Market Update 3-11-23

Markets continue lower across the board.  All major indexes are in my version of “Bear Mode.”   Bear mode is either completely out of the market or short.  The news about the recent bank failures with Silicon Valley Bank and SilverGate have sparked fear across the markets. This was enough of a systemic shock to scare many investors out of complacency into selling.

There is no shortage of bad news out there for markets to fear:  potential war, interest rates, bank failures, recession, and the list goes on.  However, we base all buy and sell signals on price.  Remember, price leads the narrative.  When the market drops, the narrative is negative.  When the markets rally, the narrative turns positive.

Major Leveraged ETFs

Below is a table of the major leveraged ETFs and their related Bull/Bear mode status with my indicators.  Remember, the same indicators work on most time-frames.

Bull Mode:  price closes above last 3 bars, AND TTM-Squeeze histogram is trending higher AND you have a 2-6 or 3-8 period positive crossover AND stochastics are trending higher AND the RSI(2) is crossing above 70

Bear Mode:  the opposite of Bull-mode   price closes lower than last 3 bars, AND TTM-Squeeze histogram is trending down, AND the 2-6 or 3-8 period EMA has had a negative crossover AND the stochastics are trending lower AND RSI(2) has crossed below 30.

Leveraged ETF	195 Min chart (½ day)	Daily Chart	Weekly Chart
UPRO	Bear Mode	Bear Mode	Bear Mode
TNA	Bear Mode	Bear Mode	Bull Mode
UDOW	Bear Mode	Bear Mode	Bear Mode
TQQQ	Bear Mode	Bear Mode	Bull Mode
SOXL	Bear Mode	Bear Mode	Bull Mode
FNGU	Bear Mode	Bear Mode	Bull Mode

• The lower time frames are all in Bear-mode
• The S&P and Dow weekly index charts are in Bear-Mode
• The remaining indexes in weekly bull mode are trending down and look to be setting up to throw a weekly Bear-Mode signal
• Several other ETFs not listed above are in bear mode.  Positions were taken in YANG and BNKD recently
• KOLD, a 2X inverse natural gas ETF gave a Bull mode signal. (This one is highly volatile)

Major Indexes

S&P 500

The S&P 500 is in daily and now weekly Bear mode.  Bear-mode being my signals (3-8 EMA crossover, Nadaraya Watson turning negative, and price close below the last 3 bars.)  How low it can go is unknown, however no long positions taken during Bear Mode.  It is important to note historically, weekly Bear Modes can last 3-16 weeks.  

• Weekly chart of S&P 500
• Bear Mode on the weekly chart
• You can see the more recent Bear Mode signals (red down arrows) over the last couple of years

• Daily chart of S&P 500
• Hard sell or short signal occurred on February 16th
• How low we go before going into Bull mode is unknown, we just ride the bull and bear modes for all they are worth

Dow Jones Industrial Average

The Dow is also in the daily and weekly Bear-Mode.   Again, Bear-mode is the use of my signals (3-8 EMA crossover, Nadaraya Watson turning negative, and price close below the last 3 bars.)  I will refrain from any long positions when the indexes are in Bear-mode.

• Weekly chart of the Dow
• The Dow is in weekly and daily Bear mode;  out or or shorts only.
• No target on down side
• Holding SPXS, an inverse S&P500 ETF since 2/16

• Daily chart of Dow Jones Industrial Average
• Sell signals on the February 9th and again on February 16th
• Holding inverse ETF – SDOW at the moment from the 9th.

Russell 2000 Index

The Russell 2000 is in daily Bear-Mode and has not flipped to weekly Bear-mode yet.  It is important to note the Russell 2000 is largely comprised of financial stocks. (roughly 23%)  Couple this with the recent bank news and you have potential for a large sell-off.   Full disclosure, I took a position in the the inverse Russell 2000 ETF – TZA on February 9th and added on February 21st.

• A daily chart of the Russell 2000 index
• Bear mode signal was triggered on February 9th.
• The index is heavy on financials which 
• Holding a position in TZA since 2/9/23

Indicators

One of my goto indicators is the MMTW – Percent of stocks above their 20-day moving average.  This indicator oscillates between 0 and 100.  MMTW went into Bear-mode on January 30th.  When it is trending higher coming from lows below 20 this is bullish.  When it is above 80 and trending lower, this is bearish.

Bullish Percent Index

The below chart shows the Bullish Percent index for the S&P 500, the New York composite index, and the Nasdaq 100.   From a high-level, this indicator looks at the point and figure charts of each stock within the index and derives what percent of the stocks are in “bullish” or “bearish” mode. When it is trending down from above 70 and crosses below the 3 and 8 period EMAs this is bearish.  Moving from below 30 above the 3 and 8 period EMAs is bullish. 

• Bullish Percent indexes for the S&P 500, the New York Composite, and the Nasdaq 100.
• All are in full Bear-mode
• All BPs broke down on February 10th.

Summary

Markets have and continue to look bearish. Could they bounce?  Of Course.  Could they continue down, absolutely.   I am short, and remain short until a bull-signal takes place.  If you are looking to go long, wait for a Bull signal.    I will list more charts of interest in my next post.