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7/17/18
Thomas Thornton

Netflix and Chill

I know, I know.  Netflix and Chill title might be a little risque but it's what sell side analysts are telling their clients today after Netflix completely missed street estimates and company guidance for subscriber growth by a million subscribers.  Not insignificant in my view but they say chill.  Analysts are blaming World Cup and lack of a hit series this quarter but funny how they didn't mention those risks ahead of the report. They are mostly defending the company not believing this is the end of sub growth. The company lowered next quarter sub numbers way down so perhaps next quarter is even more important.  From my point of view, the extreme overbought nature and lack of short interest raised the bar ahead of the report.  I didn't expect the big whiff on numbers but I did expect a pullback.  The same set up is in play with some of the other large mega cap FANG tech companies.  Overbought, exhausted and lack of shorts raises the earnings bar.  Quite a change from last quarter!  I'm recommending covering the short on the Trade Ideas Sheet since it will be bought as a "generational FANG buying opportunity."  Old habits of buying every dip don't stop on the first blowup.  Going to take a few more.

Yesterday's Trump Putin summit turned out to be a non event despite the strong bipartisan critical commentary against Trump. This will not play well into midterms.  Today Fed Chairman Powell testifies in front of the Senate and I don't expect much change however the Q&A could be interesting as he tends to say exactly what he's thinking and the market has been spooked in the past.  Lastly, Goldman Sachs reported good numbers, changed CEO's both as expected yet still has not reinstated the company buyback.  For the company that does more stock buybacks for other companies to not do a buyback after being down in the past quarter might be a big market tell.  

Notable:

  • US Markets - Sentiment still elevated and people buying dips proves it
  • Hedge Fund Telemetry Trade Ideas - Covered NFLX and Added BA short
  • European Markets - Trading sideways
  • German and US 10 year yields - Similar DeMark Countdowns
  • Asian Markets - Little more downside expected in Hong Kong and Nikkei surprising
  • Google
  • Gold Update
  • Boeing - New short idea
  • Apple - Nearly at same place as after earnings
  • Crude and Energy Update
  • IBM - Reports tonight
  • Disney Netflix Pair Trade Update
  • Bond Update - TLT still needs one more move up for 13
  • DeMark Screens - Daily, Weekly, Monthly upside/downside exhaustion signals within the S&P 1500 and Euro Stoxx 600

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 69%


SPX not much change.  Gapped down and now on highs.  Let's see if that's where we close.  


Nasdaq bullish sentiment is at 70% still elevated


QQQ large gap down and bounced on highs now


FANG + Index is not on its high and it should be noted it didn't make a new high in July


Dow Jones holding 25,000.  I added Boeing back as a short idea and it is the largest weight and has been greatest attribute YTD.  I don't like how industrial sector has traded and feel the tariff actions are not over by any means

 
Hedge Fund Telemetry Trade Ideas


Trade Ideas - Covered NFLX for 17.9% return.  Added 2.5% sized BA short

 
European Markets


Euro Stoxx 50 down on the day and now is on day 3 of 13 with a red Sequential downside Countdown


German DAX still under 50 day and going nowhere


UK holding support for now.  PM May is losing support and this could be a catalyst

 
German and US 10 Year Yield


Both the German and US 10 year have similar patterns and have generally seen a bid in the bond markets.  


US 10 year.  A break of 2.80 or 2.94?

 
Asian Markets


Hong Kong is now on day 10 of 13 with a downside red Countdown


Nikkei has acted better than expected and perhaps can make a move over 23,000

 
Google


Google has the green Setup 9 as expected.  A pullback ahead is likely

 
Gold Update


Gold bullish sentiment is at 15% and still depressed


GLD is now on day 8 of 13 of this secondary Countdown.  I'm holding despite being down a little waiting for the seasonal goodness to kick in.


Gold Futures similar

 
Boeing


BA has bounced again and I added it to the short side on the Trade Ideas Sheet.  I'm playing for the wave 3 downside price objective.  If this makes a high over June high, the pattern is null and I'm gone

 
Apple


Despite the Nasdaq going up recently Apple is still at the same place shortly after the last earnings report.  

 
Crude and Energy Update


Crude bullish sentiment is at 55% and down from the 88% level just a week ago.  Crude is down over 8% in a week.  


Crude has a green Setup 9 and it's worked well at upside and downside inflection points.  


XOP Energy ETF is breaking the 50 day


OIH Oil Service has been much weaker and needs to make a new recent low to get the downside Countdown 13 exhaustion

 
IBM


IBM reports after the bell and I am playing for a break of the 140 level.  I detailed my thoughts yesterday on a Real Vision Trade Ideas video.  Check it out

 
Disney Netflix Pair Trade


Disney as a recent long idea is acting well and is on day 9 of 13 with an upside Countdown


NFLX whiffed and gapped down.  Close the short

 
Bonds


Bond bullish sentiment is at 71% and a slight tick down from 74%


TLT Bond ETF remains on day 12 of 13.  One more up move needed for the upside 13.  

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

Daily/Weekly DeMark upside/downside exhaustion signals (Sequential) weekly updated on Monday's and monthly on the first day of the new month.  Price flips occur when a stock closes higher/lower than four previous closes and increases conviction of a price turn.

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:    BIIB, MOH, MSFT, NTAP, OXM
DAILY DOWNSIDE 13:   AVP

DAILY UPSIDE WITH PRICE FLIP REVERSAL DOWN:   ADM, AMGN, HOLX, MGLN
DAILY DOWNSIDE WITH PRICE FLIP REVERSAL UP:   BAC


Updated: 7/16/18
WEEKLY UPSIDE 13:   AMED, COHU, CRK, CRS, CTSH, CVGW, FAST, MTRN, SON
WEEKLY DOWNSIDE 13:   GPRE

Updated: 7/1/18
MONTHLY UPSIDE 13:    ADI, AEE, BAX, BCOR, ETFC, ICUI, ITG, MED, MOH, NEE, SMTC, THG, TTEK, TXN, VICR, VSH, WCN, WST
MONTHLY DOWNSIDE 13:    TUES

Euro Stoxx 600 Universe:

DAILY UPSIDE 13:   ACKB BB, AHT LN, DCC LN
DAILY DOWNSIDE 13:  FINGB SS, LAND LN

DAILY UPSIDE WITH PRICE FLIP REVERSAL DOWN:   DRX LN, MGGT LN, SBRY LN
DAILY DOWNSIDE WITH PRICE FLIP REVERSAL UP:   CBK GR, G IM, MB IM


Updated: 7/16/18

WEEKLY UPSIDE 13:  BVI FP, DB1 GR, ICAD FP, MC FP
WEEKLY DOWNSIDE 13AV/ LN

Updated: 7/1/18
MONTHLY UPSIDE 13:     BLND LN, CDI FP, CRH ID, DCC LN, DOM LN, RACE IM, REL LN, RMS FP, SXS LN, WKL NA, ZAL GR
MONTHLY DOWNSIDE 13:  BMPS IM




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