How Do You Get Those Momentum Traders Back In The Market To Once Again Start Thinking About New All Time Highs?

Benzinga

Marc Chaikin is a stock analyst and Founder and CEO of Chaikin Analytics.  #1 Morning Stock Show To Get You Ready For The Stock Market Open, PreMarket Gainers, Earnings This Week, Economic Data & More!  Benzinga PreMarket Prep 8:00AM ET- 9:00AM ET BenzingaTV on YouTube.

Transcript

00:00 So you've got a lot of these momentum traders,

00:01 momentum has broken.

00:03 How do you get those momentum traders back in the market

00:08 to once again, start thinking about new all-time highs?

00:11 - You've got to go through levels,

00:13 but also when you're in a situation

00:15 where everything is oversold,

00:17 I start to look at the sentiment indicators

00:19 and the CNN fear and greed index is an extreme fear.

00:23 So my point is-

00:25 - Is it though?

00:25 Like, and I challenge, I was just having an argument.

00:28 - Oh, it is.

00:29 It, and then the indicator is really a poor indicator

00:32 because I'm not feeling extreme fear out here.

00:34 I've been through extreme fear.

00:35 I've been in this market for 23 years.

00:37 Extreme fear, financial crisis.

00:39 Extreme fear, obviously when we had the COVID shutdowns,

00:43 those are extreme fears.

00:45 The VIX is at 18.

00:47 I mean, this is an extreme fear.

00:49 - Well, it's extreme fear-

00:50 - VIX at 27.30, that's-

00:51 - Extreme fear in the bond market, Dennis, that's-

00:54 - I'm just saying like, even looking at that though,

00:57 like with equities holding up as well,

00:58 this doesn't feel like it's an extreme fear market.

01:01 I still hear half the analysts coming on CNBC

01:04 talking about a soft landing.

01:06 I mean, once, so I'm just challenging

01:08 how they're calculating that

01:09 because we don't know what goes into the CNN metrics

01:12 to figure out-

01:13 - Yeah, we do.

01:13 No, we do.

01:14 It's- - Well, what is it?

01:15 - It's published.

01:16 Oh, it's advanced decline lines, new highs,

01:18 it's bonds versus stocks.

01:20 It's very transparent.

01:23 - I'll say right now, it's wrong.

01:26 We are not in extreme fears.

01:27 I've traded and day traded this market,

01:29 made millions of trades,

01:30 not like a million dollars worth of trade,

01:32 I've made millions of physical trades in this market.

01:35 This market is not an extreme fear market right now.

01:38 It's not even close.

01:39 So that CNN indicator, whatever they're putting in there,

01:42 there, it's just not right.

01:45 - So the reason I bring up a sentiment indicator,

01:48 which I don't normally rely on,

01:50 is you're entering this seasonal period

01:52 where markets are expected to bottom.

01:57 October 4th through the 7th is my best guess.

02:01 You have broken the lower volatility bands.

02:04 You had a very heavy volume day in the S&P.

02:07 So my overall thing is, if you're a trader, sure,

02:10 sit on your hands and let the market come to you.

02:13 If you're an investor, don't give up your core holding.

02:17 So you gotta always know who your audience is.

02:20 So for me, if you're an investor and you have some cash,

02:24 look for opportunities.

02:26 They still exist in the construction stocks like Fix and EME

02:30 and some of the smaller cap names.

02:32 There are some tech stocks like Nutanix

02:35 that have popped up on my radar screen,

02:38 an old favorite that's acting very well.

02:41 So there are special names that you can buy

02:44 if you're talking about the big indices, sure.

02:47 But one thing to notice is the equal weighted S&P

02:51 broke down a long time ago.

02:54 It's leading the cap weighted or normal S&P by about a month.

02:59 So that does speak to what you're experiencing.

03:05 It's just that traders have left the market.

03:08 The bids are out, are gone.

03:11 But that's also a level of fear that is not apparent

03:16 if you're just looking at the S&P 500,

03:18 but the equal weighted is really doggy.

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