“…Flip More Burgers You Lazy…”

We still believe this is a bear market, but we’re going to respect today’s reversal because the early bad was so bad that to come back from that abyss says there should be some follow-through on the upside. But we still believe this is a bear market. And we’ll get to the quote in our title shortly.

Here’s what we saw today:

1. NYSE New Lows were 792 today, the highest total since 805 were recorded on Mar 23, 2020.
2. NASDAQ New Lows were 1755 today, the highest total since 1937 were recorded on Mar 16, 2020. As you can see in the NASDAQ New Lows chart below, except for the March 2020 cluster of high readings when there were 6 days of at least 1034 New Lows today’s 1755 certainly qualifies as near-term capitulation.

1. At today’s intra-day low, the Russell 2000, which had been the worst of the major indexes coming into today, was down -21 ½% from its Nov 8, 2021, high but then staged a 5 ½% rally (after creating an intra-day double-bottom) to close just off of its intra-day high. If it had closed at its high for the day it would’ve put in a Hammer Candlestick which would’ve likely made the call for more upside more likely, but the almost Hammer (not to be confused with Thor’s Mjolnir) Candlestick is good enough for government work.

We think a rally can take the Russell 2000 back to its breakdown point of 2100 – 2120 where it’s going to run into a lot of resistance and downward-sloping 50-, 100-, and 200-day moving averages. We want to sell 2100 – 2120. Today’s intra-day low of 1931 is the stop.

1. Similar hammer-esque price action occurred for the S&P, NASDAQ, NDX, and DJIA. Please remember that while each of these indexes, and the Russell 2000 above, are oversold on a daily basis only the RTY can be considered oversold on a weekly basis and none of these indexes are oversold on a monthly basis. In fact, they’re all still historically overbought.

1. The VIX traded to nearly 40 reflecting, as did the 1755 NASDAQ New Lows, a measure of near-term capitulation.
2. Bitcoin also staged a similar type of a bounce / rally / reversal. We even heard today that the cryptocurrency’s action was the catalyst that helped turn equities. That might very well have been the case, but technicals for Bitcoin are worse than they are for any of the equity indexes mentioned above and sentiment for it remains as hubristically complacent as it was back in November 2021 when it was first coming off its fake breakout. So, we want to sell rallies here, too. Resistance is at 40000 and support is still at 30000, but we’re not confident it holds.

But paying attention to the Twitter musings of Nayib Bukele, the President of El Salvador, is an effective way to get a sentiment read on Bitcoin. Under Bukele’s direction El Salvador has adopted Bitcoin as legal tender and he has been public about his “buy the dip” forays into the crypto-verse. President Bukele, even more than Michael Saylor, provides all the sentiment insight we need to get a handle on where investors stand on Bitcoin. For example, today he tweeted the following. Because this is a family publication, we’ve chosen to omit his exclamatory profanity, but you get the point.

Incidentally, the WSJ’s Mary Anastasia O’Grady had an opinion piece on Sept 12, 2021, on the El Salvador – Nayib Bukele – Bitcoin troika entitled, “El Salvador Runs a Bitcoin Scam.” You can read it here.