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8/2/18
Thomas Thornton

Fool me once, shame on you; fool me twice, shame on me

Trust is one of the most basic factors when it comes to investing.  Eleven years ago today Jim Cramer ranted on CNBC that the Fed "knows nothing."  This was the start of when trust in the markets was lost.  The amount of confidence in the US markets today is astounding since there are all types of concerns.  Notably we have a President who can send out a tweet causing a stock or market to plummet and one who has started a trade war with every trade partner.  The most important trade partner is China and the rhetoric is heating up yet the market sold off overnight with the futures down 50bps and now is up on the day. The devaluation in the Yuan continues and alarm bells are ringing as the Asian and European markets were sold off very hard on the tariff news as it's clear people are not as confident.   Despite US market breadth being flat to down today, people feel confident they can continue to put money into Apple (the largest weight in the S&P and Nasdaq) and the prospects will be fine in the coming quarters with steady earnings and dividends.  I don't disagree although I would not chase it here.  

This leads me to the trust people have with Tesla.  They reported a quarter last night that had a little for both the bulls and bears.  The bulls were happy to see less cash burned through the quarter, Elon Musk keeping his shit together on the conference call, and the continued promises of more cars being produced and that the company turning a profit in the next quarter.  The bears pointed out the balance sheet issues that any other company would face harsh questions on the conference call.  The conference call was a joke in that there was no discussion by management about the financials and zero pointed questions by analysts in the Q&A.  There was even an upgrade today by an analyst.  This has been the biggest "trust me stock" in my career.    Even if the stock is up 10% today and bulls celebrate the time is ahead for those lofty promises to be met.  


  • US Markets - Sentiment, Daily and 60 minute tactical views
  • Hedge Fund Telemetry Trade Ideas - no changes
  • Seasonality for August and September
  • Tesla - Trust
  • IBM Update -Weekly chart still says lower
  • Currency Update - Yuan daily upside exhaustion yet weekly could be a better read
  • European Market Update -  Another lower high which is frustrating.  Watch Italian 10 year for a move over 3%
  • Global Market Update - Still looks weak
  • Asian Market Update - Bad day in Asia.  India could be starting to top.  Yields rising in Japan
  • Crude Update - Holding today's low
  • Gold Update - No changes still trades terrible
  • Bond Update - Potential for higher yields in the US 10 year
  • 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 daily not making much progress today


SPX 60 minute tactical time frame still has risk if below 2800


Nasdaq bullish sentiment is at 66%


NDX Index held the 50 day and we'll see if this secondary Countdown sticks


NDX 60 min tactical time frame could make a lower high and break down towards 7000


Dow Jones Industrial Average a bit weaker today

 
Hedge Fund Telemetry Trade Ideas


Trade Ideas - No changes.  Tesla has given back a lot of the gains yet I will hold for the upside exhaustion due next week.  This is the nature of this stock.  

 
Seasonality


August and September seasonality in the past 20 years have averaged down 1%


August tends to start off OK then fades until the last week


Global seasonality in the past 10 years.  Thanks to Bespoke for these charts


This SPX current time frame and the DJIA 1929-30 analog was interesting.  Please do no repost this chart.  

 
Tesla - Trust


Tesla bounced after earnings and now is on day 11 of 13 with a pending Countdown.  The Countdown would have been cancelled as there was a green Setup in progress on the downside but with lift the Setup is gone.  We should see an upside red 13 Countdown early next week.  There is a downside wave 3 price objective of 240.32 that will come into play when this breaks the low from 3 days ago.  I am not covering.  


Here is Tesla's quarterly income and this is promised to be positive in this quarter and next...


Although they claim they will be cash flow positive this quarter they can't give any confidence in July numbers.  And this is the not the first time Elon has said they don't need capital but later raised capital.  Still people trust him


Seen this before...

 
IBM Update


IBM is a short idea that I recently discussed on Real Vision.  This the weekly chart of IBM on week 4 of 13 with a downside red Sequential Countdown.  The wave 3 downside price objective is 20% lower at 113.96.  A break of 140 should break the confidence of the bulls who continue to have faith of a turnaround

 
Currencies


US Dollar bullish sentiment is at 78%


US Dollar Index still in the sideways pattern  


Euro bullish sentiment is at 37%


Euro Spot has not been able to turn after the recent exhaustion signal


British Pound could be headed for a break of the 1.30 level


The weekly of the Pound shows it right on support.  


Yuan daily did get the exhaustion Countdown 13 today.  Each one in this move has stalled briefly or failed.  This is important


The weekly makes it very clear that more downside is ahead for the USDCNH with is on week 7 of 13.  

 
European Markets


Euro Stoxx 50 just can't seem to get momentum to turn up


German DAX is now on day 8 of 13 with a downside red Sequential Countdown


UK FTSE also looks lower


Italy looks to test support with a new secondary Countdown


Italian 10 year yield could make a move higher.  Watch 3.00%


Euro Banks still chopping around not far from the lows

 
Global Markets


Bloomberg World Index has been going sideways all year and now is on day 10 of 13 with a downside Countdown


EEM Emerging Markets ETF is now on day 11 of 13.  

 
Asian Markets


Nikkei still can't get over 23,000 and above that level I would take a long position


Japan 10 year yield was mentioned a couple weeks ago when it lifted and it hasn't stopped.  This move although not much matters since there is quite a bit of holders well below these levels.  


India's Nifty 50 turning on the green Setup 9.  A pullback to 10,900 would be interesting place to buy


China and Hong Kong were hit again last night

 
Crude Update


Crude bullish sentiment is at 79%


Crude trying to hold the lows today

 
Gold Update


Gold bullish sentiment is at 10% and no change


Gold still has not triggered the red Sequential downside Countdown

 
Bond Update


Bond bullish sentiment is at 46% and has now moved under the 50% mid point level.  


The US 10 year yield leans higher with the upside red Countdown  


TLT Bond ETF is trying to hold here but I'm not sure it will with the upside Countdown in the 10 year yield

 
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:   CPT, DRE, MNRO, NWN, VSI
DAILY DOWNSIDE 13:   DRIV, FII, ONE, SCHW

DAILY UPSIDE WITH PRICE FLIP REVERSAL DOWN:   AIR, AVT, CNP, D, DIS, DORM, DTE, EOG, ERA, FRAN, HOLX, ITT, KEY, LANC, NBL, NWN, ORN, RIG, SHW, WTS
DAILY DOWNSIDE WITH PRICE FLIP REVERSAL UP:   F


Updated: 7/30/18
WEEKLY UPSIDE 13:   AIN, AME, AVAV, AXP, COST, FARO, GIII, HRC, KO, LGND, NBTB, NTRS, POL, PRI, RBC, SHW, TSS, WTS
WEEKLY DOWNSIDE 13:   GFF, HOG, LB

Updated: 8/1/18
MONTHLY UPSIDE 13:    AIZ, ATR, BIO, CBU, CDNS, CMS, CSX, DGX, EE, FCN, FIX, GTY, HAE, HAS, IDXX, IEX, KSU, MA, NI, NPK, PTC, RLI, ROL, WEC
MONTHLY DOWNSIDE 13:    CIR, HIBB

Euro Stoxx 600 Universe:
DAILY UPSIDE 13:   CRDA LN, SEBA SS, TSCO LN
DAILY DOWNSIDE 13:  ILD FP

DAILY UPSIDE WITH PRICE FLIP REVERSAL DOWN:   JMAT LN
DAILY DOWNSIDE WITH PRICE FLIP REVERSAL UP:   COB LN, INTU LN

Updated: 7/30/18

WEEKLY UPSIDE 13:  ALFA SS, KGF LN, NESTE FH, NZYMB DC
WEEKLY DOWNSIDE 13ABF LN, GNK LN

Updated: 8/1/18
MONTHLY UPSIDE 13:     TEMN SW
MONTHLY DOWNSIDE 13:  CO FP, GETIB SS, RXL FP, TALK LN




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