July 21, 2017

Are You Ready for a Pullback? A Few Interesting Statistics That Say, Yes.

It was an amazing day in the market if you are a bear. Not because the decline was anything to write home about, but because the latest daily trend was broken.

The trend – open lower, close higher.

Today’s price action  – open higher, close lower.

Of course, we will need some bearish confirmation over the next several trading days, but I think with the current amount of lopsided bearish indicators in the market the probability of a continued mover is high.

Almost every indicator I follow is now in a bearish state and there are more notable bearish stats from sentiment analyst Jason Goepfert to add to the list

The first is the  Fear Barometer from Credit Suisse.  According to Mr. Goepfert the barometer has nearly set a record, meaning that there is heavy demand for put protection on the S&P 500.  The previous times it hit this level preceded market peaks.

But the stat I found to be the most amazing related to the price action in the behemoth Apple (Nasdaq: AAPL). Goepfert stated that there have been 3 other times in 15 years that Apple stock rallied at least +2% to a 52-week high, then reversed during the course of the trading days to close at least -2% lower. Every time, the S&P 500 declined at least -6.8% at some point during the next month. Moreover, if you just took the 1% reversals in Apple, the S&P would have lost on average -5.2%.

Could all of this underlying bearishness  finally lead to the bull’s last stand?  One thing is certain, we will all know very soon.

I will discuss this much further in the weekend report.

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