Did I miss anything while I was away?

Thomas Thornton, Hedge Fund Telemetry info@hedgefundtelemetry.com

12/28/2018

Before I left for a not so pleasant vacation (I got my 5 year flu in London) I did a report looking at a technical balance sheet with assets (oversold, rewards) and liabilities (overbought, risks).  Things had been moving towards the oversold side quickly but as I said only about 70% of the indicators were fully oversold. I started covering taking some excellent gains while adding long exposure in the most beat up quality names and sectors. 

While I was gone, I did check up on the markets and ran some studies I normally do each day.  Some indicators were at oversold levels not seen since 2008 and bullish sentiment on the S&P hit 4%.   Any time sentiment is 5% or less, I’ll lean long.  The percentage of stocks above the 10 day moving average was 0%, 50 day 2% and 200 day at 7%.  That’s a crash.  As I laid in my hotel room with a fever, watching the market plummet on my phone (there is no CNBC but lots of old US sitcoms) I logged on to my Bloomberg on my 13 inch Mac (which is a feat in itself since I normally fill two 32 inch monitors with Bloomberg stuff).  Looking at some of my shorter term charts I could see price targets met and downside DeMark signals with rather significant volume.  It was a puke.  On Twitter I said “Buy em” and I started running VWAP levels from different time frames.  It started to move and move and move.  It was a huge breadth surge 16x1 advance decline just what was needed.  A lot of people can say this was a bear market bounce.  Maybe.  I don’t care.  I think we’ll see higher levels and then we can figure it out.  I think we can get to 2600 perhaps a little over 2700 on the S&P.  And by the way the average bear market rally since 1990 is 16.3%.  A hole in one is a hole in one even if you hit the ball off a tree.  

I’m back in Greenwich, still with the flu but feeling good about 2019.  We are going to do a webinar next week probably later in the week.  Sentiment charts are now up to date.   I will get to emails later today.   

US EQUITY MARKETS

S&P bullish sentiment is at 27% and I expect an attempt to get to 50%

 

S&P 500 Index daily watching the upside DeMark Trend Factor price targets

Nasdaq 100 Index bullish sentiment is at 28%

Nasdaq 100 Index daily 

Dow Jones Industrial Average Index daily 

Russell 2000 IWM ETF daily expect lower high bounce

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%.  

No changes to Trade Ideas.  I stated I would be holding all energy longs (even with wider losses) to play for downside DeMark Countdown in WTI and seasonal trade.  I might on Monday take a couple off for tax losses.  Overall PNL isn’t keeping me up at night.

FOCUS OF THE DAY – A couple internals

10 day vol’s on the S&P about as high as it’s going to get for now

S&P Cumulative Breadth since Dec 3rd when I showed the lower high wave 2/B has dropped hard toward the downside wave 3 price objective as the S&P lost 16%.  I didn’t expect that much downside as December is typically a decent month.  I now expect a lower high wave 4 followed by a lower low wave 5.  That will be sometime in the Spring.  

STOCKS I AM WATCHING TODAY

Apple with the downside Countdown 13’s with both Combo and Sequential.  It’s happening in wave 3 of 5 on the downside and I’m not a huge fan of being anything other than a trader with a wave 3 exhaustion since wave 4 will be a lower high bounce followed by a lower low wave 5.  

Tesla getting Larry Ellison to the board is very positive and he’s already a major shareholder.  He’s not an outsider and if he really looks at the books he might reconsider.  Nothing really changes with the short thesis and the difficulty with Tesla as a short continues.  Keep your size in check

Crude Thoughts

Crude bullish sentiment is at 20%  and I expect this to increase in the coming weeks with positive seasonal factors ahead

WTI Crude has downside DeMark Sequential Countdown 13 and Setup 9 exhaustion signals now.  We need to see this quickly move up

EUROPEAN MARKETS

Euro Stoxx 50 bullish sentiment is at 5% – This is extreme 

Euro Stoxx 50 Index daily  with downside DeMark Countdown 13 combined with 5% sentiment = very low risk buy here

German DAX Index daily no changes to recent poor action

UK FTSE 100 Index bullish sentiment is at 7%

UK FTSE 100 Index daily price flip up today with green Setup 1

CURRENCIES

US Dollar bullish sentiment is at 68% down from recent highs over 90%

US Dollar Index daily 

Euro bullish sentiment is at 32%

Euro Spot daily like the USD just drifting 

British Pound Sterling bullish sentiment is at 17%

British Pound Sterling daily

US BOND MARKET

Bond bullish sentiment is at 81% slightly off recent peak highs over 90%

US 10 Year Yield should see a reversal up soon

US 30 Year Yield still could work a little lower first

US Investment Grade Corporate Bond ETF looks like a buy here

TLT US 20 year + ETF 

GOLD 

Gold bullish sentiment is at 35% and really can’t make much progress to 50%

GLD Gold ETF daily 

GDX Gold Miners ETF daily 

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 for November

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.    I WILL POST ON SITE IN A LITTLE WHILE.  CHECK BACK UNDER TICKER TAPE

 

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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