Don’t shoot the messenger and disregarding politics here, my favorite momentum indicator is Zweig’s up volume vs down volume on the NYSE. I have referenced this several times over the years. Most great traders are terrible analysts and most great analysts are terrible traders. That said, one great amateur analyst I know (meaning he does not work for some Wall Street firm) is as bullish as ever based on Wednesday’s action. That day saw a 65 to 1 up volume over down volume on the NYSE - the highest ever. That was greater than the infamous 42 to 1 that launched the greatest bull market of all time on August 18, 1982. With the recent volatility we have seen recently it won’t take long to see if Wednesday was indeed THE day.
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It was after all, one of the bigger short squeezes of all-time!
From a definition perspective, it's pretty easy to argue at this point it was a DCB, as it was NOT based on fundamentals (rather the deep fear that a deep recession was being risked) and the price direction immediately reversed that night/the next day. But to fully define a DCB:
https://www.investopedia.com/terms/d/deadcatbounce.asp
Bottom Line: We won't know until sometime later.
That said, from a T/A perspective, they really had to fight on Wednesday to get thru the Fibo 50% retracement level.
The 61.8% level, not far above it, is expected to be stiff resistance and many believe we will not get through it on the first attempt. And the buffon put (er blink) line is expected by many to be re-tested.
On the positive-looking side, I'll stack the Zweig data that you presented with comments Lawrence O'Donnell made on Wed night, pretty much saying we now know the insanely calculated tariffs will never happen:
https://www.msnbc.com/the-last-word/watch/lawrence-trump-backs-down-on-tariffs-after-a-day-of-fearing-elon-musk-might-call-him-a-moron-236996677787
Bottom Line: IMO, this one is different from past, similar drops, in that it is self-induced and a mad man has the keys to the car. So round and round we go, where we stop, nobody knows, until we see what he ultimately does with the keys.
The stock and bond markets are now weighing whether the Trump "reciprocal tariff" team and it's leader (Trump) will be able to arrive at minimally disruptive agreements with the 57 countries currently scheduled to face steeply increased tariffs after 90 days. The markets are also continuing to weigh the impact of the new across the board 10% tariff, the recently increased tariffs on Canada and Mexico and the recently increased tariffs on steel, aluminum, and autos (with prescription drugs tariffs coming soon). And, of course, the markets are waiting to see if Trump and Xi Jinping are able to get past the first move and resolve their differences in a market friendly way.
The Zweig indicator's long history of success provides reason to hope as does Trump's desire to retain congressional majorities after the mid-term elections. But, Trump thrives on chaos and has been letting his intuition guide his actions since his return to the White House. Hopefully Trump will figure out a way declare victory and move on. We probably know before very long if Zweig's indicator is up to the challenge Trump is presenting it with.
$INDU peaked at 45054.36 on 1/31/25, fell to 40661.77 on 3/13/25, and then rallied to 42821.83 on 3/26/25. The difference between 45054.36 and 40661.77 is 4392.59, which when subtracted from 40661.77 is 36269.18, which is rather close to the low of 36611.78 on 4/7/25.
In a similar vein, $SPX peaked at 6147.43 on 2/19/25, fell to 5504.65 on 3/13/25, and then rallied to 5786.95 on 3/25/25. The difference between 6147.43 and 5504.65 is 642.78, which when subtracted from 5504.65 is 4861.87, which is rather close to the low of 4835.04 on 4/7/25.
https://ibb.co/S1BPJMn
I don't believe in charts, so take my comments accordingly.
IIRC the low value of the S&P was due to inflation. By August of 1982 the inflation rate had dropped from around 8.4 in January to 5.9 in August. So the bond market was off to the start of its own bull market.
”Respondents also said they were bracing for prices to surge 6.7% in the year ahead.” (WSJ)
WABC is right that valuations are high. As investors we need to be selective. FWIW, here’s 20 low P/E stocks. That said, anything can happen over the next several months - so there may be / probably will be better times to buy.
Also - Lewis Braham authored a Barron’s article earlier this week highlighting funds that might do well under current “chaotic” conditions. Worth a look.
Re: ”Never met a rich chartist.” Good one!
https://www.msn.com/en-us/money/savingandinvesting/the-chaos-resistant-fund-portfolio/ar-AA1Ch1BR
Nice to learn the unique aspects of these funds mentioned here. AQR funds are interesting, but they often have expense ratio over 2%.
Yes, the AQR funds mentioned do look interesting.
I'd need to do analyze them more thoroughly before investing.
But those expense ratios!
I've been dismissive of alt funds in the past but I might consider purchasing one in the future.
With S&P futures DOWN 1.25%, from the link I had previously posted, the Buffoon's Blink Bounce is starting to look more and more like a classic Dead Cat Bounce and Bear Market rally:
Excerpt:
Dead Cat Bounce:
Key Takeaways
A dead cat bounce is a rally that is unsupported by fundamentals that is reversed by price movement to the downside.
Check
In technical analysis, a dead cat bounce is considered to be a continuation pattern.
Check
At first, the bounce may appear to be a reversal of the prevailing trend, but it is quickly followed by a continuation of the downward price move.
Check
Dead cat bounce patterns are usually only realized after the fact and are difficult to identify in real-time.
Still TBD fully after more time
At least, that's how I'm scoring it at home.
https://stockcharts.com/h-sc/ui?s=$SPX&p=D&b=5&g=0&id=p08140338207
And FWIW, based on that scoring,
the likelihood based on market history that a Golden Cross is 6-12 months away,
earnings season will include a lot of pulled guidance, and
the notion (read, reality?) that nothing other than the announcement of tariff deals, reductions or eliminations CAN move the market meaningfully higher,
we believe a re-test of the Liberation Day lows is highly likely and we are NOT re-deploying any of our March 31 stock SALE proceeds at this time. We are inside the S&P range at which we may start re-deploying, but we believe better re-entry points are coming.
That all said, we are getting antsy to start re-deploying via DCA into FSELX, which we SOLD on March 31 and is DOWN 14.3% from that point (and DOWN 25.6% YTD) heading into today's OPEN.
We're getting close to the Liberation Day lows. S&P is within spitting distance of the Big C. NASDAQ now DOWN 28% from its peak. Getting into the tempting zone (to DCA or dump) but we've seen this too many times before to act...yet. Feeling reasonably confident a re-test of the lows will happen. We have a big advantage this time around over prior cycles in that we lightened up at EOY, then SOLD 1/2 on March 31. And being paid very well this time to wait makes it even easier to use Extreme Caution.
Today, markets are immediately back to the HOPE phase.
https://www.cnbc.com/2025/04/22/bessent-trump-tariffs-china-deescalate.html
Not sure why HOPE took over today based on that line of Bessent BS, other than the notion that we are haphazardly developing a range with bumpers at the Liberation Day low and Buffoon BLINK Bounce high.
If history is any lesson, we will make at least one solid run at the re-test of the LD low, and will have a hard time busting above the BBB high, notwithstanding the expected trouble breaking back further above the 50% and 61.8% Fibo retracement levels.
Expecting the whole process to once again see Golden Crosses to take ~6-9-12 months. We started re-deploying into hard hit Domestic funds yesterday, will be adding a new Foreign fund today, and will finish the DCAing back in of March 31 SELLs proceeds over the next 3-12 months, with specific timeline TBD by the ebbs and flows of the buffoon.
https://www.investopedia.com/stocks-trigger-100-percent-accurate-bullish-signal-after-3-day-rally-11722168#:~:text=Stocks on the New York,within a 10-day period.
Excerpt:
Since the 1940s, the S&P 500—or its predecessor index before 1959—has averaged a 6-month return of 14.8% and a 12-month return of 23.4% after ZBT signals.
And a contrarian/skeptical view from Tom McClellan:
Excerpt:
ZBT's Long-Term Record Is Spottier
Interesting stuff.
I too will however be skeptical of it as an accurate indicator THIS (bizarro world) TIME until the S&P makes a meaningful move above 5,500 and takes out the 50% (5,491) and 61.8% (5,646) Fibo retracement levels.
FWIW, no chance I would at this level add new money or re-deploy our stock sale proceeds from our March 31 SELLs (with S&P at 5,612) into Domestic stocks. We did however re-deploy some on April 21 with the S&P at 5,158. YMMV.
Stay tuned and keep your finger on the button.
As it turns out, not all T/A are created equal!
One particular T/A from BellCurveTrading has, even in these seemingly blindfolded times, successfully projected and predicted the recent, respective index tops AND the respective index % drawdowns that we've seen to date. Pretty remarkable!
Today on CNBC he stated these levels as the likely bottoms on the respective indexes:
S&P: 4,500-4,100
N100: 16,000-14,500
Dow: 35,000-33,000
I do a little TA now and again but had not heard of these you mentioned. I'll be watching.