Today’s action is interesting as the momentum names are falling hard after leading the markets for the last few months. Recall I showed the high beta vs low volatility yesterday and that has stalled with new DeMark sell exhaustion 13’s. This is the growth vs value ratio also with DeMark sell Countdown 13’s in play. Let’s see if it continues in the coming days.
The weekly with growth vs value has recent Combo 13’s and sell Setup 9. It does look extended.
The Momentum basket from GS shows a very sharp decline today.
However, the markets are not terrible, with breadth positive, as many stocks are up on the day despite momentum falling significantly. It could be a de-risking type of move with many of the favored shorts up today (consumer discretionary has many stocks up for no reason). Selling recent momentum and covering shorts to lower gross exposure? It’s a new quarter, and perhaps this will be short-lived, or it will continue.
Trade Ideas Sheet: Back to +17% vs S&P +5.5% YTD
Changes: If you were looking to short SPY and QQQ I would today as the short term momentum indicators will likely shift to sell signals today by the close.
I still like the recent put spreads that are still actionable: SPY July 18th expiration 585-577, while the QQQ 520-500 July 3rd expiration is dead. I have two TSLA July 18th expiration put spreads 265-215 and 300-275. More on Tesla below, including several charts, and delivery estimates (out tomorrow) and guest comments highlighting the full bear case for Tesla.
Tesla has near-term support at 300. I can’t see this lifting after tomorrow’s delivery numbers and after the recent underwhelming robotaxi “launch”.
Here’s the replay link for today’s short interest webinar.
US INDEXES
S&P futures 60-minute tactical time frame did not start a new downside Sequential Countdown after the buy Setup 9. It’s still possible while the Nasdaq 100 futures did start a downside Sequential Countdown.
S&P 500 Index daily is getting closer to the Sequential sell Countdown 13. It might not occur this week but probably next week.
Nasdaq 100 futures 60-minute tactical time frame with a downside Sequential pending on hour bar 4 of 13 holding the level I mentioned earlier at 22,600
Nasdaq 100 Index daily stalling today. The Reference Close at 22,190 and 20 day at 21,964 are first levels to watch
My friend who goes by Le Shrub on X posted this in our Bloomberg chat room. When looking at the Nasdaq in Euro terms it is still below the February peak by nearly 10%. This is since the US Dollar is down 8%, Klaus is still in a drawdown. Sorry, Klaus and friends in Europe.
Russell 2000 with the strict version of the Combo 13 with sell Setup 9 due tomorrow. Upside Propulsion target achieved (solid pink line)
Mag 7 and 493 S&P ex Mag 7 update
Mag 7 is down 1.25% today with recent strict versions of the Combo 13 that Tom DeMark might be looking at today.
The 493 S&P ex Mag 7 still has potential for upside with the Sequential on day 10 of 13. It’s not a place to add long exposure but keep in mind if things start to slip lower.
Trade Ideas Sheet
Starting to see some shorts move lower, adding alpha. More downside is expected.
The short term SPY and QQQ momentum indicators are close to signaling sell signals with the top nearly crossing with the second below still possible today.
ARKK has moved higher thanks to the large positions with Circle, Coinbase, and Tesla. A new sell Setup 9 and price reversal down. I still like the August 60-50 put spread if you want to express your short with options.
Tesla daily has some support here at 300 yet it’s below the 50 and 200 day. I have more on Tesla Q2 deliveries due tomorrow and the full bear case further down this note.
I have been more focused on the weekly chart as the recent bounce was a corrective lower high wave 2 bounce. Breaking and closing below the wave 1 (yellow 1) at 239 would qualify downside wave 3 of 5 with a potential price objective of 117.80
Tomorrow morning Tesla will report quarterly deliveries. Bloomberg sell side consensus is at 389k while Troy Teslike who does great work (and better than the sell side) has Q2 deliveries at 356k. Last quarter (Q1) was notably weak at 336k which was blamed on the refresh of the Model Y, which is now in the market. Q3 deliveries are estimated at 431k which no doubt will move lower.
Seasonality & financials sector positioning
GS posted the seasonality for July in a recent note, and I have had many people ask me for my thoughts on the strong seasonality for July. Considering the strong May and June, some of the juice could be gone to lift the markets higher. GS also mentioned the seasonality changes through the month, with the strongest gains occurring early in the month, peaking on July 17th, and then it gets tougher. This is also around the time earnings start.
GS clients are very long financials heading into earnings starting in two weeks. I’ve believed the bar is set very high for Q2 earnings, and this would be a concern if I were long financials.
guest monthly letter
My friend Mark Spiegel is one of the better-known Tesla short sellers on X. I’ve known Mark for years, and we share a passion for cars, frequently attending car shows and meets. He’s a value investor and up 20% YTD mostly due to his concentrated portfolio. He’s still long VW and short Tesla. I did screenshots of his latest monthly letter, so the blue hyperlinks won’t work. He is also a pretty funny guy. The valuation of VW appears unusually underpriced when considering the sum of its parts. Will it ever work? Maybe.
Mark covers the Tesla short thesis in detail and the current news.
And the Trump-Musk feud will likely continue; even if Elon says he will refrain from escalating, we all know Elon has no restraint when it comes to speaking his mind. It’s pretty entertaining!
Hedge Fund Telemetry ETF Percentage Price Oscillator Monitor
The PPO monitor (percentage price oscillator) force ranks ETFs by percentage above/below the 50-day moving average. This monitor and others are offered to Hedge Fund Telemetry subscribers on Bloomberg. Mixed action with recent strong ETFs weak today URA, ARKK, SMH, FDN, QQQ, XLK MGK, XLE.
Index ETF and select factor performance
ETF with today’s performance with 5-day, 1-month, and 1-year rolling performance YTD. Some defensive broad strength ETFs leading today
Goldman Sachs Most Shorted baskets vs. S&P Indexes
This monitor has the S&P indexes and the Goldman Sachs most shorted baskets. Short baskets are mostly squeezing ex industrials. Heavy squeezing with consumer discretionary and some defensive sectors: consumer staples, REITs
DeMark Observations
Within the S&P 500, the DeMark Sequential and Combo Countdown 13s and 12/13s on daily and weekly periods. Green = buy Setups/Countdowns, Red = sell Setups/Countdowns. Price flips are helpful to see reversals up (green) and down (red) for idea generation. The extra letters at the end of the symbols are just a Bloomberg thing. Worth noting: More Sequential and Combo sell Countdown 13’s developing and 15 new sell Setup 9’s today
Major ETFs among a 160+ ETF universe. Seeing some important S&P sector ETFs with daily sell Countdown 13’s XLRE, XLB, XLF with RSP and XLY with Combo on day 12 of 13.
If you have any questions or comments, please email us. Data sources: Bloomberg, DeMark Analytics, Goldman Sachs, Street Account, Vital Knowledge, Daily Sentiment Index, and Erlanger Research