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3/7/19
Thomas Thornton

Eyes wide shut

Twenty years ago today one of my favorite film makers, Stanley Kubrick passed away.  He had just completed Eyes Wide Shut with Tom Cruise.  I wasn't a fan of Eyes Wide Shut. If directed by anyone other than Kubrick it would be straight to VHS.   My favorite Kubrick films are:  2001, Spartacus, Full Metal Jacket, Shining, Dr. Strangelove, and Clockwork Orange.  All of them hold up well after all the years and from a film making and ground breaking shocking way.  And thanks to Carl Quintanilla from CNBC for the heads up who is a giant film buff and genuine great guy.  

The market participants and analysts I've been reading lately seem to have their eyes wide shut to some of the risks happening within the markets globally.  I read Rich Ross technician from ISI's recent note and found myself disagreeing with everyone of his calls. I still like Rich as he went after someone on CNBC once for their continued wrong calls on Bitcoin - never to be seen on CNBC again. People including "top strategists" on CNBC have turned back into the "What to buy NOW" and "keep buying" mantra.  The Fed and "Powell Put" will save everything.  The US China trade deal will "get done" but what exactly will "get done." Bloomberg had a story highlighting  some skepticism about ability of a US China trade deal to drive a market rally. Semiconductor CEO's keep talking "second half recovery" and a US China trade deal will see a huge boost in semi sales while most of the semi stocks have already moved right back up as no warnings over huge inventories will need to get worked off first.  With the Fed on hold, the USD "should come down" but it's not and gold with an accommodative Fed should lift right?  The bond markets around the world with the Fed on pause and now the ECB saying they will inject another series of TLTRO's.  You know "TLTRO's will help the Euro banks." but Euro banks are getting slammed today.  Drahgi even said "Negative interest rates worked well."  Yep genius with the European bank index down 35% from the highs.  Some Fed Governor even said yesterday QE is possible as could be negative rates.   Wait. Isn't the economy doing "great"?    

Opps this turned into a mini rant.  It wasn't meant to be but rather to highlight how a 20% gain from the lows in  December has kept people's eyes wide shut again.   The risks remain and they are high if the Central Banks waste bullets pushing on a string with new stimulative measures at this point with the market up.  As I showed the other day the last two Fed cutting cycles had 10 and 13 cuts and both saw significant market drops along the way... the last cut always works!   Stay defensive and keep your eyes wide open.  

US Markets


SPX bullish sentiment is at  70%


SPX daily rolling.  Under 2750 and I hear CTA's will turn seller.  


SPX 60 minute tactical time frame with over a 2 week low today


Nasdaq bullish sentiment is at 65%


NDX Index has been very strong but today's weak again


NDX 60 minute tactical time frame sloppy but holding 7000


Dow Jones Industrial Average rolling over


IWM Russell 2000 rolling over

 
Hedge Fund Telemetry Trade Ideas

Trade Ideas Sheet
Trade Ideas Changes:  No changes today

 
FANG's could be topping here while people think it's a good hiding place.  It's not


FAANG custom index has some recent DeMark Countdowns and a Setup 9.  People have been saying to hide in the FANGS.  This might be a really bad idea as that was last year's best idea.  And just remember people are NOT short any of these names in size to cause a short squeeze


FANG (ex Apple)


FANG+

 
A few healthcare stocks that look terrible... as longs


ANTM is one on the Trade Ideas Sheet as a short.  There were both daily and weekly upside Countdown 13's together.  Can it fill the gap to 270?  I think so


CVS continues lower.  I get A LOT of inquires on this one and even though it's oversold I can't say buy it here.  I'd like a reversal first.  Remember it's very hard to buy a very oversold stock in an overbought market.  They sell losers first when everything falls


UNH with a steep drop.  Setup 9 could see a short term lift but I feel this goes lower

 
High Beta and Low Volatility ETF's - Update


High Beta with a lot of upside Countdown 13's and rolling over now


Low Volatility has been exceptional on the way up but it could be coming to an end

 
US Sector Focus - Trannies


Transports down 10 days in a row.  Now with Setup 9 and could see a short term bounce but I believe weak seasonality in March/April will see this lower.  Especially with Airlines and as you know I have two on my Trade Ideas Sheet short.  Some airlines are making multi year relative lows vs the SPX too  

 
PPO Monitor - Percentage Price Oscillator

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:  I grabbed this a little while ago and it showed most of the ETF's down but some above the intraday VWAP's suggesting a bounce off the lows.  Transports, Gold, Energy hitting 20 day lows.  Most are now under the 10 and 20 day moving average.  Recall a couple weeks ago when everything was above the moving averages.  

 
Cannabis Index


A pullback in Cannabis stocks is likely from here

 
Currencies


US Dollar bullish sentiment is at 76% and I zoomed the sentiment so you can see it held the 50% level and back above the moving averages


US Dollar Index should continue higher and break out but not sure how far it can go


Euro bullish sentiment is at 18%


Euro Spot looking lower even after Draghi did his best.  

 
European Markets


Euro Stoxx 50 nearing the trend line.  


Euro Bank Index reversing after recent upside Countdown 13 from last week (yeah we showed it then)


UK FTSE 100 still looks toppy here

 
Global Markets


Bloomberg World Index


EEM Emerging Markets ETF



 
Asian Markets


China A Shares ETF with a big price flip down


Nikkei should work lower.  Maybe a lower low vs December


Hong Kong looks tired

 
Corn and Wheat Update


Corn has drifted a little lower.  I still like the seasonality in coming months with Corn and Wheat but wait for a turn up.  


Wheat couldn't hold that first downside Countdown.  More Combo 13's here.  Wait for a turn up


DBA Agriculture ETF slipped a little further than expected too

 
Gold Update


Gold bullish sentiment is at 54%


Gold with Setup 9.  Maybe it can bounce here.  I'm not a buyer into a wave 2 of 5 wave (lower high expected)

 
Bond Update


Bond bullish sentiment is at 73%


US 10 Year Yield has been tough to make a call on which I've been saying for months.  


US 30 Year Yield reversed after recent Setup 9 down.  Watch 2.99% as support.  


High Yield ETF

 

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