Breadth Flip
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The main talk of the street continues to be equity risk premium relative to rates. The only difference now is stocks reacted to the sell signals we had almost a full week ago when the markets completed their DeMARK 9 sell setups.
Key events coming up this week:
US MBA mortgage applications, Wednesday
Federal Reserve releases minutes from its latest policy meeting, Wednesday
Eurozone CPI, Thursday
US GDP, initial jobless claims, Thursday
Atlanta Fed President Raphael Bostic speaks, Thursday
BOJ governor-nominee Kazuo Ueda appears before Japan’s lower house, Friday
US PCE deflator, personal spending, new home sales, University of Michigan consumer sentiment, Friday
Russia’s invasion of Ukraine hits the one-year mark, Friday
First, PYPL CEO picked up a lot of shares last week. Company executives sell shares for a lot of different reasons. There is really only one reason they buy millions of dollars worth of shares. I saw that not only did we close higher today in PYPL, but we completed a perfected 9 buy setup.
Its not just stocks that are catching back up to yields…
Small caps back to DeMARK TDST levels
Gold TD 9 setup completed after reversing post 13's. This means that we are looking for a combo 13 or sequential 13 to complete now on downside. I am looking to add more short exposure to gold mining names.
Nasdaq breadth flipped bearish.
The market went from almost 80% of the Nasdaq names to being above the 50-day moving average to around 57%.
Finally, one of the most important charts I’m tracking right now: the Bollinger band width in the Dow Jones.
Here is a regression of the band width with the forward 20-day change of the Dow Jones. The gist here is we don’t want to come in and fade weakness right away.
With the Dow now failing near the Sequential/Combo risk levels, I think its safe to leave it some space until yields start to back off again or show encouraging signs that intraday reversals are safe to play.
I’m still very bearish on energy names, looking for Chevron to reach the TD Absolute retracement level near 143
