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Let's call the whole thing off
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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
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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%
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SPX daily should have the green Setup 9 tomorrow too
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SPY vs TLT ratio is nearing another top
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Nasdaq bullish sentiment is at 74%
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NDX Index had upside exhaustion on Friday
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Nasdaq 100 Futures has the upside exhaustion today
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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.
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IWM Russell 2000 upside exhaustion was from Thursday
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Hedge Fund Telemetry Trade Ideas
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Trade Ideas - Added back 2.5% TSLA short to make it 5% and removed UNP short
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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.
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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.
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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.
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Materials Sector - Potential upside
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I'm going to be searching in the materials sector for some long ideas in the coming days
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AMD Short Interest and Call Buying
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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
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US Dollar bullish sentiment is at 66% and down from the 96% peak recently when I said that the USD would come back down
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Euro bullish sentiment is at 47% and is nearing 50% again
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British Pound bullish sentiment is at 30% and at the high end of the lower range
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British Pound Sterling still a work in progress
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Chinese Yuan gained last night
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Euro Stoxx 50 still looks good and I remain long
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EEM Emerging Markets ETF back over the 50 day and is improving. I remain long
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India Nifty Fifty Index on day 10 of 13 with upside Sequential Countdown
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Nikkei bullish sentiment is at 68%
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Nikkei is on day 11 of 13 with Sequential Countdown and believe upside is limited here
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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.
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Gold still has a lot of work to do but I remain long
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Bond bullish sentiment is at 76% and nearing recent highs
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This hasn't broken yet to the downside and believe this still is possible
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High yield upside exhaustion
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Investment grade upside exhaustion.
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DEMARK SCREENS - Daily, Weekly, Monthly Upside/Downside Exhaustion Signals
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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 13: BAYN 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
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