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As the US equity market continues to drift highe,r we still are expecting some daily upside exhaustion signals to trigger this week or early next week.  Sentiment loitered in the 50% range last month and now it has moved higher and is in the elevated zone between 70% and 80%.  The percentage of stocks above the 10 day moving average is at 85% where things also tend to stall out.  Various sectors have been rotating with Consumer Staples and Healthcare leading last week while somewhat surprisingly the most favored sector - tech lagged the S&P.  

One of my old mentors used to tell me to "bring a shotgun rather than a rifle" with markets that have these characteristics.  With slow drifting action like this, it brings complacency and thus it pays to scale out of long ideas and to scale into new short ideas while maintaining proper sizing and consistent somewhat wider than normal stops. Thus, take aim with a shotgun with your pricing rather than be too precise.  It's similar to when things are near lows that one must use the same strategy and be accepting of some ideas not working but when the ideas work the gains are out sized.

This is a big week with macro events for sure to dominate the news flow.  Central Banks - Fed Wednesday (84% chance for a hike), ECB Thursday (potential for taper, and BOJ Friday (no changes).  Tomorrow is a big day in the UK with the Parliament vote on Brexit. Watch the Pound very close.  On another note,  I actually don't expect the Trump/Kim meeting to be market moving. 

If you can take off some long exposure, add to cash percentages and be patient.  Use a shotgun and not a rifle.  

Notable:

• US Markets - Sentiment back to the elevated zone.  Still some remaining upside with various Countdowns getting late in the move
  
  
• Hedge Fund Telemetry Trade Ideas - Doubled up TSLA and added MCD short
  
  
• Currencies - A little bit more corrective action needed but watch the Pound tomorrow for a break
  
  
• European Markets - A little relief in Italy today but still looks tough
  
  
• Asian Markets - Actually pretty quiet
  
  
• Crude Update - At a critical support level now
  
  
• Bitcoin Update - Big gap down and must hold 6600 - I don't think this is the bottom yet
  
  
• Soybeans - Close the remaining short trade
  
  
• McDonald's - New short idea
  
  
• Retail XRT ETF - Looking at the daily and weekly and could see a little more upside before a top
  
  
• Tesla Update -  Another strong up day that now has a weekly wave 5 downside price objective lower
  
  
• Bond Update - Stuck in the middle of the recent range, I have my eye on Investment Grade bonds for a long setup soon
  
  
• 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  74% and starting to turn rouge

SPY did get the pink Combo 13 upside exhaustion today while the red Sequential is on day 10 of 13.  280.01 is the 5th wave upside price objective.  This is one of the main reasons I'll stay short knowing upside is limited

Nasdaq bullish sentiment is at 72%

QQQ weekly did get the red Sequential upside 13 last week.  Although from 2016 to now has only seen minor short lived and shallow pullbacks I would not rule out in the coming months a deeper move lower after earnings

NYFANG Index is on day 11 of 13 with an upside Countdown

IWM Russell 2000 ETF has a green Setup 9 today and is on day 10 of 13 with an upside red Countdown

Dow Jones is on day 8 of 13 with an upside Countdown

Trade Ideas - Added 2.5% to TSLA short bringing it to 5%.  Added 2.5% short MCD.  I would continue to add to Consumer Staples longs.

Italy is bouncing today yet still has a downside Countdown on day 5 of 13.  Look at the last downside red Countdown how it went sideways.   Count happen again

Euro Stoxx 50 is trying to hold after the recent pullback.  If you are long 3400 is obvious support and use as a stop

US Dollar bullish sentiment is at 70% and down from recent 94% peak

US Dollar Index is on day 8 of 9 with a green downside Setup.  I do expect a further move higher but am not sure this is the low in this pullback.  

Euro bullish sentiment is at 24% and is up from 4% recent low

Euro is on day 8 of 9 with upside green Setup

British Pound bullish sentiment is at 23% and has to be watched tomorrow

Pound Spot price had a good downside exhaustion 13 and has bounced enough to qualify this as the 2nd of 5 waves on the downside.  If the recent lows break there is a wave 3 downside price objective of 1.2575.

Nikkei is on day 6 of 9 with an upside green Setup after holding the 50 day moving average.  I've been cautious on the Nikkei after the recent upside exhaustion signals but now this has to break the 22,250 to confirm that caution

Korean Kospi continues sideways action and is on day 9 of 13 with an upside Countdown

Crude bullish sentiment is at 38% and remains under 50% midpoint

WTI Crude Futures is holding the 65 level.  A break down from here has little support until 60

Bloomberg Energy Index is above the 50 day for now.  

Bitcoin gapped lower and is on day 4 of 13 with a downside red Countdown.  If this breaks the 6600 level it will revert back to the downside wave 5 and there is a price objective at 1135.  It seems to me that price objective is unlikely to be achieved but lower is def possible

Soybean bullish sentiment is at 19% down from the peak of 86% when the short trade was suggested

The upside 13 Countdown combined with the extreme bullish sentiment made this an ideal trade setup.  Now with some downside exhaustion cover any remaining short.

McDonald's daily  had an upside exhaustion 13 Countdown and reversal.  Add a 2.5% sized short

The weekly has a potential downside wave 3 price objective of 129.67.  A break of 159.50 would increase my conviction

XRT Retail ETF is on day 8 of 13 with an upside Countdown and I will admit has been surprising.  CNBC is starting to hoot about this one too so it's late in the game

XRT weekly is on week 10 of 13 with a red Countdown and week 9 of 9 with an upside green Setup.  Again this is getting late in the game

Tesla is up strong again today and I added another 2.5% sized position short to bring it to max 5%.  There is a wave 3 upside daily price objective of 340.45.  THIS is a typical bring a shotgun type of stock.  Or a flamethrower...  

The weekly last year had a downside wave 3 price objective of 253 which was achieved and now the bounce has moved it into wave 4 of 5.  The new downside wave 5 price objective is 213.03.  

Bond bullish sentiment is at 47% and hanging out again in the middle zone - undecided

US 10 year yield is still in the middle of the recent range.  I've been cautiously thinking a bounce bounce is ahead but I would feel comfortable with a break under 2.90.  

TLT Bond ETF is one I added long last week with the new upside red Countdown.  I'll stick with it for now but I'd really feel better if this could get above 1.20.  

LQD Investment Grade ETF still is on day 12 of 13 with a downside red Countdown. I would like to buy this when the 13 triggers.  Investment Grade has been crushed all year and considering the massive inflows, people have lost a considerable amount of money this year in something that typically doesn't lose money like this.  

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