Each and every drop is finding buyers, which is bullish no matter how one looks at it. But every new all-time high finds sellers and has caused massive drops, which is not bullish, no matter how one looks at it.
The fact that a majority of the points being made on the upside, are being done in overnight trading when participation is very low, is somewhat disturbing. If everything was as rosy as the media wants us to believe, then why must all the work be done when there is almost no volume? Once the cash markets open, volume disappears and we either go sideways or grind a little higher-or volume picks up and we drop.
That is NOT an efficient market and one must take these moves with a grain of salt. As we have seen over and over again, the minute we start to hear “this market just won’t go down” is exactly when it goes down. For the most part, since September of 2014, each “new all-time” high has lasted no more than 7 days, before seeing a majority of the gains given back.
Once everyone “believes” the SPX is breaking out and jumps on the long side band wagon, the smart money switches to sell mode and provides the retail trader with the shares they are seeking. According to Woody Dorsey of sentiment timing, there is a black hole drop pending in the 3rd quarter of 2015. The last “black hole” drop call he made, was for September 2014 and the SPX dropped 200 points on the exact date he predicted 1 month before. His track record speaks for itself and marking the 3rd quarter on your computer may be wise.
For now-sentiment has reached extremes and expecting the “new all-time highs” being made as I type, to last, is not a great trading strategy. Being we could head into holiday mode and drift sideways-expecting this breakout to last has proven the wrong strategy since September. Woody has identified the next major turn date-which is not that far off. So be careful here.
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