November 12, 2023

MarketMap™ 2023 Scenario Planner #19

A failed bullish scenario will be dealt with harshly

Take the following for example, “This looks like a massacre for the stock market bears.  (1) Hedge Funds have increased stock short positions for 12 consecutive weeks, the longest streak in history! Data from Goldman Sachs. (2) And now we are entering November and December, the best 2-month period of the year with data going back to 1950 (3) Bear market in bonds may be over, channel break out. (4) Oil declining despite winter and ME tensions”

It is not worthy of pulling out the flawed assumptions behind each point.  It is easier to say the contrarian idea is not grounded, and the remainder are postulations.  Yet, this is a fine example of the working mentality inside the bastions of bullish fortune seekers. Two points here spurred by a good question. “Is the Moody’s news event the catalyst?”

Even with the high in July being a lower high, such major pivot do not need to have a clear shocking news event setting it off. Many times, they will hit on great news, like the 10/16/23 S-T high pivot.

Rather, a high turning point can be the clear and abject failure of the bullish rationale leaving the majority in the lurch. As Joe Granville would call them “Bag Holders.”  The other thing to remember here is, given that bulls tend to exaggerate the good and ignore the bad, how the market reacts come the reopen Sunday and later with the day session Monday, will be the answer to the query, “is this news from Moody’s the catalyst?”  A valid question in our space regarding the Elliott Wave chart shown here.

This work by Jack Cahn is licensed under a Creative Commons Attribution-NonCommercial 4.0 International