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Best Six Months Rally Respite Underway April Tracks Election Year Seasonality
By: Almanac Trader | April 9, 2024
It’s been a banner “Best Six Months (BSM)” (November-April) for the Dow and S&P 500. From our Seasonal MACD Buy Signal on October 9, 2023, through our April 2, 2024 Seasonal MACD Sell Signal), DJIA gained 16.6%, S&P 500 20.1% – double the historical average BSM gains. These big gains have not left much on the table until later this year.
Risks are more elevated now. Sentiment continues to run high. Valuations are extended. Geopolitical tensions have not eased. And persistent inflation pressures have the Fed in no rush to cut rates. As the election campaign rhetoric heats up and the Best Six Months comes to a close, we are shifting to a more cautious stance.
As you can see in the chart of April 2024 compared to election year Aprils since 1950 the market is tracking the softer election year April pattern.
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$SPY Large $2.4M OTM Call
By: Cheddar Flow | April 9, 2024
• $SPY Large $2.4M OTM Call
This is a highly unusual print that is betting on aggressive continuation to bullish momentum
*Above the Ask*
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$SPX: Small speculators are wildly bullish. An absurdly small sample size from this particular indicator, so NOT a “sell signal” IMO. But perhaps a good place to invoke…
By: Jay Kaeppel | April 9, 2024
• Small speculators are wildly bullish. An absurdly small sample size from this particular indicator, so NOT a “sell signal” IMO. But perhaps a good place to invoke…
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Today, the equal-weight S&P 500 fund $RSP will celebrate its 100th consecutive session levitating above its 50-day moving average...
By: Jason Goepfert | April 9, 2024
• Today, the equal-weight S&P 500 fund $RSP will celebrate its 100th consecutive session levitating above its 50-day moving average.
It's done this only 4 times in its history.
All good things come to an end.
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S&P 500: With a reading of 87.86, the US stock market remains overbought, which is raising concerns among some investors who foresee a possible correction in the near future
By: Isabelnet | April 9, 2024
• With a reading of 87.86, the US stock market remains overbought, which is raising concerns among some investors who foresee a possible correction in the near future.
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S&P 500: An increase of 25% or more in the S&P 500 within 100 days (using the first signal in a cluster) suggests a positive outlook for the next 12 months, historically resulting in a median gain of 13.4% since 1950
By: Isabelnet | April 9, 2024
• An increase of 25% or more in the S&P 500 within 100 days (using the first signal in a cluster) suggests a positive outlook for the next 12 months, historically resulting in a median gain of 13.4% since 1950.
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The 10 Top/Bottom NASDAQ 100 Index percent net change performers
By: Thom Hartle | April 9, 2024
• Today (8:33 CST), the 10 top/bottom percent net change performers in the NASDAQ 100 Index.
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AI-generated Buy and Sell Daily Signals
By: Hedgeye | April 9, 2024
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$SPX 5200 is acting as a magnet level with the enormous options positioning at that strike across puts and calls
By: Markets & Mayhem | April 8, 2024
• $SPX 5200 is acting as a magnet level with the enormous options positioning at that strike across puts and calls.
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Most Oversold Stocks coming into the week - $LULU $MCD $NKE $SBUX $ULTA making the list
By: Barchart | April 8, 2024
• Most Oversold Stocks coming into the week - $LULU $MCD $NKE $SBUX $ULTA making the list.
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With a current value of 88.27, the Market Greed/Fear Index indicates an extreme level of greed within the US stock market, potentially leading to concerns about overconfidence
By: Isabelnet | April 8, 2024
• Sentiment
With a current value of 88.27, the Market Greed/Fear Index indicates an extreme level of greed within the US stock market, potentially leading to concerns about overconfidence.
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S&P 500 after ending streak of >1 year without a -2% daily change
By: Jason Goepfert | April 8, 2024
• While some consider this frivolous trivia, I disagree.
It incorporates investor tendencies during and after periods of high momentum and low volatility.
And when these environments ended, they preceded losses of more than -10% within the next 6 months only once.
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2 Indicators Pointing at Potential Volatility Ahead
By: Schaeffer's Investment Research | April 8, 2024
• Traders should be open to unusually large moves higher or lower this week
• The SPX channel depends on a "glass half empty" or glass half full" mindset
“There appears to be sideways action in the SPX 5,235 and 5,250 area, with the former level representing 10% above last year’s close… With respect to levels of support to watch if sellers overwhelm buyers in the near term, I recommend focusing on two levels, both of which are moving targets. The first is the bottom rail of the bullish channel connecting higher lows since mid-January, which comes into the week at 5,190, but will be at 5,225 on Friday. Another level of potential support is the SPX’s 30-day moving average, which is at 5,130 now and projected to be at 5,175-5,180 by week's end. ”
-Monday Morning Outlook, April 1, 2024
If you have been following this commentary over the past few weeks, I have been quantifying the momentum backdrop we have seen in the stock market -- measured by the S&P 500 Index’s (SPX – 5,204.34) impressive rise since late October -- in addition to potential points of resistance, such as the level that is exactly 10% above last year’s close, or 5,235.
Per the chart below, that area indeed came into play as resistance. Additionally, a bull channel began to become evident. I have mentioned the 30-day moving average as well, which contained the mid-January low. I find this interesting because it is not on the radar of most technicians, who focus on the more popular 20-day moving average.
When assessing last week’s price action, in a week that saw Federal Reserve funds futures participants push the odds of an interest rate cut in June from slightly more than a coin flip to slightly less than coin flip, one can either take a “glass half empty” or “glass half full” approach.
The former refers to the break of channel support on Thursday, which was attributed to a Fed president (who is not a voter in the monetary policy setting committee) floating the idea of no rate cuts this year. In fact, Friday’s intraday high at 5,225 was at the bottom rail of this channel.
The “glass half full” approach points to the SPX holding -- at least for now -- the 30-day moving average (at 5,160), a trendline that marked a solid buying opportunity in January.
This channel break is noteworthy because it could be suggesting that, at the very least, momentum has slowed. If the SPX quickly makes a bold move above the bottom-rail of the channel, it will confirm the 30-day moving average hold and give bulls renewed hope for more pain in the weeks ahead for bears.
Coincidentally, the bottom rail of the channel begins the week at 5,235, which is a level that coincides with 10% above the 2023 close. This channel ends the week at 5,271, which means a new high could be achieved this week, even with the SPX below the bottom rail of the channel.
Bulls should also take note of the CBOE Market Volatility Index’s (VIX – 16.01) move above 15.40, which is half the 2023 high and an area that has marked multiple peaks this year. With two closes comfortably above 15.40, be open to the possibility that the VIX is hinting at higher volatility ahead, which could mean coincidental weakness in equities.
“There was a short interest build in the second half of 2021 as stocks rallied, and this preceded notable weakness in the market from the start of 2022 that lasted into the fourth quarter of 2022. As such, it is not a given that the market will soar to new highs amid this seemingly bullish backdrop. ”
-Monday Morning Outlook, April 1, 2024
In last week’s commentary, I noted the short interest build that occurred in the first half of March. On the surface, this is bullish. But as I noted last week, if weakness in the market is in the cards, the shorts could become more aggressive and therefore add to selling.
On one hand, depending on how shorts react, they could use last week’s decline to cover losing positions, keeping pullbacks mild-natured. Or they may wait and look for opportunities to feed on additional weakness, as witnessed in 2022.
Something that intrigued me last week was Thursday’s candle, which happened on the day the bottom of the bull channel was breached. It was a bearish outside day, in which both the high and low were above the prior day’s high and low, with the close below the prior day’s low.
In fact, the SPX opened more than 0.5% higher that day and closed lower by over a percentage point. In other words, it covered a big distance from the open to the close.
I asked Rocky White, our Senior Quantitative Analyst, to investigate prior instances of this happening. Using data since 1998, he found this to be a rare occurrence, with only seven prior events and the first happening in 2008.
The good news is this signal is not overwhelmingly bearish, but the bad news is that it does hint at volatility ahead, as the VIX is currently suggesting. Note that in the five, ten, and 21 days after the SPX opens by 0.5% or higher, it closes more than one percentage point lower relative to the prior day. The average move higher is greater the average in these periods, but the average move lower is also greater than the average for these periods.
As such, if you are trading in these time frames, be open to unusually large moves higher or lower. With Fed minutes due out this week, there could be additional volatility. But for bulls, the good news is that the last time a candle occurred with the market near all-time highs was December 2021. The market was higher by four percent five and ten days later, and higher by nearly 6%, using a one-month measuring period.
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The 10 Top/Bottom S&P 500 Index percent net change performers
By: Thom Hartle | April 8, 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 8, 2024
• Today (8:33 CST), the 10 top/bottom percent net change performers in the NASDAQ 100 Index.
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AI-generated Buy and Sell Daily Signals
By: Hedgeye | April 8, 2024
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The S&P 500's $SPY performance each year since 1994
By: Evan | April 7, 2024
• The S&P 500's $SPY performance each year since 1994
1994: +0.4%
1995: +38.1%
1996: +22.5%
1997: +33.5%
1998: +28.7%
1999: +20.4%
2000: -9.7%
2001: -11.8%
2002: -21.6%
2003: +28.2%
2004: +10.7%
2005: +4.8%
2006: +15.9%
2007: +5.1%
2008: -36.8%
2009: +26.4%
2010: +15.1%
2011: +1.9%
2012: +16%
2013: +32.3%
2014: +13.5%
2015: +1.3%
2016: +12%
2017: +21.7%
2018: -4.6%
2019: +31.2%
2020: +18.4%
2021: +28.8%
2022: -18.2%
2023: +24.2%
2024*: +9.4% (So Far)
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Sweep orders > $500K from today on $SPY. Overwhelmingly bullish, shorter dated flow
By: TrendSpider | April 5, 2024
• We filtered for sweep orders > $500K from today on $SPY.
Overwhelmingly bullish, shorter dated flow.
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CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | April 6, 2024
• Following futures positions of non-commercials are as of April 2, 2024.
E-mini S&P 500: Currently net short 78.1k, down 91.3k.
Non-commercials are actively reducing their net shorts, with holdings at a 16-week low; in the week to March 12th, they were net short 239,827 contracts, which have now been cut down to 78,122.
On March 12th, the S&P 500 closed at 5175 and went on to post a fresh intraday high of 5265 on the 28th, with the following session (April 1st), which was a Monday, ticking 5264 before weakening slightly. Non-commercials probably thought the large cap index is setting up for another breakout at 5260s. It will be interesting to find out how they reacted to Thursday’s intraday reversal to the downside (more on this here); at the session low, the cash was down 2.1 percent for the week. In the end, thanks to Friday’s 1.1-percent rally, the weekly loss was reduced to one percent.
Since last October’s low, bulls have been in absolute control and are not going to give up the momentum they have gained without a fight. They put their foot down on Friday. But they are now also dealing with a breach of trendline support from last October, not to mention an RSI divergence. Friday’s rally enabled them to reclaim 5170s, but for them to regain momentum, they will need to break out of 5260s as soon as possible.
Nasdaq (mini): Currently net short 5.2k, down 1.9k.
Thursday’s drop closed the Nasdaq 100 just under the 50-day (17915). The average has not been breached since last October when the index bottomed. Tech bulls needed to show some determination and they did do that on Friday when the intraday low tagged the average and the index rallied 1.3 percent for the session.
For the week, the index fell 0.8 percent, which was better than a loss of 2.1 percent at Thursday’s low, which is small consolation for the bulls. Their problem lies in a sideways action that has now gone on for five weeks. On March 1st, the Nasdaq 100 tagged 18333; this week’s high of 18392 was posted on Monday. The all-time high of 18465 was recorded on March 21st.
Beside the loss of momentum – with RSI divergence – the tech-heavy index (18108) is in breach a rising trend line from last October’s low three weeks ago (more on this here).
Russell 2000 mini-index: Currently net short 22.2k, up 626.
One more week and one more rejection at 2100, which has stopped small-cap bulls for the past month. The March 28th intraday high of 2135 set a two-year high, but the Russell 2000 continues to struggle staying above 2100. This week, it rallied north of the resistance twice intraday but only to close the week down 2.9 percent to 2063.
Horizontal resistance at 2100 goes back to January 2021. This level also represents a measured-move target of a 1700-1900 range breakout on December 13th. Continued rejection at 2100 raises the odds the index heads toward at least 2000 in due course.
US Dollar Index: Currently net short 1.9k, up 1.3k.
The US Dollar Index dropped 0.4 percent this week to 104.07. This came in a week in which the long end of the treasury yield curve rallied nicely. After three straight up weeks, it is possible fatigue is setting in.
Resistance at 103-104 goes back to December 2016. Tuesday’s intraday high of 104.84 just about tested the February 14th high of 104.88. Back then, after that high, the index came under pressure to eventually bottom at 102.30 on March 8th.
Odds favor the dollar index weakens in the sessions ahead.
VIX: Currently net short 50.3k, up 6.4k.
The breach two weeks ago of a rising trend line from December 12th when VIX bottomed at 11.81 is proving false. This week, the volatility index jumped 3.02 points to 16.03, with Thursday rallying as high as 16.92.
VIX remains above both the 50- and 200-day (respectively at 13.95 and 14.66), with both averages slightly rising. This is also the first time since last October the weekly RSI (at 56.22) decidedly rallied past the median.
If the weekly prevails, VIX has more room to rally. The caveat in this is that the daily is now getting extended.
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SPY: Negative reversal bars at a 52-week high have a consistent tendency to lead to further short-term pullbacks of up to a week later
By: Jason Goepfert | April 5, 2024
• Negative reversal bars at a 52-week high have a consistent tendency to lead to further short-term pullbacks of up to a week later.
After that...nope.
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Extremely Overbought Stock Market Uses Non-Voting FOMC Member Kashkari’s Hawkish Comments As Excuse To Sell Off
By: Hedgopia | April 5, 2024
It is probable US households’ equity allocation set a new high last quarter. Stocks have relentlessly rallied for over five months – without so much of a correction. With investor sentiment looking frothy, bulls are increasingly running out of tailwinds to continue to push equities higher.
In the December quarter, US households’ equity allocation jumped 1.87 percentage points sequentially to 36.2 percent (Chart 1). This was the largest quarter-over-quarter increase in three years. The all-time high of 37.7 percent was set in 4Q21 – just before the S&P 500 peaked at 4819 in January 2022; the index did not bottom until hitting 3491 in October that year.
It is probable the equity allocation set a fresh record in the March quarter. This series is contained in the Federal Reserve’s Z.1 report, which is published with a rather long lag. Numbers for the last quarter were released about a month ago, with the March quarter on schedule for early June.
The large cap index jumped 11.2 percent in 4Q23 and another 10.2 percent in 1Q24. The market capitalization of S&P 500 companies expanded by $4.1 trillion in the December quarter and by another $4 trillion in the March quarter. This should be enough to push the equity allocation past the 37.7 percent record. It is worth reviewing how investor sentiment behaved back then.
This week (as of Tuesday), Investors Intelligence bulls increased 1.9 percentage points week-over-week to 62.5 percent, while bears slid 1.1 percentage points to 14.1 percent. This respectively was the highest since April 2021 and the lowest since January 2018. The bulls-to-bears ratio printed 4.4. In three of the last four weeks, the ratio crossed four, with the prior week (the week to March 26th), coming in at 3.99, which is essentially four (Chart 2).
This was also the fourth week in a row the bullish percent remained north of 60 percent. The last time this sentiment was as elevated was the latter months of 2020 and early 2021. Back then, for 10 consecutive weeks between November 2020 and January 2021, bulls’ count remained north of 60 percent, with the bulls-to-bears ratio well north of three percent. This bullishness got hardly unwound in 2021, as, between January and July, there were 10 weeks of bulls over 60 percent. The S&P 500 suffered a minor drop in January but went on to rally in nine of the next 11 months to finish 2021 up 26.9 percent. This was when the equity allocation jumped to 37.7 percent. And this is what ultimately gave way to the 2022 collapse in stocks.
From just the sentiment perspective, it is hard to tell if the bullish boat is leaning to one side enough to capsize right away. Just going by the Investors Intelligence survey, and if past is prologue, there is room for sentiment to continue higher before it hits a tipping point. At the same time, households’ equity allocation is dangerously close to a bubble territory.
Just since the October low, the S&P 500 rallied north of 28 percent before selling off a tad this week, and this creates a situation in which it is tempting to lock in gains – at least some. For that to occur, and for stops to get taken out, the technically-oriented ones in particular are keenly watching some levels.
With one session to go, the S&P 500, down two percent this week to 5147, is now in breach of a rising trend line from last October’s low (Chart 3). A similar trend line on the Nasdaq 100 was compromised three weeks ago. Thursday’s 1.2-percent decline resulted in the S&P 500 also losing shorter-term moving averages, with the bulls unable to defend 5170s and also not able to push through 5260s. The index peaked at 5265 on March 28th.
Ironically, Thursday’s selloff was blamed – wrongly – on hawkish interest-rate comments from Neel Kashkari, Minneapolis Fed president. First, he has been hawkish for a while now. Second, he is not a voting member this year. This is an extended market looking for a reason to sell off, and there is a long way to go before the currently soapy sentiment is unwound.
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AI-generated Buy and Sell Daily Signals
By: Hedgeye | April 5, 2024
NEW SIGNALS TODAY:
• UST 30yr Yield - Adds Buy
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Tech put buyers are likely monetizing here after yesterday's downside $NVDA $QQQ
By: Cheddar Flow | April 5, 2024
• Tech put buyers are likely monetizing here after yesterday's downside
$NVDA $QQQ
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$SPX Large Puts With Time Starting to Roll in
By: Cheddar Flow | April 5, 2024
• $SPX Large Puts With Time Starting to Roll in
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Markets Monthly Pattern »» Watchlist - Top 10
By: Marty Armstrong | April 5, 2024
April Ends Best Six Months #1 DJIA
By: Almanac Trader | April 3, 2024
April is the final month of the “Best Six Months” for DJIA and the S&P 500. April is #1 DJIA month by average performance since 1950, 2nd best S&P 500 month and 4th best NASDAQ (since 1971).
In election years, performance and rank softens slightly, 3rd best DJIA and S&P 500 month, 6th for NASDAQ, but remains bullish. April is the last month of DJIA and S&P 500 “Best Six Months.” NASDAQ’s Best Months run through June. Election Year Aprils are up 1.3% on average for S&P 500.
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Seasonality for QQQ (25 Years)
By: TrendSpider | April 3, 2024
• When filtering out non-election years, we can see $QQQ also has one of its lowest win rates in April:
Positive just 33% of the time over the last 25 years.
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Can the S&P 500 Reach 5390?
By: Dr. Arnout Ter Schure | April 3, 2024
• The index reached $5260s as anticipated last and can now target $5390, a break above last week’s high. Contingent on holding above at least $5228.
Weak Bears Equals Strong Bulls
In our previous update, we anticipated using the Elliott Wave Principle (EWP) for the S&P500 (SPX):
“…the (grey) $5093 level is support, tested today, and a break below it would be a strong warning to the bulls. Ultimately, we need to see a break below $5056 … and a follow-through below $4946 … to confirm a significant top has been struck. However, if, like last, the index breaks higher because the bears fail to break below critical levels and reach the next target zone of ~$5260, support will be moved up to $5150.”
Fast forward, and the index held the $5093 level, broke higher, i.e., above the March 8 high at $5189, and reached $5264 on March 28 as anticipated. However, it has rallied over the last three weeks in an overlapping fashion, which strongly suggests an ending diagonal is forming. See Figure 1 below.
Figure 1. Daily SPX chart with detailed EWP count and technical indicators
The Dreaded Ending Diagonal
In a five-wave ending diagonal, the wave structure is most often an overlapping, confusing, 3-3-3-3-3 count as all five of the waves of an ending diagonal break down to only three waves each, indicating exhaustion of the larger degree trend. Most ending diagonals have a wedge shape where they fit within two converging lines. The 3rd, 4th, and 5th waves often reach the 100-123.60%, 50.0-61.8%, and 138.20-161.80% Fibonacci extensions of W-1, measured from the W-2 low, respectively.
In Figure 1 above, we can see that the grey W-i, ii, iii, and iv thus far are all made up of three waves and that W-iii and W-iv topped and bottomed at the exact Fib-extensions. The grey arrows show that if the length of W-i, iii, and the potential W-v are equal, the latter can target precisely the 161.80% extension at $5390.
Thus, the price action is ticking off all the ED boxes. However, as always, the forecast is contingent on holding above the colored warning levels, with a 1st warning (blue) for the Bulls below yesterday’s high, a 2n warning below Tuesday’s low, and a break below the red warning level at $5055 will trigger a drop to $4600+/-100.
Our last update found that “the negative divergences between several technical indicators are blatantly obvious, but they are a condition, not a trigger, as “divergence is only divergence until it is not.” Price is the final arbiter, and as such, the Bears have yet to break it below the colored [warning] levels …, which we use to alert our premium members the odds are for a top are increasing with each subsequent break lower.” Three weeks later, the divergences are even more apparent. Still, the index’s price has yet to respond to it, showing that, indeed, price is the final arbiter as divergences are a condition, not a trigger.
Suppose our assessment of the ending diagonal’s price pattern is correct, as they are notoriously tricky due to their overlapping price action. In that case, a breakout above last week’s high can ideally target $5390. Ultimately, we still need to see a break below $5056 with a severe warning below $5100 to confirm a significant top has been struck.
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Money managers Reduced their exposure to the US Equity markets since last week...
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NAAIM Exposure Index
April 4, 2024
The NAAIM Number
84.24
Last Quarter Average
87.84
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AI-generated Buy and Sell Daily Signals
By: Hedgeye | April 4, 2024
NEW SIGNALS TODAY:
• Sell: N/A
• Buy: XLE, CAD/USD
• Close Buy: N/A
• Close Sell: N/A
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The AAII Investor Sentiment
By: AAII | April 4, 2024
Bullish 47.3%
Neutral 30.5%
Bearish 22.2%
• Historical 1-Year High
Bullish: 52.9%
Neutral: 39.5%
Bearish: 50.3%
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AI-generated Buy and Sell Daily Signals
By: Hedgeye | April 3, 2024
NEW SIGNALS TODAY:
• Sell: N/A
• Buy: XLI, WTI Crude
• Close Buy: Japan
• Close Sell: SOYB, WEAT
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$SPX The Plunge Protection Team is Stepping in $52.7 Million Calls
By: Cheddar Flow | April 2, 2024
• $SPX The Plunge Protection Team is Stepping in
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AI-generated Buy and Sell Daily Signals
By: Hedgeye | April 2, 2024
NEW SIGNALS TODAY:
• Sell: TSLA
• Buy: Japan, GBP/USD
• Close Buy: Silver
• Close Sell: Steel, XLI, Lithium
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Essentially Sideways In March, Nasdaq 100 In Search Of Catalyst, 1Q24 Earnings From US Tech Behemoths Still Month Away
By: Hedgopia | April 1, 2024
Although it rose 1.2 percent, the Nasdaq 100 essentially went sideways in March. This also offers tech bulls an opportunity to force another breakout. Catalysts are needed. There is, however, a month to go before the leading tech companies report their calendar first quarter. Amidst this, non-commercials last week went net short Nasdaq (mini) futures.
Last month, the Nasdaq 100 added 1.2 percent. This compares with jumps of 3.1 percent by the S&P 500 large cap index and 3.4 percent by the Russell 2000 small cap index. Apart from this relative underperformance, the tech-heavy index also pretty much went sideways last month.
On March 1st, the index tagged 18333, which was a fresh high at the time. This was surpassed on the 8th when it ticked 18415 intraday but only to reverse lower to close at 18018. This behavior was once again on display on the 21st when 18465 was reached intraday but the session closed at 18320. Amidst this flattish action, the month closed at 18255 last Thursday.
It should not come as a surprise if the Nasdaq 100 is in fatigue. Through last week’s high, it surged 31.3 percent from the low of last October. This is also coming at a time when the bulls were unable to defend a rising trend line from that low (Chart 1).
In the event of downward pressure in the sessions ahead, there is short-term horizontal support at 18000, followed by the 50-day at 17835, which coincides with the daily lower Bollinger band at 17824. Breakout retest takes place at 16700s.
In the futures market, non-commercials are now leaning bearish. Last week (as of Tuesday), they switched to net short Nasdaq (mini) futures. It is only 7,116 contracts, but the important thing is that they have not been net short since last August.
In the week to January 30th, these traders were the most net long in three years, before they began to reduce holdings (Chart 2).
Concurrently, short interest on QQQ (Invesco QQQ Trust) rose 8.5 percent period-over-period mid-March to 61.6 million. Before that, these shorts experienced a massive squeeze, as at the end of February, short interest at 56.8 million was the lowest since October 2021.
At the end of September 2022, short interest had built up to 90.1 million (Chart 3). In October that year, the Nasdaq 100 reached a major bottom (Chart 1), rallying nearly 77 percent since. Shorts contributed massively to this, as they covered. This bullish tailwind is no more.
If anything, shorts could very well use this as an opportunity to gradually build positions.
The index remains top-heavy. In QQQ, the combined share of the top six companies – Microsoft (MSFT), Apple (AAPL), Nvidia (NVDA), Amazon (AMZN), google owner Alphabet (GOOG) and Facebook owner Meta (META) – is currently 37.5 percent. In SPY (SPDR S&P 500 ETF), they account for 28.1 percent (Chart 4).
Of the six, Apple (AAPL) in particular acts sick, as it remains 14 percent from its all-time high from last December, and NVDA – after surging seven-fold from its October 2022 bottom – could be in a process of peaking.
From the bulls’ perspective, March’s sideways action in the Nasdaq 100 could act as a blessing in disguise if they can engineer another breakout. For that, catalysts are needed. Except for NVDA, which is on an April quarter, the remaining five do not report their March quarter until late April or early May.
Estimates are reasonable, but a lot can change between now and then. From 30 days ago, sell-side estimates are down for all six companies (Table 1). This has lowered the bar for them to jump over, but there is still a month left.
This can very well create a vacuum in which the Nasdaq 100 cannot help but careen toward the nearest support.
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$SPX Bulls Stepping in
By: Cheddar Flow | April 1, 2024
• $SPX Bulls Stepping in
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The 10 Top/Bottom S&P 500 Index percent net change performers
By: Thom Hartle | April 1, 2024
• Today (8:35 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 1, 2024
• Today (8:35 CST), the 10 top/bottom percent net change performers in the NASDAQ 100 Index.
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Sentiment: The Market Greed/Fear Index currently stands at 88.18, reflecting an extreme level of greed within the US stock market, raising concerns about potential overconfidence and poor decision-making
By: Isabelnet | April 1, 2024
• Sentiment
The Market Greed/Fear Index currently stands at 88.18, reflecting an extreme level of greed within the US stock market, raising concerns about potential overconfidence and poor decision-making.
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S&P 500: Following two consecutive quarterly gains of 10%, which is quite rare, the S&P 500 has, on average, increased by 12.3% a year later since 1954
By: Isabelnet | April 1, 2024
• S&P 500
Following two consecutive quarterly gains of 10%, which is quite rare, the S&P 500 has, on average, increased by 12.3% a year later since 1954.
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AI-generated Buy and Sell Daily Signals
By: Hedgeye | April 1, 2024
NEW SIGNALS TODAY:
• Sell: Copper, $LIT
• Buy: AAPL
• Close Buy: Japan, Oil
• Close Sell: CAD/USD, $HYG
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$QQQ Tech pullback on the horizon?
By: TrendSpider | March 30, 2024
• Tech pullback on the horizon? $QQQ
When we refine seasonality data to focus only on election years, the Nasdaq 100's win rate in April dips to only 33% over the last 25 years.
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Best performing NASDAQ 100 stocks from Q1
By: Evan | March 31, 2024
• Best performing NASDAQ 100 stocks from Q1.
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Best performing S&P 500 stocks from Q1
By: Evan | March 31, 2024
• Best performing S&P 500 stocks from Q1
Super Micro $SMCI +255.3%
Nvidia $NVDA +82.5%
Constellation Energy $CEG +58.1%
Deckers $DECK +40.8%
Micron $MU +38.1%
General Electric $GE +37.5%
Facebook $META +37.2%
Marathon Petro $MPC +35.8%
Disney $DIS +35.5%
Eli Lilly $LLY +33.5%
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CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | March 30, 2024
• Following futures positions of non-commercials are as of March 26, 2024.
E-mini S&P 500: Currently net short 169.4k, down 24.7k.
Yet another week and yet another high! Up 0.4 percent this week, Thursday saw the S&P 500 post a new intraday high of 5265, with a weekly close of 5254.
This follows equity bears’ inability last week to take advantage of back-to-back weekly candles with long upper shadows – one a spinning top and the other nearly a gravestone doji. These potentially bearish candles did not confirm as the bulls pressed on. A rising trend line from last October was also defended last week (more on this here).
The large cap index has now rallied in 18 of the last 22 weeks. From the low of last October through Thursday’s high, it added 28.3 percent. Not surprisingly, conditions are overbought. The last time the weekly RSI at 79 was as overbought was January 2020, when the index peaked the next month for a sharp five-week drop.
Nasdaq (mini): Currently net short 7.1k, up 18.3k.
Non-commercials have switched to net short. They had been net long since last August. This comes on the heels of the Nasdaq 100 pretty much marking time in March. Yes, the tech-heavy index rallied 1.2 percent in March but began the month by tagging 18333 on the 1st. This week, it dropped 0.5 percent to 18254, with a new intraday high of 18465 on the 21st.
Immediately ahead, there is short-term horizontal support at 18000. Just underneath lies the 50-day (17835), which coincides with the daily lower Bollinger band (17824).
Russell 2000 mini-index: Currently net short 21.5k, up 8.1k.
Bulls managed to pull off what they have had trouble achieving the past two years. The Russell 2000 closed the week above 2100, tagging 2135 on Thursday and ending at 2125, up 2.5 percent for the week. In March 2022, the index touched 2138 and headed lower. Small-cap bulls obviously hope things do not end similarly this time around.
In fact, horizontal resistance at 2100 goes back to January 2021. This level also represents a measured-move target of a 1700-1900 range breakout on December 13th. Closing above this level could potentially act as a morale-booster. In the end, it all boils down to flows. It remains to be seen if this week’s action helps draw in new funds.
US Dollar Index: Currently net short 629, up 1.3k.
Up 0.3 percent this week, the US Dollar Index enjoyed its third consecutive up week. Earlier, it bottomed at 102.30 on March 8th. This week, dollar bulls failed to cling on to Friday’s intraday high of 104.67, closing at 104.49.
Resistance at 103-104 goes back to December 2016. Closing above this level should give the edge to the bulls. With that said, technical conditions are getting extended here.
In the meantime, for the first time since June 2021, non-commercials have switched to net short.
VIX: Currently net short 43.9k, down 888.
Last week, a rising trend line from December 12th when VIX bottomed at 11.81 was breached. This week, Monday’s rally attempt in which the volatility index touched 13.57 was faded, followed by the trend line providing resistance on Tuesday and Wednesday.
In the event volatility comes under more pressure in the sessions ahead, the March 21st bullish hammer during which VIX ticked 12.40 intraday is worth watching.
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