Bird Watching

Thomas Thornton, Hedge Fund Telemetry info@hedgefundtelemetry.com

2/20/2019

Today the Federal Reserve will release last month’s minutes of the January meeting.  As a reminder the Fed hawks turned into doves reversing the policies that were in action.  Raising rates and Fed balance sheet runoff were seemingly now on hold.   The reasoning was the global economy could start to start to bleed into the US economy.  The global economy is slowing and the US is slowing but the market reliance on the Fed for support is going to be tested soon as they are now on hold while I expect Q1 earnings will start to show continued slowing.  The Fed can’t cut or add a new QE program in my view and if they do it would be pushing a string.  

Today’s note has a stock focus with a lot of random names I’ve been watching.  I also look deeper at Gold which I believe is a sell now with sentiment at 90% bulls and a few upside DeMark signals.  Continue to be cautious into this upside move as it’s not going to last for long.  

US EQUITY MARKETS

S&P bullish sentiment is at 88% for the second day in a row.  

 

S&P 500 Index daily with Countdowns in play

S&P 500 Index 60 minute tactical time frame wave 5 with Countdown 13’s 

Nasdaq 100 Index bullish sentiment is at 73%

Nasdaq 100 QQQ ETF daily on day 6 of 9 with upside Setup 

Nasdaq 100 Index 60 minute tactical time frame wave 5 with Countdown 13’s

Dow Jones Industrial Average Index daily with recent Sequential Countdown

Russell 2000 IWM ETF daily drifting higher but still focused on initial Countdown 13’s

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%.  ADDED 2.5% SIZED SHORT IN GLD, SOLD FXI LONG +5.5%, COVERED CAT WITH 8% LOSS (SLOPPY ON MY PART)

FOCUS OF THE DAY

Here’s a great chart from my friend Jason at Sentimentrader looking at the most correlated 100 day price paths.  For the next chart please listen to this song

I can’t believe JPMorgan put this out and said liquidity continues to gradually improve.  This liquidity is really dangerous with a market that has just lifted 20% and with very low short interest.  Shallow is the song and I hope it wins Sunday at the Oscars.  

RANDOM STUFF I AM WATCHING TODAY IN NO PARTICULAR ORDER

FANG Custom indexes nearing upside Countdown 13’s.  Here is FAANG

Same with the original FANG

FANG + Index nearly there

Apple started a new upside Countdown,  I’m going to use 178 as a stop as I believe there is downside ahead

AMZN on day 10 of 13.  A little more upside needed for the 13

CMG on day 12 of 13.  Needs a close higher than 2 previous highs

CSX with some 13’s

FCX with an upside Sequential Countdown 13 today

SLB with an upside Countdown 13.  I reduced this long recently and might sell remaining part +19%

SPLV – WSJ today had a story how “low volatility” “smart ETF’s” have been doing well.  Recent 13’s might change that 

Tesla had the new General Council resign today after 2 months on the job.  How this holds up baffles me

UNP like CSX has some 13’s on top

WMT reversal after yesterday’s Countdown 13

US Steel on day 12 of 13 with upside Countdown

SECTOR FOCUS – XRT and XLF with upside exhaustion while UGAZ is near downside exhaustion

Retail XRT 

XLF Financials 

UGAZ 3x levered Natural Gas ETF still needs one more down day for the 13 but I like this long and if it drops 10% I might double size 

ASIAN MARKETS NEARING UPSIDE EXHAUSTION 

Hong Kong has been one of my favorite longs this year but it’s getting some upside exhaustion signals near the wave 3 price objective

FXI still has more upside left with the Countdowns but I took profits on the long today +5.5% as I am more concerned with Hang Seng Index (and after having drinks with Kyle Bass last Friday)

Nikkei with upside Sequential Countdown 13 today.  The Nikkei has a great record with the DeMark Sequential 

EUROPEAN MARKETS

Euro Stoxx 50 bullish sentiment is at 52%

Euro Stoxx 50 Index daily still should top out here

CURRENCIES

US Dollar bullish sentiment is at 65%

US Dollar Index daily still range bound

Euro bullish sentiment is at 23%

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Euro Spot daily still in range 

Chinese Yuan daily should continue to gain

US BOND MARKET

Bond bullish sentiment is at is at 78%

US 10 Year Yield not strong conviction but think it works lower but sentiment elevated gives me pause to do anything with bonds

US High Yield Corporate Bond ETF HYG toppy

GOLD 

Gold bullish sentiment is at 90% and this is very elevated for Gold

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GLD Gold ETF daily today with Sequential and Combo upside 13’s and I added a small 2.5% sized short today.  Below are the last few years showing how well the DeMark Indicators worked through various periods

GDX Gold Miners ETF daily stretched.  I covered yesterday

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