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Semiconductors are known as a leading indicator for economic growth due to chips are now in just about everything from phones, computers, cars, and of course you can even put a chip in your dog if they ever get lost they can be identified.  Today Taiwan Semiconductor announced earnings which missed and then they guided down expectations from EPS, revs, and margins big time while blaming continued weak demand from their mobile sector.  I've seen a few semiconductor cycles and each one ends with a key product peaking.  Apple is the largest client of TSM as they produce the processors for all of the iPhone models.  It's been widely reported Apple's iPhone sales are weak and this news confirms it.  Usually ongoing reports of weak iPhone demand would see Apple's shares price in this negative news to the downside.  Apple is down today 2.5% and is isn't so far off from all time highs.  This is utter complacency and reliance on Apple's large buyback as the core product is clearly weakening.  This has large implications as Apple is the largest weight in the S&P and Nasdaq.  They report on May 1st and I'll remain short.   Semi's across the board are weak and that could very well be a canary in the coal mine for economic growth.  

On the other end, Amazon reported they have 100 million Prime members and that's just an unreal number that likely will continue to grow.  I'm short the stock and I'm underwater.  As of now I'm going to hold this despite it being unpleasant.  One of the reasons is that retail has been rough in the past quarter with so many companies missing estimates and if Walmart is seeing some weakness, shouldn't Amazon too?  I know there's more to this but I just wanted to briefly put out these thoughts.  

Today's disaster is Phillip Morris down 16% the most since 2008.  Procter and Gamble reported today and the response isn't great and I felt with the large drop their was a probability for a bounce.  I bought PG and CLX recently as defensive longs and today I removed at a loss CLX and will hold PG for now.  The overall market action isn't very good either and we could have seen another lower high form as I've been expecting.   Support levels I'm watching are still some distance lower from here.  I calculated from the April 2nd low the VWAP on SPY at 263.25, QQQ 160.00, IWM 153.75, DIA 242.25.  Breaking those levels will likely see our friends "The Sellers" again.  Lastly, bond yields are lifting on the 10 year while the 2 year yield might be a place to hide with the yield at 2.43%.  

Notable:

• US Markets - Sentiment stalled at midpoint again, potentially another lower high, breadth has been good yet no breadth surge combined with low volume makes this an eh bounce
  
• Hedge Fund Telemetry Trade Ideas - Removed CLX long and Added to AIG long
  
• European Market - DAX should consolidate
  
• VIX Update - Watching for upside over 20
  
• Currencies - USD is exceptionally boring these days
  
• Canary in the coalmine - Tech is at risk
  
• Consumer Staples Update
  
• Natural Gas - Removing long bias
  
• Bond Update - IF YOU LOOK AT ONLY ONE THING TODAY CHECK OUT THE ACTION IN BONDS.  TLT, LQD, 2 Year, 2/10 Yield Curve
  
• DeMark Screens - Daily, Weekly, Monthly upside/downside exhaustion signals within the S&P 1500 and Euro Stoxx 600
  

Here's a link to the Hedge Fund Telemetry market sentiment page with 40 charts of sentiment including equities, bonds, currencies, and commodities updated each day.   

SPX bullish sentiment is at 45% down from 49% and likely down further later today

SPY could be making another lower high

Nasdaq bullish sentiment is at 54% for the second day in a row.  This will be down later back under 50% no doubt with semi's getting crushed

QQQ is nearing the 164 level where it gapped up to on Tuesday.  Use that as first minor support

Cumulative breadth has been good and many people are highlighting new highs.  Keep in mind breadth hit new highs in March right before things dropped.  As the team at Ned Davis said "there hasn't been a breadth surge"  and that combined with the low volume lift matters.  

Dow isn't down that much today likely due to Boeing being flat on the day and the financials in the index up or flat.    

Trade Ideas:  Removed CLX for a 5% loss.  Sizing it at 2.5% contained it as a nick and not stitches were needed.  I doubled up AIG to 5% total size now.  I like the chart on the daily and weekly and considering I am short other financials, it's a balance.  

AIG starting to make a turn after some downside exhaustion signals and completing the 5th down wave.  

DAX consolidation due and should see the 50 day again

The VIX Index has pulled back to a green TDST dotted line and that could be support.  A move over 20 and things will be game on for long volatility  

US Dollar bullish sentiment is at 42% and just can't get moving either way

DXY US Dollar Index completed the green Setup 9 and thus the pending upside red Countdown was cancelled.  I'm neutral for now until something moves in either direction.  

Semiconductors SMH ETF is dropping hard today on the TSM news and is on day 5 of 13 with a downside red Countdown and has a Wave 3 downside price objective of 91.04

AAPL gapped down and is now on day 2 of 13 with a downside red Countdown.  The downside price objective for Wave 3 is 154.57.  The buyback guy at Apple should get a raise.  

INTC hit a new 52 week high and has pulled back.  This isn't the worst chart and it might be a buy in the high 40's.  INTC is the largest weight in SMH so there's that to consider as other semi's look very vulnerable

MU is one that peaked on day 12 of 13 and gapped down on earnings.  MU is another good canary in the coalmine stock to gauge semiconductor demand.  There is a Wave 3 downside price objective of 39.80

NVDA has made a lower high and has a Wave 3 downside price objective of 191.85.  

QCOM is one of my favorite companies but the stock over the years has been only good for short term trades.  Back last summer when INTC and QCOM both had downside exhaustion signals I recommended them as longs.  A few sideways months went by and then the Broadcom takeover news.  When news like this happens I take profits either partial or all.  I was happy to be out of the stock after the news of the government blocking the takeover hit.  As of now it still looks weak and yep, that's due to mobile demand being weak.  

When I have said I don't feel very confident buying into a downside Wave 3 into the 4th Wave let this be an example.  The end of the corrective waves can come fast.  I'm holding PG long still and I'm debating that for the next day.

PM was also in Wave 4 and ta daaa it gapped down to the Wave 5 price objective.  

I've been long Natural Gas and today I am pulling the plug on the long trade.  It just won't go up and I'll step on the sidelines for now

Bond bullish sentiment is at 42% and likely will be down big today with the long end of the curve selling off hard

TLT Bond ETF has been going sideways and had an unfulfilled downside red Countdown.  For the downside 13 to trigger it has to be under 117.91 the close of the 8th red bar.  

LQD ETF investment grade bonds are falling and have more downside potential as it's on day 4 of 13 with a downside Countdown and there is a downside Wave 3 price objective of 110.16.  This is very very concerning and does not bode well for SPX names.  

US 2 year has been making a mockery of the DeMark Sequential and Combo since last September with more failed upside exhaustion signals after another.  Not shown but it's on day 12 of 13 today and within an upside Wave 5 price objective.  

2/10 yield curve is reacting well after the recent exhaustion signals

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