D for Distribution, 24 May 2023

🖼 Daily Technical Picture 📈

"D is for Down
Like the Market today
D is for Distribution
We are on our way"

➤ Equities fell back into the recent consolidation. As discussed in yesterday's note, the price action now favours the bearish view. Price tends to fall to the bottom of the range.

➤ Assuming we are in the Distribution phase, the path lower can be abrupt or staggered. The abrupt case sees prices shoot straight through and below the low of the consolidation. The speed that happens displays the urgency of Sellers.

➤ A staggered path will see re-tests with prices briefly bouncing higher along the way down. It normally starts with the re-test of the high of the range. Each time the re-test will fail and prices fall further. It is at a lower speed with less urgency.

➤ Given the narrow range of the consolidation, it would only require a couple of large down days to find the bottom of the range. I'm not expecting a slow grind whatever path the price takes.

➤ Interestingly, I have received a buy signal and this has been dutifully executed. It is a small position to play the "re-test". Incidentally this hedges out the pre-existing small short position. Overall the portfolio is fairly neutral.

➤ Conclusion: 🐆 The Distribution can only be confirmed after the fact. i.e. price breaks below the range and keeps falling. Anything before that is just conjecture.

EQUITY TREND:

⦿ Short-term (weeks) - UP
⦿ Medium-term (< 6 months) - UP
⦿ Long-term (>6 months) - DOWN