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5/24/18
Thomas Thornton

Sticks and stones may break my bones but names will never hurt me

President Trump called off the summit with North Korea citing "tremendous anger and hostility" in recent statements coming from North Korea.  Equity markets are giving back gains from yesterday, bonds are rallying, and the US Dollar is down.  Gold is perking up too.  Some are saying this is a negotiating tactic and Trump did leave the door open to talk.  I didn't read the "Art of the deal" so I can't confirm.  What it does show is that the thin skinned sensitivity to rhetoric is making a return.

The buy the dip people are doing their best and it's too early to tell as the major US indexes are still within a tight multi week range.  People who are buying are assuming the summit will get back on track.  I tend to believe that too but if the recent low end of the range breaks the sellers will be active.  Sectors that are very heavy are energy and financials - both sectors I have had a recent negative bias.  

Today is my daughter's graduation from high school and I'm going to be off the desk all day.  I'm a very proud dad!  


Notable:

  • US Markets - Sentiment remains at the midpoint.  Tight range

  • Hedge Fund Telemetry Trade Ideas

  • European Markets - Reversals continue, Euro Banks new low

  • Currencies - Nearing a short term turn with USD and crosses.  Bitcoin fading lower

  • Nikkei - Reversal lower after upside exhaustion signal

  • Credit Spreads Update - Keep an eye on spreads with energy stocks fading

  • "If you had $1000 to put in a mutual fund, do you expect to have a gain in a year?"

  • A few recent ideas - BBY, NFLX

  • Corn Update - Looks higher into seasonal trade

  • Bond Update - Corrective bounce

  • DeMark Screens - Daily, Weekly, Monthly upside/downside exhaustion signals within the S&P 1500 and Euro Stoxx 600 - SEEING A LOT OF PRICE FLIPS LOWER - POTENTIALLY BEARISH

US Markets


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 47%


SPY is about a point lower from when I grabbed this chart.  270 (2700 SPX) is the breakdown level people will be watching. 


Nasdaq bullish sentiment is at 46%


QQQ is down a little more too.  Still in a range.  


Dow Jones has support at 50 day 24,400


IWM Russell has turned lower despite an upside daily Countdown on day 4/13


IWM Weekly has an upside red 13 exhaustion in play.  A pullback to the 50 week moving average is highly probable

 
Hedge Fund Telemetry Trade Ideas


Trade Ideas - No changes today.  

 
European Markets


UK FTSE upside exhaustion and now price flip down (trading below 4 previous closes)  


Euro banks continue to make new lows  

 
Currencies


US Dollar Index is toppy and has a green Setup 8/9 and red Sequential on day 10/13.  A pullback is likely soon and then a bounce to and even higher high for the USD


Euro also getting close to a turn


Turkish Lira still is getting killed (inverted) on day 6/13.  They raised rates yesterday and caused a short term bounce that has now failed.  


Bitcoin XBTUSD is on day 2/13 with a downside Sequential Countdown.  A break of the April low will revert this back to the downside wave 5 and that upside wave 3 price objective will be cancelled.  

 
Nikkei Update


Nikkei at a short term support level.  I don't expect this to hold


Nikkei bullish sentiment is at 71% and down from the recent peak of 88%

 
Credit Spreads - Update


This is the BarCap high yield vs 10 year spread on a daily time frame.  There is now a red 7/13 and it suggests spreads could get wider (higher on this chart)


The weekly shows the potential break out levels.  With energy stocks exhausting this spread could start to widen soon.  

 
University of Michigan Probability of increases in stock market prices in a year


This survey asks people if they had $1000 and put it in the market now would it be up in a year.  Although there is no upside exhaustion ahead of other drops this peaked months ago and it's a good gauge of people's interest in the stock market.  The excitement from 2017 is now over. 

 
A few recent ideas


Best Buy was a recent short idea that I entered too early and was stopped out.  I will see how this trades today to reevaluate getting back in.  


NFLX is a new short idea.  The daily had an upside red Sequential upside exhaustion two days ago and there is a secondary upside Countdown on day 11/13.  That is due to the two upside green Setup 9's working in sync.  My size is small so I can handle some volatility.  


Weekly shows the upside 13 this week in NFLX.  

 
Corn Update


Corn bullish sentiment is at 51% and moving higher.  


Corn Futures had some upside exhaustion signals that I showed and stressed that these were not shortable exhaustion signals due to wave 3 tend to not work for long, seasonality also is very strong in May to the end of June.  Now it looks to be targeting the upside wave 5 price objective of 423.  

 
Bonds


Bond bullish sentiment is at 31% and now up from recent low of 15%.  This is moving higher


US 10 year yield had a good price reaction with the green Setup 9.  A little lower and wave 4 will triggger and we will get a new wave 5 upside price objective.  

 
DEMARK SCREENS - Daily, Weekly, Monthly Upside/Downside Exhaustion Signals

Daily/Weekly DeMark upside/downside exhaustion signals (Sequential) Weekly updated on Monday's.  Price flips occur when a stock closes higher/lower than four previous closes.    

The upside 13's are sell signals and downside 13's are buy signals.  Price flip's are confirmation signals that increases potential for a price trend change. For example, if you are long a stock and there is an upside 13, you will want to take cautious action by selling down or out of a position.  If initiating a short sale with the upside 13's, we tend to start with a 1/2 size and add with the downside price flip.  The opposite is true for when there are downside 13's.  Take a 1/2 size position and add with the upside price flip.  The DeMark Indicators are designed to assist the user with buying into weakness and selling into strength to anticipate trend exhaustion. Selling into a rally and buying into a decline often afford the opportunity to exit a trade without too serious a loss if wrong.

S&P 1500 Universe: 

DAILY UPSIDE 13:   ADC, EXPO, GTY, O, PRFT, SWM, WY
DAILY DOWNSIDE 13:  BGG, EBIX, GS, Y


DAILY UPSIDE WITH PRICE FLIP REVERSAL DOWN:   AMED, BF/B, CTS, DVN, EGL, EOG, ESV, F, GNTX, HES, HMSY, MTRX, MTSC, MTX, NE, OXY, PES, PSX, QEP, SLCA, TGT
DAILY DOWNSIDE WITH PRICE FLIP REVERSAL UP:   D, PPL

Updated: 5/21/18
WEEKLY UPSIDE 13:   BRS, CNMD, CUB, CVG, GHL, GWR, HP, MASI, MRO, NSC, MNK, QNST, RJF, SGMS, WPX
WEEKLY DOWNSIDE 13:   ALK, PZZA

Updated: 5/1/18
MONTHLY UPSIDE 13: CTXS, HSII, SYK, UFCS, WBS    
MONTHLY DOWNSIDE 13:     AKRX, HLX, HVT, MNK

Euro Stoxx 600 Universe:

DAILY UPSIDE 13:   AMEAS FH, EOAN GR, ORA FP
DAILY DOWNSIDE 13:  ING FP, PSM GR, SHB LN

DAILY UPSIDE WITH PRICE FLIP REVERSAL DOWN:   ACS SM, ANTO LN, ASML NA, ATCOA SS, BAYN GR, CDI FP, CEZ CP, DRX LN, EOAN GR, FP FP, GALP PL, IBE SM, LUPE SS, MC FP, MRW LN, POM FP, PRU LN, REP SM, RIO LN, ROR LN, SAND SS, STERV FH, TEN IM
DAILY DOWNSIDE WITH PRICE FLIP REVERSAL UP:   NONE

Updated: 5/21/18
WEEKLY UPSIDE 13:  AAL LN, AMS SM, BP/LN, FP FP, GN DC, RMG LN, SAF FP, STM IM, UBM LN, UMI BB
WEEKLY DOWNSIDE 13:   FER SM

Updated: 5/1/18
MONTHLY UPSIDE 13:     HNR1 GR, HWDN LN, MHG NO
MONTHLY DOWNSIDE 13:  AGK LN




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