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TVO Market Barometer 7-23: Are we headed to new highs or taking a breather?

The low volume consolidation continued for a second consecutive day across the indices on Monday. Any bears that failed to heed the warning (Our Next Day Move said UP last Friday) and didn’t take profits at the open, were soon left behind as markets took off.

There was a post recently where someone asked what the short’s version was of the phrase “It’s not a loss if you don’t sell.” This seems to imply that going short is the opposite of going long, but anyone who’s been a bear long enough knows that if you don’t cover quickly, “It’ll be a loss no matter what.”

While our short-term Heat Gauge has been showing a tight consolidation range recently, both of our longer term oscillators have shifted direction. IO is now headed towards positive values, while TVO is going the opposite way.

In other words, retail investors are piling on while big institutions are getting ready to take a breather. And when the “late to the party” folks finally show up, that’s the real cue for the bears to get in on the action. When that time comes, though, most of them are just too busy becoming bulls to notice. -MD

Sentiment: EAGER – Markets are in accumulation mode and big institutions are buying at a slow and steady pace.

Volume: -8% – Today’s volume was lower than the previous session.

Real Feel: BALMY – Bears were in control of the session with considerable buying under the surface.

Cycle: OVERSOLD I – Retail investors are uncertain and very light in their holdings.

Portfolio: BUY – The market is healthy and it’s a good time to contribute to long-term investments.

Next Day Move: SIDEWAYS - The probability that SPY will close positive in the next session is 54%.

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