With the last question of yesterday’s Federal Reserve press conference…
Micheal McKee Bloomberg Reporter: Chairman Powell are you creating another market bubble?
Market Bulls: You don’t have to answer that question!
Fed Chairman Powell I’ll answer the question. You want answers?
Michael McKee: I think I’m entitled to them. Fed Chairman Powell: You want answers?!
Michael McKee I want the truth! Fed Chairman Powell: You can’t handle the truth!
Fed Chairman Powell: Mr. McKee, we live in a world that has a lot of debt, and those debts have to be supported by men with a money-printing button. Who’s gonna do it? You? You, reporter McKee? I have a greater responsibility than you can possibly fathom. You weep for capitalism, and you curse the Fed. You have that luxury. You have the luxury of not knowing what I know — that capitalism’s death, while tragic, probably saved zombie insolvent companies and over-indebted consumers; and my existence, while grotesque and incomprehensible to you, saves this Ponzi scheme economy.
Fed Chairman Powell: You don’t want the truth because deep down in places you don’t talk about on Bloomberg, you want us bidding up the S&P futures at 3am — you need us paying up above the ask. We use words like “price stability” “maximum employment,” “toolkit.” We use these words as the backbone of a life spent defending this overleveraged economy. You use them as a talking point.
Fed Chairman Powell: I have neither the time nor the inclination to explain myself to a reporter who rises and sleeps under the blanket of the very financial fodder that I provide and then questions the manner in which I provide it. I would rather that you just said “Thank you for lifting the Nasdaq to all-time highs” and went on your way. Otherwise, I suggest you pick up more overvalued stocks and enjoy the gains. Either way, I don’t give a DAMN what you think you’re entitled to!
Michael McKee: Did you create a new bubble?
Fed Chairman Powell: I did the job…
Michael McKee: Did you create a new bubble?
Fed Chairman Powell: YOU’RE GOD DAMN RIGHT I DID!!!
Well, the markets are finally reversing and we can blame the Fed comments, a potential second wave, lower rates hurting value stocks, wild speculation, over-loved and overbought markets.
Today’s note cover a TON of stuff and if new to Hedge Fund Telemetry let me know if you would like a primer on DeMark Indicators. No new changes as of now with the Trade Ideas Sheet as I did take down some long exposure and I’ll let the shorts work for now.
US MARKET SENTIMENT
Nasdaq 100 bullish sentiment remained yesterday at 94% while the S&P bullish sentiment dropped to 81%
S&P daily reversing down hard with a price flip down
OEX S&P 100 reversing down after Combo 13’s
NDX daily still the strongest of all the indexes thanks to the Mega cap tech names
Russell 2000 daily with a big reversal too at the 20 day moving average
Dow Jones Industrial Average daily with big price flip down
TODAY’S FOCUS – where were the signs?
Gamma exposure (GEX); refers to the sensitivity of existing option contracts to changes in the underlying price of the S&P 500. On the chart, a GEX value of 6 billion implies that if price moves +/-1%, 6 billion shares will come to market to push price in the opposite of the prevailing direction. The highest values tend to occur as prices peak and the lowest values as prices bottom. Visit www.squeezemetrics.com for further information about this and other data they provide.
My friend Jesse Felder who writes The Felder Report posted this Google Trends chart with searches for “Day Trading” and “Call Options”
The chart below uses the Russell 3000 as its sample and breaks the index into deciles (10 groups of 300 stocks each) based on share price. Since Schwab went to $0 commissions, the lowest priced stocks have been huge outperformers, and in fact the decile of stocks with the lowest per share prices are up 15%, substantially more than the rest of the market. To us, this looks like plausible evidence that smaller traders are playing at least some role in the performance of the market.
We’d note that the decile of the highest priced stocks has also outperformed over the same time period. Since $0 commissions began, we’ve also seen the introduction of fractional share trading on many online brokerage platforms, which allows investors to buy stocks by dollar amount instead of share amount. This now lets a small-dollar investor easily invest in high-priced stocks above $1,000/share like AMZN and GOOGL. Instead of having to buy a share of AMZN at $1,400, an investor can now simply buy $100 worth of AMZN and own a fraction of a share.
I’ve been showing the 7 day moving average of the put call ratio dropping lower than the peak in the market in January and February. I can’t keep up with my annotations moving the circle lower
FACTOR AND PPO MONITOR UPDATE
Factor monitor seeing big losses today erasing the rolling 5 day gains while the 1 month rolling gains are still green
The PPO monitor (percentage price oscillator) force ranks ETF’s by percentage above/below the 50 day moving average. This monitor is offered to Hedge Fund Telemetry subscribers who are on Bloomberg. Seeing most breaking the 10 day could be first signal for a rotation down. Everything has also crossed below today’s VWAP after spending a few minutes above this morning
Within the S&P the DeMark Sequential and Combo Countdown 13’s and 12/13’s on daily and weekly time periods. The extra letters after the symbols are just a Bloomberg thing to ignore. Not much happening today after all the recent sell Countdown’s seen in the last few weeks
Bond bullish sentiment has starting to increase after reaching the 20% zone
US 10 year yield falling however there is a pending DeMark Countdown 13
US 30 year yield got the expected pullback with the sell Setup 9
us Sectors etf update
All annotations on charts and on Markets Conviction Page on site
europe and asian markets
European market with big reversal price flips today after bullish sentiment reversed after 90% extreme readings
Asian markets with big price flip reversals yesterday
Currency bullish sentiment now shows some extremes levels with the USD at 16% bulls
USD DXY Index holding TDST line
British Pound Sterling
Bitcoin with nearing upside DeMark Sequential 13
commodities – Gold and Crude
Gold futures sentiment is elevated and the chart continues sideways
Crude bullish sentiment started to move down after being extreme while price down today was due and sentiment later will be much lower later
peaky blinders market scan
This is the new scan I’ve been testing. Three days ago there were the most sell signals seen since I’ve been running it every day. And no buy signals. In March all we saw were buy signals
Don’t block me Jay!