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A lot of things are lining up for a pullback and it could get stormy. The market has run out of momentum much like a sailboat without its sails up. After an amazing start to the year, it's important to prepare your portfolio for this storm. It could be short lived and the indexes could make a higher low and continue higher into April earnings or it could be an absolute move below the December lows. I've thought the daily charts would be more important for
that higher low scenario and I still do but below are weekly charts that show a possible deeper and longer period of under performance ahead. I'm OK saying I don't know which scenario will happen at this point but leave open the possibility for both.
Going to leave it short today as I have some development meetings with some new programmers for the site. It's quite the operation to run this thing but I love it! Thank you for all your support as we continue to invest into the platform for reliability and functionality.
Oh... if anyone is in the Boston area on March 30th, I'm speaking at the Harvard Business School Investment Symposium. I'm really honored they asked me and it's open for all to attend and not just the MBA students. Here a link with details
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SPX bullish sentiment is at 77% and still elevated
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SPX daily watch 2709 as first support
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SPX weekly will lose the Setup if next week it closes under 2775
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Nasdaq bullish sentiment is at 70% and also elevated
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NDX Index has an upside Countdown but I'm thinking 6909 support will be seen first
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NDX weekly with Setup 9 and should see follow through in coming weeks lower
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Dow Jones Industrial Average stalling but watch 25,053 as support
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IWM Russell 2000 daily rolling
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IWM weekly with Setup 9 and could see further move lower
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Hedge Fund Telemetry Trade Ideas
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Trade Ideas Sheet Trade Ideas Changes: Taking profit on GLD long +4% and adding to BA short to bring it to 5% max sized long. I like what I have and believe some of the shorts will start to turn into gains soon. The PNL shows +4.41% but it's actually 7.71% YTD as the PNL from last April (when we started tracking trade ideas ended the year -3.3%. We're revamping this format as it's less than optimal. I do have a BA option idea below
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A few internals I'm watching
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Nasdaq Summation Index is a great early indicator combining breadth and volume. At the lows in December it helped with conviction to get long and now it's RIPPED to new highs but this week if you zoom in it's down on the week. Things typically get scary when it crosses zero (for shorts on the way up and for longs on the way down)
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SPY vs VIX weekly chart is an old one I've had for A LONG TIME. A divergence could continue with price (the divergence happened last September with the price of SPX making a new high but this didn't) . The single line MACD really has been NUTS too
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VIX looks to be bottoming and I expect this to move up soon
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UVXY is another way to trade volatility. It's hairy and has structural issues with the roll but on occasion it works for a trade
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Boeing about to descend back to earth - A Real Vision Video is out tomorrow
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Dow Jones Industrial Average is a price weighted index. It's not the most efficient but it's been around over 100 years and it is what it is. We can exploit it when we see these types of things. BA has attributed 16% of the total gain from the March 09 lows almost exactly 10 years ago. It's up 1740% from the lows which is just nuts. It's done double for the index than the next best stock MMM. I have a Real Vision video coming out tomorrow
highlighting a smorgasbord of technical factors and indicators that suggests it will descend back down to earth. Fasten your seatbelts and put your tray table back up. If you don't want to short I recommended buying the Jan 2020 400 puts for ~$25 and selling the Jan 2020 340 puts for ~$10 for a net cost of $15 for a 4x potential gain.
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Dow attribution from December lows has BA doing a quarter of the heavy lifting. BA was actually up 50% the true low... in 3 months people... 3 friggen months!
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BA short interest is very low. At $100 the short ratio was 10 days to cover, today it's 1 day to cover.
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US Sector Focus - Transports
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IYT Transports ETF with Combo and Setup at the top. Here's a little DeMark lesson for everyone today on how a pending Countdown can cancel.
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PPO Monitor - Percentage Price Oscillator
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The PPO Monitor is a proprietary monitor developed to force rank Indexes, Sectors, and Stocks. It ranks top down by strongest to weakest by percentage above/below the 50 day moving average. Shorter term signals can be seen when the 10 and 20 day moving averages turn up (green) or down (red) which often are followed by the 50 day moving average. This is useful to watch for historically overbought/oversold percentage above/below the 50 day moving
average. It is non correlated with the DeMark Indicators however we have found upside/downside exhaustion signals often occur when something rises to the top or drifts to the bottom of the monitor - increasing the timing aspect. We share this monitor with clients with Bloomberg Terminals. An added feature is that each market/ETF can be expanded with each component force ranked in the same way. A couple other features include price deviation from intraday VWAP (useful for intraday reversals) and new 20 day highs/lows on right side. Please inquire if you would like to be permissioned to use the PPO Monitor.
Today's highlights: More ETF's under the 10 and 20 day and breakdowns under VWAP mostly all day. Breadth is weak with NYSE - 1500 and Nasdaq - 1340
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The following chart shows the Percentage Price Oscillator (50 day moving average) in action. Boeing at peak levels % above the 50 day and 20 day. Yes we look at individual stocks like we do exactly the same way in the PPO ETF monitor. If you are on Bloomberg and you're not using this let me know.
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US Dollar bullish sentiment is at 73% and could make another run higher into 90% zone
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US Dollar Index looks probable for it to make a run at new highs with low Countdown
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Euro bullish sentiment is at 16% and remains depressed
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Euro Spot nearing the lower end of the range
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Euro Stoxx 50 should consolidate these gains
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Global Markets, EX USA, and Total US Market
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Bloomberg World Index with a cluster of upside Countdown 13's
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World Index EX USA stalling too.
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US Total Stock Market ETF looking toppy
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ASHR China A Share ETF with more Countdowns. VERY overbought
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Nikkei sideways but expect lower
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China / Hong Kong FXI ETF still strong but expect a pullback to consolidate gains
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Crude and Natural Gas Update
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Crude bullish sentiment is at 77% and remains elevated but it is slightly declining now
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WTI Crude Futures still sideways but I expect it to back off a little more
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UGAZ as I have stressed is not for the faint of heart and it's down 6% and it's still up 15% from entry.
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Gold bullish sentiment is at 51% down from a recent high of 90%
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Gold on day 8 of 9 with Setup - Taking profit on short +4%
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Bond bullish sentiment is at 67%
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US 10 Year Yield still in tight range
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US 30 Year Yield reversing after the Setup 9
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TLT reversing after the Setup 9
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DEMARK SCREENS - Daily, Weekly, Monthly Upside/Downside Exhaustion Signals
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Daily/Weekly DeMark upside/downside exhaustion signals (Sequential) updated daily, Weekly signals on Monday's and monthly on the first day of the new month. Price flips occur when a stock closes higher/lower than four previous closes and increases conviction of a price turn.
The upside 13's are sell signals and downside 13's are buy signals. Price flip's are confirmation signals that increases potential for a price trend change. For example, if you are long a stock and there is an upside 13, you will want to take cautious action by selling down or out of a position. If initiating a short sale with the upside 13's, we tend to start with a 1/2 size and add with the downside price flip. The opposite is true for when there are downside 13's. Take a
1/2 size position and add with the upside price flip. 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.
S&P 500 Universe: DAILY UPSIDE 13: BLL, CI, ICE, INCY, JEC DAILY DOWNSIDE 13: TSN
DAILY UPSIDE WITH PRICE FLIP REVERSAL
DOWN: NONE DAILY DOWNSIDE WITH PRICE FLIP REVERSAL UP: CELG, CERN, FBHS, LOW, LRCX, MAX, SIVB, TSN, WDC
Updated: 10/26/18 WEEKLY UPSIDE 13: CME WEEKLY DOWNSIDE 13: ALXN, AMG, BHF
Updated: 11/1/18 MONTHLY UPSIDE 13: ALXN, CINF, CRM, FFIV, JNJ, MSI, MTD, RTN, V, VRSK, XEL, YUM MONTHLY DOWNSIDE 13: WHR
Euro Stoxx 600 Universe: DAILY UPSIDE 13: ERICB SS DAILY DOWNSIDE 13: BMPS IM, SYDB DC
DAILY UPSIDE WITH PRICE FLIP REVERSAL DOWN: NONE DAILY DOWNSIDE WITH PRICE FLIP REVERSAL UP: AZM IM, TSCO LN
Updated: 10/26/18 WEEKLY UPSIDE 13: AZN LN, DRX LN, TOP DC WEEKLY DOWNSIDE 13: BME SM, DANSKE DC, FPE3 GR, HSBA LN, KN, FP, PNL NA, SAN SM, VOE AV
Updated: 11/1/18 MONTHLY UPSIDE 13: NONE MONTHLY DOWNSIDE 13: DBK GR, TPK LN
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distribute, print or copy any part of this message if you are not the intended recipient. Hedge Fund Telemetry LLC. cannot guarantee the confidentiality of the material transmitted; therefore, information of a sensitive or confidential nature should not be transmitted. There is risk in trading markets. Hedge Fund Telemetry LLC reports are based on information gathered from various sources and believed to be reliable, but are not guaranteed as to accuracy and completeness. The information is subject to change without notice and Hedge Fund Telemetry LLC has no obligation to provide any updates or changes. Hedge Fund Telemetry LLC is providing this data for informational and educational purposes and does not believe that it is sufficient to base an investment decision on. This information should not be regarded as a solicitation or recommendation of any particular security or to engage in any trading strategy. One should always check with your licensed financial
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