12/29/22 Bear Trap Exposed


Initially, Markets rose premarket … but quickly gave up the early gains and opened flat.

At the open, a surge of buyers pushed the markets higher and then … disappeared.

Afterward, the markets fell steadily through the day.

All 4 indexes closed deep in the red…

  • Dow Jones -1.1%
  • Nasdaq -1.4%
  • S&P 500 -1.2%
  • Russell 2000 -1.5%

Sector Round Up

All 11 sectors ended Wednesday in the red too.

The biggest losers…

  • Energy (XLE) -2.2%
  • Technology (XLK) -1.6%
  • Real Estate (XLRE) -1.6%

Losing the least…

  • Financials (XLF) -0.4%
  • Healthcare (XLV) -0.7%
  • Consumer Discretionary (XLY) -0.8%

A clear reason for the selling is hard to pin down.

Some home sales data came in well below expectations, but that didn’t seem to be the defining factor.

The volume was light. It’s more likely that buyers simply lack conviction heading into the end of the year.


The VIX held below the key level of 22.5. The fear needed for a massive selloff isn’t there … yet.

VIX Daily Candles – Chart via thinkorswim

Our other signals suggest overly bearish bets could be setting a bear trap.


2023 is now 2 trading days away.

3 of 7 days of the “Santa Rally” are in the books. At yesterday’s close, the S&P 500 is down 1.0%

  • The average return for the Santa rally is +1.3%
  • It runs through January 4th


*Low Float
^Open Position

*EVER support at $12
*NINE on watch
PDSB support at $10
CABA support at $7
SMMT support at $4.50
TERN support at $9
ORMP support at $10
ORIC support at $5
ETNB support at $10
GLYC support at $2.50
^CROX support at $100
^PRQR on watch
VKTX on watch
WVE support at $5, resistance at $6.50
CPRX support at $18
ARDX support at $2
GOTU support at $2.50

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