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8/31/18
Thomas Thornton

End of Summer Trading

It's the end of August and for many the end of Summer vacation.  Kids are headed back to school and portfolio managers will be back as well for the final stretch to the end of the year.  Many portfolio managers are underperforming and mark my word they are going to do everything they can to make up those gains.  It hasn't been an uneventful August as there were a few decent swings and tweets (funding secured) and thus an increase  volatility, as the S&P’s had a 120 point range this month vs. only 73 points last August. .  August volume this year slightly better vs. 2017; MTD volume as averaged 6.1B vs. 5.9B last year.

Later today I will be on Yahoo Finance TV after 3pm and will talk markets and I will mention some of the current risks I see in the market.  One of my clients just emailed me saying "They only put bears on at the close before a three day weekend."   Good point.

Hope everyone has a great long weekend and if you have any questions, thoughts, or just want to say hi,  I will be on my desk Monday as we continue to build out the new website.  As reminder, if you're getting this note forwarded to you, you will need a password going forward to access my work.  To sign up to become a client please click here


  • US Markets - Sentiment extreme, DeMark upside exhaustion signals in play
  • Hedge Fund Telemetry Trade Ideas - Sold longs:  FEZ, HAL, added back short AMZN 5%
  • Healthcare Sector with upside exhaustion signals
  • Consumer Staples - Finally nearing a buyable pullback level
  • A few recent stocks I'm watching
  • Currency Update - Reversals with USDEUR and Yuan still is weak
  • European Market Update - Removed Euro Stoxx 50 long, more lower highs
  • Global Market Update - EEM holding in OK for now
  • Asian Market Update - Nikkei has an upside DeMark Sequential exhaustion in play
  • Crude Update - Extreme bullish sentiment at 90% and green Setup 9 suggest a pullback due
  • Gold Update - still needs work to do but it's not going down which is a positive
  • Bond Update - US 10 year yields are going lower with DeMark Countdown. BUY BONDS NOW
  • 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 75%


S&P 500 Index


FANG + Index with a green Setup 9 potentially ending the 4th wave


Nasdaq bullish sentiment is at 77%


NDX Index with green Setup 9 today


Dow Jones Industrial Average price flip down today with green 1


IWM Russell 2000 stalling here

 
Hedge Fund Telemetry Trade Ideas


Trade Ideas -  removed FEZ, HAL longs - small gain and small loss.  Added back 5% AMZN short.  A few option trades I put on for October OPEX.  SPY 285/270 put spread for $1.70 8x potential, long QQQ 180/165 put spread for $1.50 10x potential,  VIX 15/20 call spread $1.50 3x potential

 
Healthcare Sector Upside Exhaustion Signals


IBB Biotech is near on day 12 of 13.  


XLV is on day 12 of 13 too

 
Consumer Staples Update


Been wanting a wave 2 pullback which is my favorite wave to buy.  

 
A few recent stocks I've been watching


I added back a 5% short in Amazon today with the green Setup 9.  I read the MS note a couple times and I really think the reaction was an over reaction.  


UPS with a price flip lower today (green 1 - trading lower than 4 previous closes)


HAL just couldn't get moving and I removed it today as I also see crude sentiment in the extreme zone and with a green Setup 9.  The group looks lower (see below on OIH)

 
Currencies


US Dollar bullish sentiment is at 53% and holding the midpoint 50% level


US Dollar Index bouncing


Euro bullish sentiment is at 48%


Euro Spot reversing on the green Setup 9 as expected


Yuan still is weak and didn't bounce much

 
European Markets


Euro Stoxx 50 just fell apart.  I removed the small FEZ long with a small gain.  If the US starts to weaken, Europe will fall too.  


German DAX another lower high


UK FTSE new recent low and headed lower


Euro Banks making a new low.  The second chart is the weekly and on week 9 of 13.  Going lower

 
Global Markets


Bloomberg World Index reversal after the green Setup 9 as expected


EEM Emerging Markets ETF isn't down that much and I'm holding the small long for now

 
Asian Markets


Nikkei bullish sentiment is at 70%


Nikkei should reverse lower


FXI still sideways

 
Crude Update


Crude bullish sentiment is at 90% and this is very extreme and as sell off is due


Crude should sell off from here

 
Gold Update


Gold bullish sentiment is at 26%


Gold just needs more work to do

 
Bond Update


Bond bullish sentiment is at 73%


US 10 Year YIeld on day 4 of 13 with a downside red Sequential Countdown.  Bonds are going to rally and stocks are going lower.  Risk off

 
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:   BDX, GOOG, LXU, MNST, PGR, PTC
DAILY DOWNSIDE 13:   AOS, HIG, WTFC

DAILY UPSIDE WITH PRICE FLIP REVERSAL DOWN:   ACIW, ACT, AMSF, AON, BDC, BJRI, BMS, COST, CRM, CSL, CUB, HOS, HRS, JKHY, MAA, MSTR, NSC, PRGS, R, RTN, SNPS, TGT, VRTU
DAILY DOWNSIDE WITH PRICE FLIP REVERSAL UP:   IVC, NCI

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:   CDI FP, SEBA SS
DAILY DOWNSIDE 13:  AA/ LN, EZJ LN, INVP LN, PRU LN, PSM GR

DAILY UPSIDE WITH PRICE FLIP REVERSAL DOWN:   PRU LN
DAILY DOWNSIDE WITH PRICE FLIP REVERSAL UP:   DMGT LN, EDTAB SS, ETL FP

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




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