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One of the more predicable things that happens, when the Fed raises rates, is blaming the Fed for any subsequent stock market pullback or economic softening.  Go back to 1929, 1937, 2001, 2008, and even in 2015 when tapering talk was discussed.  They always blame the Fed.  Yesterday President Trump said the Fed was "loco" and "has gone crazy for raising rates".  Fed Chairman Powell is doing what the Fed should do after 9 years of ultra low rates.  Having the ability to come in at times of stress is what the Fed does (and they need more bullets to fire) and a pullback like we've seen over the past few weeks isn't going to change his mandate.  He didn't do anything in February with a deeper pullback into March and expectations remain the same for future hikes.  

Another very predicable thing is the people calling to buy the dips offering a ton of studies and reasons.  People on both Bloomberg and CNBC today have been overwhelmingly saying to buy the dip as things are "oversold".  These are people who saw no risk a few weeks ago or overbought conditions and never said to take down risk.  The fear in the market is not yet there in my opinion to call for a durable bottom.  The tactical 60 minute charts of the S&P and Nasdaq 100 are due for a bounce but it's going to be a wave 4 of 5 corrective lower high bounce followed by a lower low.  On a daily time frame this first move down is wave 1 of 5 and a corrective lower high wave 2 is ahead.  S&P bullish sentiment is at 28% and this isn't oversold enough.  The percentage of stocks above the 50 day has dropped hard but it still can go lower.  Yesterday had a very strong breadth thrust on the downside that had 248 S&P stocks make 20 day lows.  This is a large number that adds to my conviction that a lower high bounce is possible ahead.  Tomorrow the big US banks will report and the bar is relatively low this quarter.  Overall the earnings are expected to be OK but where are we in the cycle is the big question.  Diminishing marginal return on rate increases seemed to have hit a breaking point. Not getting that incremental increase in margin. Loan growth not taking off. Credit quality has remained stellar. Better hope banks don't report any mild issues there because that is the last shoe to drop.  

I've reduced some short exposure this morning on the Trade Ideas Sheet with the belief a lower high bounce is ahead.   If I am wrong and things continue lower which is totally possible with foreign markets under pressure breaking all support levels my exposure will be fine.  I still believe strongly having a decent sized percentage of cash at this time is appropriate.  This period of volatility is not over and by no means is the all clear flag waving.  

• US Markets -  Sentiment is not oversold yet.  Tactical 60 minute charts should see a lower high bounce soon
  
• Hedge Fund Telemetry Trade Ideas - Took some profits on some shorts and added FB long
  
• The Anatomy of Nasdaq Declines - From Ned Davis
  
• Will the US drag the world lower?
  
• Credit Spreads Update
  
• Facebook - New Long Idea
  
• PPO Monitor - Percentage Price Oscillator Force Ranked Sector Rotation - Defensive stocks on top now
  
• Bloomberg Technical Pattern Recognition Screen
  
• Currency Update -  UK Pound looks higher
  
• European Market Update - Indexes making new lows with no bottom in sight
  
• Global Market Update - Korea and India still look lower
  
• Asian Market Update - Nikkei short now +7.5% and Shanghai breaking down again
  
• Crude Update - Sentiment coming down and price will follow
  
• Gold Update -  Looking good on the long side
  
• Bond Update  - A bond bounce is here
  
• DeMark Screens - Daily, Weekly, Monthly upside/downside exhaustion signals within the S&P 500 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.  When the new website launches we will be adding new charts and historical sentiment data for Euro Stoxx 50, UK FTSE 100, German DAX, French Cac 40.  We will be adding Japanese Bonds, German Bunds, and a few more.  
SPX bullish sentiment is at 28%.  I can't wait to launch our new sentiment charts.  These Excel based charts are horrible.  Sorry new site coming soon.  

SPX daily

SPX 60 minute tactical time frame

S&P cumulative breadth

Nasdaq bullish sentiment is at 26%

NDX Index

NDX 60 minute time frame

Nasdaq Summation Index NOT oversold enough

Dow Jones Industrial Average 60 minute time frame

Trade Ideas Sheet - Long and short US equity ideas including ETF's.  We will be overhauling the Trade Ideas Sheets for long only, short only, ETF's when the new website rolls out soon.  There will also be a clearer email distribution with changes.  
Trade Ideas Changes:   REDUCED SIZE TO 2.5% BRK/B +2%, XLI +4.5%, QQQ +5.5%, NVDA +10%, Covered:  XLF +5.75%, AMD +21%.  ADDED NEW 2.5% LONG FB
Stops on everything.  TSLA 320, GDX 17.35 , FEYE 16.00, NVDA 295,  QQQ 190 (raised stop), XLK 79 (raised stop), SPY 295, XLY 118, AXP 114,  XRT 53, IWM 172, XLV 95, BRK/B 225, DIA 275, XLI 81.50, IBB 123, AMD 30 (lowered stop), ROST 100.50, ABT 76, ORCL 53, LULU 165, AMZN 1990 (lowered stop to breakeven), DXJ 61, GLD 111, FB 148

From Ned Davis Research "Since 1971, when the Nasdaq has lost -5%, the probability of it turning into a -10% decline has been 33%.  Of those that did turn into a -10% dip, 50% went on to lose 15%.  And another 50% of severe corrections became full blown bear markets."  

This is the total US market ETF now on day 3 of 13 with a downside Countdown and still well above the February lows.  Keep in mind in the last week the market has lost 4 months of gains

The world ex US is making new lows on day 4 of 13 with its Countdown.  This is making new lows and there is no support below

Credit spreads have been contained and I offer a few reasons why as well some concerns on how they could widen quickly.  People are way too complacent in my view since US Treasuries and High Yield have both been hit hard and that is very different from other periods when US Treasuries rallied into a risk off period.  

This is the JNK vs TLT ratio which isn't a great comparison.  BUT... look at the widening (lower) in 2011 and 2014-2015 periods.  These periods saw big pullbacks in the energy sector and the energy sector is 10% of the JNK

HYG ETF

Energy XLE ETF with periods where spreads blew out.  Both of these periods had huge losses in the market.  

I hate FB and I'm buying a small sized long with the downside 13 and 9 today.  My stop is tight at 148 and if stopped we'll move on.

SPY vs IWM ratio has seen pronounced outperformance by large cap and that could be ending

SPY vs RSP (equal weight) also has seen strong outperformance which could be ending

SPY vs TLT with a big reversal and other periods with this signal saw weak equities vs bonds

Semi's still look lower

The PPO Monitor is a proprietary monitor developed to force rank Indexes, Sectors, and Stocks.  It ranks top down by strongest to weakest by percentage above/below the 50 day moving average.  Shorter term signals can be seen when the 10 and 20 day moving averages turn up (green) or down (red) which often are followed by the 50 day moving average.  This is useful to watch for historically overbought/oversold percentage above/below the 50 day moving average.  It is non correlated with the DeMark Indicators however we have found upside/downside exhaustion signals often occur when something rises to the top or drifts to the bottom of the monitor - increasing the timing aspect. We share this monitor with clients with Bloomberg Terminals.  An added feature is that each market/ETF can be expanded with each component force ranked in the same way.  A couple other features include price deviation from intraday VWAP (useful for intraday reversals) and new 20 day highs/lows on right side.  Please inquire if you would like to be permissioned to use the PPO Monitor.  

Today's highlights:  As designed the sector rotation into risk off has appeared once again with Gold and Gold Miners at the top.  Utilities are up there too.  Energy which was at the top is weakening as expected.  

S&P 500 Members/Absolute Price Performance and Relative Price Performance vs S&P 500 and Sector ETF's.  ETF's vs Index Sectors.  Pair Trades.  Long side  is first symbol, short side is second symbol.  

US Dollar bullish sentiment remains at 58%

US Dollar Index still range bound

Euro bullish sentiment is at

Euro Spot

British Pound should work higher

Yuan

Bitcoin with some risk off action.  6000 is still the line in the sand

Euro Stoxx 50 is going lower

German DAX ditto

UK FTSE 100 nearing downside wave 5 price objective

European Volatility looks higher

India Nifty 50 still should work lower

Korean Kospi is now in wave 5 down

Nikkei bullish sentiment is at 57% down from a recent bell ringer 96%

Nikkei has been very good with the DeMark Indicators

Shanghai breaking down again

Crude bullish sentiment is at 77% down from a recent high of 96%

WTI Crude Futures should work lower

Gold bullish sentiment is at 24%

Gold is acting great today

Gold Miners still can be bought

Bond bullish sentiment is at 38%

US 10 Year Yield should work lower

TLT price flip up today

IEF also turning up

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