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

I've been perplexed with the US 10 Year over the recent months as it has been in a very tight range with bullish sentiment elevated and Commitment of Traders data showing large speculators set up very net short.  Jeff Gundlach, of Double Line Funds is one of my favorite market people and I have huge respect for him as he is never shy to express an opinion on all types or markets including stocks which most bond people never do.  But I think he might be interpreting the CoT data wrong.  Yesterday I had one of my clients who runs a credit hedge fund email me with a explanation of what he sees actually happening.  Here's are his thoughts:

We are a credit hedge fund that is intimately familiar with the long basis trade. Big money…. Fixed income mutual funds are using futures for duration needs and taking the cash (not margined on the long future position) to purchase commercial paper or shorter duration product which in a flat yield curve give them almost as much yield with less duration risk.   Meanwhile, the institutional bid for futures make futures look rich to their cash cousins.   So large speculators are selling the futures and buying the cash… long the basis to capitalize on the relative richness of the futures.   These large speculators are not short… but leveraged and what will affect their being pushed out of the position will be the cost of financing the position…. Not a rally.    A tell tale sign of this is that cash repo markets have very few specials indicating no large short base in treasuries at all.

If anyone is friends with Jeff Gundlach, I'd love to get his opinion on this.  By the way my client, like Jeff is a Buffalo Bills fan too.   

I feel so lucky that I have so many super smart clients from around the world who are experts in various markets.  Everyday is a day to learn more.  

Today is 9/11 and around the US and especially around the NY area, it is a somber day as we all knew people who died.  After 17 years I still get chills when I was in San Francisco attending the Bank of America Tech Conference and early morning communicating with friends in NYC by IM they all logged off suddenly.  It was strange.  When I saw what was happening, I had friends in NYC call me and IM me asking me to call their parents and wives saying they were headed home.  I had a new laptop and remember never opening the Cantor early note from 9/11.  It was a time of utter confusion and disbelief that if you were too young back then, my words can't describe the sadness, anger, and resilience in the US.  Here's my favorite Tom Petty song "I won't back down" he did at the 9/11 tribute.  It sums up how I felt going forward.   

• US Markets - Sentiment off highs but above midpoint majority line.  Will the 50 day hold with the NDX?
  
• Hedge Fund Telemetry Trade Ideas - Added VOD long
  
• Jeff Gundlach and the Commitment of Traders data on the US 10 Year
  
• FAANG and FANG + Index Update
  
• FDX and UPS Update
  
• Vodaphone New Long Idea
  
• Currency Update - Watch the Yuan for continued weakness
  
• European Market Update -  Not a buy yet
  
• Global Market Update - EEM, Brazil, and India
  
• Asian Market Update - Big bounce in Japan but not in China
  
• Crude Update - Still think drift lower
  
• Gold and Copper Update - Gold Futures daily with another downside exhaustion but weekly not there yet
  
• DeMark Screens - Daily, Weekly, Monthly upside/downside exhaustion signals within the S&P 1500 and Euro Stoxx 600
  

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 65%.  Next week we will be rolling out new charts.  Much improved.

S&P Futures still room on the downside to get to 50 day

Nasdaq bullish sentiment is at 55% holding the important majority line at 50%

NDX Index holding the 50 day.  

Dow Jones Industrial Average also have turned over a little

IWM Russell 2000 weaker relatively lately

Trade Ideas - Removed TLT long and added VOD 2.5% long

Jeff tweeted this out recently

Here's how the CoT positioning with large speculators is set up.  It looks very short but is it?

US 10 year held the 2.80 level and now looks like it will breakout with the upside red Sequential Countdown on day 3 of 13

TLT Bond ETF is still in that range but I'm removing my long for now.  

FAANG held the 50 day

FANG + was well under the 50 day and at support.  There is a new red Sequential Countdown

FDX with a new upside red Sequential Countdown 13

UPS had a recent upside Sequential and Combo upside exhaustion where it has stalled but hasn't been able to turn lower.  Perhaps with FDX triggering it will work with the group

Vodaphone is down 32% in the past year and has both Sequential and Combo exhaustion.  The yield on this is 8% and I am adding this to the long side with the Trade Ideas Sheet.  For those who trade the local shares in London, the Countdowns are similar

US Dollar bullish sentiment is at 44%

US Dollar Index still in tight range

Euro bullish sentiment is at 47% and nearly equal to the USD sentiment

Euro Spot

Yuan continues to weaken and I expect it to be below 6.90 this week and soon below 7

Euro Stoxx 50 still not a buy but could bounce on tomorrow green 9

German DAX same with DAX

EEM is also expecting a green 9 tomorrow

Brazill at risk of making a new low.  

India Nifty 50 continues lower to the 50 day

Nikkei bounced big today

FXI still looks weak but green 9 could turn this so we will see

Crude bullish sentiment is at 70%

Crude still looks lower

Gold bullish sentiment is at 23%

Gold Futures with another daily downside red Sequential Countdown 13.  

Gold Futures weekly has more downside to go

GLD weekly is on week 12 of 13 so getting closer but Combo is on week 9 of 13

Copper near new lows

FCX update

Unsubscribe me from Hedge Fund Telemetry

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