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BULLS hanging on....ST & IT LONG

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#11 dTraderB



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Posted 28 January 2019 - 10:11 PM

Resistance above the market


The strength on Friday enabled many of our major indices and sectors to approach, test, or slightly pierce key 20 week EMAs.  The benchmark S&P 500 is a perfect example of this test (red arrow below):

15486833313051436725554.pngDuring periods of downtrending price action, weekly PPOs tend to remain negative, weekly RSIs typically top in the 50-60 range and overhead 20 week EMAs provide critical resistance.  Despite all the strength off the December low, these three bearish traits remain intact.  The bulls' worries are not over.  Thus far, the bulls have been incredibly resilient and that's a good sign, but more tests remain.  This morning, a warning from Caterpillar (CAT) will likely test the bulls' mettle once again.


#12 ww4321



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Posted 29 January 2019 - 07:06 AM

thanks for analysis

it is clear and concise-easy to follow

#13 dTraderB



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Posted 29 January 2019 - 07:43 AM

WSJ morning report:

Key Events

The S&P/Case-Shiller home-price index for November is out at 9 a.m. ET.

The Conference Board's consumer confidence index for January is expected to slip to 125.0 from 128.1 the prior month. The latest figures are slated for 10 a.m.

The Federal Reserve starts its two-day policy meeting.


Market Facts
  • The KBW Regional Banking Index rose 1.1% Monday, putting it up 15% for the year and on track for its largest monthly advance since November 2016, with some analysts more optimistic about the U.S. economy than global growth. Small-cap stocks have also outperformed. The Russell 2000 index of small-cap stocks is up 9.3% this month, also heading for its best month since November 2016.
  • Net bets on higher Brent crude prices by hedge funds and other speculative investors have risen in three consecutive weeks to their highest level since Nov. 13, ICE figures through Jan. 22 show. Brent futures fell 2.8% Monday, though they are still up 11% for the year.


The plain-spoken Fed chairman sometimes leaves markets confused. Fed Chairman Jerome Powell likes to think of himself as a straightforward communicator, but his past three months as the central bank’s leader have proved challenging as markets have occasionally misinterpreted his remarks.


Investors have pushed up the stock prices of most of the companies in the S&P 500 that have reported earnings so far this month, even for many that fell short of expectations.

That’s a sign of the market’s low expectations headed into 2019 after fears of a substantial earnings slowdown, along with the potential ramifications of trade tariffs and rising interest rates, contributed to the S&P 500's worst December in 87 years.

Among some of the stocks that have seen a bounce despite posting weaker-than-expected results are Ford, tool distributor Fastenal and memory-chip maker Western Digital—all of which had suffered double-digit percentage declines last month.

About 61% of the 113 companies that have reported year-end results through Monday morning have seen their share prices rise in subsequent trading sessions, according to FactSet, the biggest percentage for any quarter of 2018. That’s even as the companies in the index are on pace to expand profits by less than half the rate of the third quarter.

Still, investors aren’t all forgiving. Shares of Caterpillar fell 9.1% on Monday after the machinery maker reported its first profit miss since 2016.

The coming days will be crucial in determining whether the trend continues.

Roughly 37% of the firms in the S&P 500 are scheduled to release results this week, the busiest of the fourth-quarter period.

Bank of America adds that the shares of companies posting stronger-than-expected earnings and sales results have outperformed by 2.8 percentage points the next day, the biggest reward since mid-2012, while those that have missed estimates on both metrics have lagged by 1.3 percentage points, well below the historical average.

“Low investor expectations are evident in stock price reactions, following a severe valuation de-rating in many areas of the market in 2018, particularly in global/trade-sensitive sectors like industrials,” Bank of America Merrill Lynch analysts wrote in a note Monday.

Investors worried those factors would potentially put the U.S. economy into a recession, even though analysts across Wall Street said the chances of that happening in 2019 were unlikely.

But fresh data this year—including evidence of a strong labor market and ongoing expansion across most of the U.S. economy—have helped calm investors.

#14 dTraderB



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Posted 29 January 2019 - 07:46 AM

Best FED analysis out there, IMO


The Federal Reserve will leave interest rates unchanged at the conclusion of this week’s FOMC meeting. Any excitement that the meeting might bring will be contained in the statement and the press conference. The balance sheet will be of particular interest to market participants. The Fed’s challenge on that front will be communicating that should they slow the pace of balance sheet reduction, they will do so for technical reasons rather than as a shift in their underlying policy stance.

There is no question that the Fed will hold rates steady this week. Central bankers have made this abundantly clear by repeatedly stating that the Fed can afford to be “patient” when considering future policy changes. Now that policy rates are near the lower bound of neutral, the Fed believes they can slow the pace of rate hikes as they assess the impact of past policy actions. Policy thus has shifted to a more data dependent mode.

The statement will be searched for signs of dovishness with a focus on the Fed’s description of the economy and any expectations for the path of policy in the months ahead. The data flow of course was crippled by the now-concluded government shutdown. That said, I suspect the Fed will retain a fairly optimistic view of the economy.



#15 dTraderB



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Posted 29 January 2019 - 12:51 PM

Stalling, snoozing, but still looks bullish, could be consolidating.....


When this reverses, look out below!   SPX 2400 handle in a few days!



As we wrote last week, we dipped a tiny toe into the market while repeating our mantra: if this doesn't work we'll run for it. Well, we ran for it.

This in spite of technical tools which point to higher prices. If we ran a rule-of-seven analysis (http://www.edwards-m...uleofseven.pdf/) on this wave, we would get target prices of  2921 and 3112.

Not only that, but the P&F analysis has a target of 2809. These may very well be accurate - it's just that we didn't want to get seasick from volatility.



#16 dTraderB



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Posted 29 January 2019 - 12:57 PM

This is a long BUT very informative *essay*  LOL 

But, good.... may not agree with everything 


Technically Speaking: Can The Fed’s Reversal Save The Bull?

Written by Lance Roberts | Jan, 29, 2019


A WSJ article suggesting that the Fed would not only stop hiking interest rates but also cease the balance sheet reduction which has been extracting liquidity from the market.

In mid-2018, the Federal Reserve was adamant that a strong economy and rising inflationary pressures required tighter monetary conditions. At that time they were discussing additional rate hikes and a continued reduction of their $4 Trillion balance sheet.

All it took was a rough December, pressure from Wall Street’s member banks, and a disgruntled White House to completely flip their thinking.” 


This is a change for Jerome Powell, who was believed to be substantially against Fed interventions, shows his worst fear being realized – being held “hostage” by the markets. A look at Fed meeting minutes from 2013 was his recognition of that fear.

“I have one final point, which is to ask, what is the plan if the economy does not cooperate? We are at $4 trillion in expectation now. That is where the balance sheet stops in expectation now.  If we have two bad employment reports, the markets are going to move that number way out. We’re headed for $5 trillion, as others have mentioned.  And the idea that President Kocherlakota said and Governor Duke echoed— that we ’re now a captive of the market — is somewhat chilling to me.”

This week, the Fed meets to discuss their next policy moves. If the Fed announces a reduction/elimination of future rate hikes and/or a reduction/elimination of the balance sheet reduction, stocks will likely find a bid.

At least in the short-term.


Longer-term the markets are still dealing with an aging economic growth cycle, weakening rates of earnings growth, and rising political tensions. But from a technical basis, they are also dealing with a break of long-term trend lines and very major “sell” signals.


The problem for the Fed is that while ceasing rate hikes and balance sheet reductions may be a short-term positive, monetary policy is already substantially tighter than it was at the lows. In other words, “stopping” tightening is not the same as “easing.”

Back To The Future – 2015/2016

We have seen a similar period previously. During the 2015-2016 correction, the Fed had just announced it’s intent to start hiking rates and had stopped reinvesting liquidity into the markets. (Early tightening.)

The market plunged sharply prompting several Fed Presidents to make announcements reminding markets they still remained extremely “accommodative.”


Click link to continue, if still interested....


#17 dTraderB



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Posted 29 January 2019 - 01:00 PM

Who knows, tax refunds will revive COnsumer expectations & confidence


THE LONG VIEW  ⚫️ @HayekAndKeynes
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Main source of US strength is under fire. Consumer expectations took a big hit in the last couple of months. Expectations are now below tax cut levels.

9:49 AM - 29 Jan 2019

#18 dTraderB



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Posted 29 January 2019 - 01:04 PM

Go to backtest this!


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9:54 AM - 29 Jan 2019

#19 dTraderB



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Posted 29 January 2019 - 01:21 PM

Snoozeville continues.... a minor pop now, so far.



I MAY LOOK at REITs...anyone else? 


McCullough: Our Top 3 Longs Right Now



Our Macro process suggests, over the next few quarters, the U.S. economy will shift from Quad 4 (i.e. Growth and inflation slowing) to Quad 3 (Growth slowing, Inflation accelerating).

In this new environment, according to our back-tests, REITs have historically outperformed.

As we transition from Quad 4 to Quad 3 our top three long ideas ranked are Treasurys, REITs and Gold.

We’re bearish on the U.S. equity market as a whole here at Hedgeye. But that doesn’t mean there aren’t some things we like on the long side.

Several long ideas have been working well for our subscribers to kick off 2019. That includes REITs (VNQ). Hedgeye CEO Keith McCullough explains in the video below:

REITs is one of the few places that back tests bullishly in both Quad 4 and Quad 3,” McCullough explains (referring to our economic outlook for the U.S. in the first half of 2019).

“We’ve already been a buyer of REITs since interest rates peaked and rolled over…now all we’ve got to do is buy them at the low end of the risk range.

Watch the video below on why our Top 3 current long ideas for Q1 2019 are Treasurys (TLT), REITs, and Gold (GLD).



#20 dTraderB



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Posted 29 January 2019 - 01:28 PM

APPLE may surprise but I doubt it. 


Other important companies reporting today:


Speaking of tech, the Nasdaq's fate very much rests on Apple's (AAPL) earnings this evening.  Apple become the World's first Trillion-Dollar company this summer as share prices climbed to $230, but we topped out there and topped all the way back to $140, down $90 (39%) and that means the weak bounce is $18 – to $158 and we have been rejected at that, so far and that does not actually bode well as anything but strong earnings are likely to at least retest that $140 line:

Apple guided revenues down but did not guide earnings lower so it will be interesting to see what the report turns up tonight.  Analysts are still expecting $4.17 per share in earnings and that's way up from last year's $3.89 but that estimate is WAY down from $4.94, which was the expectations back in October, when they announced  a very solid Q3.  There have been endless rumors that IPhone sales are off and China is doing a soft boycott of Apple due to the US-Huawei Incident, which China is now calling a Kidnapping and is calling on the UN to sanction US!  

Anyway, I think the bar may be a bit low for AAPL (we're long) and hopefully they do beat and lift the markets higher but, if they have a big miss – they'll take the indexes with them and we have a chance to re-test our lows.  Reporting with Apple this evening are Amgen (AMGN), Boston Properties (BXP), Ebay (EBAY), Juniper (JNPR) and MicroStrategy (MSTR) but this morning we already had good reports from 3M (MMM), Biogen (BIIB), Corning (GLW), L3 Technology (LLL), Paccar (PCAR), Pfizer (PFE), Phillips (PHG), Rockwell (ROK), Verizon (VZ) and Xerox (XRX) – so things can't be all bad out there.  

Tomorrow, Alibaba (BABA) will give us some insight into how much China's economy is actually hurting.  China's Amazon is at about $50Bn in revenue (they only count their commissions, not the raw sales that generate them) and drops 12% ($11Bn) to the bottom line but their revenues are still growing by about 40% per year with little sign of slowing – until possibly now…