Naked and Afraid

Thomas Thornton, Hedge Fund Telemetry info@hedgefundtelemetry.com

11/19/2018

 

The election played out as expected without any surprises and with the unknown now known, traders followed up today with the typical relief bounce.  The bounce off the recent lows is pretty significant recapturing more than half of what was lost in October.  Bullish sentiment with the S&P went from 83% bulls on 9/20 to 8% on 10/24 and is now 35%.  The first move down on the major indexes was the first of five waves down that I expect to play out over the coming months.  This bounce has now enabled wave 2 which will make a lower low from the September highs.  The timing of when wave 2 ends is tricky and I offer two ideas.  First, the daily upside DeMark green Setup count is getting close to fulfilling nine consecutive days closing higher than four previous closes.  The Setup 9’s have seen decent inflection once triggered.  The second is the shorter term 60 minute tactical charts that have moved up off the lows into wave three of five.  I expect once the fifth wave requirement in in the tactical charts is met the lower high bounce will be set on the daily chart too.

There will likely be some FOMO as the indexes drift a little higher but let’s remember, the markets are buying up some of the big mega cap names that just missed earnings and/or guided down.  Nothing has changed after this election result.  I’m fine holding a large percentage in cash (after covering a lot much lower) with a slightly current net long exposure with what I do have deployed.  Several of the indicators I have used to measure breadth have not shown any signs of strong accumulation off the lows while the signs of capitulation never materialized at the lows.  This is a bit surprising to me.

Thanks again for your patience as we roll out our new site and platform. It’s taking me a little more time to get used to publishing on the new platform. We are however really proud of our new daily sentiment charts with both market price and sentiment positioned together and one can adjust time periods going back to 2000.  There are new European markets (Euro Stoxx, DAX, CAC, FTSE) added with our new site too.  You might need to do a hard refresh (Shift + F5) on the page to update yesterday’s data.  Finally, clients will be getting an email soon with a password reset but until then the site is open to view.

US EQUITY MARKETS

 

S&P bullish sentiment is back up to 35% and without a doubt will make a big jump today

 

SPX Index nearly at the October mid month level

SPX 60 minute tactical have bounced as expected the to wave 3 upside price objective

Nasdaq 100 Index has bounced and also is in wave 2

NDX 60 minute tactical has an upside Sequential 13 now in play

Dow Jones Industrial Average ditto for the wave 2 bounce

Russell 2000 IWM ETF on day 7 of 9 with green Setup in wave 2 as well

US BONDS

Bond bullish sentiment is at 41% and has made a series of lower highs

US 30 year yield had a big reversal lower lower today.

US 10 year yield had a reversal too and could see the upside green Setup completion in jeapardy

VIX INDEX – Volatility Update

VIX bullish sentiment remains elevated but should see a large drop tonight

This is the 60 minute tactical time frame which shows two upward 5 waves and now in the 5th wave on the downside

CRUDE – Update

Crude bullish sentiment has dropped from 96% bell ringer highs to 29% 

WTI Crude Futures should have a downside DeMark Sequential Countdown 13 tomorrow

MAJOR CURRENCIES

US Dollar bullish sentiment is at 79% and off the recent highs of 95%

US Dollar Index had wide swing today and remains in the range

Bitcoin is looking like it could make a move higher from this base.  Breaking the recent closing low at 6074 is where I would stop out

Here’s the same chart on a longer term to show how flat it has been

CONSUMER DISCRETIONARY XLY – Update

Consumer Discretionary also is in a wave 2 bounce 

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