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Best Returns Last 10 Years...
By: Charlie Bilello | May 6, 2024
• Last 10 Years...
NVIDIA $NVDA: +20,081%
Bitcoin $BTC: +14,740%
$AMD: +3,486%
Tesla $TSLA: +1,208%
Amazon $AMZN: +1,112%
Netflix $NFLX: +1,105%
Microsoft $MSFT: +1,104%
Apple $AAPL: +887%
Facebook $META: +640%
Google $GOOGL: +521%
S&P 500 $SPY: +225%
Gold $GLD: +72%
US CPI: +32%
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$SPY $3.8 Million Far OTM Put (Highly Unusual)
By: Cheddar Flow | May 6, 2024
• $SPY $3.8M Far OTM Put (Highly Unusual)
This order has a near-term expiration and a lot of premium
Contract volume has seen a substantial uptick today
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Major Ultra-Bullish Signal is Approaching
By: Lucas Downey | May 6, 2024
Last week we took a deep dive in our data and found something interesting. When the BMI falls 40+ points in 16 weeks, it’s extraordinary.
In fact, over the past 30 years, it’s occurred 303 times.
While that may not seem exceptional on the surface, in reality most of those instances cluster around 17 discrete episodes throughout the 3 decade period including back-tested data.
But history proves these prolonged money flow dips are quite bullish over the medium to long-term. Even more striking are periods that are very similar to today’s environment.
I’m referring to conditions when the BMI fell 40+ points from a red-hot overbought reading over the next 4-month trading period.
Let’s visualize one from recent memory.
We experienced a similar peak to drop like now after the pandemic. From mid to late 2020, the BMI dropped from the 90 area to the low 50s, eerily similar to today.
By far this is the closest analog to today’s situation:
- Investors were still spooked by the unprecedented macro environment
- Bearish rhetoric was all over the media given the unfolding pandemic
That pullback eventually ended with a powerful rally starting soon later:
What’s important to note is that market lows were eventually hit and the BMI began rallying well ahead of the surge that followed.
Turns out, this similar pattern has been rather predictable in our data.
If you’re allergic to an extremely bullish setup, LOOK AWAY NOW.
When we single out similar BMI pullbacks to now, we find 6 instances ranging from 1998, 2019, & 2020.
What we find is near-term stocks struggle with the S&P 500 falling 4.1% a month later and 1.2% 3-months later.
But the underlying message that you need to heed is stocks zoom 6 and 12 months later with average gains of 14% and 20.3% respectively.
If that doesn’t impress you, I’ve included all 303 instances as well. In aggregate, they forecast market beating forward returns:
But I don’t want to stop with the coming bullish message.
For those that think Technology stocks are not going to shine again…keep dreaming.
This massive BMI drop favors those bold enough to bet on high-quality growth stocks.
Here I’ve performed the same analysis but with the NASDAQ 100 (NDX). The same weakness is seen 1 to 3 months out, with -2.5% and -.2% returns respectively.
But that’s when you want to be accumulating best of breed stocks. 6-months later the NDX surges 31.6% and 12-months later an awe-inspiring 49.5% jolt is seen.
And for those curious, the 303 instances offer outstanding forward gains too:
Folks, stop worrying about interest rates. You might risk missing a major ultra-bullish situation.
Instead, follow evidence-based data.
New market leaders are under heavy accumulation…now isn’t the time to bounce, it’s the time to pounce.
We are getting our subscribers ready for when the all-clear signal finally strikes. I firmly believe it’s around the corner.
Just like we sent out some of the best stocks to buy in October, we’re prepping for a similar rip.
A market map is the way.
Here’s the bottom line: Investors are looking for clarity in this turbulent market. Data has more answers than the news ever will.
We are currently witnessing a rare 40+ point drop in the Big Money Index (BMI). History says a little more pain will lead to monster gains in the coming months.
Not only that, whenever the BMI drops 40+ points from a red-hot overbought period similar to now, stocks have never been lower a year later, with the NASDAQ averaging a 49.5% twelve-month gain.
Don’t stop and stare. PREPARE!
After doing this study, earlier this week we sent 3 stocks to our PRO Members that we love for this coming uptrend. And chances are they aren’t names you’re familiar with…but the Big Money loves them!
Listen, a major ultra-bullish signal is approaching.
Don’t wait for the media bull whistle to blow…it’ll be too late.
Follow the money and you’ll be ahead of the move.
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The 10 Top/Bottom S&P 500 Index percent net change performers
By: Thom Hartle | May 6, 2024
• Today (8:34 CST), the 10 top/bottom percent net change performers in the S&P 500 Index.
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The 10 Top/Bottom NASDAQ 100 Index percent net change performers
By: Thom Hartle | May 6, 2024
• Today (8:34 CST), the 10 top/bottom percent net change performers in the NASDAQ 100 Index.
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After 2 Up Weeks, Major US Indices End Last Week Right On 50-DMA, Which Is Flat And Itching To Turn Down
By: Hedgopia | May 6, 2024
After peaking in March and dropping in mid- to-high single-digit percent, the major US equity indices have rallied the last two weeks, ending last week right on the 50-day. A takeout of the average, which was lost three weeks ago, is likely but a sustained move higher is unlikely as overhead resistance is galore.
From the March 28th peak of 5265, the S&P 500 gave back 5.9 percent through the April 19th low of 4954. From that low, the large cap index rallied nicely to test the 50-day last Monday but was rejected. This was an opportunity for equity bears to press, which they did, managing to exert downward pressure last Tuesday and Wednesday. The downward momentum even continued early Thursday, with the index down 1.7 percent for the week through the session low of 5011, which got bought. By Friday, momentum had completely swung the other way, as the session gapped up to tick 5139 intraday but close the week at 5128, up 0.6 percent for the week and essentially right at the 50-day (5129).
It is likely the average – currently flat – gets taken out this week. As a matter of fact, Friday’s 1.3-percent jump helped the index push through a falling trendline from the March 28th high. But there are other levels where selling is likely to pick up. Since the April 19th low, the index has traded within a rising channel; Last Friday’s high just about touched the upper end. It is entirely possible the index continues higher all along the rising channel, which in due course will then line up with horizontal resistance at 5170s (Chart 1).
Things have evolved similarly on the Nasdaq 100, which between the March 21st peak of 18465 and the April 19th low of 16974, dropped 8.1 percent. Last week, it closed at 17891, with the tech-heavy index touching the 50-day (17927) intraday. The index has been under the average for 15 sessions now – which is also the case with the S&P 500. The average is also flat on the Nasdaq 100.
As is the case with the S&P 500, the Nasdaq 100 has traded within a rising channel since last month’s low; last week’s one-percent rally brought the index right to the upper end. Should it manage to break out, there is no shortage of levels overhead where tech bears are likely to get more aggressive.
At 18100 lies trendline resistance from the March 21st high. Then, there is 18300s, which the Nasdaq 100 failed to decisively break out of several times over seven weeks beginning March 1st (Chart 2).
The story is different in the small-cap arena, not the least because the Russell 2000 remains way under its November 2021 peak of 2459. Last week, it closed at 2036, having rallied as high as 2135 on March 28th (Chart 3).
Earlier, after peaking in 2021, the small cap index touched 1641 in June 2022 and 1642 in October that year. These lows were successfully tested last October as the index ticked 1634 before reversing higher.
A 61.8-percent Fibonacci retracement of the peak-to-trough drop comes to 2144. After losing the level in January 2022, the index has found stiff resistance at 2100, which also represents a measured-move price target post-breakout at 1900 last December. Before that, the Russell 2000 essentially played ping pong between 1700 and 1900 going back to January 2022.
Until 2100 gives way, small-cap bulls get no bragging rights. Ditto with the bears who need to at least push the index below 2000 to build some momentum. For now, the Russell 2000 is in no man’s land. And, as is the case with its large-cap cousins, it ended last week right on its 50-day. It did gap up to rally one percent last Friday, but ended the session in a weak note, as it was up as much as 1.9 percent at the session high.
On each of the three indices, the 50-day is flat. Unless the bulls get their act together – and quick – the average could very well be looking to turn down.
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Why Extended Choppy Price Action May Lie Ahead
By: Schaeffer's Investment Research | May 6, 2024
• Last week’s action was a net positive for bulls
• Bulls and bears are fighting for control
“Last week’s rally that followed the expiration-week decline was encouraging, but there is still work to be done from a technical perspective. On Friday, the SPX closed just below the confluence of its declining 20-day and flattening 50-day moving averages in the 5,115-5,125 zone. Moreover, the 5,111 level is a 50% retracement of the March closing high and this month’s closing low. And finally, there is potential trendline resistance connecting lower highs in the first two weeks of this month. That trendline comes into the week at 5,135 and at week’s end will be around 5,110. ”
-Monday Morning Outlook, April 29, 2024
The S&P 500 Index (SPX – 5,127.79) rally that followed April standard expiration week was encouraging, but as I suggested, there was work to be done. The index was below technical resistance from multiple perspectives, leaving room for a Monday rally that quickly gave way to selling.
The 50-day moving average and the area coinciding with a 50% retracement of the late March closing high and mid-April closing low acted like a brick wall. Choppy action then followed the SPX’s break below the 50-day trendline, as both bulls and bears tried to seize control.
Support last week, while flimsy, was around the SPX’s unpopular, yet at times significant 80-day trendline, situated around 5,048. This trendline marked support in early May and mid-August 2023. Crosses below it in September and back above it in mid-November marked sell and buy signals, respectively.
A full or near full candle close below the moving average in a week outside of standard expiration may be viewed as a potential sell signal, based on this trendline’s importance in the past year. If a sell signal indeed materializes, the next support level will be around 4,940-4,965. The former is 20% above the October 2023 closing low, while the latter is marking April’s closing low around 4,965.
A move below this region of support would increase the possibility of the SPX revisiting 4,800 – the site of its previous all-time high from January 2023, before it gave way to a January breakout.
So far, the SPX bounced off the supportive 80-day moving average, reaching potential resistance levels again. The first was the trendline connecting highs at the start of the current decline, which the index breached on Friday. It comes into the week at 5,102 and will be at 5,077 at the end of the week, meaning it's sloping five points lower each day.
However, the convergence of the 30- and 50-day moving averages at 5,130 should be on your radar as a point of potential resistance to watch, if the see-saw action continues. The SPX closed under this level on Friday, putting the trendline breakout in an awkward position heading into next week. Early price action may determine if the SPX breaks out or re-enters the choppy environment.
On the sentiment front, a few sentiment indicators were neutral. The weekly National Association of Active Investment Manager’s (NAAIM) survey suggests 60% of active managers are invested, with extremes being either 15-20% invested or fully invested.
This group could be in a holding pattern for now, after no major surprises emerged from the Federal Open Market Committee (FOMC) meeting. This week brings another batch of economic indicators, however, including inflation and retail sales data. With these reports due out during standard May expiration week, the options market could exaggerate its reactions.
One sentiment indicator that moved in options bulls' favor last week was the 10-day, buy-to-open put/call volume ratio on SPX components. It is now showing hints of rolling over from a relatively high level. This type of behavior typically comes up as the market begins a basing period around the eventual lows, withs some rollovers in the ratio coinciding with bottoms.
If the SPX moves above the technical levels discussed above, this indicator will be more valid. Both sentiment and technical indicators suggest extended choppy price action this week, with the potential for the needle being moved during standard expiration week.
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Is this a Dead-Cat Bounce or a Bounce with Legs?
By: Arthur Hill | May 3, 2024
• A key short-term breadth indicator became oversold in mid April.
• Stocks are bouncing after this oversold reading.
• Breadth, however, has yet to show a serious expansion in participation.
Stocks fell sharply into late April and then rebounded over the last two weeks. SPY fell 5.34% from March 28th to April 19th and then rebounded with a 3.26% gain the last two weeks. Does this bounce have legs? Chartists can separate serious bounces from dead-cat bounces using breadth. Today's example will use the S&P 500 and the percentage of S&P 500 stocks their 20 day SMAs.
There are two steps. First, the indicator needs to become oversold (setup). Second, we need to see a significant increase (breakout) in upside participation (signal). An oversold reading signals a significant decline and provides the setup for a bounce. Aggressive traders can trade the oversold condition. A subsequent move above the breakout level signals adequate participation to sustain the advance. Now comes the subjective part. We must choose our oversold and breakout levels. I am choosing 10 and 70 percent for SPX %Above 20-day SMA.
The green shading on the chart above shows when SPX %Above 20-day became oversold and the green arrow-lines mark the subsequent move above 70%. There were setup-signals in March-April and again in October-November. Both led to significant bounces. Notice the red shading where the indicator failed to clear 70% in mid October. This was a feeble bounce and SPY moved to a new low in late October. SPX %Above 20-day then surged above 70% in early November for a signal. Recently, the indicator became oversold here in mid April for a setup and moved back above 50% this week. An oversold bounce is indeed underway, but I need to see a move above 70% to show a participation breakout.
We are monitoring the rebound in the S&P 500 and Nasdaq 100 at TrendInvestorPro (ChartTrader). Our 10 indicator composite indicator became oversold in mid April, but we have yet to see the required breadth thrust to signal a strong increase in participation.
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CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | May 4, 2024
• Following futures positions of non-commercials are as of April 30, 2024.
E-mini S&P 500: Currently net long 43.1k, down 24.5k.
Equity bulls should be very happy with how things turned out this week. The S&P 500 rallied 0.6 percent but at Thursday’s low of 5011 was down 1.7 percent for the week. That low was bought, with the bulls gapping up the index (5128) on Friday to close out the week at the 50-day (5130). Earlier on Monday, their advance was stopped at that average. In the likely event the average gets taken out next week, the next layer of resistance lies at 5170s.
The large cap index peaked at 5265 on March 28th and the subsequent selling stopped at 4954 on April 19th.
Nasdaq (mini): Currently net long 2.8k, down 3.4k.
Tech bulls got help from both the FOMC and earnings this week (more on this here). On Wednesday, Chair Jerome Powell shot down the idea of the possibility of a rate hike (more on this here). Then, March-quarter results from both Amazon (AMZN) and Apple (AAPL) pleased investors. The rally in the last two sessions culminated in a one-percent gain for the week, which at one point was down 2.4 percent.
When it was all said and done, the Nasdaq 100 (17891) finished just under the 50-day (17927). The tech-heavy index peaked at 18465 on March 21st, failing to sustainably break out of 18300s for seven weeks before rolling over. Before this resistance gets tested, tech bulls will first have to clear 18100, which represents trendline resistance from that high.
Russell 2000 mini-index: Currently net short 40.3k, up 4.2k.
The Russell 2000 rallied 1.7 percent for the week, but small-cap bulls are probably not happy with how Friday fared; the session gapped up to add 1.9 percent intraday but only to reverse to end up one percent to 2036 – just under the 50-day at 2039.
On a closing basis, support at 2000 was breached both Tuesday and Wednesday, touching 1968 intraday Wednesday. At the same time, the small cap index retreated well before reaching 2100 resistance, ticking 2055 on Friday.
The index remains rangebound.
US Dollar Index: Currently net short 35, down 178.
On Wednesday, the US dollar index rallied as high as 106.38 but only to retreat. By Friday, it was down 0.8 percent for the week to 104.92. This was the fourth week in a row the index stalled just north of 106.
Earlier, the index bottomed at 100.32 last December, followed by a takeout three weeks ago of 103-104, which goes back to December 2016.
A crucial test lies ahead. A rising trendline from the December low draws to 104. It is unlikely this support is lost right away. Even on Friday, the intraday low of 104.41 – barely above the 50-day at 104.39 – was bought. That said, the weekly remains way overbought and it is just a matter of time before this trendline is compromised.
VIX: Currently net short 22.4k, up 4.4k.
The last time VIX’s weekly RSI rallied above 70 was March 2020; since then, the momentum metric has struggled to rally above 63. This was also true this time, when it turned back down three weeks ago; this was when the volatility index tagged 21.36 and retreated. VIX fell in the subsequent two weeks, with this week’s close of 13.49 comfortably breaching the 50- and 200-day.
VIX is oversold on the daily, and this could very well be a make-or-break moment for volatility bulls. The index closed the week right on a rising trendline from last December when it ticked 11.81 and rallied. This is a must-save.
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$SPX Woah $Millions of Calls
By: Cheddar Flow | May 3, 2024
• $SPX Woah
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The 10 Top/Bottom NASDAQ 100 Index percent net change performers
By: Thom Hartle | May 3, 2024
• Today (8:34 CST), the 10 top/bottom percent net change performers in the NASDAQ 100 Index.
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Dovish Message Likely To Ignite Positive Wealth Effect From Equities And Home Prices
By: Hedgopia | May 2, 2024
Markets were on pins and needles as to if Powell would be open to the possibility of a rate hike. He hardly sounded hawkish Wednesday. A dovish message hardly helps cool down the positive wealth effect coming from equities and home prices. It could rather be helping inflation remain sticky.
A day prior to the conclusion of the two-day FOMC meeting, the employment cost index for the March quarter was released, and it came in hotter than expected. Private-industry total compensation increased 4.1 percent from a year ago. The series peaked in 2Q22 at 5.5 percent, which was a 38-year high, and has been north of four percent for 11 quarters now (Chart 1).
This comes on the heels of hotter-than-expected readings in recent months in both the consumer price index and personal consumption expenditures. Price increases are not dropping at the rate many had hoped.
Of late, several FOMC members have sounded alarmed by prospects of sticky inflation, with some even stating only one rate cut – at best – was needed this year; the March-meeting dot plot showed FOMC members expected three 25-basis-point cuts. The fed funds rate, after having been raised from a range of zero to 25 basis points in March 2022 to between 525 basis points and 550 basis points through last July, was once again left unchanged this week.
With most economic data coming in stronger than expected of late, markets were nervous if Chair Jerome Powell would open the door to the possibility of a hike, if the need be. He did not, stating in the post-meeting presser that “I think it’s unlikely that the next policy rate move will be a hike. I’d say it’s unlikely.”
When pressed what it would take for them to hike, he said, “I think we’d need to see persuasive evidence that our policy stance is not sufficiently restrictive to bring inflation sustainably down to two percent over time. That is not what we think we’re seeing.”
On Wednesday, markets were confused, and this was reflected in how equities traded. Stocks took off at 2:30, rallied hard for half an hour until they rolled over at 3:00. The S&P 500 reversed from up 1.2 percent at the session high to down 0.3 percent at close, with a massive shooting star (Chart 2); on Monday, sellers showed up at 50-day moving average.
Deep down, Powell’s body language suggests there is a clear bias toward easing. But they need data to cooperate. Apart from the economy refusing to show signs of deceleration, stocks have rallied huge since last October’s low, adding trillions in market cap, and that helps consumer mood/spending. Ditto with housing. Home prices are rising once again.
In February, using the S&P Case-Shiller home price index, US home prices firmed up 6.4 percent year-over-year. This was the steepest price appreciation in 15 months. In March 2022, prices were rising at a record 20.8 percent, before going the other way. For three months from April through June last year, prices dropped, albeit marginally (Chart 3). Since last July, the growth rate has been in acceleration.
The Federal Reserve has time on its side and likely takes time on rate cuts. One can argue the monetary policy is not restrictive enough to particularly impact equities and home prices, which influence inflation through the wealth effect. A dovish message at a time like this does not help.
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S&P 500 Election Year 2024 vs. 1968 & 2012
By: Almanac Trader | May 3, 2024
With all the college protests in the news it brings comparisons of 1968 to mind. 2024’s Big Election Year Q1 gains have already put the 2012 analog in my sights. Both were election years with somewhat correlated yet somewhat different narratives to 2024. The chart is from my members only webinar yesterday. S&P is clearly tracking 2012, not 1968 so far this year.
1968 was marked by escalations in Vietnam, the Tet Offensive, and protests on US college campuses and elsewhere. Sitting President Lyndon Johnson dropped out of the race on March 31. Robert Kennedy senior, the leading democratic candidate, was assassinated on June 6. George Wallace ran a formidable third-party candidacy garnering 13.5% of the popular vote and won 5 states and 46 electoral votes. But Q1 was down, and April was up.
In 2012 sitting President Barak Obama ran and won reelection. It was a year with the market driven by the Fed and interest rates. Zero interest rate policy (ZIRP) and quantitative easing (QE) were dug in deep. The Fed spun out QE3 and Operation Twist. Q1 was up big followed by a down April. Again, aside from the protests and wars 2024 is correlated more closely to 2012 than 1968.
This updated S&P 500 Election Year Seasonal Pattern chart underscores the market’s tendency to be weaker in April and May after big Q1 gains in election years 1956, 1964, 1972, 1976, 1988, 1996, 2012. However, the market is likely to be flatter than the green line above due to inflation, the Fed, interest rates, a prominent third party candidate and two ongoing wars. Page 26 of the 2024 Stock Trader’s Almanac reminds us that “War Can Be a Major Factor on Presidential Races. Democrats historically lost on foreign shores while Republicans lost at home.
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Money managers Increased their exposure to the US Equity markets since last week...
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NAAIM Exposure Index
May 2, 2024
The NAAIM Number
61.97
Last Quarter Average
87.84
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$SPY $2.8M OTM Call Volume for this strike + expiration has been rising steadily all week
By: Cheddar Flow | May 2, 2024
• $SPY $2.8M OTM Call
Volume for this strike + expiration has been rising steadily all week
*Above the Ask*
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The 10 Top/Bottom S&P 500 Index percent net change performers
By: Thom Hartle | May 2, 2024
• Today (8:34 CST), the 10 top/bottom percent net change performers in the S&P 500 Index.
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The AAII Investor Sentiment
By: AAII | May 2, 2024
Bullish 38.5%
Neutral 29.0%
Bearish 32.5%
• Historical 1-Year High
Bullish: 52.9%
Neutral: 37.4%
Bearish: 50.3%
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$SPY $1.2 Million Unusual Far OTM Put Ahead of FOMC
By: Cheddar Flow | May 1, 2024
• $SPY $1.2M Unusual Far OTM Put Ahead of FOMC
The majority of similar prints have been above or at the ask with stable volume
It seems like this is a hedge prior to the event
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S&P 500: Should long-term investors ignore the old adage "sell in May and go away?"
By: Isabelnet | May 1, 2024
• S&P 500
Should long-term investors ignore the old adage "sell in May and go away?".
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The net difference between bulls and bears reflects the overall sentiment and suggests a temporary pullback within a bullish market trend
By: Isabelnet | May 1, 2024
• Sentiment
The net difference between bulls and bears reflects the overall sentiment and suggests a temporary pullback within a bullish market trend.
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The 10 Top/Bottom NASDAQ 100 Index percent net change performers
By: Thom Hartle | May 1, 2024
• Today (8:33 CST), the 10 top/bottom percent net change performers in the NASDAQ 100 Index.
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$SPX - Micro-Chart Update of the 'Broadening' Plot formed within the lrgr one from yesterdays 5-Min chart. Here shown on a 1-Min...
By: Sahara | May 1, 2024
• $SPX - Micro-Chart Update
An update of the 'Broadening' Plot formed within the lrgr one from yesterdays 5-Min chart. Here shown on a 1-Min...
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More Pain Ahead for the NASDAQ100?
By: Dr. Arnout Ter Schure | April 30, 2024
• A counter-trend rally has most likely been completed, contingent on holding below at least $18100, and the index should be ready to drop to $15900+/-500.
Was That a Dead Cat Bounce?
In our previous update from early April (see here), we found that the NASDA100 (NDX) had peaked at $18464 on March 21, which was only 0.81% below the ideal target of ~$18615 we had set forth three weeks prior. As such, we concluded:
“…Thus, our preferred [Elliott Wave Principle] (EWP) count is for a larger top to have formed, … and [the Index] is heading for the ideal black W-4? target zone of $15900+/-200.”
Over the next seven trading days, the index lost an additional 5.8%, validating our warning, but it has since staged a 5% rally to yesterday’s $17820 high. Thus, is the correction over, or did we experience a “Dead cat bounce”?
Once again, the EWP can greatly help us. Namely, the rally from the April 19 low has so far been in three (green) waves. See the chart in Figure 1 below. Three-wave rallies are counter-trend rallies, aka “dead cat bounces.”
Thus, our preferred EWP count is for a larger top to have formed yesterday, the red W-b/ii, contingent on holding below the colored warning levels shown in Figure 1 above. The index should now be ready to embark on its red W-c/iii leg lower to ideally $15900+/-500, depending on the Fibonacci extension of this second leg lower.
Our less likely alternative is that yesterday’s high was only a fourth wave and a smaller decline to around $16700+/-100 awaits. The “countertrend rally and the next leg-lower” sequence can commence there.
Seasonality and the Anatomy of a Three-wave Rally
However, based on seasonality for an election year, where we look at the Dow Jones because it allows us to have 32 data points vs. only ten if we use the much younger NDX, the recent April 19 low and April 29 high were right on queue. See Figure 2 below. Moreover, as you can see from our X/Twitter profile here, we have accurately forecasted every market high and low since last week using a counter-trend scenario/EWP count. Forecasts like these dramatically help our premium members to stay on the right side of the market.
Figure 2. Dow Jones average seasonality for an election year since 1897, resulting in 32 data points.
Thus, six weeks ago, we found the NDX would likely top at around $18615, and we got $18464. Three weeks ago, we warned that a significant top could have formed and were validated with a 5.8% decline since. The current rally off the recent low counts best as a counter-trend rally and, together with seasonality, suggests the next leg lower to ideally $15900+/-500, is underway, contingent on holding below the warning levels for the Bears outlined in this article. Lastly, please note that a break below the October 2023 low tells us the bull market is over.
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May’s First Trading Day: S&P 500 and Russell 2000 Higher 69.2% of the Time
By: Almanac Trader | April 30, 2024
The first trading day of May has had a bullish history over the past 26 years. DJIA, S&P 500 and NASDAQ have all averaged around 0.4% on the day. S&P 500 and Russell 2000 have the best track records, up 18 times or 69.2% of the time since 1998. With an average gain of 0.21%, Russell 2000 is slightly weaker. May’s first trading day’s worst loss was in 2020. DJIA and S&P 500 shed over 2.5% while NASDAQ and Russell 2000 dropped over 3%.
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$SPX Hello there $145+ Million Calls
By: Cheddar Flow | April 30, 2024
• $SPX Hello there
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$SPX Large $40+ Million ATM Call Roll
By: Cheddar Flow | April 30, 2024
• $SPX Large $40M+ ATM Call Roll
This whale is likely rolling their 4/30's to 5/31 here for end of month rebalancing
Even though both are above the ask, the split, expiration change and timing make it a contract roll
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The 10 Top/Bottom S&P 500 Index percent net change performers
By: Thom Hartle | April 30, 2024
• Today (8:33 CST), the 10 top/bottom percent net change performers in the S&P 500 Index.
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The 10 Top/Bottom NASDAQ 100 Index percent net change performers
By: Thom Hartle | April 30, 2024
• Today (8:33 CST), the 10 top/bottom percent net change performers in the NASDAQ 100 Index.
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S&P 500: The current reading of 68.37 indicates that the US stock market is not yet overbought, suggesting that there is still upside potential
By: Isabelnet | April 30, 2024
• S&P 500
The current reading of 68.37 indicates that the US stock market is not yet overbought, suggesting that there is still upside potential.
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The Zweig Breadth Thrust is considered the granddaddy of thrusts, with an excellent record of signaling ends to corrections...
By: SentimenTrader | April 30, 2024
• The Zweig Breadth Thrust is considered the granddaddy of thrusts, with an excellent record of signaling ends to corrections. It got close to triggering this time but fell short.
Even so, its behavior so far is compelling and may be enough of a tailwind for bulls, even if it's far from "official."
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The S&P 500 Financials triggered a bullish signal when the percentage of stocks trading above their 10-day average surged above 80%, following more than 80% of the issues achieving an oversold condition. This surge from an oversold status occurred within the context of more than 80% of members closing above their 200-day average
By: SentimenTrader | April 29, 2024
• The S&P 500 Financials triggered a bullish signal when the percentage of stocks trading above their 10-day average surged above 80%, following more than 80% of the issues achieving an oversold condition. This surge from an oversold status occurred within the context of more than 80% of members closing above their 200-day average.
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The Market Greed/Fear Index stands at 60.07, which is now far from extreme greed territory, indicating a more neutral sentiment in the market
By: Isabelnet | April 29, 2024
• Sentiment
The Market Greed/Fear Index stands at 60.07, which is now far from extreme greed territory, indicating a more neutral sentiment in the market.
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In election years, historical data shows that the S&P 500 tends to perform strongly during the months of June, July, and August, as investors gain confidence from the clarity provided by the election process
By: Isabelnet | April 29, 2024
• S&P 500
In election years, historical data shows that the S&P 500 tends to perform strongly during the months of June, July, and August, as investors gain confidence from the clarity provided by the election process.
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$SPX - Latest Watching a Pot'l 'Diamond' Plot...
By: Sahara | April 29, 2024
• $SPX - Latest
Watching a Pot'l 'Diamond' Plot...
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For Equities To Repeat Last Week’s Feat, They Will Need Help From Both FOMC And Tech Earnings This Week
By: Hedgopia | April 29, 2024
In the latter part of last week, tech delivered, helping the major US equity indices rally big. Two issues could make or mar this week. The FOMC meets, and two more tech behemoths report earnings.
The FOMC meets this week, and what comes out of it could prove to be crucial for risk assets.
US stocks bottomed last October and took off post-December 13th FOMC meeting when Chair Jerome Powell made a dovish pivot. Soon, the futures market was consistently betting on as many as six 25-basis-point cuts this year – pricing in even seven at one point. This began to get modeled in analyst forecasts, and risk assets, including equities, shifted into higher gear.
Fast forward to now, futures traders now expect only one cut – in September (Chart 1). Earlier, the Federal Reserve tightened from a range of zero to 25 basis points in March 2022 to between 525 basis points and 550 basis points last July, even as it continues to shrink its still-inflated balance sheet.
Persistent strength in most economic data, including jobs, and sticky inflation has forced even the dovish FOMC members to change their tune and lean hawkish. There are some that are now vouching for no cut to maybe one cut. Until the March meeting, the dot plot expected three cuts this year.
It is possible Powell on Wednesday will lean hawkish outright, or at least not sound as dovish as in December or later. From risk assets’ perspective, the worse is if he openly espouses one cut, let alone talk about the possibility of a hike.
For tech investors, with tech-focused indices such as the Nasdaq 100 having rallied massively from last October’s low on optimism of loads of rate cuts, the interest-rate outlook matters. Thus the importance of this week’s FOMC meeting. Then, there is March-quarter earnings.
Last week, the big ones delivered. Facebook owner Meta (META) bettered the consensus estimates but its outlook came up short and was punished. Microsoft (MSFT) and Google owner Alphabet (GOOG), on the other hand, pleased investors with both their quarterly results and the outlook.
As a matter of fact, thanks primarily to tech earnings, the blended earnings estimates for S&P 500 companies as of last Thursday jumped $2.31 from nine days ago to $55.49, which is the highest since mid-January (Chart 2). This week, Amazon (AMZN) reports on Tuesday and Apple (AAPL) on Thursday. Going into this, AAPL’s estimates are flat to ever so slightly lower from a month ago, while AMZN’s is flat.
If both these events cooperate – FOMC and earnings – there is room for the Nasdaq 100 to continue to push higher.
Last week, the tech-heavy index jumped four percent to 17718. This followed four consecutive down weeks. Earlier, it posted a new intraday high of 18465 on March 21st but struggled to decisively break out of 18300s for seven weeks before sellers took control. By the 19th, the Nasdaq 100 ticked 16974, down 8.1 percent from the high.
Ahead, the 50-day, which is now slightly pointing lower, rests at 17939, with the index under the average for 10 sessions. At 18000 lies trendline resistance from last month’s high (Chart 3). Even in a scenario in which the index rallies, sellers probably will get active at this resistance.
The S&P 500 is the other one to get impacted the most by this. Both these indices are market cap-weighted, and the bigger companies are obviously given bigger weights. The top six – MSFT, AAPL, Nvidia (NVDA), AMZN, GOOG and META – account for 37.5 percent of the Nasdaq 100 and 28.1 percent of the S&P 500 (Chart 4).
This is a massive amount of concentration in just a select a few. This cannot be considered healthy from many respects, but the fact remains that they are also the ones minting a lot of money with healthy margins.
If AAPL and AMZN deliver this week and the stocks rally, the share of the six will only expand.
The two are reporting even as the S&P 500 finds itself just under the 50-day. Last week, the large cap index rallied 2.7 percent to 5100, with Friday’s intraday high of 5115 just about testing the average at 5124 (Chart 5).
The index has remained under the average for 10 sessions, having dropped for three weeks in a row before last week’s rally. Earlier, it ticked 5265 on March 28th and turned lower, failing to clear 5260s in three sessions over seven. Bulls put foot down at 4954 on the 19th – for a 5.9-percent drop from high to low.
Importantly, several daily indicators such as the RSI have now risen to the median. This is an opportunity for the bears to force the metric turn down, which will then lead to a reassertion of downward momentum. Bulls put their foot down last week, and they will have to do it again this week. For that, they will need help from both Powell and tech earnings.
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Market Situation Report: Impending Quantitative Tightening Tapering
By: Hedgeye | April 29, 2024
Quantitative Tightening (QT) was initiated in 2022 with the objective of draining excess reserves from the financial system. However, the extent of liquidity removal thus far has been negligible, and there are indications that the Federal Reserve may announce a tapering of QT operations in the upcoming week.
Despite the Fed's bond holdings decreasing by $1.6 trillion from their peak in mid-2022 due to QT, bank reserves, which represent system liquidity, have remained virtually unchanged. This can be attributed to money market funds effectively neutralizing a significant portion of QT's impact by absorbing a substantial amount of Treasury issuance from Secretary Janet Yellen, thereby preventing the need for private sector banks to do so. Additionally, Yellen has taken steps to mitigate duration risk in the system by disproportionately issuing short-term Treasury bills.
If the Federal Reserve announces a tapering of QT operations, coupled with the Treasury Department utilizing a portion of the current $941 billion balance in the Treasury General Account, it could result in a prolonged period of ample liquidity in financial markets.
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U.S. Stocks appear to be at an important Short-term/Tactical turning point within an ongoing Intermediate-Term correction
By: Macro Charts | April 27, 2024
U.S. Stocks appear to be at an important Short-term/Tactical turning point within an ongoing Intermediate-Term correction.
Weekly Sell signals remain active – a multi-week/multi-month correction is likely still in progress.
If a bounce develops, it should ultimately fail – an updated chart review suggests key levels to consider adjusting risk exposure.
China remains in a confirmed NEW Bull Market – this week’s price action was a classic continuation Buy signal.
We’ll cover some key Chinese Stocks that continue to hold my attention.
Bond Yields & Volatility remain in an uptrend and have room to move significantly higher.
We’ll cover potential projections & scenarios I’ve been tracking for the past few months.
The Dollar is in an uptrend after launching from a multi-month base.
Precious Metals & Miners may need to pause/consolidate for a while.
SECTION 1:
CORE MODELS & DATA
Core Risk was extremely oversold and turned UP on Monday.
As shared last week, the model plunged since triggering Sell mid/late March – one of the fastest drops in history.
With this turn UP confirmed, look for “a” bottom and potential sharp retracement bounce lasting ideally 1-2 weeks.
It’s possible this was “the” bottom and Stocks will now rally back to the highs – however I consider this a lower-probability scenario, and will present charts as to why.
Further, Weekly Sell signals remain active – a multi-week/multi-month correction is likely still in progress.
Another possibility: the current sequence could play out similar to the Buy signals in the correction that ended last October (see chart below).
Either way: Short-term odds are likely skewed higher.
Later in this report, we’ll cover potential key chart levels to consider adjusting risk exposure.
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The most overbought stocks in the S&P 500
By: Barchart | April 28, 2024
• Alphabet $GOOGL, Chipotle Mexican Grill $CMG, and Charles Schwab $SCHW are among this week's most overbought stocks in the S&P 500.
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Here's What You Need To Know About Last Week's Rebound
By: Tom Bowley | April 28, 2024
The Volatility Index ($VIX) is one of my key sentiment indicators and it has a history of accurately predicting corrections and bear markets. We've had neither without the VIX first clearing an important hurdle in the 17-20 range. Bear markets require a huge dose of fear and panic and the VIX acts as our stock market meteorologist - one that predicts major market storms as they're approaching. Throughout this entire secular bull market, the S&P 500's poor periods of performance have been marked by VIX readings above 20. Rather than repeat these results in this article, you can check out a Trading Places article that I wrote in November 2023, "What Are The Chances Of A Market Crash? This Indicator Says ZERO!"
On recent Trading Places Live YouTube shows and in my regular emails to our EB.com members, I've consistently discussed the significant increase in risk that accompanies a VIX close above 20. I do not take it lightly and neither should you. But check out what happened over the past few weeks as the VIX spiked and neared 20:
We had a straight-up move off the October 2023 low and the above chart simply reeks of slowing bullish momentum throughout the second half of Q1. I expected March weakness, but it was delayed into April. That final move lower in October was characterized by the big VIX increase - ultimately with closes on the VIX above 20. Once that VIX returned below 17, the selling and correction was over and the bull market resumed. Hence, the reason for my November article linked above.
When I evaluate a bounce like the one we had last week, I like to see if there's a resumption of the "risk on" market environment. Here are a few ratios that I like to follow and how they responded during the bounce:
These 3 ratios all bounced higher with the S&P 500, but all remain in downtrends that began before the S&P 500 selling did. That tells me that "risk off" still remains in play to some degree and we'll need further confirmation that a short-term bottom is in play. IF we do turn lower again, watch the VIX. If we see fresh new lows on the S&P 500 and the fear dissipates (ie, VIX remains below 20), I'd view that as a positive signal.
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$SPX - Zoomed in...
By: Sahara | April 27, 2024
• ... $SPX - Zoomed in...
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Election year seasonality has been spot on this month with $QQQ pulling back right on cue. Will April showers bring May flowers for the bulls?
By: TrendSpider | April 26, 2024
• Election year seasonality has been spot on this month with $QQQ pulling back right on cue.
Will April showers bring May flowers for the bulls?
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CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | April 27, 2024
• Following futures positions of non-commercials are as of April 23, 2024.
E-mini S&P 500: Currently net long 67.7k, down 6.4k.
Equity bulls’ mettle is being tested and it will only get intense next week. They put their foot down this week after the S&P 500 gave back 5.9 percent intraday from the March 28th high. The large cap index ticked 5265 in that session and turned lower, having tried and failed to clear 5260s in three sessions over seven.
Last Friday, the index tagged 4954. This week, it rallied 2.7 percent to 5100, with Friday’s intraday high of 5115, which just about tested the 50-day at 5124. The S&P 500 has been under the average for 10 sessions now.
Concurrently, several daily indicators such as the RSI have approached the median, and this is a decision time for the bulls – as well as for the bears. If the RSI, for instance, turns back down, then the latter will be eyeing at least last Friday’s low.
In due course, breakout retest at 4819 is just a matter of time. That was the prior high from January 2022 and the S&P 500 waited two years to surpass the old high this January.
Sentiment has taken a hit in recent weeks, but not low enough to signal a durable bottom (more on this here).
Nasdaq (mini): Currently net long 6.1k, down 2.4k.
The Nasdaq 100 had a topsy-turvy week, with a high of 17773 and a low of 17010. Until Thursday, it touched 17172 intraday; early on it that session, bulls were on the back foot reacting to Meta’s (META) March-quarter results. Then, come Friday, they came roaring back on the back of results from Microsoft (MSFT) and Google owner Alphabet (GOOG). In the end, tech bulls could not have asked for more (more on this here). The tech-heavy index shot up four percent for the week to 17718.
This came after four consecutive down weeks. The Nasdaq 100 posted a new intraday high of 18465 on March 21st but failed to sustainably break out of 18300s for seven weeks before rolling over. By last Friday, it ticked 16974, down 8.1 percent from the high.
Next week, Amazon (AMZN) reports on Tuesday and Apple (AAPL) on Thursday. If these results help and the index continues higher, the 50-day, which was breached 10 sessions ago, is at 17939. After that comes 18200, which is where trendline resistance from the March 21st high, rests.
Russell 2000 mini-index: Currently net short 36.1k, down 2.4k.
The Russell 2000 is back at 2000, closing up 2.8 percent this week to 2002; last week, it fell by the same amount from 2003. There is decent support/resistance at 2000. Earlier, after several attempts for a month through early this month, small-cap bulls failed to convincingly break out of 2100. Subsequently, the index dropped to 1932 last Friday.
As things stand, it is a toss-up between the bulls and bears. Inability to push through 2000 eventually opens the door to breakout retest at 1900. On December 13th, the index broke out of a 1700-1900 range in place since January 2022.
US Dollar Index: Currently net short 213, down 716.
The US dollar index suffered its back-to-back down week, although the decline has been nothing to write home about. This week, it closed at 105.80, versus last week’s close of 105.98 and 106.01 before that.
Dollar bulls were unable to build on a 1.9-percent jump three weeks ago. Selling pressure has picked up just north of 106. Ideally, they would have loved to test 107, which between early October and early November last year rejected rally attempts several times.
Earlier, the index bottomed at 100.32 last December, followed by a takeout three weeks ago of 103-104, which goes back to December 2016.
On the weekly, the path of least resistance is down.
VIX: Currently net short 18k, down 4.5k.
After three up weeks – each of them with long upper wicks – VIX tumbled 3.68 points this week to 15.03. The 50- and 200-day are right underneath – 14.84 and 14.87 respectively. If volatility bulls fail to save these averages, the index could test the 13 handle in no time. Next week is key.
Non-commercials, in the meantime, continued to reduce net shorts in VIX futures. At 18,000 contracts, holdings are at a 25-week low. In the week to October 31st last year, when equities were bottoming, these traders cut net shorts to 13,979 before accumulating again. Historically, VIX has tended to peak as these traders either go net long or get close to doing that.
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$SPX Millions worth of highly unusual put sell orders
By: Cheddar Flow | April 26, 2024
• $SPX Millions worth of highly unusual put sell orders
These were sold to open and the whales are betting that the S&P 500 will stay above 5015-5040 into end of next week
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