Taylor Horton
Markets are showing a potential bearish divergence with the potential to move lower. Taylor goes into detail with his Bear vs Bull Analysis.
The financial market can sometimes feel like a battleground, with the bulls and bears constantly jostling for dominance. In this article, we’ll dissect the latest market trends and dynamics, and see what these might mean for traders and investors alike.
The market has recently shown some notable changes. A mere half-hour after the market closed recently, it became clear that the bulls are in a precarious position. The big three squeeze momentum, which started to decline in late July, is now on its third day of a short squeeze. What’s more alarming is the recent close under the 50 SMA. This means, for the first time since May, the bears have taken a substantial lead with a score of three, leaving the bulls trailing at zero.
For anyone who has been tracking this since the market’s bullish phase, this signifies that the bulls now have no solid ground. Gone are the days of riding on robust structure and momentum; now, it seems all they have is hope.
To put things in perspective, a heat map was introduced that scores the bulls and bears. This map is especially useful to determine control dominance from a weekly to a two-minute chart. For the S&P, a magenta coloring indicates that the bears are firmly in control, dominating the two-day chart all the way down to the two-minute chart.
Similarly, bearish control spans from the two-day chart down to the two-minute chart for the cues. A closer look at small caps and the RSP (equal weighted index) reveals a slightly different story. While the bears rule the daily to two-minute charts for the small caps, the bulls control the weekly and three-day charts for the RSP.
Considering individual stocks, both Tesla and Apple are swamped in magenta, indicating bearish dominance. In contrast, Microsoft mirrors Apple, while Amazon maintains a robust structure, despite a generalized bearish ambiance when examining the S&P and the cues.
The underlying message here is caution. If the S&P and the cues mirror Patrick Star in their bright pink state, it’s a signal to tread carefully when considering upward trades. For now, the data seems to be suggesting a preference for short trades, driven not by personal bias, but by the clear signals of the indicators.
Currently, in the Mastery, there is an ongoing short on McDonald’s, evidenced by the prominently red A+ label. Another stock on the radar for potential shorting is AMD. It displays several neutral squeezes across different time frames, with the daily squeeze indicating a sell signal. Given the risk-reward assessment, shorting AMD seems like a plausible move.
Revisiting the theme of small account trading, trades like the one with AMD are reminiscent of how a small account was grown from $2,500 to $25,000 in just a few months. The strategy employed was aggressive position sizing but honing in on the trader’s edge: the squeeze and the sell signal.
For those interested in small account challenges, a new one is brewing. Aimed at Mastery participants, the next challenge will be a live activity. But the specifics? That’s up to the community. An ongoing poll is trying to determine the target: whether it should be from $2,500 to $25,000, $25,000 to $100,000, or $10,000 to $100,000.
Missed our live session? No worries! Dive into the secrets behind the “Big 3” Squeeze that Taylor hails as the ultimate trading setup. Explore the methods and techniques that position it as a transformative strategy in trading. Whether you’re just starting out or are an experienced trader, this strategy has the potential to redefine your trading game.
As the current scoreboard stands, everything points towards a market where bears are dominating. If the bulls cannot rally and reclaim their territory, we might witness a continuation of the bearish trend, potentially even reaching the weekly 21 EMAs. As with everything in the financial world, the landscape is constantly changing. But for now, caution and vigilance seem to be the orders of the day. Always, thank you for your time and happy trading!
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