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Overbought Conditions Stay Nimble. DeMARK scans and relative charts.
Short term, we are back into an oversold situation on the market. I am looking for some kind of retest to the 9/20 EMA which is lining up around 383 for now. As long as the bond market stays bid, crypto is bid and rates do not accelerate to the upside, we should continue to see the 13 upside sequential count complete as we qualified upside risk level breaks after a 9 sell setup.
I think the bonds are giving us the all clear here in the short term, but we are fast approaching resistance near the 20 EMA (right around 100.6). As energy looks to have one last final up leg this week, look for SPY lower, bonds slightly lower and energy to complete the 13 and then we can try longs on the market again.
Active sequential and combo counts are here on the weekly for XLE. Tomorrow if we get one more high, we will complete the 13 combo upside and thus I will get big on an energy short again. I am already long the 85 puts for December, but will add to those.
China looks interesting to me on dips as well. I am looking for some kind of news headline where I can get in back near 26.5 on ASHR. Big weekly counts completed and is steel deemed uninvestible given the geopolitical risks around China at the moment.
Like I've been saying on crypto, Bitcoin is holding risk levels and this could have a monster squeeze up on ANY positive news given the technical setup. We also have to remember that FTX was the primary mechanism of which a lot of buy side was able to short via their perpetual futures. Now that those don't exist, the market should be a lot more tamer on the downside because nobody is pressing shorts -- at least nobody big in the US. Binance still has instruments but from a regulatory perspective, it is hard for hedge funds to open accounts there.
Snowflake has been somewhat lagging lately but I do still like the weekly charts. I am giving this one a lot of space but the valuation is somewhat compelling. Unfortunately, it is still not the market to be in high tech growth at the moment. If we retest the gap at 140, I will give it a shot
I'm a little bit skeptical on large cap bios (IBB) because everything there really has run a lot and due for a pullback. Look at AMGN and GILD for example. The IBB/SPY ratio is clearly signaling some short term exhaustion from the DeMARK side.
However, a great setup to me is the equal weight biotechs versus the large caps. Look at the XBI/IBB ratio below. This looks like a good pairs trade to me.
I think the banks are also signaling that this was peak rates. Weekly resistance and failure of the TDST levels with daily 13's and combo's on the XLF/SPY ratio. I think it's time to cash in the chips on banks and move on.
Back to energy: a company that I have been following for a long time is NR (Newpark). They are an oil services organization that specializes in providing lubricants for oil rigs. Big weekly 13 sell on the chart as of today.
EUFN also with a daily 13 combo, this is the index for European financials (Think DB, CS etc) confirming what we see on the relative charts on XLF in the US imo.
I can't stress enough how well IBM works on DeMARK charts. Today we completed a 13 combo. I will buy some puts purely based on this chart.
The SHOP bottoming pattern looks legit too and might be worthwhile on dips. This goes back to the long tech on dips theme.
Let me know if you have any questions