Is this still just a Bear Market Rally?


Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on August 11, 2022. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).

As regular readers know, for weeks my indicators have been saying that stocks should bounce rather strongly.

The May bounce wasn’t ready for the big league yet (which forced me to take a few bites of humble pie in early June), but the rally from the June 16 low surely delivered (the S&P 500 is up over 15%).

The Free Market Outlook from June 21 titled “Blood on Wall Street,” stated there’s panic and blood on Wall Street and that “this is about the time to be rational and go against the trend.”

Even before that, the June 19 Profit Radar Report, published a highly controversial Elliott Wave Theory count. Although the wave count was ambiguous, this was my preferred interpretation.

Based on this count, a 3-wave decline (A-B-C) just ended and the S&P was ready to rally.

This was highly controversial because almost every Elliott Wave analysts expected dooms day scenario-like outcomes (with wave 3 of 3 down about to rip lower).

A few days earlier, in the June 15 Profit Radar Report, I published a bullish wedge which also could unlock much higher targets.

Well, the S&P 500 is now up over 15% and has retraced nearly 50% of the points lost from the January high to the June low.

The S&P 500 has fulfilled my forecast of a significant bounce and (based on price and some sentiment gauges) has reached the zone where a bear market rally ‘should’ soon (not necessarily right away) roll over.

Based on Google searches for ‘bear market rally,’ it seems like that’s what investors expect.

Here is the big question: Is this just a bear market rally, doomed to roll over, or could it be more, perhaps much more?

Last night’s Profit Radar Report featured two historic examples (one of them helped us nail the 2020 low) to help ascertain the odds of a bear market rally.

Last night’s update, an archive of all past research, and continued purely fact-based, out-of-the box analysis are available via the Profit Radar Report Profit Radar Report. Be the best-informed investor you know and don’t get caught following the crowded traded.

The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.

Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”

S&P 500 and Inflation Update


Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on July 9, 2022. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).

The last Market Outlook (June 16, how time flies) made only two observations regarding the S&P 500:

– There’s a massive chart gap at 3,900, which certainly will be closed.

– There’s support at 3,600 – 3,300, which could be tested.

In addition, the Profit Radar Report highlighted that 3,664 is where a potential S&P 500 C-wave would be a Fibonacci 1.382 x wave A (the most bullish S&P 500 scenario).

Since then, the S&P fell as low as 3,636 and bounced as high as 3,945 (reaching the up and down side ‘target’ mentioned above).

Investors are emotionally charged and it’s easy to get carried away with doomsday or overly optimistic expectations. I too have a bullish and bearish scenario. I favor the bullish scenario, but I’m not married to it.

I wrote in the June 29 Profit Radar Report that: “We will give the market some space to get itself together and wait for either a move above the 3,950 zone (red bar) or below the 3,720 zone (green bar).

The S&P is still stuck in this zone, and it’s ‘watch and wait’ time as long as it stays stuck.

Now, the more important invalidation level for the most bearish option is not the red zone, it’s a different zone, and it must be cleared to take the doomsday option off the table (I’ve highlighted this level in the Profit Radar Report).

One positive study was featured in the June 19, Profit Radar Report. It showed every time when only 2% (or less) of NYSE-traded stocks closed above their respective 50-day SMA and only 12.8% (or less) above their 200-day SMA. There were 29 signals confined to 5 clusters.

In general, most sentiment and breadth-based studies project at least a short-term bounce while economic indicator-based studies project poor longer-term forward returns.

The best thing to do in a market like this is to look at the facts and don’t get carried away by the media’s attention grabbing coverage.

On a different note, I mentioned in the June 19 Profit Radar Report than inflation may well take a pause for a couple of months.

Since then, prime ‘inflation trades’ (assets that have benefit from inflation fears) have taken major haircuts.

EWZ (Brazil ETF), DBA (agriculture ETF), UNG (natural gas ETF) have suffered heavy double digit losses, gold and silver were summoned for a meeting behind the wood shed and even king oil is down. Many of those assets are over-sold, potentially ready for a bounce.

Continued updates and comprehensive, fact-based, out-of-the box analysis (and the invalidation level for the S&P 500 doomsday scenario) are available via the Profit Radar Report

The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.

Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”

Is it Time to Buy?


Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on May 26, 2022. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).

Is it time to buy? Considering the financial/economical/political backdrop, that’s a bold question. The headlines below probably reflect investors angst:

– WSJ: Stock market bottom remains elusive despite deepening decline

– Fortune: It’s looking a lot like the dot-com crash again

– IBD: Market correction worsens as ‘hard’ reality sets in

– WSJ: Conditions are ripe for a deep bear market

Sometimes things are soo bad, it’s worth taking a stab at buying some deeply over-sold stocks/indexes.

Recent Profit Radar Reports featured a number of deeply over-sold and over-hated companies worth a flyer. One of them is one of the largest company in the world, down over 45% from its all-time high, trading below it’s pre-pandemic price tag, and resting at major support.

No, stocks are not out of the woods, but many are at an inflection zone. The odds of a bounce here are better than they’ve been in months.

Yesterday’s Profit Radar Report stated that: “The S&P 500’s close back within the trend channel and above the descending trend line is a short-term positive.”

The DJIA chart sports one reason to be bullish that no one is talking about, but has been infallible over the past 13 years. Can you see it?

It’s said that fortune favors the brave, and perhaps now is the time to be brave. Fortune, or better success, for certain does not favor the ignorant, and now is not the time to be ignorant (not being ignorant also means to see the potential down side risk despite the up side potential and protect against it).

The Profit Radar Report looks at all the facts without bias and says it how it is. This includes the reason to be bullish (or at least postpone turning bearish) on DJIA and the over-sold and over-hated mega cap stock at massive support. Find out now and sign up for the Profit Radar Report

The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.

Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”

Are Things Bad Enough to be Good?


Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on May 12, 2022 If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).

The S&P 500 reached the 4,000 zone this week, which has been our potential down side target for a while (April 13 Profit Radar Report). The area surrounding 4,000 was an inflection zone where a bounce would become more likely.

Since the S&P did not react to this support zone, price can slice lower into our next target zone. 

Down side momentum picked up and breadth has turned horrible. Is it bad enough where it’s actually good for stocks?

I’d like to share some stats on how the S&P 500 performed in the past when breadth was as bad as last week. This is from Sunday’s Profit Radar Report:

Another bruising day dropped the S&P 500 right into the 4,000 zone. At the end of the day, the S&P fell 3.20% with only 11.83% of NYSE-traded stocks advancing (on only 7% of volume, based on preliminary data). This followed Wednesday’s 3.56% / 5.30% / 11.87% day.

Most breadth readings are at the lowest level since the pandemic low.

Sunday’s PRR highlighted similar down days. 10 of the 25 signals saw extreme clusters (down volume >93% on 2 of 3 days, orange lines). Even though the 2008 meltdown hosted 3 of those 10 signals, 1, 2, 6, 12 month later the S&P was higher 9 out of 10 times.

The percentage of 52-week highs minus low was at -30.90%. The chart below shows the 64 signal dates with more than -30% while more than 12% from the all-time high.

Similar to prior studies, many clusters fall into the ominous years of 1974, 1987, 2008/09, 2020.

The study below has a shorter history (since 2003) but includes more indicators. Again we see 2008, 2020 and 2012.”

What does all of this mean?

Looking at similar ‘events’ in the past provides a gauge of what would be normal to expect in the future.

A 2008-like event is always an outlier event. Based on the data it’s possible, but such an extended meltdown seems unlikely.

While below 4,000, the S&P can continue lower into our next target range. Some indicators are already in ‘it’s so bad it’s good’ territory, and if stocks fall into the target range, we’ll probably buy to take advantage of a bounce. Whether such a bounce could still set new all-time high would be evaluated at the time

Continuous updates and fact-based, out-of-the box analysis is available via the Profit Radar Report

The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.

Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”

Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on May 5, 2022. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).

Yesterday the S&P 500 delivered the biggest one-day pop since April 20, 2020, that’s more than 2 years ago.

Trading and advising through the 2008/09 meltdown I remember that some of the biggest pops happen during bear markets.

And I distinctly remember that the ‘big pop in bear markets’ notion made a comeback in the post-pandemic rally (it obviously wasn’t true then). So what do big pops really mean?

To find out I isolated dates where the S&P gained more than 2.7% with more than 80% of stocks advancing (on more than 80% of volume) while down more than 12% from its all-time high.

There were 50 signal dates since 1970, all of them highlighted below. More often than not those kind of pops occurred going into or coming out of a significant low. But, there were those 2002, 2008/09 instances that preceded a meltdown.

The S&P is down more today than it was up yesterday, so that will be another interesting study for the next Profit Radar Report: What happens after big up/down days? If you want to find out, sign up for the Profit Radar Report.

The April 13 Profit Radar Report stated that: “The S&P could fall towards and even below 4,000 before giving away whether option 1 or 2 is playing out.”

S&P 4,000 is not far away so we should soon find out.

Last Friday, the S&P closed at the lowest level since May 19, 2021. Since last Friday was the last day of April, it was also the publication day of the monthly Sentiment Picture.

The Sentiment Picture consists of two parts:

1) Charting various sentiment gauges (see chart below)

2) Identifying other times with similar sentiment readings and how the S&P 500 performed thereafter.

As you can see, there were a couple of sentiment extremes, but sentiment indicators aren’t as bearish perhaps the media. Is that good or bad for stocks?

The answer along with usually out-of-the-box but always fact-based analysis is available via the Profit Radar Report

The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.

Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”

Historic Price Thrust


Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on March 24, 2022. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).

Last week’s Free Market Outlook discussed how the ‘death cross’ – which triggered on March 14, when the S&P 500 traded 320 points lower – is actually bullish for stocks.

The Sunday, March 13 Profit Radar Report stated that: “In terms of timing, early this week is likely the best window for a low.”

On Tuesday, Wednesday, Thursday, Friday (March 15 – 18), the S&P 500 gained more than 1% each day. There have only been 4 other times (since 1970) where the S&P 500 gained more than 1% on 4 consecutive days. Those 4 times are highlighted below.

So far so good, stocks bounced when they were ‘supposed to.’ The S&P 500 has now reached the bottom of the ‘where the rubber meets the road’ zone.

This zone is likely where we will find out if the bounce has legs or will roll over.

I have a clear preference, which is based on hundreds of indicators making up the Risk/Reward Heat Map.

Here is the latest study to be included as part of the Risk/Reward Heat Map:

It looks at the years where the YTD performance is most similar to 2022 and how the S&P performed those years.

This study was published in Sunday’s Profit Radar Report update.

For a continuous flow of fact-based analysis, sign up for the Profit Radar Report

The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.

Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”

Big Headline Wrong-foots Investors


Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on March 17. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).

It became clear last week that the S&P 500’s 50-day SMA was about to fall below the 200-day SMA, it’s called a ‘death cross’ (I didn’t come up with that), and the media makes a big deal about it. Here are some headlines from Monday (when the death cross happened):

– Bloomberg: Watch S&P 500 falls into ‘death cross’

– MarketWatch: Death cross crystalizes … in a bearish sign for the stock market

– Yahoo Finance: Investors now expect a bear market in 2022

I didn’t even mention the death cross. Why? Unlike catchy headlines, the facts show that the ominous label is downright misleading.

Since 1970, the death cross + (with filter) triggered 8 other times. The added filter requires for the signal to be the first in at least 10 month, and to happen after a minimum loss of 3% over the previous 4 weeks.

The chart below shows the trajectory 40 days prior to the signal (dashed red line) and the performance after the signal.

The astute reader will notice that only 7 signals are shown. Why?

Because this chart was original published in the March 30, 2020 Profit Radar Report. The death cross discussed at the time triggered on March 27, 2020, when the S&P 500 closed at 2,541.47.

The March 27, 2020 death cross triggered an avalanche of bearish headlines, but this timely study unmistakable showed that the death cross is not bearish, but quite the opposite.

Now you know why the Profit Radar Report relies only on facts, not popular opinion (and why the Profit Radar Report has one of the highest renewal rates in the business).

Of course, the so called death cross was in conflict with our assessment. Last week’s free Market Outlook stated that:

The S&P 500 is getting closer to a potential bounce in terms of timing. I would still like to see one more nasty washout day that meets certain requirements to pull the trigger.”

We did not get that nasty washout day (Monday’s drop didn’t meet my requirements), but the S&P 500 appears to have completed a the purple contracting diagonal shown last week … and the S&P has soared more than 200 points since the death cross.

Resistance is nearby, but as long as diagonal support holds, we are looking for higher prices. Gains don’t have to be explosive, but further up side seems more likely than a breakdown (triangle support can be used as point of ruin).

Crude oil: The March 2 PRR warned that: “RSI-2 is over-bought and resistance created by the May 2011 highs is nearby. This is not the time to chase oil.

Oil fell as much as 28.42% from its high, but found support around 95. More important support is around 86.

There are so many unprecedented variables right now, but that’s what people said during the March 2020 drop and pop.

Fact-and-data-based analysis worked during the unprecedented pandemic and has the best odds of working again today.

Defeat analysis paralysis, get an edge on the crowd, and invest based on facts not tales. Sign up for the Profit Radar Report

The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.

Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”

Will High Oil Prices Sink Stocks and Economy?


Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on March 10, 2022. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).

Oil prices have gone parabolic and in California (even at Costco) we’re paying almost $6 for a gallon of gas.

I remember back in 2008, the last time oil soared like this, the pervasive narrative was that rising oil kills the economy (and stocks). This narrative resurfaced in 2011 and 2017.

Do rising oil prices really kill stocks and the economy?

The chart below plots oil prices against the S&P 500 and highlights periods of rising oil. While this did eventually have an effect on stocks in 2008/09, it didn’t matter in 2011, 2017, 2020/21.

Let’s zoom out further and use a rules-based approach to identify similar precedents of rising oil prices. On Tuesday, crude oil closed 60.61% above its 200-day SMA. This is not the highest ever reading, but it’s up there.

The chart below identifies all other times when oil prices traded more than 40% above their 200-day SMA. There are 4 distinct clusters. Around 1990, 1999, 2008, 2020.

2008 was the only instance with an immediate effect (the decline, however, started already earlier and was triggered by the financial crisis).

The first signal in 1999 was followed by one more rally leg to new S&P highs.

Perhaps more interesting is that crude oil prices (gray graph) didn’t do that well after similar situations.

The Profit Radar Report was bullish oil for 2022, but the developments in Russia/Ukraine intensified the move we expected.

Sunday’s Profit Radar Report highlighted resistance (red lines, shown in the first chart) and warned that now is not the time to chase price (crude oil has fallen as much as 20% in the last 3 days).

As regular readers know, I’ve been following the expanding diagonal pattern, which was first published on February 3, again on February 24 and March 3.

Thus far, the pattern (and its down side target) has not been invalidated.

Regardless of the pattern, I warned in the February 6 Profit Radar Report that we are entering a period of extreme choppiness.

This was emphasized again in the February 20 Profit Radar Report, which stated that: “In terms of timing, a low in March would be preferred, which could mean a stair-step decline lower).”

The S&P 500 is getting closer to a potential bounce in terms of timing. I would still like to see one more nasty washout day that meets certain requirements to pull the trigger.

To find out what my S&P 500 buy limit is and to get a continuous flow of fact-based quality research, sign up for the Profit Radar Report

The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.

Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”

Clear Crowd Psychology Signal


Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on March 3, 2022. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).

Last week we looked at the S&P 500 diagonal. This diagonal pattern has kept us on the right path for several weeks and has provided a down side target which has not yet been reached.

This week we’ll look at more traditional technical analysis. 

1) The S&P 500 tagged support around 4,1130 and closed the open chart gap at 4,116.93

2) There was a bullish RSI-35 divergence at the February 23 closing low

3) The S&P 500 is now back a black trend channel resistance

4) The S&P 500 is above the first diagonal resistance line

5) The S&P 500 is about in the middle of the recent trading range

6) There is another open chart gap (and support) at 4,020.63

… And there is war in the Ukraine, inflation, and a pandemic

What does all this mean?

Thus far the S&P bounced from support and is now butting up against initial resistance, nothing unusual. However, price is getting close to invalidating the diagonal (I drew two potential diagonal resistance line, one solid and one dashed, both in purple and descending). The RSI divergence could mean a low (of some sort) is already in.

In other words, all the technical analysis in the world does not provide a big edge at this time. This is not unexpected. I warned in the Profit Radar Report that we are about to enter such a time: 

“Last week’s (S&P 500) price overlap eliminated one clear Elliott Wave Theory pattern. We are left with either:

– A messy pattern

– A mid-term bullish pattern which would soon project another pullback

– A bearish pattern which would project a sizable bounce

Regardless of which path the market chooses, choppiness appears to be ahead. A decline should be followed by a bounce and a rally would likely to be followed by a pullback.”

I don’t pretend to know when I don’t, but knowing when to expect an untradeable environment is also helpful (unless you enjoy getting whip-sawed).

Based on the diagonal pattern, I’ve been looking for overall lower prices for about the past month. This pattern is not yet dead, but it’s getting stretched.

Although it’s difficult to find a low-risk entry at this time, the most promising approach looks to buy if and once we see new lows.

Whether the ensuing bounce will challenge or surpass the prior all-time highs is not clear, but it should be tradeable. 

On that note, crowd psychology is providing very interesting feedback.

At least once a month, the Profit Radar Report provides an in depth look at investor sentiment. Here is what was published on February 27:

The first chart plots the S&P 500 against 9 different sentiment gauges. At first glance this chart probably doesn’t tell you much.

That’s why I take it a step further. That step is to identify other times with the most similar sentiment readings.

How do I quantify ‘most similar’?

Most similar means when at least 6 (of the 9) sentiment gauges fall within a 10% range of current readings. And that’s where it gets interesting.

The next chart shows that there were 7 signal dates where at least 6 of 9 indicators are within a 10% range. All of them occurred near significant lows (2015, 2016) or after a low was carved out (2020).

The sample size is small, but its curiously unanimous.

Regular readers of the Profit Radar Report know that I apply the same approach to identifying precedents to market breadth, volatility, most closely correlated price patterns, etc.

The result is not always as clear (or small), but it gives us an idea of how markets have reacted in the past under similar circumstances (which obviously don’t include Russia, inflation or a pandemic), but it’s still the best we can do.

Continuous updates and factual out-of-the-box analysis is available via the Profit Radar Report

The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.

Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”


Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on March 3, 2022. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).

Last week we looked at the S&P 500 diagonal. This diagonal pattern has kept us on the right path for several weeks and has provided a down side target which has not yet been reached.

This week we’ll look at more traditional technical analysis. 

1) The S&P 500 tagged support around 4,1130 and closed the open chart gap at 4,116.93

2) There was a bullish RSI-35 divergence at the February 23 closing low

3) The S&P 500 is now back a black trend channel resistance

4) The S&P 500 is above the first diagonal resistance line

5) The S&P 500 is about in the middle of the recent trading range

6) There is another open chart gap (and support) at 4,020.63

… And there is war in the Ukraine, inflation, and a pandemic

What does all this mean?

Thus far the S&P bounced from support and is now butting up against initial resistance, nothing unusual. However, price is getting close to invalidating the diagonal (I drew two potential diagonal resistance line, one solid and one dashed, both in purple and descending). The RSI divergence could mean a low (of some sort) is already in.

In other words, all the technical analysis in the world does not provide a big edge at this time. This is not unexpected. I warned in the Profit Radar Report that we are about to enter such a time: 

“Last week’s (S&P 500) price overlap eliminated one clear Elliott Wave Theory pattern. We are left with either:

– A messy pattern

– A mid-term bullish pattern which would soon project another pullback

– A bearish pattern which would project a sizable bounce

Regardless of which path the market chooses, choppiness appears to be ahead. A decline should be followed by a bounce and a rally would likely to be followed by a pullback.”

I don’t pretend to know when I don’t, but knowing when to expect an untradeable environment is also helpful (unless you enjoy getting whip-sawed).

Based on the diagonal pattern, I’ve been looking for overall lower prices for about the past month. This pattern is not yet dead, but it’s getting stretched.

Although it’s difficult to find a low-risk entry at this time, the most promising approach looks to buy if and once we see new lows.

Whether the ensuing bounce will challenge or surpass the prior all-time highs is not clear, but it should be tradeable. 

On that note, crowd psychology is providing very interesting feedback.

At least once a month, the Profit Radar Report provides an in depth look at investor sentiment. Here is what was published on February 27:

The first chart plots the S&P 500 against 9 different sentiment gauges. At first glance this chart probably doesn’t tell you much.

That’s why I take it a step further. That step is to identify other times with the most similar sentiment readings.

How do I quantify ‘most similar’?

Most similar means when at least 6 (of the 9) sentiment gauges fall within a 10% range of current readings. And that’s where it gets interesting.

The next chart shows that there were 7 signal dates where at least 6 of 9 indicators are within a 10% range. All of them occurred near significant lows (2015, 2016) or after a low was carved out (2020).

The sample size is small, but its curiously unanimous.

Regular readers of the Profit Radar Report know that I apply the same approach to identifying precedents to market breadth, volatility, most closely correlated price patterns, etc.

The result is not always as clear (or small), but it gives us an idea of how markets have reacted in the past under similar circumstances (which obviously don’t include Russia, inflation or a pandemic), but it’s still the best we can do.

Continuous updates and factual out-of-the-box analysis is available via the Profit Radar Report

The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.

Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”

S&P 500 Downside Target Triggered


Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on February 24, 2022. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).

Much has happened and yet not much has changed. The February 2 Profit Radar Report (and February 3, Free Market Outlook) pointed out that a standard S&P 500 impulsive decline (Elliott Wave talk for trend conforming 5-wave move) is no longer possible (due to a wave 4, wave 1 overlap), but plotted out the diagonal shown below.

This diagonal, which required a wave 5 down (to new lows and beyond) has been my default ‘blue print’ since first publishing it on February 2.

As the pattern matured, it provided validation and invalidation levels. Two of those were published in the February 16 Profit Radar Report:

– Invalidation level: 4,596

– Validation level: 4,364

The S&P fell below 4,364 last Friday to further validate the diagonal.

As a side note, the yellow line shown is the 18-day SMA. It was plotted because a subscriber had asked if the S&P 500 closing above the 18-day SMA (on February 16) is bullish.

The explanation was a bit longer than you’ll want to read, but the short answer – considering the circumstances – was: No, not bullish.

Back to the diagonal though. In addition to providing validation and invalidation levels, it also provides a minimum down side target.

In fact, it’s not a diagonal if the down side target is not met. Since we knew the minimum down side target from the beginning, we’ve been looking for lower prices … and continue to do so.

In terms of chart support, the S&P tagged minor support around 4,130 today and closed the open chart gap at 4,116.93 (dashed purple line).

RSI-2 is over-sold, which normally causes a bounce, but – based on Elliott Wave Theory – stocks are likely in a wave 3 decline (the most powerful portion of a down leg), which means over-sold readings can be ignored for a while.

Perhaps most importantly though, the minimum down side target of the diagonal has not been reached. Once it is – with or without prior bounce – we are actually looking for a low-risk entry to buy.

The minimum down side target of the diagonal, and objective fact based research updates are available via the Profit Radar Report

The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.

Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”

Will the Shocking January Barometer Come True?


Subscribers to iSPYETF’s free e-mail newsletter receive a market outlook, usually once a week. The market outlook below was sent out on February 10, 2022. If you’d like to sign up for the free e-newsletter, you may do so here (we will never share your e-mail with anyone, just as we don’t accept advertising).

The January 30 Profit Radar Report stated that: “Once the S&P 500 reaches the up side target (4,500 – 4,600) we’ll assess whether new all-time highs or another leg lower are next.”

The S&P is still in that resistance zone.

The S&P already bounced over 350 points from January’s low, fooling many bears (we were not one of them). Nevertheless, the month of January entered history books with a steep 5.25% loss.

Many consider this the January Barometer: As January goes so goes the rest of the year (invented and popularized by StockTradersAlmanac).

Other barometers are the Santa Claus Rally (last 5 days of the old and first 2 days of the new year) and the first 5 days of January.

The table below shows the performance of all three barometers. Red numbers mean that the barometer was incorrect. As the table at the bottom shows, the accuracy ratio, since 1970, is 60% – 70%.

Highlighted in blue are other years, there were 4, when the Santa Claus rally was up, and the first 5 days of January and the entire January were down (as this time around). 3 of 4 years, the S&P ended the year with a loss.

The above data is interesting, but it’s not a key ingredient of my analysis. I calculate and tabulate performance to get an objective read on indicators and barometers (StockTradersAlmanac cherry picks a bit and claims the January barometer has 90% accuracy).

I won’t present a ‘faulty 90% accurate’ indicator to my subscribers. There are some very high probability studies and indicators, and when I mention them they are tested and factual.

Since we’re talking about seasonality, I find the average S&P 500 performance for mid years of the election cycle more helpful. It actually harmonizes with many of the indicators and is available in the 2022 S&P 500 Forecast.

QQQ bounced from the support outlined weeks ago and is now approaching noteworthy resistance.

In summary, most indexes have reached resistance which could spark a pullback, the ‘messy’ bearish option outlined last week is still possible.

Continuous updates, the 2022 S&P 500 Forecast and out-of-the box technical and historical analysis is available via the Profit Radar Report

The Profit Radar Report comes with a 30-day money back guarantee, but fair warning: 90% of users stay on beyond 30 days.

Barron’s rates iSPYETF a “trader with a good track record,” and Investor’s Business Daily writes “Simon says and the market is playing along.”