The technical trajectory - has supported our view for several weeks regarding probabilities of 'front-selling' in April; erosion in May; and likely not surviving this month without a notable decline in the S&P. (Our downside estimates in terms of time and price are provided to regular members daily via text or video analysis.)
Meanwhile the S&P 'swoon' really is a 'catch-down' with behavior of the broader market, even the Dow Industrial Average, which is already below the referenced lows of recent weeks, tracks a more visible path to lower levels.
This reluctant decline has been facilitated of course by events (including many clarifications by the Fed of the 'probability' of a rate hike); but preceded by many indications of distribution and heaviness money managers and analysts mostly tried to ignore, as they shuffled the sector deck (rearranging musical chairs) in a way intended to obfuscate the ongoing selling in vulnerable momentum areas.
(The latest horror presumably by terrorists against civilian aviation is a reminder that more than financial issues challenge mankind; despite an implied revenue threat to most travel-related businesses. The lead-up to this latest threat, may be the long TSA lines at airports. Ironically I recently mentioned concern the lines weren't solely inefficiency or labor issues, as much as 'security; as if' they had a particular unpublicized threat; thus TSA doing their job carefully. In fact I'd mentioned to members days ago that's likely why Delta bought part of 'Clear', a service in several cities that gets members ahead even of the TSAPre lines. By doing so that's telling you this problem isn't going to see much relief soon for a majority of travelers; or that Government waited too long to streamline the tedious process.)
All-in-all the market's been a laborious 'process'. But while not exciting; it was as we forecast. It's rare (if not unprecedented) that we would retain a single 'guideline trade' for now three weeks. We did that (and stated daily) because we advised against a too-frequent trading approach; reflecting our confidence this was a topping process that was going to work its way to lower levels, as has evolved according to the April-May overall projection.
Fundamentals - can only be viewed in a vacuum 'technically' when trading for sure; but not when one considers long-term investment implications. Today we frequently hear 'technical' arguments for movements higher based on patterns that might be plausible; however (as described in the full Edition).
Do keep in mind how many pundits or analysts have been compelled to retreat and downgrade guidance and GDP outlooks, just as we've forewarned for more than a year. We have allowed for trading moves either way in the framework, but recognize throughout that it was subsidized first by monetary policy; and later by buybacks; both of which were not affirmed by growth in actual business profits.
This realization that interpretation done properly, would overlay technicals upon fundamentals, tells us that this remains a dangerous market, as we've outlined. It's been incredibly tortuous for investors waiting for a good buying opportunity; at the same time recognizing this ongoing sell-the-rallies distribution while very guardedly hanging-onto one's wallets, has served investors agreeing quite well.
With profits made by shorting rallies (or lightening-up portfolios to build cash) for quite some time; investors should be rewarded for their patience already (since so many stocks they really want to own are down 20-50% already; although the reports about this are rare 'as if' these were scattered occurrences) and in good shape to take advantage of the deluge in (more details reserved).
We're holding solidly short from June S&P 2104, and remain pleased to avoid 'over-trading' on a daily basis; by (unusually) maintaining this stance for three weeks.
Daily action - for Thursday was forecast as likely being pretty wild for Expiration week's wrap-up amidst probing of the area just beneath the 'precipice'. (More.)
Part of this erratic (and expected desperate rebound pattern that would fail) also related to our overall call for the S&P to break the lows of a week-ago Friday, as well as challenge the early April lows (crucial lateral support level), which just as we thought, would break, see a rebound, and only then head even lower. That's the part we want to anticipate next; whether now or likely after (redacted).
Holding short from June S&P 2104. As this evolves we envision (projections). Technicians debating whether it holds any particular level (noted) really aren't helping investors; because once it's proven that the S&P fails; eventually that's how you get perennial longs to sell into ultimate weakness, even near the lows, which eventually will occur. (Balance for ingerletter.com members only.)
Prior highlights follow: (technical & fundamental charts & text redacted)
Battlegrounds are fluid - with multiple dynamics ongoing. Downside bias rose in the April-May time-frame; but so did shorts, who are alternately run-in despite the validity of increasingly risky forward dynamics. We urge investors to remain wary; while traders stay nimble; as the S&P decline is actually trailing the broad market; already in-decline for a longer time, and at lower relative levels.
Enjoy the evening (and join us as a regular daily member);
-Gene Inger
www.ingerletter.com
