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While Futures Rise, Markets Are Setting Up Nicely For The Bears

Published 12/07/2021, 12:23 AM
Updated 07/09/2023, 06:31 AM

Happy New Week, everyone. Although the values of futures pre-market have become rather meaningless lately, I’ll mention as of this composition that the ES and RTY are green and the NQ is red. Nothing dramatic is happening, and the only scheduled event of any consequence this week is the CPI report pre-market on Friday.

So the ES is indeed green, but for the past week, the market has been following a series of lower lows and lower highs. More importantly, it also completed a tidy little topping pattern which also just happens to be constructed beneath a broken uptrend. In other words, things are looking fairly well-positioned for the bears, in spite of these daily little exercises in green-i-tude from our bullish friends.

ES Chart

The energy bulls are getting some happiness, as the badly-oversold crude oil futures get bid up (they’re up over 3% as I’m typing this). This isn’t a surprise, although I hardly think this is the start of something bigger.

On the contrary, this is a counter-trend rally—the proverbial dead cat bounce—in the context of a much more fundamental failure in the price. This will wear itself out soon enough and, I believe, take out recent lows in short order.

Crude Oil Chart

A few weeks ago, the small caps (Russell 2000, represented by the RTY futures here) scared the bejesus out of me, but no longer. The hearty bullish breakout failed utterly (yellow tint) and was soon followed by a shattering of the uptrend (arrow). As with the market in general, a steady drumbeat of lower lows and lower highs has been thumping away.

RTY Chart

The chart I find especially engaging right now is the NASDAQ (NQ futures shown here). That’s a pretty spiffy little H&S topping pattern. The funny thing is that the market is only a few percent off its lifetime highs and is still insanely and madly overvalued.

In the midst of that, everyone is scurrying around congratulating themselves on surviving this “bear market” and is preparing for new assaults to lifetime highs, principally compelled by Goldman Sachs’ endless calls for an end-of-year market melt-up. I’m not so sure.

NQ Chart

Latest comments

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It is clear that the author has strong feelings about the current valuations.  "scurrying around congratulating themselves"... really?   Chris's assessment that the author is highly emotional is on point. Simply presenting the data and facts that give support to his opinion without attempting witty jabs would be a far more effective means of persuasion, if that's even the desired outcome here.  I'm not sure that that was the intent at all though.  As it stands, this article is nothing more than a venting session for one who's been ignoring the market trends and betting against the market for too long.  Sharp market declines are an inevitability and could very well be right around the corner, but those who profess to have nailed the timing of such a decline charting and feeling alone have a far greater chance at missed opportunity. Good luck.
Interesting content of this article, but I don't like that a.)  I can't read the charts to find out which time period they use and b.) the writing style is distracting me into all those colorful words like 'spiffy little', 'madly', etc, which show that the author is a very emotional person. Emotional persons are easily scared and feel better being in the bear camp or seeing the next bear around each corner. -- So, for today the bears got crushed bigly in what could be a short squeeze or a real XMS / Santa Claus rally ;)   and tomorrow? A gap and *****
"crushed bigly"... sounds like the emotional words of someone who is easily spooked...
I see someone doesn't get my MAGA humor! :)
destroyed bigly today. Same thesis but open wounds on my back. yeah still short but another beating and put on my grave 🪦 I was right but my timing was a day off 📴 I figured can't hide from inflation Weds or can we? 🍌👉💀🙊🙉🙈
thank gawd I covered my short and broke even..then went long for J Powell B's reasons for inflation. closing my fat longs to get short one more time. just waiting for the setup. my wounds have been repaired for round 2😝
I think you're right. Just a matter of time...
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