Our Technical Macro Overview
These are just my technical views and are not to be considered as investment advice.
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Following are my observations only, and is for informational and educational purposes only. Nothing here is a recommendation to buy or sell any securities or make any investment decisions. My views and/or positions can change at any time with no notice.
01/16/2019 SPX CHALLENGING TARGET RANGE
Posted pre-market. SPX closed yesterday at 2610, finally into my targeted 2600 to 2650 range from the 12/26 low. 2631 is the 50 day sma and also represents the November 2018 low. 2600 to 2640 represents the October 2018 lows, so this range does have some key price levels. NYMO is still overbought at 84, but is working off it's extreme high readings as the index edges higher. Nasdaq (COMPQ) closed at 7023, over it's declining 50 sma yesterday for only the second time since early October. VIX is still washed out for now. SPY, IWM and USO are still testing their overhead 50 smas and 2650 in SPX is a key level of interest.
Areas of strength include application software, with CRM notably above it's November and December highs and did not make a lower low in December. NFLX has also cleared Nov. and Dec. highs for now. Brazil (EWZ) is still acting well, above it's 200sma.
I started to scale back into to my USO short this week, below it's declining 50sma with a stop at 11.90. My index positioning is unchanged and I am still over 50% cash.
01/13/19 WEEK AHEAD PREVIEW
Weekly closes as of 1/11/19:
SPX 2596, COMPQ 6971, WTI 51.59, 10y UST 2.70, Gold 1289, VIX 18.19
My current technical overview:
SPY, QQQ, IWM and WTI Crude oil are overbought on their daily momentum charts and all pressing up against their declining 50sma or very close. VIX at 18.19 is washed out on it's daily chart and NYMO is still reading overbought at 107.19. While I am not bearish, and try to avoid any directional bias, my technical positioning is a "technical bounce" in a longer term downtrend. SPY, QQQ, IWM have all made lower highs and lower lows. The 12/26 rally came off deeply oversold conditions, and the bigger the drop, the bigger the bounce. This is how momentum and mean reversion work. SPY and the others are in a downtrend until they are not. Key SPX levels for me are 2450/2500 on a pullback and 2600/2650 and 2820 on the upside. For now 2650 neutralizes the downtrend and 2820 ends it.
Key stocks JPM, BAC and GS are all overbought in longer term downtrends as well and below their declining 50 day MAs. AMZN and SQ have rallied up to their overhead 200 day MAs and NFLX closed above the 200 day on Friday. "Overbought" does not mean markets have to pull back. Markets and stocks can often consolidate sideways and work off their overbought readings. This next week should provide more guidance.
Earnings reporting season gets going this week and accerlates the week after. Apple, Samsung and Macy's have been early warnings/misses. Markets have been telegraphing a global slowdown, as China PMI and US ISM have posted weak numbers and German YOY Industrial production came in at -4.6%, it's worst YOY since 2008. These numbers are noteworthy, but most tend to get caught up in the very short term day to day market moves. Time will tell if these numbers improve or not.
The combination of very overbought daily momentum readings in many names running up into their declining MAs, coupled with a washed out VIX and overbought NYMO sets the stage for at least some type of consolidation if not more. SPX 2450 to 2500 are levels of interest if there is any meaningful consolidation. A close over 2650 on SPX would be noteworthy to neutralize this recent downtrend.
More active/aggressive position traders will look to enter shorts in any of SPY, QQQ, or USO with 5 - 7% stops. If markets are going to pullback here, they should start to in the next one to three days. As discussed last week, straight up or straight down are the easier moves from here. A head fake in either direction to trap some new money and then sharp reversal in the other direction is also a very likely outcome, and one which would be much more difficult for some.
I am not bullish or bearish, and try to avoid any type of directional bias. I use price charts to help me gauge trend and risk/reward scenarios. Positions do not have to be an opinion or a prediction, they can simply be positions based on risk/reward with stops to keep the inevitable losses in check.
For now my index positioning remains over 50% cash, as I have scaled out of my 60% long position in SPY from 240 on the way up, and down to 11% exposure there. My longer term trend following short opened in QQQ from 170 is at 31% exposure currently. Other index positions incude a small short in USO from much higher and long GDX from slighty lower.
01/11/2019 TESTING THE 2600/2650 RANGE
After the close on 12/26, I posted 2600 to 2650 on SPX as a shorter term upside target. SPX traded up to 2597 today and closed at 2596. Daily momentum is now fully overbought and the 50day sma is at 2635. As the market showed in December however, at extremes, momentum readings can stay extended for more than one day, but eventually they do revert to the mean. Momentum in financial markets works like an elastic band, the more stretched the reading, the stronger the snap back. With that being said, the range between 2600 to 2650 could prove to be telling.
At the close today, over 60% of the Core ETFs that I track register overbought, NYMO is elevated at 114.77, and
VIX continues to be washed out. Markets could continue higher here, but the odds favor at least some consolidation to work off the high momentum readings.
If the longer term downtrend is going to continue, markets should start to stall out in the next few days. If they do not, a break higher could be expected if sellers are not able to get some traction. From here there are many scenarios, but three are very probable. Two are fairly simple, markets start to decline or they break out further. A third possible scenario, of which there are a few, and one of the more complex ones, would be for markets to make a slight break in either direction, either up or down, bring in new money in the direction of that break, and then reverse sharply. The head fake/whipsaw could provide extra volatility.
For now, I am staying mostly in cash and slighty net short via QQQ, with some long SPY exposure. 2650 is the "line in the sand" for me to track.
01/10/2019 MOMENTUM AND MOVING AVERAGES
NYMO closed yesterday at 117.76, it's second highest daily reading in 21 years of data, only January 2009 at 121.86 was higher. VIX momentum closed at 27.41, it's third lowest reading in the last 12 months. SPY is less than 2% from it's declining 50sma and QQQ and IWM are +/- 1% below, all three with near fully overbought daily momentum readings. Momentum can often overshoot in either direction, but the risk/reward scenario has tilted to the higher cash, slightly short side for me for now. TLT is consolidating on lower volume, but my focus remains on the U.S. indices.
01/09/2019 SPX NEARING 2600 - 2650 TARGET RANGE
The S&P 500 (SPX) has had a clean 9.7% counter trend rally off the 12/26 lows and extremely oversold techncial readings. As posted at the close on 12/26, I have been tracking 2600 to 2650 for a technical bounce in the longer term downtrend. SPX traded to 2580 yesterday and the declining 50sma is overhead at 2639. While I stand by my 12/26 view that we are in a technical counter trend rally in a longer term downtrend, I more importantly trade the chart on my screen, so am still long SPY for a shorter term position, but have scaled gains and moved up the trailing stops along the way. I am open to the facts that the move could continue hgher, and/or the 12/26 low could be the final low in this cycle. A close over 2820 in SPX would negate the current downtrend. I trade price and defer to what is on my screen. To follow up on some of the key market indicators that I track:
NYMO - One of the key market indicators that I track, NYMO (which tracks advancing vs declining issues) has gone from deeply oversold, (-109.61 on 12/24) to highly overbought readings, (+112.98 on 01/09, it's second highest reading on record). 40% of the equity ETFs that I track have now registered overbought, which is high, but not an extreme reading.
RSI - 12/24, 24 of 30 Major ETFs registered 30 or less, which is considered very oversold. Today that number is zero.
VIX at 20.47, now reading oversold on daily momentum and at a level which has signalled two sharp spikes over the last 13 months.
EARNINGS SEASON is starting, and with Apple and Samsung both giving lower guidance, it is unlikely to think that they will be the only two to guide lower or miss estimates. 2019 S & P earnings estimates have also come down shaprly over the last 90 days, and the (P) price often follows the (E) earnings.
CENTRAL BANKS - The Wild Card in the mix, not reflected on any technical charts, are Central Banks. Last week the Fed jawboned a possible slowdown in their hiking stance and the PBOC cut it's reserve ratio, freeing up an extra $116B into the system. The Fed also very publicly called the Working Group (Plunge Protection Team, PPT) into play near the 12/26 lows. A very real tool to stabilize markets. Any further Central Bank intervention will usually supersede what is on any chart.
As noted, I trade the price on the screen, and use SPX as my primary trend filter. I do not make market calls or predictions. Markets go where they go, and rarely do what the consensus expects. They often overshoot in both directions and can run through indicators at extremes. For now SPX is in a longer term downtrend of lower highs and lower lows since mid September, and all key MAs have turned down, which indicates that the price trend is lower for now. That being said, price can continue higher so I defer to what the market is doing and what my positions are doing. In closing, I am still long SPY as a momentum position and maintain a longer term trend following short in QQQ. A pause here at 2580 to 2650 could be expected and I will evaluate as the market dictates.
01/06/2019 WEEK AHEAD PREVIEW- MONETARY POLICY VS THE CHARTS
Marty Zweig famously said "Don't fight the Fed". Stanley Druckenmiller said that markets are liquidty driven. Simply put, loose money leads to higher asset prices and tight money leads to lower asset prices. Stock and crude oil markets have sold off over the last 60 days in the face of the Fed tightening and QT taking liquidity out of the system.
S&P 500 (SPX, SPY)
The S&P 500, SPX, closed the week +1.86% at 2531.
On Wednesday, Apple surprised markets with a warning that Q4 sales will miss estimates, which led to a -2.48% day in the S&P on Thursday.
The S&P 500 traded up 3.43% on Friday after Fed Chief Powell took a softer stance on hiking rates, and the PBOC cut it's reserve ratios by 1%, which should provide and extra $116B of liquidity to the financial system. The markets reaction to the Fed and PBOC confirms what Marty and Stan have said about monetary policy.
My view since the Dec. 26 low is that we have a tradeable technical bounce in stocks inside of a longer term downtrend. The 20, 50, 100 and 200 day moving averages have all turned down in the S & P 500 (SPX). The S&P tested it's 20sma on Friday and market momentum is neutral for now based on the data that I track, so an upside test of the 50sma near 2600 to 2650 is my next level of interest if markets continue higher. The longer term downtrend in SPX does not prevent me from having the shorter term position long in SPY, but I have been scaling gains on the way up.
I expect the higher volatility swings to continue, as markets react sharply to any Central Bank news and Corporate earnings reports start this week. If the markets reaction to the Apple announcement is a precursor, there could be some outsized moves in the cards in single stocks over the next few weeks.
As always, I am making no predictions and am staying open minded to what price actually does. For now I am at over 50% cash and keeping a firm eye on the downside risk. I still have a shorter term swing long position in SPY and a longer term Trend Following short in QQQ. Different trades and different time frames.
FLIGHT TO SAFETY (UST, TLT & YEN, FXY)
10 year UST yields closed the week -2.81% at 2.65 but tested 2.55, then reversed sharply higher Friday after FOMC. 10s are still in a downtrend below their now declining 200sma. TLT, Treasury Bond ETF, closed the week +.88% and is overbought in an uptrend over it's 200sma. All key MAs in TLT have turned up, and although a consolidation could be expected, the longer term trend is higher for now in TLT and lower in yields.
USDJPY closed the week -1.58% at 108.46, as the Yen index (XJY) blew through it's 200day moving average (sma) to the upside. USDJPY had a "flash crash" as it traded down to 104.80 on Thursday, before reversing higher. A softer Fed stance could lead to a weaker dollar, and Yen is also considered a safety trade in volatile stock markets. FXY, Yen ETF, finished the week + 1.64% at 88.05, and is nicely over it's 200sma for now. From a Trend Following perspective, Yen and Treasuries are in an uptrend and UST yields are in a downtrend. I have no positions here currently,
CRUDE OIL (WTIC, USO)
WTI Crude oil closed the week at 47.96, +5.80%, and has come off extremely oversold readings. WTI tested it 's overhead 20 day sma this week, which it has not closed above since early October. Crude made a low recently at 42.36, and the $42 level also marked lows in Crude in late 2016 and early 2017. USD will likely have an impact of Crude prices going forward, and although I have a scaled down trend following short position in USO from much higher, I am open minded to the fact that Crude may have put in a near term or longer term low. The low is the low for now unless it is broken. I am not taking any counter trend positions in WTI currently.
GOLD AND GOLD MINERS
Gold closed the week at 1285, +.22% for the week, and at it highest closing level since early June 2018. Gold is currently in an intermediate term uptrend with the 20, 50, 100smas having turned up, and the 200sma is still trending down, but trying to flatten.
The Gold Miners ETF, GDX, closed the week +3.40% at 21.30, and at it's highest weekly close since mid July. GDX is in an intermediate term uptrend and all key MAs have turned up, with the 200sma slightly up for now.
I do not draw any Macro conclusions between Gold and other markets or try to explain the moves. I have a longer term trend following position in GDX currently.
1/03/2019 THE STOCK MARKET IS THE BEST ECONOMIST THAT WE KNOW
I borrowed that quote from Stanley Druckenmiller from his recent Real Vision interview. He is a well known follower of price action and said that market action is the best predictor of future events. Here is some interesting recent market action:
WTI Crude Oil is -38% over the last 90 days
Bull market leader Apple (AAPL) is - 38% over the last 90 days
U.S. Treasury 10 year yields (TNX) are -21% over the last 90 days
Semiconductor ETF (SMH) is - 22% over the last 90 days
China ETF (FXI) is - 27% over the last 12 months
Homebuilders ETF (XHB) is -30% over the last 12 months
Some fundamental data:
China Factory Activity (PMI) shrank for the first time in 19 months in December.
The ISM Manufacturing Index had it's worst monthly drop in December since October 2008.
The Fed is in a tightening cycle. Thirteen Fed tightening cycles since 1950, Ten recessions ensued.
For me, price leads the news, and the fundamental data is just confirming what the price moves have already telegraphed. The market data alone is signalling an economic slowdown, as markets are considered forward looking. Apple warned of weaker than expected sales yesterday, but the stock was already -28% in the last three months before that announcement. Markets have a way of discounting future events. Having traded through the 2000 to 2003 and 2008 Bear Markets and recessions, I have learned not to fight the market downtrends. Higher levels of cash, reduced activity and very little, if any single stock exposure work best for me here. Some key financial markets have spoken loud and clear. Capital preservation is always key, but in weaker economic conditions and stock market downtrends, capital preservation and good defense are more important than ever.
01/03/2019 SPY COUNTER TREND BOUNCE LOSING MOMENTUM
The SPY "bounce" coming off of extremely oversold conditions, as discussed on this Blog and my Twtter feed between 12/21 and 12/28, may be losing some of it's momentum. As I have detailed on my Twitter feed, my recent Long SPY position was a shorter term trade to try to capture some momentum reversion to the mean. I kept my longer term trend following shorts in QQQ, USO and NVDA open, as technically, markets are in a longer term downtrend. The first three to six days in the "bounce" tend to be the strongest and mark the "easier money". Thursday, 1/03/19 will mark day number six, using the 12/26 +4.96% day in SPY as the recent low.
The momentum data points that I track are now at neutral in SPY, and offer less of a reward to risk advantage for me. SPY has still not tested it's declining 20day sma and the broader downtrend is still in place. My longer term trend following shorts from early November are still highly profitable here as well, attributing to the strength of the downtrend currently.
I am closing half of my long position (avg. entry price is 240.88) at the open on 1/03 and moving up the stop of the rest of the position to breakeven at 240.88, which barring a gap down will result in a small winning trade, not what I had intended, but the hand is what it is. With the technical edge reduced, the risk management process is simple. Risk more = make more if right, lose more if wrong. Risk less = make less if right, lose less if wrong. In the current market downtrend, I am keeping risk exposure dialed back and am content to give up some potential upside in exchange for less at risk.
Downtrends trade much differently than uptrends, and oversold bounces in uptrends tend to last longer. 2017 was a period of record low volatility. Volatility returned in 2018 and the markets have now turned down. Trying to trade a high volatility downtrend the same way as a lower volatility uptrend is a recipe for losses. If my stop level at 240.88 holds, then I have a position for any continued strength, if not, the exit will keep me intact and lock in the gains.
01/02/2019 APPLE NEGATIVE GUIDANCE
On the first day of trading in 2019, Apple (AAPL) issued a negative guidance revision after the close and traded down 7.55% to close at $146 even in after hours trading. The stock closed the daily session at 157.92, -32% from it's all time high, less than 90 days ago, in early October. The stock has been in a steep downtrend since early November and has not closed above it's declining 20day moving average since then, an indication of a strong downtrend.
AAPL attributed the downward revision to a slowdown in China sales, but the downtrend has been in place for a few months now. I have no interest in AAPL on the long side at all, and continue to avoid single stocks trading in steep downtrends. The first level of key support on the monthly chart if $145 breaks down is $125. No predictions on my part, but I am avoiding AAPL on the long side completely here.
Whether it "goes up" from here or not is not my concern, anything can always happen. The combination of a weak stock in a steady downtrend in a weak overall market also in a downtrend combined with their announcement of slowing business conditions does not offer to me favorable reward to risk odds at all and is very weak technically.
Market Week Ending December 28, 2018
S&P 500 2485, WTI Crude Oil 45.33, 10y UST yields 2.73, Gold 1283.
The S & P 500 came into the week deeply oversold by a variety of metrics, including Stocks over their 200day Moving Average at 15.80, the lowest reading since October 2011, Bullish Percentage Index at 17.00, the lowest since March 2009. S & P 500 Weekly volume on 12/22 closed at 1.026B, the highest since Feb. 2018 and second highest since Jan. 2016, indicative of a short term volume wash out. The McClellan Oscillator closed 12/22 at 99.55, the lowest since Feb. 2018 and second lowest since Aug. 2015. The Put/Call Ratio reached 1.82 on 12/20, it's highest reading ever. VIX traded at 36.20 on 12/26, it's highest level since 2/2018. The CNN Fear/Greed Index went down to 3, signalling extreme stock market pessimism.
Added to the extremely oversold conditions, were a variety of media outlets reporting on the markets steep drop including the "worst December" so far since 1931, and the worst Christmas Eve trading day ever in the S & P 500.
After a brief new 52 week low on Wednesday, 12/26 the S&P closed the day 4.96% higher, it's biggest one day percentage gain since March 2009.
The S&P closed the week up 2.93%. Markets have worked off some of their oversold conditions and are up 5.87% off Wednesday's lows. My take going forward is this: Shorter term, the low at 233.76 is the low for now, but not necessarily the final low in this move. I took a tactical long position in SPY on 12/22 and added to the position on 12/26. Long SPY is my largest position for now, with a close stop and 6x the size of my longer term trend following short in QQQ. I am still short USO from early November and long GDX since late December.
For SPY, I am in the "oversold technical bounce" camp/wait and see mode for now in regards to 233.76 being the final low here. Longer term charts have suffered alot of technical damage. A statistic posted by David Rosenberg is that over the 13 Fed tightening cycles since 1950, there have been 10 recessions. The price action in semis, crude oil, and Treasuires seems to be telegraphing a slowdown ahead.
I have posted charts this week of the 2000 to 2003 Bear Market which had many sharp counter trend rallies in the context of a longer term downtrend. With the magnitude of the breakdown in many monthly charts, and the tightening of liquidity due to Fed tightening and QT, I am staying tactically long and very focused on the risks to the downside longer term.
Market Week Ending December 7, 2018
S&P 500 closed the week at 2633, -4.38% for the week. Nasdaq closed at 6969, down -4.72% for the week.
Crude Oil at 52.61 and 10 year UST yields at 2.85%.
I continue to be positioned heavily on the short side in QQQ, as the market is trending lower with three successive lower highs and lower lows. The 20, 50 and 100day SMAs, have rolled over, and the 50 day SMA has crossed below the 200 day SMA. QQQ is not yet oversold by the metrics that I track. I plan to continue to trade QQQ with half of the position being more actively managed, scaling in/ out every week or two as market conditions dictate, and the other core half of the longer term trend following position held as long as the trend is down and stops are not hit.
As I discussed on Twitter on November 25, almost all of the major equity markets and ETFs that I track had become very oversold technically and a rally was to be expected. Markets rallied sharply that week into a favorable Fed meeting and then gapped higher at the open after the G20 meeting announcement. The opening gap last Monday was sold straight down, and the steady weakness through the day on Monday was a sign that the "good news" had been priced in and markets were now technically overbought.
Leading names below their 200 day moving averages include Amazon, Netflix, Apple, Google and Facebook among others. Tech leaders include Microsoft and Cisco, both leaders from the late 90s tech bull run, and both have yet to close below their 200day MAs this year.
The stock market, considered to be forward looking, may be forecasting an economic slowdown, based on the steady downtrends in semiconductor stocks, homebuilders, crude oil, and U.S. Treasury yields, which closed below their 200day MA for the first time in 2018 this week as well. Crude oil continues to be in a downtrend, pinned below it's 20 day moving average, but holding over the $50 level for now.
Defensive sectors are acting well, and many are in uptrends incuding pharmaceuticals, consumer staples, and interest rate sensitive REITs and Utility stocks. These higher dividend, lower volatility areas do well in an economic slowdown, or period of declining interest rates, as their higher yield and lower volatility makes them more attractive in the current market environment.
Other uptrends can be found in select Gold Miners although GDX and GDXJ are still trendless and below their 200sma. China and Emerging Markets have been trading sideways here for the last 6 weeks and are holding over October lows for now. Emerging Markets have been outperforming the S & P on a relative basis since late October and I have a few moderate sized long positions in China.
Monday, April 24, 2018
SPX closed the week at 2670, in a intermediate term range for now.
My key groups of interest remain Defense, Energy, mid cap retail, metals and miners.
China and Semis have been weaker, along with Emerging Markets.
Crude oil continues its breakout while Gold has backed off slightly.
10y UST yields are currently at 2.97%.
Monday, April 16, 2018
I am currently at 37% cash.
I am focused on the 2550 - 2700 range in SPX. Shorter term markets had gotten oversold, the longer term technical picture still displays mixed signals.
Key groups of interest are Defense, Energy, Mid Cap Retail and Casual Dining, Metals & Miners.
Crude oil is at 3 1/2 year highs and breaking out for now.
Gold tested 1369 last week, near the top end of it's 4 year range, but has failed the last three times there.
1400 would signal a breakout.
10 yr. yields at 2.83 are testing their 50day sma.
Sunday, April 8, 2018
I am currently at 52% cash.
The 2700 to 2800 range in SPX from mid Feb. to mid March is now the 2600 to 2700 range and has tested below.
Markets have been oversold, but news flow is still dominant.
The Energy sector has strengthened as well as some pharma names and small and mid cap retail.
I am firmly in wait and see mode for now, but tracking markets daily.
Sunday, April 1, 2018
SPX and Nasdaq volatility continues, both are registering oversold on their daily charts.
As long as SPX 2600 and 200d sma hold, any oversold rallies could be strong.
I am seeing constructive signals in many non-tech spaces as well as money currently rotating out, which could change at any time. I will continue to have tech exposure.
Some leading tech names have broken down for now FB, TSLA, some are well extended AMZN, NFLX.
My current account structure for now is targeted at:
20% Intermediate Term ETF trades (currently 0 allocated)
10% Mid Cap Ideas (currently at 0)
50% Core Programs
Technology/Internet names are trading of headline news to a degree at this point. Many tech names are oversold, but news flow may impact them as well.
I expect more volatility, will be carrying higher than average cash and watching key S&P support levels at 2600 and the 200 day moving average currently at 2589.
10y UST yields at 2.74% are below their 50d sma, first since December, and the lowest yield since early February.
SPX gapped higher then held 2600, 2640 and closed at 2658, over 2640 level I am tracking.
Importantly SPX, Nasdaq and many leading stocks registered very oversold, under 20.
VIX also registered short term overbought at 80, which may bode well for stocks near term.
I put half of my available cash to work in an intermediate term ETF trade.
SPX is currently in a trading range which may invite slightly more active trade management via ETF to
add incremental returns.
I am still focused on high relative strength names in leading industries in Tech, Internet, Financials and Defense, as well as China Internet, being aware of the current headline risk in China names. .
SPX closed 3 points above the low for the week and just above the 200sma at 2588.
SPX is weak, and getting oversold, but not completely so. Friday was a slow, steady grind lower, but not yet
any climactic high volume panic selling and reversal that occurred on Feb 9. As a result, I did not add any money at the 200sma test and am not a buyer under 2700 until I get a reversal signal. This could hapen at any time.
Crude oil (USO) and Gold (GLD) have been trading well technically and are on my tracking list, as is Yen (FXY).
Financials (XLF) closed below their Feb 9 low. Globally, India, Japan and Germany are trading below their 200sma.
10y UST yields at 2.83% have been declining and may test their 50sma soon.
VIX at 24 is elevated, but nowhere near the 40 to 50 blowout range from February.
I am at 26% cash and raised a number of stops in open positions to hard stops in the market.
If there is any further downside testing, I will let the exits work and reevaluate for potential entry signals.
I do not have any bullish or bearish bias here, or really anytime. Markets are technically weaker here and I am
actively managing risk.
In the event of a reversal signal, I will be focused on higher relative strength names in Tech, Internet and Defense.
Thursday, 3/22/18 10:30pm
SPX close below key 2700 level at 2643.
Watching next levels of support at 2640, 2600 and 200sma currently at 2584.
Markets not yet oversold. Yields down to 2.81% currently and TLT back over 50sma.
Stops have been moved up on many positions, China names and Large Cap U.S. Industrials names are off the
buy lists for the time being due to political issues.
Focus is on defense and capital preservation.
This is not the low volatility steady uptrend of 2017.
Sunday, 3/18/18 9:30pm
I am at 11% cash.
SPX and Nasdaq finished the week lower on lower volatility. SPX currently testing its 50sma and Nasdaq still above it's 20sma.
Volatility has been subsiding as ATRs have been coming in both in the indices and in major stocks, which is constructive.
VIX spent the entire week under 18, and is currently below it's 20 and 50sma.
Tech and Internet stocks have registered very overbought and many were extended well above their 20 day smas. Some tech leaders started to weaken at the end of the week, and some consolidation in that space would be constructve, as many names have had a very strong run . Software and cloud are still the strongest spaces, although semis have been as well.
Many non-tech areas have registered oversold recently, but picked up on Friday.
Will see if this is the start of a meaningful rotation, or a one day event.
China Internet continues to be a focus space of mine and the charts are strong, but for the most part not overextended like some Nasdaq names.
10y UST yields have pulled in below their 20sma at 2.84%. The 3.00% level is considered by many pundits to be a pressure point for stocks, so that level is important.
Sunday, 3/11/2018 10:00pm
Nasdaq made new all-time highs on Friday, a technically strong sign, SPX is still 2.99% below ATH.
Markets are acting technically stronger, and I am at 15% cash currently.
10 yr UST yields are at 2.89% and under the 3.00% level.
VIX had it's first close under the 50sma since Jan 12, 2018, also a constructive sign.
High relative strength names continue to act well.
Tech, internet, software, cloud computing, and Emerging Markets are still core areas of focus for me, and
Financials are starting to break out as well. Energy names have recently cleared their twenty (20) day sma and may be improving as well.
Sunday, 3/4/2018 2:30pm
Maintaining a defensive posture, currently at 20% cash.
Raised profit stop on FDN (15% position) to a close below 50sma.
Monitoring higher volatility - $SPX weekly ATR has doubled and has had more -1% days in 2018 than all of 2017.
Inverse equity ETFs have triggered shorter term buy signals.
Longer Term uptrend is still intact.
10yr. UST yields closed below their 20sma for the first time since Dec. 2017
Tech, software, internet still outperforming and focused on high relative strength names on long side.
SPX has had consecutive down 1%+ days and back below 50sma.
Nasdaq (COMPX) rallied up to .89% from recent highs and has backed off as well.
I am watching SPX support levels of 2700, 2660 and 2640, in the event of any further pullback.
All longer term MAs still up and constructive so longer term uptrend is intact for now.
Positioned more defensively, no new positions planned and the New Money List is on hold status for now.
Raised profit stop in QQQ long position, if that triggers will evaluate partial FDN long stop.
Single stock positions and exits remain unchanged.
Tech, internet and high relative strength stocks still outperforming.
SPX closed at 2747 and up on the week, adding to the prior week's gains.
Reclaimed all key MAs, 20/50sma, VIX down to 16 and many indices, core stocks that I track and ETFs
generated new buy signals in the last two days.
I am continuing to treat the 2532 SPX low from Feb. 9 as the current low and will do so unless it breaks down.
I don't make market calls, but mathematically the low is the low until it isn't.
Key support levels besides the 50, 100 and 200sma continue to be 2680/2700 and 2640 below.
Focus Areas: Nasdaq 100 Tech/Internet, Emerging Markets, China Internet, Aerospace/Defense, Metals& Mining, Financials, and as of 2/25 Energy. Many energy names are coming off of deeply oversold readings and have generated buy signals.
Interest Rates sensitive instruments have also generated buy signals, so I am covering half of my TLT short for now.
26% cash currently
SPX up the last 6 days in a row, many oversold markets have worked off that condition.
I may look to allocate some capital this week as conditions dictate.
Areas of Focus: Internet, Emerging Markets, Chinese Internet, Nasdaq 100 Tech, Financials, Aerospace/Defense,
Metals & Mining
Avoiding: Interest rate sensitive issues, bonds, Utilities, REITS, High Yield Bonds
Still at 33% cash - and I may scale in gradually over the next few days.
Today's SPX price action was constructive with an opening gap and no time negative on the day.
SPX closed over it's 100d sma. VIX came down by 11.87% to 25.61, which is constructive.
IF prices hold over last Friday's lows, this would be constructive as well.
I still expect volatility and price discovery as short term technical levels may get tested in both directions.
Focus industries remain unchanged from 2/11/18 below.
Currently 33% cash, I am targeting at a minimum a 10% cash level until volatility levels recede.
SPX tested the 200d sma 3 times on Friday, including a test below to 2,532 and reversed higher on increasing volume.
SPX RSI registered under 30 at one point, which is a technical measure of being short term oversold.
Daily RSI had it largest two week percentage decline on record, another sign of possible technical oversold levels.
I have no way to tell if that is the low for now or not. I do not try to even specualte on that at all.
For now, however,unless new lows are triggered in SPX (below 2,532) then it is mathematically the current short term low.
I put roughly half of available cash to work on Friday, after the recovery of the 200d sma in SPX, with stops below.
This is not a market call at all, simply follow my signal based process.
Three potential scenarios from here, in no particular order:
1. Recent lows hold, do not get retested and SPX moves higher.
2. Recent lows get tested, and hold,
3. New lows break down below 2,532.
The next few days should be telling. Either a follow through up day on higher volume, or a break down to recent lows should provide insights into the sustainability of the recent lows.
I continue to take a defensive approach, have reinvested some capital and still have a high balance in cash.
Any outcome is possible, and technically I would expect more volatility.
Any potential bottoming process could be a V recovery or a multi week base building process.
Any unwind can happen at any time.
I am focused on building positions, as prices dictate in dominant market leading single stocks and ETF positions as well.
Focus themes: Nasdaq 100, Emerging Markets, China Internet, Financials, Aerospace/Defense, Next Gen Tech (AI, Robotics, Blockchain) Short bias: Interest rate sensitive instruments/Fixed Income
2/08/18 (11:35 pm)
I am continuing to focus on defense, not offense.
Cash and patience are both positions.
The markets have not proved themselves at all this week.
With profit exits this week in AAPL, JOF, RBS & stops I will be at 54% cash after the open (not including TLT short)
S&P 500 (SPX) closed very weak today, below the 100sma, and 2 points above the 150sma
also at the low for the day and below Tueday's low (both are technically weak signs)
The 200day sma is 2,538 and the 40 week sma is 2,548
Of my three possible scenarios from Feb 6 on this post below, we are at #3 - bounce and then new lows.
Now with the 200d sma possibly in sights, I am looking at two scenarios:
1. a test and hold on a closing basis
2. a break and or/close below
The 200d sma is my primary trend filter and any break or close below is a sign of major technical weakness for me.
32% cash (not including 19% TLT short)
10 yr USTs yield 2.84% and that seems to be creating a headwind against stocks.
The strongest uptrend on the screen right now is yields.
Interest rate sensitive Utilities and REITs trading well below 200sma.
The V recovery in stocks did not materialize with gap strength, as it did in June 2016.
Many stocks/ETFs still reading oversold, I am keying in on the 100sma as a possible support level.
If those do not hold, the next level I am watching would be the 200sma.
Voatility still high with VIX at 27.
I expect more volatility and potenitally wide ranges daily.
Cash and patience are both positions.
$SPX is trying to get sorted out, but no clarity today.
I do not antipcate any new positions tomorrow.
Many markets/stocks/ETFs registered oversold and tested/held key moving averages on high volume, which is technically constructive for now.
$SPX $COMPX put in what appears to be a short term bototm at least for now.
3 possible outcomes from here, in no particular order.
1. V shaped recovery
2. Bounce then retest/hold today lows.
3. Bounce then break down to new lows.
There is no way to forecast which outcome will play out. I started to scale some money back into two positions today.
I am still in wait and see mode to see how the markets trade over the next few days.
Volatility has expanded sharply and ATRs have expanded rapidly.
I am planning to evaluate and possibly scale some money in gradually over the next week or so if conditions dictate.
In single stocks I am looking to get into domimant large/mega caps in core industries and also add to some ETF positions.
38% cash due to stops.
Confirmed pullback in effect
I have let stops take me out of positions as they were set and in wait and see mode for now.
Momentum still not at oversold levels in most markets I track, but much closer.
$SPX currently below 50 sma
100sma at 2,633 is an 8% drawdown from the recent high.
200sma at 2,533 is a 12% drawdown from the recent high.
Keeping a narrow watch/buy list.
S&P 500 in possible corrective mode.
Shorter term momentum not yet worked off.
More downside selling could be expected.
Have all stops in place.
Have a narrow focused buy list with technical entry levels.
Scale money in when appropriate, use stops.
No activity yet.
2/01/18 - ACCOUNTS OVERVIEW
19% Cash (Due to 3 positions exited vs one new entry) (Does not include TLT short proceeds)
A technical pullback could be constructive.
At SPX 2,823 (1.02% above 20sma and 4.14% above 50sma)
Raise stops on any non-core or secondary names, look to rotate these into Focus/Overweight markets below, as prices dictate.
Nasdaq 100 / FAANG
Emerging Markets / China Internet
Money Center Banks
Next Gen Tech (Blockchain, AI/Robotics)
Equities/US, Europe, EMs, Japan (SPY, QQQ, VGK, EEM, DXJ)
Crude Oil, Euro
US 10 year Treasury yields
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