E Market Briefing For Monday, Feb. 11

Running into a brick wall of resistance in early February, the S&P spent a few days probing the 200-Day Moving Average, after 'nudging-above' the target zone we establish for this market (from the forecast S&P 2300-2400 lows; to the 2600-2700 resistance area, which I termed a 'congestion zone') all the way back in Christmas week.  


Throughout January I suggested that ideally the S&P (and even better for Nasdaq) would nudge higher into this area, and probe above S&P 2700; but not reach 2800, at least not on this phase. 

Last year I warned investors of the dangers of buybacks (providing primarily a form of additional executive compensation for insiders who were selling at record rates); of passive investing taking investors eyes off of actual stocks; and the concentration in Index trading, ETF's and algorithmic system styles, which actually detract from an investor (or analyst) being up-to-speed on the actual workings of the economy or individual stocks.  

Recently there has been more understanding of impacts from approaches of this type; however it's coming 'after' the forecast drubbing during 2018 most managers suffered, for failing to use 'analytical logic' to recognize what from my view (as you know) as a blow-off cyclical top in late January of 2018.  

My viewpoint was that we would have a break; and a series of alternating (a term 'rinse & repeat' was used) moves, with 'sell the rallies' being operative as a tactic for serious investors to build liquidity and prepare for better entry spots later-on. We particularly identified FANG-type stocks as overpriced.

This matters; because we indicated a 2nd 'crash alert' at September's end, and on October 2nd called for a break 'then'. Got it; and stayed bearish for the unwinding until the first 'scaling-back-in' (nibbling not noshing) into what I called an 'orthodox liquidation phase' finally appearing just ahead of what was not just Christmas Eve's low; but as stocks would start settling in 2019.

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