Share

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

8/27/18
Thomas Thornton

Let's call the whole thing off

You say going private and then say staying public
You say funding secured and then say funding was available
Private, public, private, public
Funding secure, funding available, funding secure, funding available
Let's call the whole thing off


The Tesla story continues to be the most bizarre equity stories, I've ever studied and traded.  The people for Tesla have a cultish love for Elon Musk.  There really isn't anything he can do to turn them.  He's supposedly for saving humanity so he comes out strangely with a flame thrower which they just loved. There are people with kids and dogs firing it up.  What could go wrong?   It could have been a Tesla branded AK-47 and they would be ordering it online.  These people are not thinking rationally especially when it comes to the Tesla's business, production problems, balance sheet, the new liabilities from share holder lawsuits, the SEC and of course the looming competition coming from every automaker.  On of my favorite financial writers, Michael Lewitt of The Credit Strategist has been very vocal about these issues and I posted below his recent note.  I recommend you subscribe to his newsletter.  

The equity markets in the US continue higher (with the Nafta news as today's narrative) while more indexes trigger DeMark upside Countdown exhaustion signals just as we had in January.  Back in January, I turned very cautious and recommended people take down long exposure and sit in some cash for a pullback.  If you are able to raise some cash do so, and if you want to stay long, tighten stops.  This is a market that has gone up absent shorts covering.  That means shorts are not the ones buying higher but the sector work I have done shows this is a FOMO chase happening.  Look at AMD up 6% today.  There are no shorts involved here and the call buying is extreme.  I have some charts below that illustrate what I'm seeing.

I'll be working this week with my programmers on our new site so expect a few shorter Daily Notes in the coming days.  If you have any suggestions or things you would like on the website, please let me know. 

  • US Markets - Sentiment is elevated, more upside DeMark exhaustion signals, NDX Attribution remains nuts
  • Hedge Fund Telemetry Trade Ideas - Removed UNP short, added to TSLA short
  • Tesla Update
  • Materials Sector - Starting to look for long ideas here
  • AMD short interest and call buying
  • Amazon Update - Still not upside exhaustion signal
  • Currency Update - USD could be starting a 5 wave series down
  • European Market Update - Still like Euro Stoxx 50 long
  • Global Market Update - Still like EEM long and holding off on FXI for now
  • Asian Market Update holding off on FXI for now
  • Gold Update - Improving sentiment now needs price to follow
  • Bond Update - Need to see 2.80 break on 10 year.  Upside exhaustion in High Yield and Investment Grade ETF's
  • DeMark Screens - Daily, Weekly, Monthly upside/downside exhaustion signals within the S&P 1500 and Euro Stoxx 600 - Weekly exhaustion signals updated today

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 73%


SPX daily should have the green Setup 9 tomorrow too


S&P 100 same story


SPY vs TLT ratio is nearing another top


Nasdaq bullish sentiment is at 74%


NDX Index had upside exhaustion on Friday


Nasdaq 100 Futures has the upside exhaustion today


NDX attribution remains very narrow.  Look at AMZN as it attributed 27.62% of the total gain this year.  As comparison KHC the leading stock on the opposite side has subtracted 1.5% of the total gain.  There are only three stocks that have subtracted 1% or more while the top 3 are 60% of the total gain.  This is extreme and much more than the 2007 top.  


IWM Russell 2000 upside exhaustion was from Thursday

 
Hedge Fund Telemetry Trade Ideas


Trade Ideas - Added back 2.5% TSLA short to make it 5% and removed UNP short

 
Tesla


First Tesla short interest dropped after the latest "going private" fiasco.  The short interest ratio is 4.41% on the Erlanger score while the straight out short interest ratio is 2.1%.  Erlanger factors in a moving average and considering the large volume on the recent news, I'd go with the Erlanger.  


I added back the 2.5% short I took off recently this morning.  I figured a short bounce could happen and now I think there is real risk ahead especially with the SEC.  


I normally do not post full reports but I have such respect for Michael's work that I felt you should read it in its entirety.  Again I recommend checking out his work.  

 
Materials Sector - Potential upside


I'm going to be searching in the materials sector for some long ideas in the coming days

 
AMD Short Interest and Call Buying


Erlanger has some great indicators that I've used for a long time and am happy to be back showing you guys.  AMD has been on a tear to the upside and it is the poster child for chasing upside.  Short interest has been dropping and currently isn't too high.  But below the Erlanger Option Rank is at 0% which the Call Put Ratio is at a high.  This means there are tons of people buying calls on this and that typically ends with a sharp pullback

 
Amazon Update


Still on day 11 of 13

 
Currencies


US Dollar bullish sentiment is at 66% and down from the 96% peak recently when I said that the USD would come back down


US Dollar Index


Euro bullish sentiment is at 47% and is nearing 50% again


Euro Spot


British Pound bullish sentiment is at 30% and at the high end of the lower range


British Pound Sterling still a work in progress


Chinese Yuan gained last night

 
European Markets


Euro Stoxx 50 still looks good and I remain long

 
Global Markets


EEM Emerging Markets ETF back over the 50 day and is improving.  I remain long


India Nifty Fifty Index on day 10 of 13 with upside Sequential Countdown

 
Asian Markets


Nikkei bullish sentiment is at 68%


Nikkei is on day 11 of 13 with Sequential Countdown and believe upside is limited here


FXI Hong Kong China ETF

 
Gold Update


Gold bullish sentiment is at 38% and this is up from 6% just a couple weeks ago.  Now price needs to catch up to sentiment.


Gold still has a lot of work to do but I remain long

 
Bond Update


Bond bullish sentiment is at 76% and nearing recent highs


This hasn't broken yet to the downside and believe this still is possible


High yield upside exhaustion


Investment grade upside exhaustion.  

 
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:   ABT, ACT, AGYS, AON, BIG, COP, CTXS, ECL, HES, HSC, IDXX, INTU, MRCY, MSTR, NVDA, OII, PRGS, ROG, TTWO, V, VRTU, WDFC
DAILY DOWNSIDE 13:   AGCO, AMP, IVC, KAMN, LAD, RRTS

DAILY UPSIDE WITH PRICE FLIP REVERSAL DOWN:   DAL, DRI, ESE, ESRX, KORS, MNK, OXM, PJC, SIG, SMP, UEIC
DAILY DOWNSIDE WITH PRICE FLIP REVERSAL UP:   AMP, GEF, NDSN

Updated: 8/27/18
WEEKLY UPSIDE 13:   AGYS, ANF, ARQL, CNC, DIN, DOV, ELY, EME, GCO, IT, MED, NSC, TMK, TUES, TYL, WSM, YUM
WEEKLY DOWNSIDE 13:   PM

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:   DLG FR, DRX LN, NIBEB SS, SAP GR
DAILY DOWNSIDE 13:  BARC LN, CNA LN, CON GR, ELUXB SS

DAILY UPSIDE WITH PRICE FLIP REVERSAL DOWN:   CARLB DC, ULVR LN
DAILY DOWNSIDE WITH PRICE FLIP REVERSAL UP:   ANTO LN

Updated: 8/27/18

WEEKLY UPSIDE 13:  HXS LN, UCB BB, IVS SM
WEEKLY DOWNSIDE 13BAYN GR, DC/ LN, HUH1V FH, TKA GR

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




Unsubscribe me from Hedge Fund Telemetry

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

CONFIDENTIALITY NOTE and DISCLAIMER: This message is for the named person's use only. It may contain confidential, proprietary or legally privileged material. No confidentiality or privilege is waived by any accidental or unintentional transmission. If you receive this message in error, please immediately delete it and all copies of it from your system, destroy any hard copies and notify the sender. You must not, directly or indirectly, use, disclose, distribute, print or copy any part of this message if you are not the intended recipient. Hedge Fund Telemetry LLC. cannot guarantee the confidentiality of the material transmitted; therefore, information of a sensitive or confidential nature should not be transmitted. There is risk in trading markets.  Hedge Fund Telemetry LLC reports are based on information gathered from various sources and believed to be reliable, but are not guaranteed as to accuracy and completeness.  The information is subject to change without notice and Hedge Fund Telemetry LLC has no obligation to provide any updates or changes. Hedge Fund Telemetry LLC is providing this data for informational and educational purposes and does not believe that it is sufficient to base an investment decision on. This information should not be regarded as a solicitation or recommendation of any particular security or to engage in any trading strategy. One should always check with your licensed financial advisor to determine suitability of any investments.

 


Email Marketing by ActiveCampaign