Share

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

3/6/19
Thomas Thornton

Sailing into a storm


A lot of things are lining up for a pullback and it could get stormy.  The market has run out of momentum much like a sailboat without its sails up.  After an amazing start to the year, it's important to prepare your portfolio for this storm.  It could be short lived and the indexes could make a higher low and continue higher into April earnings or it could be an absolute move below the December lows.  I've thought the daily charts would be more important for that higher low scenario and I still do but below are weekly charts that show a possible deeper and longer period of under performance ahead.  I'm OK saying I don't know which scenario will happen at this point but leave open the possibility for both.   

Going to leave it short today as I have some development meetings with some new programmers for the site.  It's quite the operation to run this thing but I love it! Thank you for all your support as we continue to invest into the platform for reliability and functionality.  

Oh... if anyone is in the Boston area on March 30th, I'm speaking at the Harvard Business School Investment Symposium.  I'm really honored they asked me and it's open for all to attend and not just the MBA students.  Here a link with details

US Markets


SPX bullish sentiment is at  77% and still elevated


SPX daily watch 2709 as first support


SPX weekly will lose the Setup if next week it closes under 2775


Nasdaq bullish sentiment is at 70% and also elevated


NDX Index has an upside Countdown but I'm thinking 6909 support will be seen first


NDX weekly with Setup 9 and should see follow through in coming weeks lower


Dow Jones Industrial Average stalling but watch 25,053 as support


IWM Russell 2000 daily rolling


IWM weekly with Setup 9 and could see further move lower


Micro Cap rolling

 
Hedge Fund Telemetry Trade Ideas

Trade Ideas Sheet  
Trade Ideas Changes:  Taking profit on GLD long +4% and adding to BA short to bring it to 5% max sized long.
I like what I have and believe some of the shorts will start to turn into gains soon.  The PNL shows +4.41%  but it's actually 7.71% YTD as the PNL from last April (when we started tracking trade ideas ended the year -3.3%.  We're revamping this format as it's less than optimal.  I do have a BA option idea below

 
A few internals I'm watching


Nasdaq Summation Index is a great early indicator combining breadth and volume.  At the lows in December it helped with conviction to get long and now it's RIPPED to new highs but this week if you zoom in it's down on the week.  Things typically get scary when it crosses zero (for shorts on the way up and for longs on the way down)


SPY vs VIX weekly chart is an old one I've had for A LONG TIME.   A divergence could continue with price (the divergence happened last September with the price of SPX making a new high but this didn't) .  The single line MACD really has been NUTS too


VIX looks to be bottoming and I expect this to move up soon


UVXY is another way to trade volatility.  It's hairy and has structural issues with the roll but on occasion it works for a trade

 
Boeing about to descend back to earth - A Real Vision Video is out tomorrow


Dow Jones Industrial Average is a price weighted index.  It's not the most efficient but it's been around over 100 years and it is what it is.  We can exploit it when we see these types of things.  BA has attributed 16%  of the total gain from the March 09 lows almost exactly 10 years ago.  It's up 1740% from the lows which is just nuts.  It's done double for the index than the next best stock MMM.   I have a Real Vision video coming out tomorrow highlighting a smorgasbord of technical factors and indicators that suggests it will descend back down to earth.  Fasten your seatbelts and put your tray table back up.   If you don't want to short I recommended buying the Jan 2020 400 puts for ~$25 and selling the Jan 2020  340 puts for ~$10 for a net cost of $15 for a 4x potential gain.  


Dow attribution from December lows has BA doing a quarter of the heavy lifting.  BA was actually up 50% the true low... in 3 months people... 3 friggen months!


BA short interest is very low.  At $100 the short ratio was 10 days to cover, today it's 1 day to cover.  


BA Daily


BA Weekly


BA Monthly

 
US Sector Focus - Transports


IYT Transports ETF with Combo and Setup at the top.  Here's a little DeMark lesson for everyone today on how a pending Countdown can cancel.  

 
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:  More ETF's under the 10 and 20 day and breakdowns under VWAP mostly all day.  Breadth is weak with NYSE - 1500 and Nasdaq - 1340


The following chart shows the Percentage Price Oscillator (50 day moving average) in action.  Boeing at peak levels % above the 50 day and 20 day.  Yes we look at individual stocks like we do exactly the same way in the PPO ETF monitor.  If you are on Bloomberg and you're not using this let me know.  

 
Currencies


US Dollar bullish sentiment is at 73% and could make another run higher into 90% zone


US Dollar Index looks probable for it to make a run at new highs with low Countdown


Euro bullish sentiment is at 16% and remains depressed


Euro Spot nearing the lower end of the range

 
European Markets


Euro Stoxx 50 should consolidate these gains

 
Global Markets, EX USA, and Total US Market


Bloomberg World Index with a cluster of upside Countdown 13's


World Index EX USA stalling too.  


US Total Stock Market ETF looking toppy

 
Asian Markets


ASHR China A Share ETF with more Countdowns.  VERY overbought


Nikkei sideways but expect lower


China / Hong Kong FXI ETF still strong but expect a pullback to consolidate gains

 
Crude and Natural Gas Update


Crude bullish sentiment is at 77% and remains elevated but it is slightly declining now


WTI Crude Futures still sideways but I expect it to back off a little more


UGAZ as I have stressed is not for the faint of heart and it's down 6% and it's still up 15% from entry.  

 
Gold Update


Gold bullish sentiment is at 51% down from a recent high of 90%


Gold on day 8 of 9 with Setup - Taking profit on short +4%

 
Bond Update


Bond bullish sentiment is at 67%


US 10 Year Yield still in tight range


US 30 Year Yield reversing after the Setup 9


TLT reversing after the Setup 9

 
DEMARK SCREENS - Daily, Weekly, Monthly Upside/Downside Exhaustion Signals

Daily/Weekly DeMark upside/downside exhaustion signals (Sequential)  updated daily, Weekly signals 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 500 Universe:
DAILY UPSIDE 13:   BLL, CI, ICE, INCY, JEC
DAILY DOWNSIDE 13:  TSN

DAILY UPSIDE WITH PRICE FLIP REVERSAL DOWN:    NONE
DAILY DOWNSIDE WITH PRICE FLIP REVERSAL UP:   CELG, CERN, FBHS, LOW, LRCX, MAX, SIVB, TSN, WDC

Updated: 10/26/18
WEEKLY UPSIDE 13:  CME
WEEKLY DOWNSIDE 13:   ALXN, AMG, BHF

Updated: 11/1/18
MONTHLY UPSIDE 13:    ALXN, CINF, CRM, FFIV, JNJ, MSI, MTD, RTN, V, VRSK, XEL, YUM
MONTHLY DOWNSIDE 13:    WHR

Euro Stoxx 600 Universe:
DAILY UPSIDE 13:   ERICB SS
DAILY DOWNSIDE 13:  BMPS IM, SYDB DC

DAILY UPSIDE WITH PRICE FLIP REVERSAL DOWN:    NONE
DAILY DOWNSIDE WITH PRICE FLIP REVERSAL UP:   AZM IM, TSCO LN


Updated: 10/26/18

WEEKLY UPSIDE 13:   AZN LN, DRX LN, TOP DC
WEEKLY DOWNSIDE 13:   BME SM, DANSKE DC, FPE3 GR, HSBA LN, KN, FP, PNL NA, SAN SM, VOE AV

Updated: 11/1/18
MONTHLY UPSIDE 13:     NONE
MONTHLY DOWNSIDE 13:  DBK GR, TPK LN




Unsubscribe me from Hedge Fund Telemetry

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

CONFIDENTIALITY NOTE and DISCLAIMER: This message is for the named person's use only. It may contain confidential, proprietary or legally privileged material. No confidentiality or privilege is waived by any accidental or unintentional transmission. If you receive this message in error, please immediately delete it and all copies of it from your system, destroy any hard copies and notify the sender. You must not, directly or indirectly, use, disclose, distribute, print or copy any part of this message if you are not the intended recipient. Hedge Fund Telemetry LLC. cannot guarantee the confidentiality of the material transmitted; therefore, information of a sensitive or confidential nature should not be transmitted. There is risk in trading markets.  Hedge Fund Telemetry LLC reports are based on information gathered from various sources and believed to be reliable, but are not guaranteed as to accuracy and completeness.  The information is subject to change without notice and Hedge Fund Telemetry LLC has no obligation to provide any updates or changes. Hedge Fund Telemetry LLC is providing this data for informational and educational purposes and does not believe that it is sufficient to base an investment decision on. This information should not be regarded as a solicitation or recommendation of any particular security or to engage in any trading strategy. One should always check with your licensed financial advisor to determine suitability of any investments.