I am hosting a Market Update webinar on Wednesday morning. If you have any questions or chart requests, please email. I tend to select more well-known names or markets.
Today’s Conference Board Consumer Confidence data was released. It was weak. Consumer sentiment remains one of the most critical indicators for the economy. Former Fed Chairman was highly focused on consumer confidence and would make various comments over the years, and I believe it moved his view on Fed Funds Rates. One of the comments in his memoir was that he admitted he had underestimated the decline in consumer confidence several times. The Conference Board Consumer Confidence peaked in 1999/2000 and bottomed in late 2008. It topped in late 2018 and has been making lower highs with a spike lower in 2020, in the early days of COVID. The reasons given by those surveyed in this report are similar to those reported in the last few years. Higher prices, inflation, tariffs, and job security.
The future expectations increased after Biden was elected, and they did as well when Trump was elected both times. The tariff liberation day spiked to new lows, made a lower high, and dropped again. Some cited the same reasons as above, as well as the government shutdown. What all this says to me is that the consumer is not as healthy or confident. High prices remain, debt levels are elevated, and now job security is becoming an increasing factor.
There are many questions today about market strength, particularly regarding brick-and-mortar retailer stocks. KSS Kohl’s is up 36%. The earnings were fine and enough to trigger the short squeeze. The amount of short interest remains high, BUT it’s well off the highs seen 5 months ago, with 27% of the float still short. There has been a long-term death watch for brick-and-mortar retail stores due to the internet retailers like Amazon taking a massive share. I could discuss this in more detail, but one thing I post each day is the GS’s most shorted baskets. These are the most shorted stocks that GS prime brokerage (institutional and hedge funds) is short. Game Stop was similar, no real reason for being, and an obvious short. As Joe Granville said decades ago, if it’s obvious, it’s obviously wrong. The consumer discretionary index (weighted with AMZN and TSLA at 42% together) is up 2.99% YTD, while the most shorted consumer discretionary short is down 2.76% YTD. I love this monitor because it signals when shorts get too comfortable and when the squeezes reach a peak. Recall the GS most shorted tech basket was up 100%+ YTD and today is up ‘only’ 30%. I’m seeing some signs of ‘de-grossing’, which is when hedge funds sell long positions and cover short positions.
Therefore, with consumer confidence data remaining very weak and not yielding the response you’d expect, it may be more about short-term positioning shifts. And once that subsides, those stocks that lack fundamental and technical support will fade, especially with fewer shorts involved.
Current Portfolio Ideas:
Changes: I will add 1% to the DE short to bring to 2% weight reporting tomorrow morning. I will add two long ideas with 1% (chicken size) weight: DELL, WDAY, reporting this afternoon. I will take profits on IGV Software ETF short with 5% gain and HOOD short with 12% gain. Had a few other ideas, but will chill for today. Glad I covered DKS earlier with a gain earlier today as it’s up small on the day.
Thoughts: BABA faded, and I will remain in this one, possibly building it larger. Short term momentum SPY and QQQ remain on buy signals.
US INDEXES
S&P futures 60-minute tactical time frame nearly at the upside wave 5 price objective.
S&P 500 Index daily with the Sequential on day 11 of 13. To complete this Countdown bar 13 must be greater or equal to the close of the 8th bar and the normal pattern of the 13th bar must be greater than or equal to the high of two earlier bars.
Nasdaq 100 futures 60-minute tactical time frame in upside wave 5 of 5 yet has still made lower highs
Nasdaq 100 Index daily still below the wave 2 qualified level. Sequential still out there to watch as well
gs most shorted basket update
The GS most shorted basket peaked with Sequential and Combo 13’s above the wave 5 price objective. A corrective lower high wave 2 is now qualified (not to say it done going up). Breaking the wave 1 (yellow 1) low will qualify downside wave 3 with a potential price objective of 173.
Current Portfolio
Pre changes
AAPL has a new Combo 13 and Sequential on day 12 of 13, likely to get the 13 tomorrow. I covered some of my ‘crappy’ AAPL short a bit lower and will add back to it in the future as the stock remains with an elevated valuation, nowhere with AI, and a consumer that is pretty tapped out. A price flip down under the recent low after earnings would likely be that time.
NVDA is below the 180 support and trying to hold the 170 level. I will remain short. The GOOGL Gemini 3 announcement is a serious competitor to the circular NVDA and friends deals. Michael Burry raised concerns about NVDA, and the company released a memo to address them. The mere fact that they released this is more of a problem than if they had just ignored it.
earnings previews for today and tomorrow
DE Deere has been bouncing on hopes for lower rates. There is an upside Sequential in progress on day 8 of 13. Earlier this year there was a choppy Sequential that fell on day 8. The RSI is elevated. This does not have any AI exposure like CAT does, so it will come down to 2026 guidance. Consensus is for $5.3 billion from 2025 $5 billion. If this misses the stock will fade. I will add 1% to the short to bring it to a manageable 2% weight.
The implied move is 4.63%
Short interest is down from the summer, with 3 days to cover. There has been consistent call buying with the red dots on the Options Rank – not extreme, however.
DELL has backed off hard in the last month after peaking with a Sequential sell Countdown 13. There are Sequential and Combo Countdowns in progress although RSI was oversold and it’s holding the 200 day. I will add a small 1% long position (call me chicken, I won’t mind)
The implied move is 7.88% with negative responses in the last 4 quarters.
Short interest is down from the Q2 levels and has seen an increase in the last two months. 1.9 days to cover and recent heavy put buying with the green dots on the Options Rank. Squeeze potential.
WDAY Workday has been making lower highs since the January peak. It has held the TDST at 219 and has a jagged upside Sequential in progress. Short interest is elevated because many believe legacy software companies are losing market share to AI. I will add a small long with 1% weight (call me chicken, I won’t mind)
The implied move is 6.4%
Short interest is elevated with 4 days to cover. Countering it somewhat is the Options Rank has seen heavy call buying with the red dots.
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.
Index ETF and select factor performance
ETF with today’s performance with 5-day, 1-month, and 1-year rolling performance YTD.
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:
Major ETFs among a 160+ ETF universe.
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