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Last year I showed often the Smart Money Flow Index which is calculated by taking the action of the Dow in two time periods: the first 30 minutes and the close. The first 30 minutes represent emotional buying, driven by greed and fear of the crowd based on good and bad news. There is also a lot of buying on market orders and short covering at the opening. Smart money waits until the end and they very often test the market before by shorting heavily just to see how the market reacts. Then they move in the big way. These heavy hitters also have the best possible information available to them and they do have the edge on all the other market participants.

This chart from the peak on January 26th looks like it fell off a cliff, a big one like the Grand Canyon.  Despite all of the calls for the market acting better, sellers still dominate the late day action.  It's worth thinking about when you're making trades throughout the day.  It may pay to go out to looong lunch and come back and make your decisions in the last hour.  Chart is below.

Some other internals within the equity markets are surprisingly not confirming the recent stability seen in May.  A couple below such as new 20 day highs or stocks within an index trading above the 50 day moving average are not giving me any reason to turn constructive on the equity markets at this point.  Today I look at equity markets and some recent stock ideas.  

I sent the Hedge Fund Telemetry Currency Focus email early last night and I want to say thank you for all the suggestions and nice messages.  Be sure to check it out even if you're not a currency trader since it is my belief the direction in the US Dollar will be a key catalyst on every other asset class in the coming quarters.  


Notable:

• US Markets - Sentiment back at the midpoint - a look at some internals that are mixed
  
• Hedge Fund Telemetry Trade Ideas - Added NFLX short 2.5% size with daily and weekly exhaustion signals
  
• European Markets - Extended and nearly exhausted on the Euro Stoxx 50
  
• Small and Micro Cap Indexes - A little upside left on the Small Cap daily and daily and weekly upside exhaustion signals now in play
  
• Smart Money Flow Index - Just incredible
  
• Currencies - USD daily and weekly views
  
• Asian Markets - Nikkei Index very important to watch this close after upside exhaustion with extreme bullish sentiment
  
• Bloomberg World Index and Vanguard International (ex USA) - upside exhaustion now
  
• Recent Equity Ideas
  
• Bond Update
  
• 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 50% again and still is in the last few weeks range

SPY still holding up at the top of the recent 2 week range.

S&P 500 % of stocks above the 50 day moving average is at 62% and improving.  

S&P 500 % of stocks making 20 day highs has not improved enough in the past couple weeks of gains

Nasdaq bullish sentiment is at 44%

QQQ has been going sideways for 2 weeks.  Watch when the closes are below the open.  

Nasdaq 100 % of stocks above the 50 day is at 60% and has made lower highs.  

Nasdaq 100 % of stocks making new 20 day highs is at 19% and divergent with recent price action due to the large mega cap stocks doing the majority of the attribution

Trade Ideas - Added NFLX short again 2.5% size (charts below).  Fins are up on lending news and I expect this to fade in a day or two.  A note - my positioning net short is more than most people can do or follow but if there is one takeaway it is that I am still quite cautious overall.  

Euro Stoxx 50 remains on day 11 of 13 with the upside red Sequential Countdown

UK FTSE 100 had a recycled upside red Countdown and is now on day 12 of 13.  A pullback should occur within the next 2 days.  

UK FTSE 100 % of stocks making 20 day highs is at 62% and it's a 4 std deviation move.  This also should see some moderation as previous spikes have seen pullbacks soon after

Italy is up a little today but this still looks like there is risk here for the Euro Zone

IWM Russell 2000 now has an upside red Sequential daily Countdown on day 5 of 13.  The weekly shown recently has upside exhaustion so perhaps we'll see a little more upside

S&P Small Cap 600 has been quite strong however the % of stocks making 20 day highs is only 40%.  Maybe this will continue to go a little higher.  It just seems strange to me with the recent breakout that this isn't higher.

Russell Micro Cap index daily has both pink Combo and red Sequential upside exhaustion signals now

Micro Cap weekly also has upside pink Combo and red Sequential exhaustion 13's

The daily late last year was throwing off a bunch of upside exhaustion signals that made me take notice of potential market top.  Now the daily has made a new low and is on day 12 of 13 with a red Countdown.  Will this signal mark a turn?  I'll keep you posted but you can just watch how the last hour trades and you'll know.

The weekly back in 2007 started to fall hard and it was a good signal for risk off.  This year has been nothing short of remarkable.  

This was from Topdown Charts and is also remarkable considering the year we've had.  This could be a real problem when this starts to unwind considering a lot of stocks and indexes are off the year highs.  

US Dollar bullish sentiment is at 84% and still in extreme zone

DXY Index has been in wave 3 and a pull back under a 13 day closing low is needed to trigger wave 4 and the upside wave 5 upside price objective.  A pullback in the USD is due

Weekly DXY Index shows the downside red Countdown 13 that took its sweet time after the 12.  This pattern is either starting upside 5 waves or will fail under the recent yellow 2nd wave and will head lower to 85.43 downside wave 5 price objective.  This is why I am watching the 95 level so close

Nikkei bullish sentiment is at 85% and in the extreme zone

I am really focused on the Nikkei in Asia as the recent upside exhaustion signals will see a pullback or total failure under the March lows.  This could have global implications

Bloomberg World Index has an upside red Countdown 13 exhaustion today.  244.83 is the 50 day and if that breaks then there will be some problems quite evident

Vanguard International ex USA weekly needs one more push higher to close above the 8th red bar on the Countdown.  Failure under 55.85 the 50 day will be notable

AAPL has been going sideways for the past two weeks.  185 is support and 190 is a breakout level to watch.  Honestly I wasn't so concerned after the earnings gap up and buyback announcement to get short.  What did surprise me and bug me was the reaction after Buffett said he already bought stock in Q1.  A break down under 185 should see this retrace back to the 50 day at 175.  Apple is a product driven stock and the recent products are on the refresh year and we know sales haven't been spectacular as years past.  Services are doing fine but that's not enough in my opinion

Best Buy was a short idea that drifted up and I stopped out. It's down 3.5% today and will reevaluate getting back into this soon

GE continues to trade well and I took profits too soon on this and I'm sorry about that but it's in wave 3 so I'll look to buy it back in wave 4 for the bigger upside move in wave 5.

NFLX was a recent short idea that worked with the green Setup on the upside after earnings.  I covered it as it held the 50 day and believed the upside red Sequential was worth waiting for and today it triggered so I added a 2.5% sized short position in the Trade Ideas.  

NFLX also has a weekly upside exhaustion and you know how I like to see time layering with upside or downside exhaustion signals together!  Recent signals have worked in the past couple years too.  

PG is a recent new long idea and it now has an upside red Countdown on day 3 of 13.  

SLB was a recent long idea that worked out well but I sold it a little early with the recent upside exhaustion signals on all the energy ETF's.  If you're still long it's on day 11 of 13.  

Tesla is on the edge of a major breakdown.   The implications are quite severe if this falls another 25 points as it will no doubt shake the longs who have held on through all the chaos in the past year.  One added risk is Elon Musk is highly levered with his TSLA stock and he will have to either sell down some of his stake or add collateral.  To even fathom a CEO getting a margin call should scare the long holders besides the balance sheet looking very much cash starved.  Don't forget the debt that needs to get rolled over soon too.  Tesla will be the story of the year!

Bond bullish sentiment is at 24% and off the recent low of 15%.  I do believe this can work down to 10%

US 10 year yield is backing off with the recent upside green Setup 9.  There is decent support at 3% and I wouldn't be shocked to see some yield pullback before it moves higher.  

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