The Dual Control System: How To Work So Far?

Introduction

On Jun..19, 2023 (Juneteenth Holiday) Dual Control System with SPY (The S&P 500) and the C/C Ratio was set up. Just four days from Tuesday (6/20) to Friday (6/23) passed.

Although it’s too early but this time seems to be very unusual. In a sense, the behavior of the market is completely out of norm:

1) The Market underlying trend is surely Upward, but in every session, the bearish power continuously disrupting, by pulling down persistently, as a Charles Schwab Daily Report and Wall Street Breakfast witnessed.

2) The eight-weeks-old Uptrend has kept its strong footing every week, every day. The question is what are the relisting forces, and how long they remain in the market.

3) As shown in Table 1, the C/C Ratio was 77% on Friday (Jun. 23rd), only 3% from the cap, 80%. If next week the C/C Ratio hit 80% but the market will not settle, I will not be able either sell holdings or buy any new holding. The “inaction” situation will return.

4) readers can update the current Uptrend with Table 1 and Table 2, by the “PPO” approach.

The Focus

The article reviews a Charles Schwab Report and a Wall Street Breakfast:

1) What happened this week,

2) What is expected next week,

3) How to run the Dual Control System with the current Uptrend.

What Happened on 6/23 (Friday)

Ongoing consolidation efforts and global growth concerns affect a down market, induced by a weak manufacturing PMI in major economies, including the U.S.

Today’s retreat in the stock market was broad and orderly. 24 of the 30 Dow components logged declines and all 11 S&P 500 sectors closed in the red. (Charles Schwab Report)

Stocks fell on Friday to wrap up their worst week since March, indicating the market’s three-month rally may have come to an end. Investors were spooked by aggressive central bank tightening overseas.

Business activity in Europe slowed sharply in June, while business activity also slowed in the U.S. but less dramatically than in other parts of the world.

Some of the pullback for the week was also technical in nature, with the S&P 500 hitting resistance levels:

The index last week climbed above the 4,400 points mark for the first time since April last year. After largely trading rangebound between 3,800 points to 4,200 points since January, the benchmark index’s surge from 4,200 to 4,400 has been rapid.

All three major market averages broke multi-week winning streaks: The S&P 500 lost 1.4%, ending five straight weeks of gains, the Nasdaq also shed 1.4%, snapping an eight-week winning streak, and the Dow slid 1.7%, ending a three-week run. (The WS Breakfast)

What is Expected Next Week (6/26 thru 6/30)

We have been in the super bull market [SBM], starting in March 2009 (not a new bull market, starting in Oct. 2022) with the support of the current Uptrend, starting on the end of March 2023.

The severe conundrum in the market reflects the misorientation of the forceful bear-turned bull camp [BTBC] which is completely different from the genuine all-time bull camp [GABC].

The polar difference between the two camps is that the GABC] is unified in terms of the time horizon (an around five years) and the investment direction (in long only and growth-weighted).

The BTBC is divisive on every investment spheres, ranging from (buying, short-selling, and in the immediate/short/long term) to (selecting options, equities/bonds, and their ETFs, doing valuation on value stocks/growth stocks, and setting and managing portfolios), and so on.

In fact, this consummate chaos is the outcome of the wrong pandemic recession and the ensuing wrong bear market, starting March 2020.

The coming week (6/26 – 6/30), the end of the month, the end of Q2, and the end of H1 is the right moment when the SBM marches forward to turn the market angle in the bull’s favor.

How to run the Dual Control System with the current Uptrend

Table 1 and Table 2 reveal the Uptrend had deteriorated a bit, but the Uptrend has been successfully intact.

For the short last week (6/20, 6/21, 6/22, and 6/23) “P” and “m” had 1 “P” and 3 “m” in Table 1, and the Friday votes in Apr. May, and Jun. had 7 “P” vs. 5 “m” in Table 2. Still “P” is much stronger than “m” but also “P” has more Friday votes than “m” by 7 vs. 5.

The C/C Ratio changed as 77% (6/23), 74% (6/22), 75% (6/21), and 75% (6/20), while the S&P 500 Index moved as $4,349 (6/23), $4,382 (6/22), $4,366 (6/21), and $4,389 (6/20).

This is only 4 days record, but you can smell a contrarian favor, by linking two controls, your nose is really outstanding. The settlement days (2) and ACH transfer days (2) are offset. (The settlement days 3 are including the selling day, so actual days are 2)

Nest week I do not expect a good performance of the immediate-term trading but expect a better performance of the Group as the current Uptrend will improve.

Click to enlarge

Concluding Remarks

Readers can update the current Uptrend with Table 1 and Table 2, by the Pen-and-Paper-only (PPO) approach.

When the market nicely holds, albeit the oscillations mount, please do due diligence to sharpen your weapons, mostly with PPO. Do not join comments if any article draws so many ones, say 100 or more.

We, all-time long-only and long term (around 5 years or so) not only sleep well every night, but also win almost every five years, no matter what happens in the future (even though it is not compelling, but boring somewhat).

If you follow my message, you will accomplish what you really want to do. Good luck to each of my dear readers.

Thank you for viewing and commenting.

Reference

Charlese Schwab Daily Report on 23rd, 2023

The report not only well-written but also refrain from being “bullish bias” as well.

Readers may figure out why the S&P 500 Index descent on 6/23 (F), but very slightly. You may grasp why, but don’t go too deep. We may mistake by mixing a correlation and a causation.

It is a tough statistical work to determine whether it is a causation or not.

The Charles Schwab market Report on Jun. 23rd, 2023

The stock market closed the week on a downbeat note. Ongoing consolidation efforts contributed to some of the weakness, although concerns about global growth prospects were another contributing factor. The major indices hit their best levels in the early afternoon trade as a few mega cap stocks recovered from opening losses, yet selling picked up again to interrupt that rebound effort.

Ultimately, the major indices all closed in negative territory with losses ranging from 0.7% to 1.4%.

The downside moves followed a slate of disappointing preliminary June manufacturing PMIs for Japan, Germany, the UK, the eurozone, and the U.S., all of which came in below 50 (i.e. the dividing line between expansion and contraction). Following yesterday’s central bank rate hikes, those reports fueled worries that prior rate hikes may be adversely impacting economic activity, specifically in the manufacturing sector.

Growth concerns manifested themselves in falling commodity prices, the outperformance of the dollar, and sliding Treasury yields. The U.S. Dollar Index rose 0.5% today to 102.91. WTI crude oil futures fell 0.4% to $69.18/bbl and copper futures fell 2.0% to $3.80/lb. The 2-yr note yield fell five basis points to 4.75% and the 10-yr note yield fell six basis points to 3.74%.

Today’s retreat in the stock market was broad and orderly. Decliners led advancers by a greater than 2-to-1 margin at both the NYSE and the Nasdaq. 24 of the 30 Dow components logged declines and all 11 S&P 500 sectors closed in the red.

The communication services (-0.3%) sector saw the slimmest loss, boosted by a gain in Meta Platforms (META 288.73, +3.85, +1.4%). Other sectors exhibiting relative strength included the health care (-0.3%) and financials (-0.4%) sectors. Meanwhile, the utilities (-1.5%) and consumer discretionary (-1.1%) sectors fell to the bottom of the pack.

Trading volume was extremely heavy today, reflecting the reconstitution of the Russell Indexes.

Nasdaq Composite: +28.9% YTDS&P 500: +13.3% YTD Russell 2000: +3.4% YTDS&P Midcap 400: +3.5% YTD Dow Jones Industrial Average: +1.8% YTD (The italics are emphases)

Wall Street Breakfast on Jun. 23rd, 2023

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