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4/2/19
Thomas Thornton

Important note today - Upside exhaustion signals on some major indexes with extreme sentiment

Let me be brief and to the point.  We now have bullish sentiment with equities at extreme levels >80% bulls in the US, Europe, and Asia.  This is what I call a condition.  There are now upside DeMark exhaustion signals on the S&P 500, Euro Stoxx 50, Euro Stoxx 600, DAX, India, China and near on Japan.  Furthermore, the blended global indexes have upside signals today too.  The DeMark signals work as a trigger and when sentiment is at extremes this is a significant development.  Rule of thumb when there are DeMark Countdown 13's a price reversal should occur within the next 10-12 days.  There are still some significant stocks and sector ETF's that have some more days before they get the Countdown 13's.  I find the power in numbers when there are clusters of similar Countdown 13's and when various markets have sentiment in the extreme zone.

I'm usually a little early and ahead of the markets and for sure way ahead any talking head on TV as they are talking about how wonderful things look today.  For further confirmation keep an eye on the PPO monitor to spot more sectors breaking below the 10 and 20 day moving averages.  That will take some more time.  Regardless, this is a dangerous setup that requires ignoring the FOMO and to take down risk NOW.   Lastly, I looked at the VIX today including the positioning which shows traders are set up the most short in 10 years.  What could possibly go wrong?  

US Markets


SPX bullish sentiment is at  86%


SPX daily with Sequential Countdown 13 today.  Important


S&P Futures on day 12 of 13


SPX 30 minute tactical time frame with some Countdowns in play


S&P Equal Weight ETF on day 11 of 13


S&P 100 Countdown's in play now


Nasdaq bullish sentiment is at 91% and it's very extreme


Nasdaq Composite Index with some Countdown 13's


NDX 30 minute tactical time frame with some Countdown's


Dow Jones Industrial Average drifting higher


IWM Russell 2000 lower highs and lower lows pattern?

 
Hedge Fund Telemetry Trade Ideas

Trade Ideas Sheet
Trade Ideas Changes:  DOUBLED QQQ SHORT TO 5% SIZE.  YTD PNL +5.8%.  (I have to sheets here just so I can use a larger font to view on phones)

 
VIX Index Update


VIX bullish sentiment is at 25%.  This should lift


VIX Index building a big base


VIX positioning on day 11 of 13 with Combo which has been pretty good along with the Setup 9's


VIX Futures with another Countdown 13


VVIX volatility of volatility higher lows is a divergence with S&P

 
Stocks I'm looking at today


AMZN getting closer on day 11 of 13


CSX with new Countdown 13's.  I would short this


DRI price flip down.  I remain short


HD with some Countdown 13's in wave 5.  I would short this


MSFT with a new Sequential Countdown 13.  I'm short and OK with this


UPS with some Countdowns which have worked well over the years

 
PPO Monitor - Percentage Price Oscillator

The PPO Monitor is a proprietary monitor developed to force rank Indexes, Sectors, and Stocks.  It ranks top down by strongest to weakest by percentage above/below the 50 day moving average.  Shorter term signals can be seen when the 10 and 20 day moving averages turn up (green) or down (red) which often are followed by the 50 day moving average.  This is useful to watch for historically overbought/oversold percentage above/below the 50 day moving average.  It is non correlated with the DeMark Indicators however we have found upside/downside exhaustion signals often occur when something rises to the top or drifts to the bottom of the monitor - increasing the timing aspect. We share this monitor with clients with Bloomberg Terminals.  An added feature is that each market/ETF can be expanded with each component force ranked in the same way.  A couple other features include price deviation from intraday VWAP (useful for intraday reversals) and new 20 day highs/lows on right side.  Please inquire if you would like to be permissioned to use the PPO Monitor.  

Today's highlights:  Watch for breaks under the 10 and 20 day moving averages in the coming days

 
Consumer ETF's


XLY Consumer Discretionary on day 10 of 13.  AMZN is largest weight so it makes sense


XLP Staples reversing or at least I think it's starting

 
Industrials


XLI Industrial ETF with a Sequential Countdown 13 today

 
Currencies


US Dollar bullish sentiment is at 90% and this is extreme now


US Dollar Index on day 11 of 13.  


Euro nearly new low for the cycle


YUAN watch for weakness


Bitcoin I mentioned the other day that this looked higher and wham there it goes but on day 7 of 9 with Setup.  I wouldn't chase unless I was trading this very tight

 
European Markets


Euro Stoxx 50 bullish sentiment is at 90% and extreme


Euro Stoxx 50


German DAX with Countdown 13's now


Euro Stoxx 600 with Countdown 13's


Euro Auto Sector has helped the major indexes but it's getting late in wave 5

 
Global Markets


Bloomberg World Index with another Countdown 13


EEM Emerging Markets ETF stalled at resistance


MSCI All Country on day 12 of 13 with Sequential


India Nifty 50 with Combo 13 but still a little more to go with the Sequential.  I would take profits if you got this move from February

 
Asian Markets


Nikkei bullish sentiment is at 92% and also extreme like the others


Nikkei on day 11 of 13 with Sequential but has an Aggressive Sequential 13


China A Shares ETF is a sell


China / Hong Kong FXI ETF on day 12 of 13 with Sequential but has an Aggressive Sequential 13

 
Crude Update


Crude bullish sentiment is at 84% and has been in this extreme zone for a while but no trigger to sell


WTI Crude Futures on day 4 of 13 with Sequential.  This could go up and put some hurt into the consumer

 
Coffee Update


Coffee bullish sentiment is at 10% people have hated it for a LONG time


Coffee Futures on day 12 of 13 but the signals have not worked well but maybe this time is the charm


Coffee Futures shows this cut in half since 2016 and there's a Countdown 13


JO Coffee ETF has some Countdown's in play.  I'd like to see a reversal up first around 33.50-34


Short interest for JO is very high at nearly 10 days to cover


Coffee Seasonality could lift soon but then it will FALL OFF A CLIFF if it does lift

 
Bond Update


Bond bullish sentiment is at 73%


US 10 Year Yield should bounce in wave 4 of 5 down


TLT should correct in wave 4 of 5 on the upside


HYG High Yield price flip down

 

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