaking up through the mid-Keltner line, but it was not able to pierce the upper band before it failed.

The “Simple Chart” also appears to have given a false positive crossing a few days ago. Instead, this is turning into one where the technicals ‘kiss’, and then cross back down. They are in negative territory, but not deeply so.

Let’s get back to Terry Laundry, and his Confidence Index. This was one of the key indicators that Terry used in conjunction with his T-Theory chart to assign strength or weakness to the market. It is based on the ratio between Treasuries and Corporate Bonds. I have been suggesting for a while that we needed to see corporate rates move higher (lower price) relative to Treasuries in order to sustain a bull move in equities. I have also pointed out that Treasuries need to move higher in yield to return us to a pre-2020 crisis situation where lenders are willing to risk their capital in search of safety. That combination of higher Treasuries and Corporate Bond yields is not as problematic as it sounds–the Confidence Index is a ratio, and Corporate rates needed to move higher faster than Treasuries. If they move at the same rate, then direction is flat. If Treasuries move faster to higher rates than Corporates, the direction of the Confidence Index is higher. If Corporate rates move higher faster than Treasuries, the direction is lower. We have reached a plateau and started to see this Index fall. There is strength in the market until the Confidence Index moves below the mid Keltner. Should it move below that, we can start seeing a real change to market psychology with a Wile E. Coyote moment.

We are living in a world of immediacy in News. But some deeply held sentiments take longer to change course. The map is showing many variables right now. Having closed investment longs at 4660 I am waiting for opportunity.

Stay Safe.