B"H
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Incr Prob SPY $87.53, BUT-POPS HIGHER POSSIBLE, Many Have Switched To 80-99% Cash Positions
*Overall Market Technicals Continuing To Deteriorate--Despite Possibility Of A Pop Higher-Continuing To Watch For Increased Likelihood Of SPY Trending Down Towards $87.53
*Options Expiration-Friday- 5 Of The Past 7 Quadrupole Witching Days Have Been Up.Overall-The Market Is Shifting From An Intermediate Term Uptrend To A Downtrend-Pops Can Happen Even Up To Recent Highs-But Caution Warranted.
*Nasdaq Composite Was Down .02% Today-Down Volume Far Exceeded Up Volume On TheNasdaq-An Additional Deterioration Of Technicals
*S&P 500 Closed Today At 911.13 Below May 7th Price 929.58. Pops Higher Can Happen-ButUpward Momentum Has Completely Halted.
*Many More Hedge Fund Managers & Professional Traders Have Reverted Their Portfolios To 80-99% Cash Levels Over The Past Two Weeks Thereby Limiting Overall Market Risk. This Includes David Fry, Quint Taro, Lee Munson To Name A Few. There is No Rule That Says A Trader Must Expose Their Portfolio To Risk Everyday Especially When Market Signals Are Mixed.
*JP Morgan Technical Analyst-Top Is In-Watch For 830-875 & Possibly 800 (Link Below)
*Morgan Stanley-Market Call That The Rally is Over (Link Below)
*King Cambo-Market Technicals Indicate Great Risk
*Dow Theorists-Very Negative Divergences In Dow Jones & Transports
*Doug Kass-S&P 500 Could Easily Fall Another 5% on CNBC's-Although Doug Kass Remains Positive On Banks
*Again-Pops Higher/Rally Continuation Cannot Be Ruled Out-But Managing Risk Key
*Monsanto-2 Technical Analysts Bearish-Covered On Mad Money & Dropped After Discussed.
*Wells Fargo-Tens Of Thousands Of Bearish Puts-Downward Chart Spike Today, Thursday Down To $21.57 at 11:03 pm.
On June 2 There Was A very Clear Bearish Signal On The IntraDay Charts Of the SPY, theETFThat Tracks The S&P 500. I sent out a note as those signals were given & pointed out that this was a very Bearish indication & that caution was warranted despite the possibility of near term upward pop. The S&P 500 hit a high of 949.38 on June 2 & did rally a bit higher, but today the S&P 500 is more than 4% lower & the overall market technicals are deteriorating. It cannot be repeated enough, rallies/pops higher are possible even back to the recent highs or higher. That being said-the number of Professional Traders/Hedge Fund Managers who have reduced their overall portfolio cash levels up to 80-99% is astounding. It is worth noting that while some of these traders have increased short positions, many of them have simply reduced overall risk & are waiting for the next move on the market. Many of them agree that the next move should very likely be down & are waiting for clearer signals to short the market. It bears repeating that the S&P 500 has failed to rally with very few exceptions since May 7th & that their is no upward momentum. This is one of many Bearish indicators.
Despite the possibility of a pop or even a continuation of the rally, realizing the increasing risk to the downside is likely a very good move here. Again-Tomorrow Could be an up day. 5 Of the Past 7 Quadrupile Options Expiration Days Were Up For the DOW & One cannot rule out a pop towards the recent highs or even higher--but--the risk has increased & many great traders are choosing to limit overall market risk to protect capital here. Many times in the past 10 years the S&P 500 has dropped from Mid May to Mid July & one cannot rule out that exact pattern happening this year. An additional point is that many market timers are looking for a possible rally from mid July to the fall with an additional severe drop around October. Planning that far out is a somewhat fool hardy endeavour as anything could happen between now & then, but keeping these ideas in mind as a point many market traders & analysts are looking for may be helpful in planning one's overall investment strategy.
Good Trading
JP Morgan Technical Analyst-Summer Correction:
Morgan Stanley The Top Is In, Intermediate Term
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