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On yesterday's note I recommended listening to the Tesla conference call as they tend to be colorful.  Elon Musk did not disappoint hitting new lows with his antics.  It's been widely reported how he cut off Wall St analysts because the questions were "boring and too dry."  And then spent 20 minutes answering questions from a You Tube blogger who owns a total of 54 shares of Tesla.  The replay can be accessed here.  This isn't the time to antagonize Wall St. when everyone knows they need to raise capital to survive.  Last night, since my wife is out of town, I had control of the remote and I happened to see "Enron The Smartest Guys In The Room" documentary in my suggested list (coincidence?).  The lessons and similarities with Enron are numerous.  Besides all of the many financial holes in both businesses, the CEO's became unhinged on conference calls with the frustration of having to answer difficult questions. Enron's CEO famously called an analyst an "asshole" on a conference call.   A few thoughts... First, I forgot Enron collapsed in just 24 days.  Second, there are calls to replace Elon as CEO as fix but Enron's Skilling left the company and it didn't help.  Third, Elon is the largest shareholder and is highly levered and an unwind of his shares would accelerate the decline (I am sure past Worldcom and Valiant shareholders will agree).  Lastly, Enron was the first mega company (7th largest market cap in US) to blow up after a long cycle.  Once that happened, the focus turned to other companies like Worldcom and Tyco and the egregious CEO compensation (some called it looting).  Elon Musk's reputation last night took a huge downtick with his antics and now we're seeing the repercussions.  

The overall equity market is falling hard today (as has bounced hard off lows) and it could be attributed to some corporate news, currencies, some politics or just a lack of risk appetite after the Q1 good earnings not getting rewarded.  Regardless, I've been steady with my call that lower levels were ahead based on the continued low sentiment, downside DeMark Countdowns in progress, and the downside wave patterns playing out since the top in January.  As a long short hedge fund seasoned pro, I am constantly reminded just how hard it is to get things right.  I'm pleased with the Tesla short down 8% today,  AIG missed earnings badly and also is down 8%.  This is not the time to be patient with ideas not working and AIG was without hesitation removed from the Trade Ideas list.  One must be able to accept losses as part of the job and to quickly move on.  The potential for a significant breakdown from these levels in the market is elevated especially since investors have been conditioned to "buy at the 200 day" and that the "lows are in for the year." 

Notable:

• US Markets - Once again will it hold the 200 day?  Sentiment remains subdued
  
• Hedge Fund Telemetry Trade Ideas - Took a loss on AIG, Added AMZN and IBM as shorts
  
• Tesla - What a mess
  
• Currencies - Relentless move and could get even more extreme
  
• Asian Markets - Hong Kong stuck and that's important since it was a leader
  
• Crude Update - No change - neutral
  
• Gold Update - Slight turn up but has more work ahead to do
  
• Recent Ideas - AMZN, IBM, GE
  
• Some  things I'm watching for potential long ideas - Staples and Qualcomm
  
• Corn - Getting some upside exhaustion signals yet it's a little too early with seasonality
  
• Bond Update - TLT needs to get over the 50 day and the US 2 year could turn bullish.  
  
• 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 at 25%

SPY is now on day 9 of 13 with its downside Countdown.  Nearing previous support levels again.  If this breaks, there is a downside Wave 5 target of 244.24

Nasdaq bullish sentiment is at 32%

QQQ still remains under pressure and has support at 155.76

IWM Russell 2000 now has a green Setup 9 on the downside which cancelled the unfinished upside red Countdown.  The Russell has been a hiding place for many so if this breaks down under 150 the overall market will feel apocalyptic.  

Dow Jones is on downside red 10 of 13 with its Countdown.  

Trade Ideas:  Removed AIG long -8% loss,  Added AMZN, IBM short 2.5% sized positions.  

TSLA gapped down today and is at the April lows.  A break down from here will put it in no man's land.  

Charley Grant at the WSJ has been spot on with his Tesla stories in the Journal.  He posted this yesterday with the EPS estimates for this quarter and how expectations have been taken down dramatically.   When Tesla "beat" the EPS number with -3.35 vs estimate of -3.54 people cheered and the stock actually was up 3%.  

Cathy Wood at Ark Investment loves Tesla and it's one of their largest holdings.  Here's an interview she gave a few months ago. On Twitter last night she applauded Elon Musk for shutting down the pesky Wall St analysts.  She manages real money.  Seriously.   The ETF below I would expect to drop further.  

US Dollar bullish sentiment is at 88% and is in the extreme zone.  It might stay up in this range for a while.  

US Dollar Index has woken up and did not stall with the recent upside 13 and 9.  There is now a new secondary upside Countdown and when the indicators fail the trend is telling you it's very strong.  

Euro bullish sentiment is at 17% and is getting oversold yet it has been lower in the past few years

Euro met the downside Wave 5 price objective and has a similar Countdown.  Keep in mind the positioning in the Euro has been set up very bullish in the COT traders report thus this move lower is working off that overly bullish positioning

GBP British Pound what a move.  Perhaps a little oversold but a bounce will likely be a lower high bounce and further downside after

Hong Kong continues to trade poorly.  There is a new downside secondary Countdown on day 6 of 13.  Support around 30,000ish

Crude bullish sentiment is at 71% and still is elevated

WTI Crude Futures remains neutral.  

Gold bullish sentiment is at 24%

Gold Futures reversing today after the downside green Setup 9.  There is an upside Wave 3 price objective at 1449.  This has had such a tough time trying to break out that I am a little skeptical

Amazon was added back as a 2.5% sized short today with it breaking the lows with this gap up.  

GE was added yesterday and now has a Wave 2 corrective in place enabling the upside Wave 3 price objective of 15.82

IBM was added as a 2.5% short idea although the timing may not be ideal, this weekly chart shows the potential breakdown level and a Wave 3 downside price objective of 113.93.  IBM has bought back a ton of stock ($75B) in the past 10 years by issuing debt and the average cost is 25% higher than the current price.  This is a problem and one concern I have with Apple buying back so much with the stock at these levels.  

XLP Consumer Staples is nearing the downside Wave 5 target and nearly has completed another downside Countdown 13.  

PG now has a secondary downside Countdown 13 with both red Sequential and pink Combo.  I will wait for the downside signal with the sector and then look to buy this best in class stock

CLX hit the downside Wave 5 price objective and is on day 11 of 13 with its downside Countdown

QCOM has a downside exhaustion today and is the most oversold top 10 tech name on my board - 12% below the 50 day.  

Corn bullish sentiment is at 55% and not quite at the peak levels seen every late spring

Corn Futures however did have upside exhaustion signals today so some sort of pullback is likely.  I wouldn't short it with a large position as it typically peaks in June

Bond bullish sentiment is at 29% and still subdued

TLT bond ETF move up but has come back.  The 50 day above will be important

US 2 year has laughed at the DeMark indicators all year but these last few could be worth watching at it nearly hit the upside Wave 5 price objective

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