Answering questions on short and intermediate time frame positioning

Thomas Thornton, Hedge Fund Telemetry info@hedgefundtelemetry.com

1/9/2019

Everyone seemed to really find yesterday’s note on how I use Elliott Wave useful and informative but I had a lot of email with questions on how I see the market from both a short term and intermediate time frame.  With that in mind I will say, I have been constructive on the equity markets from mid December.  I like almost every equity market for the short term which could mean over the next 4-8 weeks.  I show daily charts with downside five wave sequences from the top every day and today along with those I will show the weekly time frames which paint a different more concerning picture.  Some people were looking at the monthly charts I have posted showing a top in consumer confidence and a bottom in the US unemployment rate using DeMark indicators as really concerning and conflicting with my current bullish stance.  And how can there be different waves with different price targets?  It’s simple.  Each move up or down can have sub waves of larger waves and one can exploit a short term bullish trade in a longer term bearish trend.  I think you get it but if not stay tuned and throughout the notes in the coming months, you’ll see how it plays out in real time.  

As I mentioned on First Call today the S&P and Nasdaq are nearing some of the first upside price objectives and there are also some DeMark Setup 9’s due which should see a short term wave 2 pullback (this is where the “smart guys” wrongly short) and then followed by higher wave 3.  Take a little off if you have some gains, as it’s been a good start to the year.  

US EQUITY MARKETS

S&P bullish sentiment is at 36%

 

S&P 500 Index daily nearing the first Trend Factor price target at 2604.  A pullback here is due

S&P 500 WEEKLY shows upside wave 5 (blue 5) and now downside wave 1 of 5 (yellow 1)  This can carve out a long protracted 5 wave down move

S&P 500 60 minute tactical time frame is nearing the wave 3 price objective and confluence of other time frame price targets.  A pullback is likely but it will be short and buyable

Nasdaq 100 Index bullish sentiment is at 25%

Nasdaq 100 Index daily bounced into the 50 day and the first price target (Trend Factor).  A wave 2 pullback is due.  A 8 day closing low is needed for wave 2

Nasdaq 100 Index WEEKLY shows wave 1 (yellow)   Longer term this can make a 5 wave move lower

Nasdaq 100 60 minute tactical time frame is extended 

Dow Jones Industrial Average Index daily nearing first target

Russell 2000 IWM ETF daily running into the 50 day

TRADE IDEAS

Hedge Fund Telemetry Trade Ideas Sheet.  Equity ideas both long and short with one week to six weeks average holding period.  Sizing at inception is either 2.5% or 5% of AUM with stops set between 5%-10%.  AT THE END OF THE YEAR THE PNL WAS -3.3% SO ADD WHATEVER THE RECENT TRADE IDEAS SHEET SAYS FOR YTD. (CURRENTLY +6.38% YTD)  THE SYSTEM WILL BE REVAMPED SOON.  

REMOVED LONG:  ITB +11%, ADDED SHORT 2.5% POSITION SIZE:  IBB

FOCUS OF THE DAY – Energy back from the dead

Crude bullish sentiment is at 46%

WTI Crude now at first resistance and near the down sloping 50 day which will be a hurdle.  

OIH ETF A short term pullback with the Setup 9 could happen in the coming days.  I am not selling (for strong seasonal push coming) but if you have some gains that you want to take, I won’t talk you out of it

Two bullish looking commodities

Sugar

Corn

SECTOR FOCUS 

PPO monitor is a little short term overbought with every equity ETF over the 10 day by an average of 4.65%.  Most are above the 20 day too.  XOP 20 day high.  Energy is coming back from the dead

ITB Homebuilding continues to work and I’m going to take profits today as I expect a pullback with the green Setup 9 tomorrow.  Maybe early but it’s up 9% and I’ll take it.  

In tech when the first big surprise guide down happens, everything gets killed, then more guide down and the market buys the bad news like they are with SWKS today but the next big guide down I would say is INTC and they are the largest weight in the SMH so I’m going to add a 2.5% short probably tomorrow in the SMH as I’m looking at the 60 minute chart 

IBB Biotech – As I mentioned I missed this one as it ended up on the cutting room floor in December but here we are today with a green Setup 9.  I am going to short a 2.5% sized position for a trade back under the 50 day.  

EUROPEAN MARKETS

Euro Stoxx 50 bullish sentiment is at 27%

Euro Stoxx 50 Index daily continues to work and the 50 day is an important test

UK FTSE 100 Index bullish sentiment is at 40%

UK FTSE 100 Index daily now at the 50 day and we’ve seen this work as kryptonite for bulls

CURRENCIES

US Dollar bullish sentiment is at 53% and down from the +90% recent peak

US Dollar Index daily continues to drip lower in wave 3.  Watch the TDST at 95.04 for support

Euro bullish sentiment is at 41% and improving

Euro Spot daily going for the wave 3 price objective

US BOND MARKET

Bond bullish sentiment is at 74%

US 10 Year Yield continues to bounce.  2.80 was old support and is now resistance

US 30 Year Yield should see 3.10 

US Investment Grade Corporate Bond ETF

TLT US 20 year + ETF 

GOLD 

Gold bullish sentiment is at 55%

GLD Gold ETF daily should stall out but it hasn’t yet.  A new closing high might perk this up with the Countdown

Bloomberg Automated Technical Pattern Recognition Screens

ATPR identifies when major chart patterns are just starting to form, alerting investors to nascent shifts in sentiment.  For more information on this strategy please email us and we will send a detailed explanation.

US Stocks

European Stocks

DEMARK SCREENS – Daily Upside/Downside Exhaustion Signals

Daily/Weekly DeMark upside (sell signals) /downside (buy signals) exhaustion Countdown Sequential and Combo “13’s updated daily.  Currently we are only screening the S&P 500 universe and daily in this beta stage.  

 

The DeMark Indicators are designed to assist the user with buying into weakness and selling into strength to anticipate trend exhaustion. Selling into a rally and buying into a decline often afford the opportunity to exit a trade without too serious a loss if wrong.  If you would like more detailed information on the DeMark Indicators, please email us.  

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