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03/29/2024
Thomas Thornton

When Billionaires Eat Iguana

Amazon in the last 90 days has increased it's market cap by a little over $300 billion which is about the size of Walmart, Target, and Best Buy combined.  Jeff Bezos has increased his wealth today by $1.5 billion and in the past year $60 billion to $126 billion.  In the internet mania bubble high levels of short interest drove many of these early unprofitable stocks to absurd levels but today Amazon has only 1% of it's float short and short interest is down about 20% since mid January.  This is not a squeeze but a chase and chases end when they run out of fuel.  Amazon has been speculated to be entering many new markets including banking/finance/investment management/mortgage lending, shipping/deliveries, and healthcare.  They have a lot of money and power to be able to throw at a market and disrupt it however, this is also the type of target that government regulators have in their sights.  When or if this will happen is only speculation.  Jeff Bezos without a doubt is the greatest CEO/Founder living and he has noble space exploration goals that he figures "he will pay for with his Amazon lottery winnings."   So as you see Jeff Bezos eating Iguana this weekend  "The chicken of the trees" ask yourself is any of this normal?


The markets on Friday surged on a stronger payroll number propelling the Nasdaq to new highs, however every other major index did not confirm and technology was the only one of the 11 S&P sectors hitting new highs.  Banks and Semiconductors have been very strong but how much longer can they go up like this?  Today I am focused on Semi's, Tech, and the largest Financials in the US.  On late Friday I added some more April puts SPY 274, QQQ 170, IWM 156, and DIA 252 with only 2.5% size.  The March puts I bought (2.5% size), I've written off in my head and the 5% weight in the other April puts will take some work to the downside which I am not writing off yet.  Super short term support to watch is the VWAP from the 8:30am payroll release:  SPY 277.90, QQQ 172.55, IWM 158.50, DIA 252.78 - the Dow is now under the VWAP and has been relatively the weakest of all the major indexes watched.

Notable:

  • US Markets - Strong surge in sentiment while only the Nasdaq has made new highs
  • Amazon and Custom Basket of Weak Retail Names
  • Semiconductors - A little more upside potential before exhaustion
  • Apple and Microsoft - Weekly upside exhaustion today
  • Financials - XLF daily and weekly charts of the largest weights in the XLF exhausting
  • Industrials and Transports - Old leaders, now lagging
  • Bonds - 10 year yields with a new downside wave pattern
  • DeMark Screens - upside/downside exhaustion signals (weekly updated today)

US Markets


SPX bullish sentiment has moved up sharply to 66% from 50%.  Large pops like this or drops tend to mean revert

 


SPX daily still has the downside wave pattern active despite moving above the late February high

 


The shorter term 30 minute chart of the SPX shows an upside wave 5 price objective at 2813.  There are several upside exhaustion signals from late Friday and this morning so this could be it for the recent move

 


Nasdaq bullish sentiment is at 70% and also have popped significantly after being so divergent.  70% is where the elevated red zone starts.  

 


Nasdaq futures has a pink Combo 13 today that was deferred for several weeks.  This has been by far the strongest of all the indexes due to the weighting of the top 5 leaders. 

 


The shorter term 30 minute on the NDX also has a couple upside exhaustion signals so some stalling out and consolidating some of the recent gains is highly probable

 


The Dow daily is just at the 50 day and still below the late February lower high.

 


The Dow 30 minute charts also has a cluster of upside exhaustion signals too. This is a much weaker index than any other index in the US

 


IWM Russell 2000 has been exceptionally strong up 7% in March but it still has not made a new high yet.  

 
Amazon vs Weak Retail Basket


Amazon has been amazing but it should be known that the DeMark indicators work really well with AMZN.  It cut off but the last downside exhaustion (strong buy signal) was in September and the recent upside exhaustion signals have seen pullbacks of 5% and more recently 10%.  It's on day 7 of 13 so it's likely going to continue to 13.  

 


AMZN is in wave 5 from the September low and has an upside price objective of 1750.  I doubt it gets there with the upside Countdown on day 7 of 13 but it should work a little higher before lower

 

I created a custom basket of 14 retail names that have been terrible of late.  WMT, HD, RH, DG, DLTR, LOW, TGT, BBY, COST, ROST, DKS, BIG.  That index vs the SPX relatively still has downside ahead on day 7 of 13 with a downside Countdown.  Considering AMZN has moved significantly higher when these companies have reported weaker earnings or guidance should give people pause when thinking AMZN's business is worthy of the massive market cap gains.  

 


Here's the actual weaker retail custom index now down 13% from January highs.  

 
Semiconductors


I've been showing the recent upside Countdown with SMH and it's now on day 8 of 13.  

 


The weekly of SMH did get the upside red Countdown 13 and is the 5th wave too.  

 


NVDA daily has an upside red Countdown 13 today.  The last cluster in November worked well.  

 


MU is mirroring the SMH and is also on day 8 of 13.

 


MU wave 5 upside price objective is at 59.25 and just had a Combo exhaustion 13 on Thursday.  

 


AVGO Broadcom has been much weaker gapping up on a rumor of INTC buying them.  AVGO is also trying to buy QCOM.  I've seen many semiconductor cycles and they typically end in spectacular fashion with crazy rumors

 


INTC has been one that I have liked on the long side since last August when there was a downside exhaustion signal.  I did take profits early however.   The wave 5 price objective is 54.79.  Now that they are rumored to buy AVGO we'll see if this stalls out.  This deal would face some tough scrutiny and if it goes through would get INTC deeper into the iPhone food chain.

 
Apple and Microsoft
 

Apple is making a new all time high today.  There is no upside Countdown on the daily time frame

 


Apple weekly does however now have an upside Countdown exhaustion on this 'breakout' and I don't like to see exhaustion signals at breakouts

 


Microsoft also has been moving to an all time high while there remains some upside exhaustion on the daily time frame that still is in play.  

 


Microsoft weekly also has both red Sequential and pink Combo with upside exhaustion signals in play.  Some consolidation is due

 
Financials Update
 

XLF Financials has a mixed DeMark picture with a red Downside Countdown in progress stuck on day 5 of 13 however there is a green Setup on the upside on day 4 of 9.  If the green Setup completes 9 consecutive days of closing higher than 4 previous closes then the downside red Countdown is nullified.  

 

The following are weekly charts of some of the largest weights in the XLF.

BRK/B had an upside exhaustion in January and still has not recovered the old highs

 


BAC has a red upside weekly exhaustion today.  Some consolidation is due

 


Citi had an upside exhaustion in January and has not made a new high.  In the last year these exhaustion signals have seen stalling and nominal pullbacks

 


JPM has a pink Combo upside exhaustion 13 today in wave 5 above the price objective of 113.31

 

MS has a pink Combo today and has nearly achieved the wave 5 upside price objective of 60.61.

 
Industrials and Transports - Old leaders, now lagging
 


XLI Industrials ETF has not been able to get above the late February highs after being such a strong leader.

 


Same story with Transports stuck at the 50 day.  

 
Bonds


The reaction on Friday after the strong payroll number with Bonds was strangely muted.  I found this was not discussed as it probably should have been..

 


There is a now a wave pattern on the 10 Year Yield with a wave 3 downside price objective of 2.7199%.   If the yield makes a new high this wave pattern will revert back to the upside 5th wave.

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

Daily/Weekly DeMark upside/downside exhaustion signals (Sequential) Weekly updated on Monday's.  Price flips occur when a stock closes higher/lower than four previous closes.    

S&P 1500 Universe: 

DAILY UPSIDE 13:   ACN, GILD, KAMN, LNN, LOGM, MAR, MYE, SYNA, TRV, TTWO, TXT, UHS, XYL
DAILY DOWNSIDE 13:  LB, TCO

DAILY UPSIDE WITH PRICE FLIP REVERSAL DOWN:    SJM
DAILY DOWNSIDE WITH PRICE FLIP REVERSAL UP:   RDC

Updated: 3/12/18
WEEKLY UPSIDE 13:   CNC, CRL, FDS, JBHT, LMNX, LPSN, MGLN, MSCI, PRFT, RHT, SRDX, TDS, TXN, WDC
WEEKLY DOWNSIDE 13:   FSP, HOG, SAH

Updated: 3/1/1
MONTHLY UPSIDE 13:     BDX, BMY, CAT, COL, CW, EBIX, GNCMA, IRBT, MMSI, NFLX
MONTHLY DOWNSIDE 13:    CHK, SVU, WIN

Euro Stoxx 600 Universe: 

DAILY UPSIDE 13:   CAP FP, EBS AV, HEXAB SS, INVP LN
DAILY DOWNSIDE 13: NONE

DAILY UPSIDE WITH PRICE FLIP REVERSAL DOWN:    NONE
DAILY DOWNSIDE WITH PRICE FLIP REVERSAL UP:   HSBA LN, PTEC LN

Updated: 3/12/18
WEEKLY UPSIDE 13:    COB LN, EBS AV, GET FP, MRL SM
WEEKLY DOWNSIDE 13:   FGP LN, HMSO LN, MRK GR, ONTEX BB, SBMO NA, SIE GR

Updated: 3/1/18
MONTHLY UPSIDE 13:    ASML NA, ENX FP, FI/N SW, INVP LN, SAB SM, SCR FP, US IM
MONTHLY DOWNSIDE 13:   NONE


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