March Reeds Report Insight

Okay, so last time we talked, here's where we were, we had just tested the top of our bear market target resistance zone 4100, 4200 and basically, our message was that we were at a key inflection point and either the market had to break down from here and continue lower, or it was going to break out of this zone and we're gonna have to change our intermediate term trend outlook and we looked at a lot of major internals, a lot of things at really key resistance levels and since then, we've fallen sharply, we've had some very nice downside supply that kind of keeps this keeps us in a key inflection point to watch and suggest that we're starting a new leg down in the bear market and keeps that the bear market thesis alive. 

Now, when we talked last, we had just done basically a correction over short signal in our market timing work. If you took our market timing mastermind, and we showed you that trade that trade, basically, we took half profits here, took those profits and bought a call against our shorts that had tablished here at 416. Now, that's an over 5R trade, even when we took this to our profits, and bought our call against it. So it's a position that the first day it was initiated, there was no way you could lose money after most of the today and yet it's gaining all the time. It's a five r plus trade now, we're into capitulation. So if you haven't already, if you have this position on or something similar, this is an area where you could roll down your strikes a little bit, pay a little bit of that profit to make sure that you've got a guaranteed really high profit, but every five points, every 50 points that we go down, every five points in the SPY that we go down, you're making another r in sync with the main trend. Basically, we now have an E course for that market, market timing mastermind, so you want to learn how to do this put on trades. If you had done this, taken every correction over signal, you have one loss and 2022, costs you two r but you had four profits that are now over 50 r in profit, which means you doubled your money on a two r drawdown with this strategy. That's something we teach in the E course, if you haven't taken that I think it makes a really good diversification aggressive strategy, particularly for bear markets like this when you don't have a lot going on.

All right, lets take a look at our supply and demand and when we talked last time, we were on the verge of potential breaks, we had a false breakdown and we said okay, we had come down and said it was a potential false breakdown. If it broke above here on our spread index, that would indicate we're going to have to change to an intermediate term uptrend, but more likely, we're going to decline in sync with our macro analysis and we've declined sharply. This spread index is now below its 40 DMA, below its 200 DMA. The demand index in orange, one of the problems we saw with it is usually the demand index is the really strong index when you're starting a new bull market. That was not the case, demand had been much weaker going up and supply had been going down. It didn't break its downtrend line, and it still hasn't, it's back below its 40 DMA in a downtrend, and it's back below the supply index and the supply index, which had been weak has now turned stronger. Its backup of its 40 DMA and it's back above the demand and EXOR sort of back in sync with what you'd expect for continued bear mark. 

We look at the major internals. 

If you remember when we talk last time, they were all up at key resistance, these August highs, but they had to really break through for us to shift our position. Only one of them had briefly gone for a day above and had come back down all the rest of them were holding that level and we said look, if you break through, we're going to have to shift to a more intermediate term bullish outlook, but if you don't, and we start to turn down, that's going to be consistent with our bear rally thesis that we basically had and as we can see, three out of four of our major internals are now back below their long term moving averages, and it fallen significantly off those levels in sync with what you would expect for a bear rally to be over and as Chuck just said, we've seen just a major turnaround and small caps, small caps were relative strength leaders in the rally. They've now become relative strength laggars in this decline because of concerns about the banking system and concerns about a lot of the startups and companies that had their full deposits with Silicon Valley Bank and with some of these regional banks. 

That's been that's been a big concern, but you can see this former relative strength leader in the bear rally is now relative strength lagger on really big volume. We've had some intermediate, in the meantime, you have to get Reeds Trader, we've had some intermediate term sell signals that tell us that we're likely declining, and they're continuing to decline, but we are getting to extreme levels of sentiment and we're oversold, and we've got downside capitulation, we've got 90% and 80%, down volume days in a row, that's capitulation. When you're short stocks, individual stocks, that's the time to kind of look to either buy a call against your position to lock in profit or exit trades. When you're short, the s&p on an intermediate term timeframe looking for a bigger move down, you can roll down your call strikes to maybe lock in more profits when we get in this situation and that way, maybe you take one or two r off the table of profit, but you're making sure that if the worst case happens, you still have a really nice profit and if things continue to go the way you expect, you're still making substantial profits on the way down.