IS THIS THE START OF THE STOCK MARKET BUBBLE BURSTING?

To gain an edge, this is what you need to know now.

The Bubble

Please click here for a chart of  S&P 500 futures (ES_F).

Note the following:

• The chart is of futures because institutions use futures when they quickly want to get in or out of the market in size.
• This question would have normally been addressed in the Monday Morning Capsule.  The question is being addressed briefly now in lieu of the usual Afternoon Capsule because of the large number of emails from subscribers.
• To get a sense of the market timing, your best resource is ‘Protection Bands and What To Do Now?’ section in the Morning Capsule.   Please carefully review this section in today’s Morning Capsule.   This section uses a large number of complex inputs in 10 different categories to provide you with the final answer that is actionable.  To see the 10 categories, please click here.
• The chart shows Arora signal to short sell QQQ right before the present market drop.
• The chart shows the trend line. Note that the trend line is still intact.  The trend line will have to be decisively broken before there is a serious concern.
• RSI shows a slight divergence. In plain English, this means that RSI was trending down while the market was trending up. A sharp divergence is of concern but a slight divergence is not of concern.
• The chart shows that the volume is not high.  This indicates that there is not excessive selling.
• Please pay attention to smart money actions.  Note that lately, smart money has been selling into the strength. Also, note that we have been taking profits on a number of short-term positions.
• The VUD indicator is the most sensitive measure of net supply demand in real-time. The orange represents net supply and the green represents net demand.
• The VUD indicator is the most powerful indicator you should pay attention to.  Today the VUD indicator has alternated between orange and green with neither supply nor demand dominating.
• Our call has been that this stock market is in a bubble but the bubble is likely to get bigger.  There is no change in that call.  Shallow corrections are part of the game.  At this time the plan is to buy a shallow correction.
• Note that February is coming. We have previously written that February is a weak month in a post-election year.  In 2001, the stock market experienced a major drop in February.  However the first of the month will bring new blind money.

Money Flows

The momo crowd money flows since the Morning Capsule are mixed in that they are🔒 (To see the locked content, please take a 30 day free trial).

Smart money flows since the Morning Capsule are 🔒.

Short squeeze money flows are 🔒.

A Special Note To New Subscribers

Note the smart money behavior.  Smart money tends to sell into strength on strong up days.

New subscribers should consider adopting smart money’s  way of investing and trading.

Sentiment

Sentiment is 🔒.

Sentiment is a contrary indicator at extremes.  In plain English, this means that when sentiment becomes extremely positive it is time to sell and when sentiment becomes extremely negative it is time to buy.

Gold

The momo crowd money flows in gold are 🔒 since the Morning Capsule.

Smart money flows are 🔒 in gold since the Morning Capsule.

Oil

The momo crowd money flows in oil are 🔒 since the Morning Capsule.

Smart money flows in oil are 🔒 since the Morning Capsule.

Buy Zones And Buy Now Ratings

🔒

Nibbling

🔒

Close

There appear to be buy on close orders.

There is merit to watching the pattern of market on close orders as they represent the day’s dominant net cumulative activity  by many professionals and funds.