🟥 NEW LOW on IWC - Market Commentary

⬇️ IWC NEW LOW
The microcap ETF (IWC) has made a new low. This is not good at all. On the good side we did close up on the day - so we can call this a Rally Day and wait for a Follow Through Day (FTD).

↗️WAITING FOR FTD
SPX is sitting on the 200D Moving Average and Nasdaq s on day 6 of its Rally Day (marketd as RD on the chart). We are waiting for those FTDs in order to get into the action on the long side.

😰FEAR NEEDS TO PICK UP
The VIX like I said in my previous note, to print a picture perfect bottoming action, would need to double its low of 16, meaning a shakeout with VIX jumping to 24 would be a positive sign.

👨‍👨‍👧‍👦 SENTIMENT
Sentiment is horribly bad - which is so negative it could be showing a market bottom. The chart below shows the % of stocks above the 50D (pane1), 200D (pane2) and the VIX (pane3). Only 32% of the stocks are above 200D which is v. bearish. Why we look at this? Because any real bull market would require participation from more than 7 mega cap stocks in order to be a) strong and b) lasting. Otherwise it is a very thin market - which is not healthy.

🚽 FLUSH POSSIBILTY
I am cautious also that because the last couple of days we are seeing dislocations in relationships that are actually correlated *historically*. I am refering to interest, forex, utilities, bonds, commodities and so on. E.g. Oil broke down and the interest rates and the dollar went up. When this has happened historically there are a higher chance of a flush occuring. The probability is stacking but it would be a black swan. For the newbies a flush is a mini-crash.

📅STAY ALERT
REMEMBER We are always 4-5 days away to a new Bull Market. This is the time to keep your eye on the market. Know what the leading RS names are.

Also we are about to enter earning season. Be cautious. My strategy is to never go into an earnings event unless I have enough profit to justify the implied volatility.