The Shakedown 7-4-25

by Shake P
We are back with the Sunday Team Videos this week. The call will be our standard time, 1pm Pacific, 4pm Eastern, and 9pm Europe time. Bring your charts we will have lots to discuss!
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Markets closed at all time highs once again as stocks continue to pump higher in this incredible market run. We are seeing signs the market is beginning to overheat and could be ready for a consolidation or a pullback soon. 
 
I note below the overly bullish positioning that we can see in the Put/Call chart with trailing 5 day readings closing at our lowest, or most bullishly positioned investors all year. We know pullbacks come from these type of scenarios.
 
I also note the Fear and Greed index closing in the "extreme greed" section for the first time. I don't put a ton of weight into this, but when we go from a reading of "3 - extreme fear" in mid April to a reading of "78 - extreme greed" in late June, you have to be aware of the backdrop.
On the contrary we are entering one of the strongest periods of the year in July, which I note below fear/greed. We can still continue to run off the seasonality but if we have another few weeks of this aggressively bullish behavior, we should have some caution.
I note the NAAIM index below the SPY/QQQ daily charts to further explain the current status of positioning. We want bull markets to climb a wall of worry to give us the greatest gains, has the wall disappeared?
 
I believe the market wants to trend a go a lot higher, it will likely need to workout these overbought conditions to do so.
 
There are lots of charts still setting up which I note below. When the market has huge gains in the last 8 of 9 trading days, there will always be lots of setups. Understand the environment we're in and how we can still run -- but caution should be permitted at these levels for new risk. If I take trades this week, I will likely trim new positions into strength more-so than usual. For current swing trades we're still holding - just stick to the rules and follow the EMA trail gameplans.
 
 
 
 

NAAIM Exposure Index

The NAAIM Exposure Index measures the average equity exposure of active investment members (members of National Association of Active Investment Managers - NAAIM). This reflects how aggressively or defensively managers are positions on a scale from -200% to +200% as it includes leverage. A reading of 75, for example, means managers are 75% long equities. This serves as a sentiment and positioning indicator. Extreme readings can serve as local bottoms and tops with below 30 readings signaling overly bearish positioning, often seen near market bottoms. Readings of 100+ signal extremely bullish positioning and can signify local tops in the market.

Last week we closed with a reading of 99.3, suggesting positioning is getting overly bullish. 

 

The last 4 times we closed with a reading over 100, it lead to a market pullback as you can see in the 3 charts below.

 

March 13, 2024

March 17, 2024

July 3, 2024

December 11, 2024

 

This does NOT mean to sell all your stocks Monday in the slightest. We want to be aware of what part of the cycle the market is in. When positioning gets to these bullish of levels -- there tends to not be much more juice left in that current run. It doesn't mean a change of trend is definitely going to occur. But it does mean you should be careful about loading new risk in the weeks to come.
 
 
 

 
Economic Data This Week
 
Upcoming Earnings
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

CRCL Long
 

CRCL has been the hottest name in the market since it debuted. It finally has pulled back into its 5 and 10 EMA support. This entry is an EMA reclaim. We can see in the hourly chart how tight the name is trading. We know how explosive the name moves when it breaks out. Looking for an entry up through $192.50 Friday's high or $194 the resistance high. If this goes Monday morning I will use Friday's low as a stop location below $181. If triggers later in the week will assess recent action on hourly chart - but likely give to base low at $171.50. Understand this is as high beta as high beta gets -- I would look to heavily trim into a strong breakout move understanding where the market is at.

 

Trigger: 192.50/194

Stop: $180.80/171.49
Target: $220-260+

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