Stalling
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Lets Start With A Couple Of Observations Shared In Last Weeks Market Analysis
Every Sunday we release a thorough market analysis — so you can be prepared for the week ahead.
We were expecting a shakeout and a cool off in stocks soon.
1. When 1-Month Realized Vol Compresses Excessively — Price Almost Always Needs To Throw A Tantrum
2. VIX About To Turn
3. Price Likes To Peak Short Term In High Gamma
4. Complacency Is Never Good
And We Got Our Little Shakeout
And our job today is to assess if the fun is about to end, or if this is a healthy pause in a strong trend.
What we can say is that breadth is declining while the market is advancing — that is a clear bearish divergence. It doesn’t mean the top is in or the bull market ends.
But it means you really have to put in the work and understand the underlying market mechanics, to differentiate between a market that is sick about to roll over, and a market that might be pausing before the next thrust up.
And we can see the deterioration under the hood in TSF - Analytics as well.
We are inches from ATH, and we have a massive amount of lagging groups — groups underperforming the market and that underperformance is accelerating further.
Narrowing leadership.
Today’s analysis is a long one, grab a coffee and enjoy the read.
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Lets Start With Zooming Out — Stalling Here Is Normal
Almost a two decade long channel, respected every time.
We overshoot the channel from time to time or linger at the highs.
But never forget the bigger picture, until we break free from this channel, we are bound by it — that is historical evidence, not an opinion.
And as I always like to highlight, if we ever reach the monthly EMA 50, you buy with both hands — those are the generational buying opportunities.