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8/23/18
Thomas Thornton

Trillion Dollar Cowboy Bar

Tomorrow is the yearly Jackson Hole Wyoming Central Bank gathering where in the past a few nuggets of Central Bank policy was unveiled.  This one is Fed Chairman Jerome Powell's first as the Chairman.  This is actually a pretty important year with the Fed tightening and Europe setting a time table for tapering.  I believe Powell has a Fed Funds rate number in his head and he sees markets knows he can get there.  Again, it's an important year with the currency moves of the past quarter and some of the strain it has put on some of the EM countries.  Lastly, he's going to be make it very clear that the Fed is independent of any political pressure.  By the way, it would be really cool if all the central bankers went to the Million Dollar Cowboy Bar and threw back a few.  It would be the Trillion Dollar Cowboy Bar that night.  If you haven't been there, I recommend it.

Been on some client calls today and pardon the late note.  The market is whipping around today a bit more than usual and we now have the Nasdaq Composite joining the S&P 500, S&P 100, Dow Jones, Russell 2000, 3000, Mid Cap, Small Cap indexes with the first upside DeMark Sequential Countdown 13 since January.  Still need a little more for the Nasdaq 100.  There are a couple other indicators that are getting closer so there is high probability for a reversal of sorts in the coming days. 

A lot on today's report.  Be sure to check out near the bottom the Bond section that shows the 2/10 spread on a monthly time frame with a FRED chart below with recessions.  A lot going on here too at Hedge Fund Telemetry.  New site is coming together and next week will be beta testing with the programmers.  Thanks for all your support.  

  • US Markets - A lot of stuff with upside exhaustion signals
  • Hedge Fund Telemetry Trade Ideas - Added a couple after the trade ides email AXP short, BA short and added to XRT short
  • NYSE Cumulative Breadth - Combo upside exhaustion
  • PPO Monitor
  • A few stocks that I'm watching
  • Amazon The Most Important Stock In The World is on day 11 of 13 with upside Countdown
  • Currency Update - Tomorrow will see some currencies move.  Watch Yuan fixing tonight
  • European Market Update - Still long Euro Stoxx 50
  • Emerging Market Update
  • Asian Market Update
  • Crude Update
  • Gold Update Sentiment has moved but forgot to tell price
  • Bond Update VERY IMPORTANT LOOK AT 2/10 YIELD SPREAD
  • 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 70%


CNN Fear and Greed also diverging like the Daily Sentiment Index from index price. (Index price making new highs while sentiment is lower)


SPX daily


S&P 100 similar upside exhaustion in play


SPY short interest is quite low.  This is a risk with the market up here.  


Nasdaq 100 Index remains on day 12 of 13 with upside Countdown


Nasdaq Composite Index with a Countdown 13 today


Dow Jones Industrial Average slightly reversing after upside exhaustion signals


IWM Russell 2000 stalling here after upside signals


US Exchange total market cap had a monthly upside exhaustion with a bit of a throw over but this is still valid.  Previous signals worked well

 
Hedge Fund Telemetry Trade Ideas


Trade Ideas -  Added AXP short 2.5% size, Added BA short 2.5% short.  Doubled XRT to 5% short.  
NOTE on the Trade Ideas email earlier I said I covered USO and I meant XLU.  Sorry. 

 
NYSE Cumulative Breadth


Upside Combo 13 yesterday

 
PPO Monitor


This Bloomberg Monitor that I created to spot sector rotation and force ranking of sectors is based on the % above the 50 day.  Those that are highest above the 50 day are at the top.  I can also measure how far they are above the 50 day historically.  If you are on Bloomberg and would like this monitor please IB me.  Today it's obvious people are buying the top performing sectors and selling hard the ones that have been more pressured of late.  Also a lot of pressure intraday with mostly every sector under today's VWAP.  More on this in coming notes.

 
A few stock ideas I'm watching


AXP American Express has a daily upside Countdown 13 in a ragged chart


The weekly of AXP also has some upside exhaustion which has worked well for some 5-10% pullbacks or stalling and a few bigger moves


AXP short interest shows very low short interest.  This is a crowded long


BA Boeing is the largest Dow stock weight and has make some lower highs and I'm giving this another shot on the downside


BA short interest is also less 60% less than a year ago


NVDA stopped me out today and it's on day 12 of 13 with a red Countdown.  I'll be back


NVDA is a chasers stock (chasing green) and has very low short interest.  

 
Amazon The Most Important Stock In The World


AMZN is on day 11 of 13 with an upside Countdown

 
Currencies


US Dollar bullish sentiment is at 69% and down from 96% in the last two weeks.  Some backing and filling is likely


US Dollar Index


Chinese Yuan down last night and could break through 7 and that would have some alarm bells ringing in the middle of the night.  Tariffs went into affect today and didn't get enough attention

 
European Markets


Euro Stoxx 50 still under 50 day.  I remain constructive here long


A risk is the Italian 10 year yield breaking out

 
Emerging Markets


EEM Emerging Markets ETF reacting to the stronger USD today.  

 
Asian Markets


Nikkei bullish sentiment is at 61%


Nikkei still sideways without much mojo


FXI down after BABA fade and Tencent decline.  Still more work needed

 
Crude Update


Crude bullish sentiment is at 80% and back to extreme levels


Crude chart yesterday was this chart and not a weekly.  I think a new contract rolled and changed up the DeMark Countdown.  A move to 70 is likely but if this fails again a downside wave 2 price objective at 59.56 is possible

 
Gold Update


Gold bullish sentiment is at 35% and this is from the low of 6% just 5 day ago.  I just wanted to show the chart of GLD and how pathetic it is that this is all we got from 6%-35%.  


Gold Miners still needing to build a base.  Those hoping for a V bottom might be disappointed.  

 
Bond Update


Bond bullish sentiment is at 71%


US 2 year 10 year yield spread monthly chart is flattening and nearing 0 where it would be inverted.  There are some downside exhaustion signals similar to other periods where they were ahead of steepening and recessions.  


Here is the monthly chart of the 2/10 spread with recessions highlighted.  A steepening curve and recession ahead?


I like bonds long based on this chart.  Day 4 of 13 and nearly breaking support on the 10 year yield


TLT hit a 20 day high today.  

 
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:   CPRT, IPAR, PJC, PRGS, QCOM, ROP, SAIC, TRMB
DAILY DOWNSIDE 13:   ETFC, TEL

DAILY UPSIDE WITH PRICE FLIP REVERSAL DOWN:   AEE, AET, AJG, ALE, ASGN, BFS, BGS, BRK/B, CCI, CLX, CMCSA, CMS, ETR, FE, HCP, IDA, IRM, K, LNT, NJR, PRA, SHW, THG, TRV, UGI, URBN, VZ, XEL
DAILY DOWNSIDE WITH PRICE FLIP REVERSAL UP:   DBD, SEE

Updated: 8/20/18
WEEKLY UPSIDE 13:   DG, FORR, KSS, LII, MRK, MSCI, MSFT, NEE, ORI, ORLY, POWL, URBN, V, VVI, WMT, WWW
WEEKLY DOWNSIDE 13:   LL

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:   EKTAB SS, GPOR LN, HNR1 GR, INVEB SS, MTX GR, SGC LN
DAILY DOWNSIDE 13:  NONE

DAILY UPSIDE WITH PRICE FLIP REVERSAL DOWN:   NONE
DAILY DOWNSIDE WITH PRICE FLIP REVERSAL UP:   BLT LN, GBF GR, OMV, AV, UBI IM

Updated: 8/20/18

WEEKLY UPSIDE 13:  ADM LN, GJF NO, HSX LN, SWMA SS
WEEKLY DOWNSIDE 13JUP LN, KPN NA, SAB SM

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




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