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Tuesday, March 7, 2023

Market Update - Technical Tuesday 3/7/23 -

 First off:  It was odd to see profit taking on the first Monday of the month, when money is normally being put to work, but what better time to take profits, than when mutual funds are putting retail investors money to work?

Market Futures Green

 Seeing futures mostly flat this morning, and all eyes are going to be on Powell's testimony - on capital hill - over the next 2 days. That should give the market makers plenty of time to load the algos, ahead of the next surprise move. Looks like they might be planning to run the market up into March OPEX, just as they did in 2002. More on that in a minute! 

Yesterday, I found some sharks on Twitter claiming that when the $SPX holds the 200 day moving average for an entire month, that it marks the end of a bear market? That sounds like BS to me, and I figured it should be easy enough to disprove, so I set out to do that.  

Here's the tweet 

First I looked at the NASDAQ 

$COMPQ (NASDAQ) Holds above the 200 day moving average for nearly 3 months, before the bear market continued. 

I wonder if the tech bulls became complacent as the NASDAQ continued to hold up above the 200 day, for several months. 

Technically the $SPX didn't even signal the beginning of a bear market in 2000, so I suspect most market technicians remained bullish....    

$NYSE held support above the 200 day moving average for several months in 2002, so I suppose you could've made the same (false) argument that the bear market was over using the chart below.

As I saw 1 person comment on twitter, this just looks like another meaningless stat. 

Whether the market holds above the 200 day ma for a month, or 2, or even 4 months, is meaningless 

Other Similarities 

 There are some parallels that can be made between the $NYSE chart (revised) below, and today's market. 

  1. The most obvious thing on the chart is the market continued to make a series of lower lows, and lower highs. 
  2. In 2002, the market continued to rally into what looks like March Options Expiration. "" Today's timeline. 
  3. Tech led the bear market. "" Today's market.  

That really leaves me with an uneasy feeling, because it seems to me that the powers that be are using the 2002 playbook. 

Most of us are not old enough, or weren't experienced enough to trade the 2000 crash, effectively, but today I can confidently say I look forward to it, and I plan to make a killing trading it! 

Of course most investors will remain hopeful, but that's human nature. 

One last thing. 

Stocks Poised For Rally—But Don’t Expect It To Last, Noted Morgan Stanley Bear Wilson Says Forbes

The S&P could soon rise as much as 3% to 4,150, just shy of its highest closing price since last August, (Michael) Wilson wrote in a Monday note to clients, as investors regain confidence in stocks 

Look, that's not even a higher recent high! 

This Wilson character, has no clue where the market is going, because he doesn't even have a technical chart. 

My outlook, doesn't change day to day: I'm still looking for a washout below the 200 day moving average to shake the weak hands, followed by a rally into the spring. 

See: China's Bullish Reversal, and A Bold Call on the $SPX 

And be sure to sign up for the weekly news letter, if you haven't done so already! 

Take Care, AA 

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