This is a lengthy note with a substantial amount of information. As much as FOMO is contagious with indexes at highs, this is not the place I suggest buying into the move. There remains a lot of DeMark sell Countdown 13’s in play and some still developing as well. Tonight’s sentiment reading should be well into the extreme zone over 80%. Many indexes have longer term exhaustion signals while many sector ETFs also have exhaustion sell signals in play or developing. The quality of the stocks ripping to the upside also happen to be those lacking earnings or valuations that make little sense other than one day people will say “remember when people were crazy buying _____ at 100x sales?”
I don’t know exactly what the catalyst for a downside move will be, as there could be many I could list; however, markets tend to top with the backdrop of “good news,” and I suppose a fragile cease-fire between two long-term adversaries is enough for today. And remember when we were buying at the April lows, market sentiment was at 10% and there were many DeMark buy Countdown 13’s. The same skepticism was present then too.
TRADE IDEAS
Recent give back on the PNL is never pleasant but as I said I have a big lead and can take more risk. I do expect the short side to work in the coming days/weeks. It’s not just the short side but some give back with our energy longs.
US MARKETS
S&P 500 futures 240-minute time frame has a good look as the S&P futures nears the February highs. The new Sell Setup 9 is interesting as well since the 9’s have been decent at other inflection points.
S&P SPY daily has recent Sequential and Combo 13’s as well a Setup 9. There is the potential for a secondary Sequential on day 5 of 13. A reversal below the TDST at 583.33 is possible as it is not that far from this price.
SPY weekly with sell Setup 9 and the monthly with recent sell Countdown 13’s
RSP S&P equal weight with recent Sequential 13 and Combo still pending on day 8 of 13
Nasdaq 100 QQQ daily with recent sell Countdown 13’s remaining in play with overthrow today.
QQQ weekly with new sell Seutp 9 and monthly with new Sequential sell Countdown 13.
QQQE equal weight ETF still has the recent Sequential and Combo 13’s in play.
NDX vs NDXE equal weight with new Combo 13’s and sell Setup 9
Russell 2000 daily still has the Combo pending on day 11 of 13. Could qualify in the next few days
DIA Dow Jones with the strict version of the Combo 13
The short term SPY and QQQ did shift to a buy on the gap up today. You may feel free to follow this buy. I remain short as the DeMark signals and sentiment readings have me wanting to stay more short.
A few charts from Goldman Sachs
The GS Meme Stock Basket is near the 99th percentile. Non profitable tech has been outperforming their earnings this year. Seen this before and it ends badly.
The returns with the Russell 2000 has seen weak returns from July to end of October
Positioning has been crowded in R2K. A little surprising to me.
This is interesting showing the average duration with the GS most shorted basket. Tops in the short basket has also seen tops in the entire market. There has been correlation with the Russell 2000 and the GS most shorted basket in the past.
The percent change with the GS most shorted basket in the 5 days and 1 month is in the 97% percentile
The most short basket is on the brink of being overbought
US SECTOR ETF FOCUS
Comments on charts
XLK Technology with new Sequential and Combo 13’s still in play with an overthrow today.
SMH Semiconductors with new Sequential and Combo 13’s still in play with an overthrow today.
MAG 7 basket with new Sequential and Combo 13’s still in play with an overthrow today.
XLY Consumer Discretionary should get the Sequential sell Countdown 13 tomorrow
XLI Industrials with new Sequential and Combo 13’s still in play
XLF Financials with recent Sequential 13 still in play with an overthrow today.
XLE Energy with sharp reversal. I could see this make a higher low
XLV Healthcare
XLP Consumer Staples has moved sideways
XLC Communications Services with new Sequential and Combo 13’s still in play with an overthrow today.
XLB Materials off the highs with Sequential and Combo still pending
XLRE Real Estate sideways
XLU Utilities with recent Sequential 13
IYT Transports should get the Sequential sell Countdown 13 tomorrow.
URA Uranium ETF has been a big winner for us and the best ETF YTD out of all my 165 main ETFs I track. It’s still going and I reduced my position (50% gains – you gotta take). I would like to get a pullback to add more.
ARKK continues higher as they have a few good positions that have gone up strong – CRCL, COIN, TSLA. Sell Setup 9 might cap this top if it completes. RSI is overbought and interestingly despite positive performance ARKK streak of monthly outflows continues – the last month of inflows was December 2023.
GDX Gold Miners still has an upside Sequential in progress. Watch the 46.33 TDST
SLV Silver reversal after recent Sell Countdown 13
VIX Index and credit spreads
VIX index with new DeMark Sequential buy Countdown 13. The Combo pending on day 11 of 13 would need to makde a new lows for two days
CDX high yield and investment grade credit spreads are getting closer to exhaustion
Internals update
Advance Decline data reversed and did not get oversold and somewhat divergent from index price.
Active managers’ exposure is at 94%
S&P 500 percentage of stocks above the 20, 50, and 200-day moving averages is holding steady after reversing in the last two weeks. We bought the oversold levels in April and look to do it again
S&P with McClellan Indicators is diverging from index price action
McClellan AD summation index was something I showed recently with the sell countdown 13’s and this has started to reverse
Nasdaq Summation Index weekly has moved up and is down for the second week in a row. Small but still down. Momentum indicators are overbought
Gs SHORT BASKETS AND PPO MONITOR UPDATE
This is similar to the above monitor with various ETFs other indexes
This is the monitor that has the S&P indexes and the Goldman Sachs most shorted baskets. Unlike yesterday short baskets are seeing upside squeezing ex energy
The PPO monitor (percentage price oscillator) force ranks ETF’s by percentage above/below the 50 day moving average. For information on this monitor please refer to this primer. This monitor is offered to Hedge Fund Telemetry subscribers who are on Bloomberg. Notable: A strong day with tech leading. Uranium still working.
DeMark Observations
S&P and major ETFs continue to see more sell countdowns, with Countdown 13’s and on-deck 12’s developing. A few of our shorts with sell signals too
