Are We Seeing Buyers Exhaustion In The Stock Market?

Benzinga

Derrick Oldensmith, Senior Trader and Managing Supervisor for T3 Trading Group.

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00:00 Feels like buyer exhaustion happening here a little bit.

00:02 I mean, we've run a long ways here, Derek.

00:04 And you had some good calls when you were on the show

00:06 a couple of weeks ago.

00:07 You were leaning on the bullish side.

00:09 I mean, we still set up well into the end of the year,

00:12 but we've got a month here.

00:13 I feel like we're due for a little healthy pullback.

00:16 What are you thinking?

00:17 - Yeah, so this month of November

00:19 has obviously been incredible.

00:20 On the last day of October,

00:23 I got probably the most long I've been in two years.

00:26 It worked out really well.

00:27 And in a relatively short period of time,

00:29 for at least for me, for the way that I've traded,

00:32 on Wednesday last week,

00:34 I got really fairly heavily net short.

00:38 So that's a pretty big switch for me.

00:41 I'm not looking for a full reversal of the November move

00:46 or anything like that.

00:46 I just think that this market

00:48 got a little bit ahead of itself.

00:50 There was a lot of bullish flow

00:52 throughout the entirety of the month.

00:54 It seemed like Wednesday morning,

00:56 first of all, we had NVIDIA report earnings

00:58 and that earnings report was stellar

01:00 and the stock couldn't go up on it.

01:02 For me, I've seen this for years.

01:06 When stocks can't continue on good news,

01:09 that's usually a signal of some sort of buyer exhaustion,

01:12 like you're saying.

01:13 At the same time, we had that very heavy run up

01:16 for about 15 minutes on Wednesday morning

01:18 that to me seemed like short-term upside capitulation.

01:22 This is all happening as the market flows

01:24 that have been so supportive for the month of November,

01:27 while they're still supportive,

01:28 they're significantly less so.

01:29 We've seen the CTA funds go from net short to net long.

01:34 Goldman's saying it's the largest month of buying for CTAs

01:38 in the history of their data set.

01:40 We do still have some vol control fund buying

01:44 and systematic flows that are coming into the market.

01:46 The buyback machines are still on

01:48 for the month of November here for a lot of stocks.

01:51 But at the same time,

01:52 you're looking at a heavier pension rebalance.

01:53 This market's had a huge move.

01:55 We got really extended.

01:56 So while I would say more intermediate timeframe,

02:00 probably throughout the rest of the year,

02:02 I do remain bullish on a little bit of a shorter timeframe

02:05 as we're trying to get through this week.

02:07 I think some more correction,

02:09 whether that's through time or prices,

02:11 yet to be seen, just makes a lot of sense.

02:14 A little bit of a pullback

02:15 that maybe can create a higher low,

02:16 a pullback to upper 440s, 450 in the SPY

02:21 after we run from 410 to 460.

02:26 I just think makes a lot of sense here.

02:28 And that's what I'm trying to be positioned for

02:30 and what I'm trying to be patient for right now.

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