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Market enters ST TOPPING phase


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#11 dTraderB

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Posted 21 January 2019 - 05:57 PM

P & F chart analysis! 

 

15479511303261480062527.pnghttp://schrts.co/NZCENeFF

It is interesting to note that during the recent sell-off prices did not take out the very strong and long P&F trend line. We won't go into the niceties of P&F charting except to say that trend lines have the same import as bar chart trend lines. In fact it might be said they are marginally more powerful because of the P&F chart's filtering of noise.154795120230591731546.pnghttp://schrts.co/HqBMEUAb

In fact, the chart is an excellent presentation of the context of the markets and shows price bouncing off the long term trend line. The subsequent price recovery is also well-illustrated by the columns of Xs. The explosive nature of the recovery is shown by the candlestick chart. Just as the volatility of this period was breathtaking, the pace of the recovery has been blinding. In 17 trading days, price has traversed approximately 325 points (basis SPX).

1547951258414525318610.pnghttp://schrts.co/sXMuqfkp

The INDU reveals even more about the market. The short-term trend has accelerated almost out of control and become quite steep, as shown by the line intersecting the prices.

We would expect a reaction here, but, in fact, Friday's action showed a buy signal, including a minor gap.  Ordinarily, we would have reentered where the downtrend line was broken. But we remained on the sidelines deeply distrustful.

We are still distrustful, but eventually you have to do what the chart dictates. And right now it is dictating that long is the way to be. We are guided by our principle that if the market turns on us we can always exit.

So, next week, we will begin scaling in to the market if conditions remain stable. We will stop the position 1% under the day three days preceding Friday. This is a trade stop, not a trend stop.

https://stockcharts....the-market.html



#12 dTraderB

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Posted 21 January 2019 - 06:01 PM

John Murphy:

 

All major U.S. stock indexes have exceeded their 50-day averages (blue lines). That still leaves their 200-day averages to contain the rally. But there are a couple of other resistance lines that still need to be tested. Chart 1 shows the Dow Industrials nearing a test of their 200-day average (red arrow). In addition, the falling trendline drawn over its October/December highs should also provided stiff overhead resistance. The Dow would have to clear both barriers to signal a major turn to the upside. The same is true of the other two major stock indexes.

Chart 1154784483615570421958.png

https://stockcharts....-continues.html



#13 dTraderB

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Posted 21 January 2019 - 06:04 PM

Note that the S&P 500 exceeded its October lows in December. Stocks that subsequently broke above their November-December highs are outperforming on the upside (Citigroup has not). $SPX remains well below these highs. Stocks at or near a 52-week high are leading and in uptrends. $SPX is not even close to a 52-week high, neither is Citigroup.

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http://stockcharts.c...2400.html#faf87



#14 dTraderB

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Posted 21 January 2019 - 06:14 PM

The Great Unwind Is Upon Us
Summary

Liquidity drives markets.

Quantitative easing has expanded valuations for nearly a decade.

Quantitative tightening will depress valuations for years to come.

 

These are obviously headwinds to economic growth and higher stock prices, but I don’t believe any of them to be the root cause of the broad decline in risk assets. I will call them accelerators. There is a far more significant force that is having a gravitational pull downward on financial asset prices. That force is liquidity.

Mother of all Charts:

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As a result, by the fourth quarter of 2018, the amount of global liquidity being added each month fell from $100 billion to zero on a net basis. It was scheduled to decline by $20 billion per month in the current quarter based upon central bank guidance.

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Every year there are asset classes that win and lose, which is why we diversify our portfolios across several of them, but last year nearly every asset class posted a negative return. Why? The only logical explanation is that central banks began to unwind ten years of easy money policies by draining liquidity from the global financial system through quantitative tightening (QT). This is akin to pulling the drain plug in a bathtub full of water, and as the water level falls so do all the toy boats floating on the surface.

 

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By the fourth quarter of 2017, the Fed had stopped increasing the size of its balance sheet with asset purchases (QE), but the Bank of Japan (BOJ) and the European Central Bank (ECB) were increasing the size of theirs by a collective $100 billion per month.

7375661_15478169383300_rId7_thumb.jpg

The Fed was the first central bank to pull the drain plug more than a year ago, as can be seen below, by reducing the size of its balance through quantitative tightening or selling the bonds on its balance sheet. It was also raising short-term interest rates, which reduces liquidity.

Let’s assume that next week the trade dispute is resolved, the government reopens for business and corporate earnings meet expectations. This will probably be enough good news to drive the stock market back above its 200-day moving average at approximately 2,740 in the near term.

7375661_15478169383300_rId5_thumb.jpg

Yet I don’t believe there will be enough good news to countervail a continuation of quantitative tightening by global central banks, should it resume in earnest in the months ahead.

https://seekingalpha...-unwind-upon-us



#15 dTraderB

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Posted 21 January 2019 - 06:16 PM

Carl:

 

the dominant pattern on the chart is still the rising wedge, which is technically expected to resolve downward. Will this be one of those times when market beats the odds?

15478502194521247737190.png

https://stockcharts....icals-lurk.html



#16 dTraderB

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Posted 22 January 2019 - 08:10 AM

With CHINA in such a vulnerable state now, and in the near future, it is a good time to extract as much as possible in the TRADE negotiations. A deal can be done in a few days, not a comprehensive deal but at least an initial one.

 

 

Keith McCulloughVerified account @KeithMcCullough

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scary article on leverage > China exchanges ask for share-pledge extensions to calm market - FT #ChinaSlowing

4:32 PM - 21 Jan 2019
 

CHINA: after yet another hopeful bear market bounce, Chinese stocks drop -1.2% overnight and are -27.5% in the last year

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1:58 AM - 22 Jan 2019

Edited by dTraderB, 22 January 2019 - 08:11 AM.


#17 dTraderB

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Posted 22 January 2019 - 08:13 AM

@KeithMcCullough
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CURVE: flattens to +16bps on 10s/2s as US GDP and Earnings Growth #slow

2:23 AM - 22 Jan 2019

TREASURIES: 10yr drops to 2.76% after the 3rd Best Buying Opportunity since NOV

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2:21 AM - 22 Jan 2019
 


#18 dTraderB

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Posted 22 January 2019 - 09:58 AM

My FF:  FED's POWELL will be the sacrificial lamb - either he will resign or be forced out before it's all over.

 

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4:48 AM - 22 Jan 2019

 

 

 

 



#19 dTraderB

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Posted 22 January 2019 - 10:03 AM

Waiting to see how high this market will pop, and then what happens on the next intra revesal on the NQ 5m chart

 

 

 

Carl QuintanillaVerified account @carlquintanilla
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“It's still early in the reporting period, but so far more than half of the companies reporting have missed estimates on their top line readings. If this pace doesn't pick up in the weeks ahead, it could be a long February.” @bespokeinvest

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5:52 AM - 22 Jan 2019

 



#20 dTraderB

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Posted 22 January 2019 - 10:18 AM

OK, let's see if this double-bottom on the NQ 5 can hold....

 

 

Issues that could affect the market, in a BIG way, later this year and in 2020

 

Luke Kawa @LJKawa
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Jefferies: "It should be noted that virtually all the money that had entered into high yield markets since 2009 was withdrawn over the past eighteen months."

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3:30 AM - 22 Jan 2019
 
  • Over the past decade, investment grade debt has doubled, but the BBB tranche has nearly quadrupled – from $896 billion to almost $3.2 trillion! BBB-rated debt has never been so large, neither on a percentage basis nor in dollar terms.

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WwJa6KcS_bigger.jpgJesse Felder @jessefelder
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Given the huge size of the BBB market, downgrades could incite a large volume of selling that could then infiltrate the rest of the market and quite possibly exacerbate the negative price action.

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10:50 AM - 21 Jan 2019