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ST flat, IT short, bulls battle back from the edge of the abyss


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#11 dTraderB

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Posted 10 February 2019 - 02:57 PM

Week In Review – February 8

Summary

  • The S&P kissed its 200-day then reversed bringing most risk markets down with it. Now, analysts are “retrofitting” their fundamental view to downside price action.   Nice skate save on Friday
  • Go no further than local bond markets to confirm the risk-off end of week move. Developed yields in x/Mexico, the Euro periphery and EM out.  Even the French sovereign spread out 7 bps.  Surveillez cet endroit!
  • U.S. credit stable on the week but weaker at the end of the week
  • Dollar stronger with major Latins giving back some YTD gains. The Dixie only 1.1 percent or a chip shot away from taking out December 14th high at 97.71, which could put the kibosh on the EM rally
  • Aussie stocks led the weak or week.
  • Iron ore jumped to its highest levels since 2014 Vale concerns. We flagged Iron Ore early as an indicator and signal the old China economy is about to kick in
  • Natural gas ugly and should be higher given seasonals.

Commentary:  On February 3rd we posted,

Thus we expect the market to trade through the .618 Fibo at 2713 and kiss or temporarily pierce the 200-day moving average at 2740, getting the bulls Super Bowl lathered up, before reversing and setting on a new trajectory to test the December low.  – GMM,  Feb 3rd

Check.

We believe the index is on its way but certainly not in a straight line.  Some are betting on a 1990’s melt-up as Fed will have to ease.    That’s possible if the Fed begins easing with the S&P at 1000.   Never have seen such nonsense, however.

The initial conditions in the 1990s couldn’t be more different than they are today.  The mid-’90s was the beginning of globalization, cheap labor from China, India, and Eastern Europe.  Peak America.

Now the reverse is true.  The post-War order, i.e., globalization, is fading fast, and one, and the major reason we are cautious here,  even as a long-term investor, and will steer clear of stocks until they get much cheaper.  We are confident they will.

We don’t like the XLF (financials ETF) chart.  Ugly Doji daily candle to end the week (see chart below) clinging to its 20-day.  Watch this schpace (go lower)!

Natural gas is freakishly low here at this time of year.  Yes, shale supply HELL.   We think it deserves a stab down at these levels, however,  but on a tight leash (which a danger in itself – Nattie easily moves 10% in one day).  Be warned we have lost a ton of money in the “widow maker.”

China back online this week,  Mnuchin and Lighthizer to China for negotiations, mo earnings, CPI, and government funding deadline on Friday.

Senate Appropriations Chairman Richard Shelby (R-Ala.) acknowledged on Sunday that negotiations had stalled, and he put the odds of getting a deal at 50-50.  – Politico, Feb 10th

It will get done.  They are not that foolish.

Happy hunting this week, folks.

 

Ugly Doji On Friday Clinging To 20-day.  Going Lower

week_chart3.png?w=640

https://global-macro...iew-february-8/



#12 dTraderB

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Posted 11 February 2019 - 07:22 AM

Lance Roberts @LanceRoberts
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Should we REALLY not worry about the Fed's Balance Sheet? A look at former #Fed President Bill Dudley's commentary about why he is surprised by the market's focus on the size of the #balance #sheet. It could be because of this, could it? $SPY $TLT https://realinvestmentadvice.com/should-we-really-not-worry-about-the-feds-balance-sheet/ 

DzH0_fsUUAAA0mP.jpg
3:46 AM - 11 Feb 2019

 



#13 dTraderB

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Posted 11 February 2019 - 07:23 AM

Lance Roberts @LanceRoberts
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How investors can prosper with #technical #analysis. A #mustread from @mnkahn about how technical and #fundamental analysis can work in concert to deliver better returns. $SPY $TLT https://realinvestmentadvice.com/how-investors-can-prosper-with-technical-analysis/ 

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3:43 AM - 11 Feb 2019


#14 dTraderB

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Posted 11 February 2019 - 07:24 AM

Lance Roberts @LanceRoberts
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Bill Dudley was correct in that the "cracks are already starting to appear as the underlying economic data is beginning to show weakness." https://realinvestmentadvice.com/should-we-really-not-worry-about-the-feds-balance-sheet/ 

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4:00 AM - 11 Feb 2019


#15 dTraderB

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Posted 11 February 2019 - 07:25 AM

  1. Everyone is too fixated on equities to see the non-validation message from the bond market. 5-year breakevens have fallen from 2.08% late last year to 1.7%, even with the reflexive rebound in commodity prices. This decline in inflation expectations is telling you a thing or two.

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    The earnings recession has started. At the end of Sept, the consensus was +6.7% for YoY EPS. By end-2018, that estimate was down to +3.3%. And now -0.8%, with six of the eleven sectors in negative terrain.



#16 robo

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Posted 11 February 2019 - 12:37 PM

LOL....  The data you posted should be respected, but not many even care these days..... I have been tracking the Fed Rate cycle for years, and now others are too....

 

The Silly rabbits at the Fed - Rate Cycle data....

 

https://stockcharts....37c&a=643797474

 

https://stockcharts....36c&a=644719534

 

 

 

https://northmantrad.../11/rant-alert/

 

My historical weekly data charts for the SPX indicate - "It better be different this time" because if it's not we have seen the high for this Bull run.   It has been a nice one that's for sure

 

Unable to post my charts....


Edited by robo, 11 February 2019 - 12:46 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


#17 robo

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Posted 11 February 2019 - 01:07 PM

The SOS continues, but who be buying these shares?   I will continue to add the numbers (SOS) to my chart....  HYG should be tracked based on the Risk On data.....  Black line on my chart with a comment from Tom.

 

http://www.wsj.com/m...-moneyflow.html

 

https://stockcharts....11c&a=644642044


Edited by robo, 11 February 2019 - 01:09 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


#18 robo

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Posted 11 February 2019 - 09:05 PM

I'm waiting on the next cycle low to go long again....

 

Despite stocks being up on Friday and Monday, stocks continue to deliver sell signals.

 

Monday was day 31 for the daily equity cycle. That places stocks in their timing band for a daily cycle low. Over the past 13 trading days there have been 9 Selling on Strengthdays. Usually when there is a clustering of SOS days when stocks are in their timing band for a daily cycle low, a decline into the DCL soon follows.

 

http://imageshack.com/i/po9xt3ZKp

 

https://likesmoneycy...r-sell-signals/


“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