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Worryingly Dovish - but Bulls holding SPX 2800


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#1 dTraderB

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Posted 20 March 2019 - 09:06 PM

A rough day...because I had two urgent business meetings and COULD NOT TRADE as I wanted!

 

Anyway, I did not miss much and NQ was actually up. The BULLS still have the advantage as long as SPX closes above 2800. 

 

So, why is the FED so darn dovish? are things so bad? 

 

And, some tough talk from TRUMP with a TARIFF threat; so far, this is just a show across the bow in an attempt to get more 

from the Chines but it would help the markets if there is more finesse and less bluster. 

 

This from WSJ:

 

By Ben Walsh |  Wednesday, March 20

Worryingly Dovish. The Federal Reserve delivered pretty much what investors expected on Wednesday afternoon and announced that the Federal Open Markets Committee had left rates unchanged.

Then, it went a bit further and said that there would likely be no rate increases for the rest of the year.

That sent the the Dow, which had briefly turned positive, down 141.71 points or 0.5%, while the S&P 500 dropped 0.3%. The Nasdaq ended up a hair, rising 0.1%. 

The Fed cut its forecast of 2019's annual growth rate to 2.1% and pointed out that inflation has softened to just about 2%. 

Investors appear to be worried about the extent of the Fed's newfound dovishness. If four rate hikes in 2018 were seen as too hawkish – and the slide in stocks late last year indicates that they were – then no rate increase in 2019 seems to be viewed as the actions of a central bank trying to avoid a potential economic hiccup or downturn.

"Equity markets are wondering what the Fed is seeing they are missing,” NatAlliance Securities’ Andrew Brenner wrote. 

"The Fed gave the markets everything they expected, though came across even more dovish than anticipated," said Vanguard's chief economist, Roger Aliaga-Diaz.

 

DJIA: -0.55% to 25,745.67
S&P 500: -0.29% to 2,824.23
Nasdaq: +0.06% to 7,728.97

The Hot Stock: Netflix +4.6%
The Biggest Loser: Viacom -5.5%

Best Sector: Energy Minerals +2.7%
Worst Sector: Finance -3.7%

 

 

 



#2 dTraderB

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Posted 20 March 2019 - 09:10 PM

Those last two daily candles....looks far more bearish than bullish.

 

4165_15531202251.png



#3 dTraderB

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Posted 20 March 2019 - 09:12 PM

DP Alert: SPX Momentum Failure - Negative Divergence on ST Indicators - Broken Dollar
Erin Swenlin |   

March 20, 2019 at 07:29 PM

 

 

Good read here:

https://stockcharts....ken-dollar.html



#4 dTraderB

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Posted 20 March 2019 - 09:17 PM

Irrational fear from the FED? After all, the economy is purring along nicely.

But there is talk of a below 2$ GDP for Q1 2019. 

-------------

So the Fed croaked. No surprise as they have signaled it all year, but perhaps the extent of the capitulation is surprising.  How scared are they? No rate hikes in 2019, one rate hike in 2020 and markets don’t believe a word of it as they are now pricing in a 47% probability for a rate cut into January.

That’s recessionary fear action, far from the optimism of just a few months ago. 

And boy have they goosed markets.

How massive has this rally been?

Well, it’s created one of the largest weekly MACD histogram deviations to the upside ever.
In fact the only precedence I have for this is 1999. And what index was jammed to the max in 1999? You guessed it, the good old $NDX.

Now granted we were deeply oversold in December, but holy cow, how vertical is this?

NDXw.png?resize=584%2C386&ssl=1

Totally maxed reading. With negative divergences.

And this is where the Fed goes full dovish? Something’s off.

https://northmantrad...19/03/20/maxed/



#5 dTraderB

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Posted 20 March 2019 - 09:18 PM

TIM is looking for a STALL or ST weakness

 

1553099314100648654069.gifThe chart above is the VIX and the SPY. It can be a bearish sign for the SPY when both the SPY and VIX rally, and today marks the third day up for both. Today also marks the third day out of the last five days where the market ended up and the TICKs closed negative. A negative TICK close with the market higher will stunt the SPY rally in the short term. Therefore, the market could see a consolidation this week, but downside appears limited as there is support near the previous highs near the 280 SPY range. It is worth pointing out that large declines don’t usually begin with the VIX below +16 (today’s close 13.63). We don’t have it shown, but yesterday’s volume dropped around 20% compared to Friday’s volume, a bearish sign. In the short term, the market could stall here, but the intermediate-term trend appears up. Sold long SPX on 3/13/19 at 2810.92 = gain 2.47%.

1553099328939676694963.gifTomorrow is Fed day, which could have a short term effect on the market. The SPX did travel past the 2800 resistance level and may backtest the level is the coming days. The bottom window is the hour tick with a 50-period moving average. The red vertical lines show when the 50 hour tick fell below “0” and the blue vertical line shows when it closed above “0.” So far, the 50-hour tick remains above “0” and is still in bullish levels. The SPY could fall back to the 280 range and find support not far away. There is a 77% probability that the week after March expiration week would be down, but, as it looks now, it would not be down much. A better setup could be if this potential pullback produces panic in the TICK and TRIN, which would generate a bullish setup.

https://stockcharts....ch-19-2019.html



#6 dTraderB

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Posted 20 March 2019 - 09:19 PM

No Pessimism Even As Small-Caps Struggle
  • Jason Goepfert
     
     Published: 2019-03-20 at 10:49:14 CDT

No pessimism

On Monday, the last of our core indicators that was showing a hint of pessimism dropped off. At the same time, 40% of them were showing optimism. The last two times that happened, the S&P formed a kind of rounded peak.

1553096894934.jpg

Since 1999, many of the positive returns were clustered in 2017, a year when trend-following momentum ruled everything. If we exclude that single year from the results, then it got quite a bit uglier with risk more than twice as high as reward over the next 2-3 months.

Small-cap struggle

While the S&P 500 moved to a 100-day high, the small-cap Russell 2000 held more than 2% below its own 100-day high. That tends to concern investors who like to see everything in gear, but it wasn’t a good warning sign. More than anything, it led to better performance in the Russell versus the S&P over the next few months.
Spicy

ETFs focused on Indian stocks have had a remarkable month, up 12% or more since mid-February. The 10-day Optimism Index for PIN an INDA are now hitting extremes. According to the Backtest Engine, when the 10-day average for PIN has been this high, it added to its gains over the next week only 20% of the time.

https://www.sentimen...l-caps-struggle



#7 robo

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Posted 20 March 2019 - 09:28 PM

"TIM is looking for a STALL or ST weakness"

 

I'm back to a cash position in my Vanguard account. Waiting for the next signal.  VST trading TZA/TNA or VXXB.

 

 

"No Pessimism Even As Small-Caps Struggle"

 

I'm a long-time sub at Sentiment Trader, and use his data to trade extremes. There are none for now based on the indicators I use from him. That would be my favorites if you have an account with him...  The Dumb money is still at a 72% which is high, but nothing I would place a trade on. Waiting to see what the SS system does in the next few days....

 

Good trading!


Edited by robo, 20 March 2019 - 09:36 PM.

“There is only one side to the stock market; and it is not the bull side or the bear side, but the right side”   Jesse L. Livermore


#8 dTraderB

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Posted 20 March 2019 - 09:35 PM

Maybe the FED has not caved to the markets but has VERY GOOD REASONS to rule out rate hikes and resume QE (after sort of stopping QT)

 

@Schuldensuehner
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#Fed has caved to fin mkts. Rates steady at 2.5%, not more than 1 increase by 2021, big downgrade since Dec. Balance sheet, which swelled from $1tn to $4.5tn has been shrinking a bit, but process to end in Sep. Will leave assets >$3.5tn – new higher normal https://www.breakingviews.com/considered-view/fed-waves-white-flag-on-normalization/?SID=57436e61498ecfca83d0a177&h=f1a01b10485353d538a68dfb1bb03394&content_alert_status=Ready&utm_source=Sailthru&utm_medium=email&utm_campaign=Federal+Reserve%2C+Tech%E2%80%99s+political+donors+Wed%2C+20+Mar+2019+19%3A46+vbhat&utm_term=BV+-+Eikon#.XJLMq0yreyY.twitter 

D2I8VCBWwAE46G1.jpg
4:45 PM - 20 Mar 2019


#9 robo

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Posted 20 March 2019 - 09:40 PM

LOL.... So far the Fed has failed at taking rates back to a normal rate, and its balance sheet remains high....

 

The red line is the rates....  Silly {bleeeep} Feds waited to long.

 

Rates from 2000 until now and two Bear Markets......

 

LOL.... look at that VXF chart Brother.... Wait until the next Bear Market Bottom and watch it go again....  No use in telling you were we will bottom during the next Bear market bottom, because I trade the signals so it doesn't really matter....  

 

https://stockcharts....977&a=651053023


Edited by robo, 20 March 2019 - 09:46 PM.

“There is only one side to the stock market; and it is not the bull side or the bear side, but the right side”   Jesse L. Livermore


#10 dTraderB

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Posted 21 March 2019 - 07:42 AM

@OddStats
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OddStats Retweeted OddStats

Happy reminder (for bears) that Thursday has been the most likely day of the week following March OpEx to be negative (on $SPX over the last 10 years).

OddStats added,

D1uTJeCVAAAkpYj.png
OddStats @OddStats
Were you wondering how $SPX does the week after March OpEx? Here are the last 10 years by day of the week.
5:08 AM - 21 Mar 2019