If you are having difficulty seeing this email, you can view in your browser or click here to print.

Sorry for the late note today.  Just got jammed with a few client conference calls.  Yes I do calls with clients and often with video so you can see my screens live.  

I continue to see caution signs that make me quite concerned with global markets. And quite the reversal today too.   I will discuss some on today's note and more in the coming days.  Let's get to it...

Notable:

• US Markets - Sentiment under 50%.  Green Setup 9's could be support or new Countdowns could start soon.  Seasonality is a little choppy and stressful
  
• Hedge Fund Telemetry Trade Ideas - PG, OXY and BRK/B removed, NVDA added
  
• Credit Spread Update - Keep an eye on these in the coming days
  
• Currencies - Continuation with USD up, Euro down, Yuan down (risk here)
  
• Asian Update - More breakdowns
  
• Gold Update - Still some risk as not everything has lined up but enough to have a small long
  
• Crude and Energy Update - XOP is on day 12/13 so careful with false breakout
  
• Global Index and EEM Update
  
• Hedge Fund Telemetry Extend and Pretend Index - Downside ahead
  
• Cumulative Breadth - Rolling over like it did in January
  
• PG - Take Profits
  
• Financials at Risk?
  
• Bond Update - 5 and 10 year yields look lower with favorable seasonality too
  
• 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  47% and below the 50% mid point.  Yesterday's bounce in the market didn't get sentiment moving up much

SPX cash index does a couple potential positives.  First the green Setup 9 could see a bounce and the 2705 green dotted TDST line worked as support.  The risk is that now that we have the green Setup 9 a new red Countdown could start.  For info on how the Sequential, Setup and other DeMark Indicators here's the DeMark Primer of the basics

S&P Seasonality gets tougher in the coming quarter

Nasdaq bullish sentiment is at 47%

QQQ does have an upside pending red Countdown on day 6 of 13 however this could be cancelled if the green downside Setup 9 completes.  This would take 3 more down days with closes lower than 4 previous closes - again hit the DeMark Primer for how cancellation happens

FANG+ did have the recent upside exhaustion signals and now it's rolling over but a long way from the 50 day so there's some runway before support

IWM Russell 2000 ETF also had some upside exhaustion and is rolling over.  For an index "immune" to China tariff's it's not acting so great.  

Trade Ideas - Removed BRK/B short +2%, PG long +6.5%, OXY -1.4%  Added to NVDA short.  added to cash

Some people look at basic spreads of JNK vs TLT and it is widening and if this continues people's alarm bells will start to go off.  

For more seasoned pros this is the spread we watch.  Barclays High Yield vs US 10 Year.  This is the weekly and it's likely to see a breakout soon. (Spread widening)

US Dollar bullish sentiment is at 78% and should see a lift on today's poll

US Dollar Index is now on day 8 of 13 with a red upside Sequential Countdown.  The wave 5 upside target is at 98. Alarm bells will be ringing there

Euro bullish sentiment is at 26% and down from previous high of 33%

Euro spot is now on day 6 of 13 with a downside Countdown

GBP British Pound is on day 10 of 13 with its Countdown and has a wave 3 downside price objective of 1.2575.  

Chinese Yuan continues to drop vs USD and this type of action is very concerning for global markets

Shanghai breaking lower and is on day 2 of 13 with a downside Countdown

FXI Hong Kong China ETF breaking and is on day 5 of 13.  

Nikkei has support at 22,000.  I expect it to break and there is an air pocket below

Gold bullish sentiment is at 10%

Gold seasonality should see a bottom in July and a move higher into late Q3.  Still some potential weakness

GLD did get the downside exhaustion signals and I started a small long position in GLD.  I'm not overly confident until..

Gold Futures needs to fully exhaust on the downside and it's on day 11 of 13.  I will add when there is a price flip up when it trades above the high of 4 previous days

Crude bullish sentiment is at 69% and really has moved quickly from 7 days ago when it was 35%

WTI Crude has moved higher negating the downside wave pattern and now it's reverted back into the 5th wave and could go for the 80.00 price objective.  

XOP Energy ETF has held in better than other energy stock ETF's but it is now on day 12 of 13 so be cautious thinking this is a breakout worth buying here.

XOP vs SPX ratio on a daily time frame has an upside exhaustion 13 too and perhaps this is an early warning indicator

This doesn't look so good making new 2018 lows

EEM Emerging Markets continues lower and is on day 6 of 13 with a downside Countdown.  I have been negative on this from January.  It is nearing the downside wave 5 price objective so perhaps when the USD makes a top this will bounce too.  But from what level?

This custom index of the most overbought US stocks (20 of them and email me if you need the list).  This has real downside risk

S&P cumulative breadth has some upside exhaustion signals at the peak (like in January) and is rolling over

PG did it's job and we went 13 to 13 on this and I removed it from the long side on the Trade Ideas sheet

XLF Financials ETF trades terrible at support seen all year.  There is a new downside red Countdown on day 2 of 13.  I believe this is day 13 in a row down.  That doesn't mean it has to bounce.  When stocks get oversold like this and then break, it's a crash.   Tomorrow night the second part of the stress test comes out and it is a little tougher than the first one.  

Bank of America is on day 8 of 13 with a downside Countdown

Citi is on day 9 of 13

JPM is on day 3 of 13

MS is on day 3 of 13.  

Deutsche Bank has ignored downside exhaustion signals and when that happens it is telling you that trend is very very strong.  

Bond bullish sentiment is at 66% and I expect higher sentiment and potentially really high sentiment

My friends at Nautilus Research put out seasonality of the 5 year and considering it has been a terrible year for bonds this should work out pretty well

5 year is on day 5 of of 13.  This is risk off type of behavior by some big players

10 year on day 6 of 13

TLT Bond ETF on day 6 of 13.  I like TLT long

Unsubscribe me from Hedge Fund Telemetry

Hedge Fund Telemetry LLC, P.O. Box 4675, Greenwich, CT 06861, United States