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Action This Week After Nasdaq 100’s Gravestone Doji Last Week Worth Watching
By: Hedgopia | June 24, 2024
The Russell 2000’s continued difficulty at 2100 runs in contrast to one after another high notched by large-cap indices such as the S&P 500. That said, last week’s weekly gravestone doji on the Nasdaq 100 is worth watching.
After unsuccessfully hammering on 2100 – or just underneath – for six consecutive weeks, the Russell 2000 failed to repeat the feat last week, although it did rally 0.8 percent to 2022, with an intraweek high of 2034 on Tuesday.
The small cap index has closed above 2000 since early last month, while 2100 has stood like a mountain since early March. The latter faces a confluence of resistance.
The Russell 2000 peaked in November 2021 at 2459, subsequently bottoming at 1641 in June 2022, which was successfully tested in October of both 2022 and 2023. A 61.8-percent Fibonacci retracement of that drop amounts to 2144. The index lost 2100 in January 2022 and has since struggled at that level (Chart 1); 2100 also represents a measured-move price target post-breakout at 1900 last December. Before that, the index went back and forth between 1700 and 1900 going back to January 2022.
The story is starkly different for large-caps. The S&P 500 last week experienced its 32nd record high this year. Last Thursday, it printed 5506 before reversing slightly to end the week up 0.6 percent to 5465. Through last week’s high, the large cap index was up 15.4 percent this year.
The index has just about gone parabolic after last October’s bottom (Chart 2). There was a brief selloff – down 5.9 percent – between March and April, followed by another parabolic run higher. Post-April trough, the S&P 500 has rallied in eight of the nine weeks, including the last three.
Amidst this ebullience, the bulls were unable to hang on to all of the gains last week, resulting in a weekly candle with a long upper shadow. This in and of itself may not mean much except to subtly indicate that selling is about to pick up. This week’s action is key.
This is particularly important in the tech-heavy Nasdaq 100 where a gravestone doji formed last week (Chart 3). This comes after a strong rally lasting seven out of eight weeks. Last week, the index was up 0.2 percent to 19700 but was up as much as 1.6 percent at Thursday’s intraday high of 19980.
Last week’s candle showed up after the previous week’s bullish marubozu. Besides these mixed messages, divergence can also be seen in the RSI. Leading up to the March high (18465), the weekly RSI was in the mid-70s. The index since has rallied 1500 points, with the RSI ending last week just under 71.
As is the case with the S&P 500, this week’s action is worth a watch on the Nasdaq 100. Through last Thursday’s high, the index was already up 18.7 percent – enough to get tempted to lock in gains. In the event of downward pressure, the June 12th gap-up gets filled at 19200s.
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Nasdaq Index most overbought level in more than 6 years last week
By: Barchart | June 24, 2024
• Mega Cap Tech Stocks hit their most overbought level in more than 6 years last week.
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$SPY Held the 8D after a little 2 day pullback. 3 buck gap to the 21D if it wants it
By: Options Mike | June 23, 2024
• $SPY Held the 8D after a little 2 day pullback.
3 buck gap to the 21D if it wants it.
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$QQQ Still stronger, 21D is a ways down on this one. Gap to fill as well at the 470 area
By: Options Mike | June 23, 2024
• $QQQ Still stronger, 21D is a ways down on this one.
Gap to fill as well at the 470 area
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This upcoming week is tied for the worst win rate for the S&P 500 over the last two decades, with negative returns 32% of the time
By: TrendSpider | June 23, 2024
• Time for a short commercial break? $SPY
This upcoming week is tied for the worst win rate for the S&P 500 over the last two decades, with negative returns 32% of the time.
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The 15 Most Held Stocks by Hedge Funds
By: Barchart | June 23, 2024
• The 15 Most Held Stocks by Hedge Funds - Microsoft $MSFT is #1.
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Flow: The combination of investor confidence and strong interest in the potential returns of the US stock market led to significant inflows of $18.73 bn into US equity funds over the past week
By: Isabelnet | June 22, 2024
• Flow
The combination of investor confidence and strong interest in the potential returns of the US stock market led to significant inflows of $18.73 bn into US equity funds over the past week.
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Equity Bulls Riding Tailwinds Of Margin Debt And Buybacks – For Now
By: Hedgopia | June 21, 2024
The S&P 500 is on course for a third straight up quarter, with a touch of ‘parabolic’ to it. Buybacks and margin debt have provided a tailwind, although the latter in particular points to a lack of aggressive willingness to take on leverage. Once they stop cooperating, history teaches us ‘parabolic’ can go the other way.
There are six sessions to go before June is over. Month-to-date, the S&P 500 is up 3.7 percent. If these gains hold in the remaining sessions, the large cap index is on course for a 4.2-percent rise in the June quarter. This will be the third consecutive quarterly gain.
The S&P 500 bottomed last October. This was preceded by a major bottom in October 2022; the rally off that bottom was marked by plenty of back-and-forth action – until a higher bottom was reached last October, setting in motion a parabolic run. This is particularly so after Federal Reserve Chair Jerome Powell surprised the markets with a dovish switch on December 13th. Between March 28th and April 19th (this year), the index saw a small selloff – 5.9 percent – before beginning another parabolic run. The previous run lasted five months; this one is two months old (Chart 1).
Equity bulls are hoping the bullish run continues and are positioned as such – evident in VIX with a 13 handle and in total lack of willingness to protect gains by selling calls or buying puts, for instance. The problem remains stretched technicals. On both the daily and weekly, the RSI is north of 73 and just under 70 on the monthly. Even here, on the weekly and monthly, momentum was a lot stronger at the March high; the index has rallied 240 points from that point, but with declining momentum.
This in and of itself does not mean things will have to go the other way right away. Overbought conditions can persist longer than expected – particularly if other variables are providing a tailwind.
Speaking of which S&P 500 buybacks hit a two-year high in the March quarter, when these companies spent $236.8 billion, which was the highest since 1Q22 when a record $281 billion was splurged (Chart 2).
From 2Q23 when $174.9 billion was spent, buybacks have rebounded with a vengeance. But they remain top heavy, with the top 20 companies accounting for 50.9 percent of last quarter’s buybacks; Apple (AAPL) remained the top honcho with spending of $23.5 billion. This poses concentration risk.
FINRA margin debt, too, has risen nicely from last October’s bottom, but a genuine willingness to take on leverage remains a suspect.
Margin debt peaked at $935.9 billion in October 2021 and dropped all the way to $606.7 billion by December 2022. Last October, when equities bottomed, it stood at $635.3 billion. From that low through May, margin debt is up $174.2 billion to $809.4 billion. At the same time, leverage remains substantially below the October 2021 high, even as equity indices keep making new highs, which also suggests that once these tailwinds stop cooperating, the move lower can be as parabolic as the move higher.
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S&P 500 Index (SPX) »» Weekly Summary Analysis
By: Marty Armstrong | June 22, 2024
S&P 500 Cash Index closed today at 546462 and is trading up about 14% for the year from last year's settlement of 476983. Up to now, this market has been rising for 7 months going into June suggesting that this has been a bull market trend on the monthly time level which has been confirmed by electing all of our model's long-term Bullish Reversals from the key low. As we stand right now, this market has made a new high exceeding the previous month's high reaching thus far 550553 while it has not broken last month's low so far of 501105. Nevertheless, this market is still trading above last month's high of 534188.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in S&P 500 Cash Index, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2009 and 2002. The Last turning point on the ECM cycle high to line up with this market was 2022 and 2007 and 2000.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The S&P 500 Cash Index has continued to make new historical highs over the course of the rally from 1974 moving into 2024. Noticeably, we have elected two Bullish Reversals to date.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Pay attention to the Monthly level for any serious change in long-term trend ahead.
Focusing on our perspective using the indicating ranges on the Daily level in the S&P 500 Cash Index, this market remains moderately bullish currently with underlying support beginning at 542040 and overhead resistance forming above at 548850. The market is trading closer to the resistance level at this time.
On the weekly level, the last important high was established the week of June 17th at 550553, which was up 34 weeks from the low made back during the week of October 23rd. So far, this week is trading within last week's range of 550553 to 542040. Nevertheless, the market is still trading upward more toward resistance than support. A closing beneath last week's low would be a technical signal for a correction to retest support.
When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 550553 made 0 week ago. This market has made a new historical high this past week reaching 550553. Here the market is trading positive gravitating more toward resistance than support. We have technical support lying at 549664 which we are currently trading below implying the market is very weak. This infers that this level will now be resistance. Our Major Channel Support lies at 477284 and a break of that level would be a bearish indication for this market.
Right now, the market is above momentum on our weekly models hinting this is still bullish for now as well as trend, long-term trend. Looking at this from a wider perspective, this market has been trading up for the past 3 weeks overall.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are rising at this time with the previous low made 2022 while the last high formed on 2023. However, this market has rallied in price with the last cyclical high formed on 2022 warning that this market remains strong at this time on a correlation perspective as it has moved higher with the Momentum Model.
Interestingly, the S&P 500 Cash Index has been in a bullish phase for the past 14 months since the low established back in March 2023.
Critical support still underlies this market at 468200 and a break of that level on a monthly closing basis would warn that a sustainable decline ahead becomes possible. Nevertheless, the market is trading above last month's high showing some strength.
Nasdaq Composite Index (COMP) »» Weekly Summary Analysis
By: Marty Armstrong | June 22, 2024
NASDAQ Composite Index Cash closed today at 1768936 and is trading up about 17% for the year from last year's settlement of 1501135. As of now, this market has been rising for 7 months going into June suggesting that this has been a bull market trend on the monthly time level which has been confirmed by electing all of our model's long-term Bullish Reversals from the key low. As we stand right now, this market has made a new high exceeding the previous month's high reaching thus far 1793679 while it has not broken last month's low so far of 1555764. Nevertheless, this market is still trading above last month's high of 1703266.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in NASDAQ Composite Index Cash, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2022 and 2009 and 2002. The Last turning point on the ECM cycle high to line up with this market was 2007 and 2000.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The NASDAQ Composite Index Cash has continued to make new historical highs over the course of the rally from 2009 moving into 2024. Clearly, we have elected four Bullish Reversals to date.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Pay attention to the Monthly level for any serious change in long-term trend ahead.
The perspective using the indicating ranges on the Daily level in the NASDAQ Composite Index Cash, this market remains moderately bullish currently with underlying support beginning at 1763636 and overhead resistance forming above at 1793599. The market is trading closer to the support level at this time.
On the weekly level, the last important high was established the week of June 17th at 1793679, which was up 34 weeks from the low made back during the week of October 23rd. So far, this week is trading within last week's range of 1793679 to 1762057. Nevertheless, the market is still trading downward more toward support than resistance. A closing beneath last week's low would be a technical signal for a correction to retest support.
When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 1793679 made 0 week ago. Still, this market is within our trading envelope which spans between 1513417 and 1799865. This market has made a new historical high this past week reaching 1793679. Here the market is trading weak gravitating more toward support than resistance. We have technical support lying at 1801224 which we are currently trading below implying the market is very weak. This infers that this level will now be resistance. Our Major Channel Support lies at 1508882 and a break of that level would be a bearish indication for this market.
Right now, the market is above momentum on our weekly models hinting this is still bullish for now as well as trend, long-term trend. Looking at this from a wider perspective, this market has been trading up for the past 9 weeks overall.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are rising at this time with the previous low made 2022 while the last high formed on 2023. However, this market has rallied in price with the last cyclical high formed on 2021 warning that this market remains strong at this time on a correlation perspective as it has moved higher with the Momentum Model.
Interestingly, the NASDAQ Composite Index Cash has been in a bullish phase for the past 14 months since the low established back in March 2023.
Critical support still underlies this market at 1520870 and a break of that level on a monthly closing basis would warn that a sustainable decline ahead becomes possible. Nevertheless, the market is trading above last month's high showing some strength.
Nasdaq bulls gravestoned this week
By: TrendSpider | June 21, 2024
• Nasdaq bulls gravestoned this week. $QQQ.
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The Nasdaq 100 has a 85% win rate in July over the last two decades with a mean return of +3.48%
By: TrendSpider | June 21, 2024
• End of June dips often turn into July rips on $QQQ
The Nasdaq 100 has a 85% win rate in July over the last two decades with a mean return of +3.48%.
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$QQQ $2 Million ATM Puts
By: Cheddar Flow | June 21, 2024
• $QQQ $2M ATM Puts
These orders expire next week and were executed above the ask
We have noticed an uptick in $QQQ put flow the past couple days.
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A lot of Dark Pool activity for OPEX today *Most of these are due to rebalancing and are not directional*
$IWM, $QQQ, $SPY
By: Cheddar Flow | June 21, 2024
• A lot of Dark Pool activity for OPEX today
*Most of these are due to rebalancing and are not directional*
$IWM, $QQQ, $SPY
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History supports a pullback here on $SPY...
By: TrendSpider | June 21, 2024
• History supports a pullback here on $SPY...
This week's mean return & next week's win rate are among the lowest over the last two decades.
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$VIX Woah. Very Large $9.2 Million Put Sell
By: Cheddar Flow | June 21, 2024
• $VIX Woah. Very Large $9.2M Put Sell
This is a highly unusual order that was Sold to open (Vol>OI)
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$NDX $GOLD Ratio - Uh-Oh Which way next/?...
By: Sahara | June 21, 2024
• $NDX $GOLD Ratio - Uh-Oh
Which way next/?...
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$QQQ $1 Million ITM Put This order has a near-term expiration and was executed above the ask
By: Cheddar Flow | June 20, 2024
• $QQQ $1M ITM Put
This order has a near-term expiration and was executed above the ask
Volume on this contract has been rising all week
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$SPY Large $655M Singular Dark Pool Print
By: Cheddar Flow | June 20, 2024
• $SPY Large $655M Singular Dark Pool Print.
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S&P 500: The Sell Side Indicator, which tracks Wall Street strategists' equity allocation recommendations, remains in neutral territory, with no sell signal triggered
By: Isabelnet | June 20, 2024
• S&P 500
The Sell Side Indicator, which tracks Wall Street strategists' equity allocation recommendations, remains in neutral territory, with no sell signal triggered.
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S&P 500 - The US stock market has historically tended to be weak, and often negative, in the second half of June compared to other months of the year
By: Isabelnet | June 20, 2024
• S&P 500
The US stock market has historically tended to be weak, and often negative, in the second half of June compared to other months of the year.
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Money managers Remain Bullish with their exposure to the US Equity markets since last week...
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NAAIM Exposure Index
June 20, 2024
The NAAIM Number
85.26
Last Quarter Average
84.57
»»» Read More…
$SPX $SPY - Update 2nd Blue Target now hit...
By: Sahara | June 20, 2024
• $SPX $SPY - Update
2nd Blue Target now hit...
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The 10 Top/Bottom S&P 500 Index percent net change performers
By: Thom Hartle | June 20, 2024
• Today (8:34 CST), the 10 top/bottom percent net change performers in the S&P 500 Index.
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The 10 Top/Bottom NASDAQ 100 Index percent net change performers
By: Thom Hartle | June 20, 2024
• Today (8:34 CST), the 10 top/bottom percent net change performers in the NASDAQ 100 Index.
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$SPX Realized 2-month S&P 500 (annualized) volatility drops below 10
By: Nautilus Research | June 20, 2024
• #spx $spx Realized 2-month S&P 500 (annualized) volatility drops below 10.
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The AAII Investor Sentiment
By: AAII | June 20, 2024
Bullish 44.4%
Neutral 33.1%
Bearish 22.5%
• Historical 1-Year High
Bullish: 52.9%
Neutral: 36.4%
Bearish: 50.3%
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Core Systems at/near Major Sell signals – Tied for most extreme overbought in 10+ years
By: Macro Charts | June 17, 2024
• Core Systems at/near Major Sell signals – with *significant* room to decline.
Tied for most extreme overbought in 10+ years.
Monitoring for turn down.
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Least shorted S&P 500 stocks in May
By: Seeking Alpha | June 18, 2024
Alphabet Class C (GOOG), Mastercard (MA) and Walmart (WMT) retained the top spots as the least shorted S&P 500 (SP500) stocks in May.
As of May 31, 0.30% of Alphabet’s Class C shares were sold short. The American tech company witnessed a decline in short share volume during the month, with traders selling 36.72M shares of GOOG short, a decline of 5.9% from mid-May. Class A shares of Alphabet (GOOGL) had short interest of 0.44% last month.
Mastercard (MA) was next, with 0.48% of MA shares sold short as of May 31. The payment services firm saw a decline in short shares volume in the month, at 3.99M shares compared to the previous total of 4.49M at mid-May.
Walmart (WMT) also saw a decline in short shares volume at the end of May, with 0.50% of its shares sold short. As of May 31st, there was short interest totaling 39.97M shares, a decline of 7.7% from the previous total of 43.29M shares at mid-May.
These were the top 20 least shorted S&P 500 stocks as a percentage of float, as of May:
• Alphabet Inc C (GOOG) - Short interest as a % of float: 0.30%
• Alphabet Inc A (GOOGL) - Short interest as a % of float: 0.44%
• Mastercard (MA) - Short interest as a % of float: 0.48%
• Walmart (WMT) - Short interest as a % of float: 0.50%
• Northern Trust (NTRS) - Short interest as a % of float: 0.62%
• L3Harris Technologies (LHX) - Short interest as a % of float: 0.62%
• S&P Global (SPGI) - Short interest as a % of float: 0.63%
• TE Connectivity (TEL) - Short interest as a % of float: 0.65%
• Fortive (FTV) - Short interest as a % of float: 0.66%
• Coca-Cola (KO) - Short interest as a % of float: 0.69%
• Union Pacific (UNP) - Short interest as a % of float: 0.70%
• Amazon.com (AMZN) - Short interest as a % of float: 0.71%
• Eli Lilly & Co (LLY) - Short interest as a % of float: 0.72%
• Norfolk Southern Corp (NSC) - Short interest as a % of float: 0.72%
• General Dynamics (GD) - Short interest as a % of float: 0.72%
• JPMorgan Chase & Co (JPM) - Short interest as a % of float: 0.73%
• Chubb (CB) - Short interest as a % of float: 0.74%
• Trimble (TRMB) - Short interest as a % of float: 0.74%
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$SPX $SPY Top 5 names now > market cap than bottom 399, as of end of May.
By: Nautilus Research | June 18, 2024
• #spx $spy Top 5 names now > market cap than bottom 399, as of end of May.
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RSI on $QQQ is on track to go above 82 for only the 7th time since inception. Mixed as a short signal over the next month or so. Terrible (for shorts) after that.
By: Jason Goepfert | June 17, 2024
• RSI on $QQQ is on track to go above 82 for only the 7th time since inception.
Mixed as a short signal over the next month or so. Terrible (for shorts) after that.
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$QQQ Super Deep ITM $3.5 Million Put This was bought to open and has an odd strike
By: Cheddar Flow | June 18, 2024
• $QQQ Super Deep ITM $3.5M Put
This was bought to open and has an odd strike
The delta is -0.97 on this contract
It is possible that the whale doesn't want to worry about the greeks for a directional downside bet or it is just a hedge while they hold the underlying.
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S&P 500: With a reading of 86.14, the US stock market remains overbought, indicating a significant level of optimism among investors and the potential for a market correction in the near future
By: Isabelnet | June 18, 2024
• S&P 500
With a reading of 86.14, the US stock market remains overbought, indicating a significant level of optimism among investors and the potential for a market correction in the near future.
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Markets Monthly Pattern »» Watchlist - Top 10
By: Marty Armstrong | June 18, 2024
• Dow Jones Industrials Index »» Still Bearish
• NASDAQ Composite Index »» Pressing Higher
• NASDAQ 100 Index »» Pressing Higher
• S&P 500 Index »» Pressing Higher
• Russell 2000 Index »» Preparing to Rally
• US Dollar Index »» SPIKE LOW
• CBOE VIX Index »» Moving Lower
• NY Gold Futures »» Turning BACK DOWN
• NY Silver COMEX Futures »» Turning BACK DOWN
• NY Crude Oil Futures »» Pressing Lower
NASDAQ 100 Update: When Will the Bears Get Their Chance?
By: Dr. Arnout Ter Schure | June 17, 2024
• As long as the index can stay above at least $19,100, we expect it to complete an impulse to possibly reach $25,000 before the Bears can take over.
Target Zones From Last Month Reached
Most major US stock markets, like the NASDAQ100 (NDX), have set record highs after record highs recently. We all know nothing goes up forever, but when do the Bears get their chance other than being allowed to play in the sandbox during a brief recess? We primarily use the Elliott Wave Principle (EWP) to answer that question. Allow us to explain using Figure 1 below .
The NDX has been following an impulse higher since its mid-April low, invalidating the counter-trend rally possibility we were tracking last month, where we were looking for at least $18815-19036 as a (green) W-c.
Figure 1. NDX daily chart with detailed EWP count and technical indicators
Namely, the index did top out a day after we posted our update at $18097. Right in the target zone, we had set forth. It bottomed out on May 31 at $18189 and closed that day at $18536. Also, right in the target zone for a potential (green) W-4, we had set forth. Thus, the bears could not close the index below the first warning level we had set at $18,400 (blue dotted horizontal line in the chart of our previous update). The NDX Bulls then took over and have run the ball almost up to $20,000 (!). Thus, the green W-3, 4, 5 vs W-a-b-c potentials we were tracking became the former. Poor bears. So, when is their next chance?
A Bullish Chart Requires a Bullish Outlook
Before we can answer that question, we must assess the current state of the market/chart using several objective parameters.
1. All Technical Indicators (TIs: RSI5, MACD, CMF) are pointing up and are on a buy: Green dotted arrows.
2. The TIs are overbought, but that is a condition of a strong market, and there are no negative divergences: compare with the red and blue dotted arrows.
3. Price is above its rising Ichimoku cloud and above its rising daily Simple Moving Averages (d SMAs), which are Bullishly stacked: price>10>20>50>200d SMA: green horizontal arrows—a 100% Bullish chart.
4. The warning levels for the Bulls (blue, grey, orange, and red) continue to rise. The first warning level (blue) is $19620, and the second (grey) is $19500, etc.: compare that to our previous update at $18465, 18200, etc., respectively.
Thus, we must apply a Bullish EWP count until proven otherwise, and as long as the index can stay above $19,100, the third warning level, we can foresee it wrapping up the grey W-iii, followed by a grey W-iv, v; red W-iv and -v. See the grey-dotted arrows/path.
The waves’ target zones are at this stage but subject to change: $20,100+/-50, $19,600+/-100, $21,000+/-500, $19,200+/-200, and $25,000, respectively. At this stage, only a break below $18,400, the red 4th warning level, will turn the chart from Bullish to Bearish, but we have the earlier warnings to tell us to become more cautious.
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S&P 500 Advance-Decline Line Divergence Risk-Off Signal
By: Dean Christians | June 17, 2024
• The following outlook table contains my NYSE Advance-Decline Divergence Model, which I shared at the annual NAAIM meeting.
It contains specific rules, removing subjectivity.
It's one of ten components in my TCTM Composite Risk Warning Model.
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The Worst Performing Stocks in the S&P 500 this year...
By: Charlie Bilello | June 17, 2024
• The worst performing stock in the S&P 500 this year...
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The Best Performing Stocks in the S&P 500 this year...
By: Charlie Bilello | June 17, 2024
• The best performing stock in the S&P 500 this year...
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$SPXW Huge $40+ Million Worth of Put Sell Orders (Highly Unusual)
By: Cheddar Flow | June 17, 2024
• $SPXW Huge $40M+ Worth of Put Sell Orders (Highly Unusual)
These have a near-term expiration and were executed below the bid
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Investors: Be Wary of This S&P 500 Resistance Level
By: Schaeffer's Investment Research | June 17, 2024
• There is a chance shorts are already underwater
• Recent buying has had more to do with May’s lower-than-expected CPI reading
“…judging by Friday’s close, it might be considered more of a victory for bulls than bears. While the SPX moved below many of the key levels mentioned above on an intraday basis, the end-of-week closes were above those levels, including the previous all-time high in March at 4,254. In fact, Friday’s bullish “hammer” candle looks like the early May “hammer” that occurred prior to a two-week rally…”
- Monday Morning Outlook, June 3, 2024
“There may be hesitation among buyers and sellers ahead of Wednesday’s Federal Open Market Committee (FOMC) meeting, as sideways-to-slightly-lower stock prices have generally preceded FOMC meetings this year, with buyers stepping in post-meeting.”
- Monday Morning Outlook, June 10, 2024
The S&P 500 Index (SPX -- 5,431.60) has followed the historical script over the past two weeks, with a two-week rally following a bullish hammer candle on May 31. Price action since that hammer mirrors that of a bullish hammer candle on May 2, when the SPX was flirting with support from a multitude of perspectives.
The SPX’s price action ahead of and after Wednesday’s Federal Open Market Committee (FOMC) meeting followed the script, too, with the SPX flatlining ahead of the meeting with support at the intraday high, and buyers stepping in on FOMC day.
Admittedly, the buying had more to do with May’s lower-than-expected consumer price index (CPI) reading ahead of the open than the FOMC meeting itself. An updated dot-plot revealed most governors see between one and two rate cuts by the end of the year. This was not a huge surprise, as market participants have been adjusting to the reality of a “higher for longer” interest rate environment for months.
For instance, the first rate cut was expected in March, after December’s CPI number was released in mid-January. Federal Reserve Chairman Jerome Powell began pushing back on the timing of an expected rate cut in late January, however. This has been an ongoing theme that investors have seemingly grown accustomed to.
In the event of a SPX pullback, the May intraday high and pre-FOMC/CPI support at 5,340 represents the first level of defense. The SPX’s advancing 30-day moving average, which I have discussed in prior commentaries given its significance since late last year, is a moving support level as time passes. It comes into the week at 5,291 and is rising approximately 13 points. It could be around 5,340 by week’s end, which is coincidentally the site of the May intraday high.
A resistance area is exerting itself just overhead at 5,440-5,445. After the SPX gapped higher on Wednesday, it reached this level in the first two hours of trading. But since Wednesday morning, despite efforts to push above this level on multiple occasions into Friday’ s close, sellers prevailed. They did not show a lot of dominance, though, as the index went flat from Wednesday morning into the Friday close, with neither bulls or bears exerting control after the CPI reaction.
If I were to share only one chart that caught my eye this week, it would be the graph of SPX component short interest overlayed with SPX price action, after short interest data as of the end of May was released last week.
The second half of May weakness may in part be explained by the shorts, who got aggressive as the SPX made new highs during this same time period. Per the chart below, short interest increased by nearly 4% from mid-May into the end of May.
There is a chance that many of these shorts are already underwater, though this is not a guarantee. Since the SPX’s recent low, its advance/decline line has been retreating, suggesting fewer stocks participating in the rally that has been led by large-cap technology.
However, total short interest on SPX components is up more than 10% in 2024, and thus covering could lend support to stocks pulling back or fuel a rally in instances shorts get squeezed. Total SPX component short interest is now at a more than three-year high, which should be encouraging for bulls.
Note in the graph below that total short interest on SPX components was at a multi-year low going into 2022, a year in which the SPX struggled as shorts built up positions from that short interest trough and as stocks weakened.
“… continue to monitor the Cboe Volatility Index (VIX – 12.22) reading. It may rise slightly into Wednesday’s FOMC meeting, but moves to prior lows have generally been resolved with pullbacks of varying degrees in the equity market and a rise in volatility expectations. The May low occurred in the 11.52-11.85 area before the VIX eventually peaked at 14.88.”
- Monday Morning Outlook, June 10, 2024
With Friday being a down day for the SPX, the weakness throughout most of the day may not have come as a huge surprise to those following the Cboe Volatility Index (VIX -- 12.66). Note that at Thursday’s close, it was sitting at its prior lows.
When it gets to this level, just below 12.00, the SPX has tended to struggle in the near term. However, SPX pullbacks and VIX pops from this level have not been as alarming. If you are looking to hedge long portfolios, VIX pullbacks to prior lows may be a worthwhile time to do so.
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The Nasdaq 100 continues to notch record high after record high. Many of its stocks are not only lagging, but they're falling to monthly, quarterly, or even yearly lows and below their 10-, 50-, and 200-day moving averages
By: SentimenTrader | June 17, 2024
• The Nasdaq 100 continues to notch record high after record high. Many of its stocks are not only lagging, but they're falling to monthly, quarterly, or even yearly lows and below their 10-, 50-, and 200-day moving averages.
This is not normal. In fact, it's never happened before to this degree.
There is a possibility that the average stock will catch up to the index, that is not how things usually pan out. Almost never, in fact. Risk is high in that index.
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The 10 Top/Bottom S&P 500 Index percent net change performers
By: Thom Hartle | June 17, 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 | June 17, 2024
• Today (8:34 CST), the 10 top/bottom percent net change performers in the NASDAQ 100 Index.
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With Persistent Failure To Capitalize On Favorable Setups, Bears Wonder If Opportunity At Hand Will Be Different
By: Hedgopia | June 17, 2024
As the rally from the lows of October persists, there are fewer and fewer bears around. In the last several months, they have had several opportunities to gain the upper hand, but to no avail. Another opportunity is at hand. This coincides with interesting action in volatility last week.
At the end of last week’s two-day FOMC meeting on Wednesday, the fed funds rate was left unchanged at a range of 525 basis points to 550 basis points. The last hike was last July, with the benchmark rates having lifted from zero to 25 basis points in March 2022.
The policy-setting body’s move last week was expected. What was probably not expected was for FOMC members to go from expecting three cuts this year during the March meeting to one; the consensus expected the dot plot to shift lower to two cuts. FOMC members’ rates outlook now is one fewer than what the futures market expects.
As much as the doves within the FOMC are itching to begin lowering rates, inflation remains comfortably above the Federal Reserve’s two-percent goal. In the 12 months to May, headline and core CPI (consumer price index) increased 3.3 percent and 3.4 percent respectively – much lower than the four-decade highs of 2022 (headline at 9.1 percent in June that year and the core at 6.6 percent in September) – but progress this year has slowed (Chart 1).
The FOMC is probably not happy with the way US equities have continued to rally, and this raises risks of upward price pressure through the wealth effect. From last October’s low through last Wednesday’s fresh intraday high of 5447, the S&P 500 is up 32.7 percent – and a mouth-watering 56 percent from the October 2022 low.
Equity bulls got aggressive last December when on the 13th Fed Chair Jerome Powell decidedly signaled a dovish shift in policy. Having just bottomed in October, the large cap index closed the 12th at 4644. Stocks were beginning to price in much lower interest rates. Post-Powell shift, futures traders early this year were pricing in six to seven 25-basis-point cuts by the end of this year.
This not surprisingly set in motion animal spirits. In more ways than one, this continues. Last week, the S&P 500 rallied 1.6 percent to 5432. This was the seventh up week in last eight. Bids persistently showed up even as it was becoming clearer that the expected cuts were not forthcoming. As things stand, two cuts are expected this year – in September and December. Stocks that rallied hard on expectation of much lower benchmark rates are not adjusting lower.
To rub salt in the wound, bears have repeatedly failed to cash in on potentially favorable technical setups. Post-October low, the S&P 500 rallied hard for four weeks before a long-legged doji – an indecision candle – showed up on the weekly. This was immediately followed by a potentially bearish hanging man, which, however, was not confirmed.
Once again, in a gap-up session in which a new high was posted, a shooting star formed last Wednesday, followed by a hanging man each on Thursday and Friday (Chart 2). This is an opportunity for the bears, but it remains to be seen if success comes their way this time.
One of the things equity bulls have greatly used to their advantage is short squeeze.
As stocks were coming under severe pressure back then, by mid-September 2022, short interest on SPY (SPDR S&P 500 ETF) had ballooned to 180.5 million (Chart 3). Stocks bottomed that October, and the gradual squeeze followed. After a lot of back-and-forth, by mid-January this year, short interest once again rose to 134.7 million; it has all been downhill since then. At the end of May, short interest tumbled 11.9 percent period-over-period to 90.1 million.
In an environment in which there is a palpable lack of fear, multiple expansion continues.
After reaching an all-time high of 37.7 percent in 4Q21, US households’ equity allocation bottomed at 32.3 percent in 3Q22. From that low, the allocation has risen to 37.4 percent by the March quarter this year (Chart 4).
With nine sessions to go in the June quarter, the S&P 500 has rallied another 3.4 percent in the current quarter. Unless the index unravels in the remaining sessions, it is all but certain the 4Q21 record will be surpassed.
This nothing but adds to the bears’ woes. Bulls continue to treat both good and bad news as good, with bad news raising hopes for rate cuts. But at some point, this narrative will stop working, and the bears will gain the upper hand; as pointed out earlier, they have a decent opportunity here.
Amidst this, VIX’s behavior last week is worth a watch. In normal circumstances, VIX and the S&P 500 go in opposite directions. Last week, the two went hand in hand. VIX rallied 0.44 points to 12.66.
Going back six years, volatility bulls have repeatedly defended 12, and this seems to be happening again (Chart 5). VIX last Thursday dropped as low as 11.88 intraday but did not undercut the May 23rd low of 11.52.
If volatility bulls put their foot down, that will bring good news for equity bears.
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Prepare NOW For A Potentially Huge Storm Ahead
By: Tom Bowley | June 16, 2024
I'm not trying to be overly dramatic, because most of you know how I feel about the stock market's long-term direction. We're going higher. Fight that at your own risk. However, short-term, we have a major storm brewing. To fully understand the possible effects of this storm, you need to understand history. Over 80% of the S&P 500's gains over the past 75 years have been earned during the 26th to 6th of ALL calendar months. It's due to (1) legalized front running as Wall Street firms and hedge funds begin buying stocks ahead of big money inflows at the start of each month, and (2) those inflows. Obviously, the rest of the calendar month accounts for less than 20% of the S&P 500 gains.
Just as there's a very strong bullish period during the month, there's also one very nasty period during calendar months and it typically coincides with the week of monthly options expiration. The 19th through the 25th has produced annualized returns of -7.58% over 4232 trading days since 1950, or the equivalent of 16 years. How would you feel if I told you that the S&P 500 would drop 7.58% over the next 16 years? It would be pretty depressing, right? Well, that's exactly what's happened during this part of the calendar month, which is why we need to be aware.
I believe the stronger the market has been leading up to monthly options-expiration Friday, the stronger the potential of a decline and 75 years of stock market data backs me up on this. Is it a guarantee that we'll see selling? Of course not. But one key to trading success is understanding when stock market risks are elevated. I can say, without a doubt, that short-term stock market risks are elevated right now.
Technology (XLK) has been leading the stock market higher over the past week and month. Here are the numbers:
1-Week Performance:
1-Month Performance:
After looking at these two summaries, is there any doubt what's been leading this market higher? Unfortunately, that's the problem. The large-cap technology names that have had such a strong run to the upside, especially in the semiconductors area ($DJUSSC), have also seen extremely heavy call buying. That's led to many key stocks like Apple (AAPL), Microsoft (MSFT), NVIDIA Corp (NVDA), etc. having current prices WAAAY above their respective max pain levels. The SPY and QQQ alone show more than $13 billion of net in-the-money call premium - the highest levels of net call premium that I've ever seen. Beware a sudden drop to the downside over the next week to 10 days.
I'll discuss much, much more about this dramatic increase in call premium at our next Max Pain webinar, which will be held this Tuesday, June 18th, at 4:30pm ET. If you're not currently a member at EarningsBeats.com, you can join for FREE by starting a 30-day trial. CLICK HERE to get your membership started and to join me on Tuesday!
The XLK, in addition to max pain issues, also is now dealing with a negative divergence on its hourly chart. The last time we saw a similar negative divergence, the XLK fell roughly 5% in less than a week. Check this out:
The bottom panel shows the rate of change (ROC) for the past 65 hours, or 10 days (2 weeks). Note that the only other time in 2024 that we've seen the XLK's 2-week ROC hit or approach 10% was back in mid-January. A negative divergence was also present then and the XLK promptly fell roughly 5% in a week. From the current level, a drop of 5% would be $11 and would take the XLK back to the 216 level. I'm not saying we're going to drop 5%, I'm only pointing out that the short-term risks are elevated currently.
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At 5,434, the S&P 500 is now above every 2024 year-end price target from Wall Street strategists
By: Charlie Bilello | June 14, 2024
• At 5,434, the S&P 500 is now above every 2024 year-end price target from Wall Street strategists. And there’s still six and half months to go.
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The S&P 500 is historically a poor performer over the next two weeks
By: TrendSpider | June 14, 2024
• $SPY pullback on the horizon?
The S&P 500 is historically a poor performer over the next two weeks.
Next week in particular has returned -0.88% on average over the last two decades.
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When the S&P 500 hits new all-time highs on all five days of the week, historical data suggests a bullish outlook over the next 12 months, with a median return of 8.7% since 1950
By: Isabelnet | June 15, 2024
• S&P 500
When the S&P 500 hits new all-time highs on all five days of the week, historical data suggests a bullish outlook over the next 12 months, with a median return of 8.7% since 1950.
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CoT: Peek Into Future Through Futures, How Hedge Funds Are Positioned
By: Hedgopia | June 15, 2024
• Following futures positions of non-commercials are as of June 11, 2024.
E-mini S&P 500: Currently net short 111.4k, up 46.4k.
Several times in the last several weeks or months, equity bears fell short of capitalizing on potentially bearish technical setups. After four weeks of strength post-last October’s low, a long-legged doji showed up on the weekly four weeks ago, followed by a weekly hanging man. The latter candle in particular was not confirmed as bulls put up a strong show in the subsequent two weeks, with this week up 1.6 percent and last week 1.3 percent.
Bears yet again have an opportunity. On Wednesday, the S&P 500 posted a new intraday high of 5447 but only to close at 5421, resulting in a daily shooting star. This was followed by back-to-back buying pressure that showed up just north of 5400, forming a hanging man on both Thursday and Friday, ending the week at 5432.
If weakness develops this week, this would have come after seven out of eight weeks of unrelenting rally. Last October, the large cap index bottomed at 4104.
Nasdaq (mini): Currently net short 8k, up 10k.
On the back of Apple (AAPL)’s strong performance, the Nasdaq 100 had yet another strong week, up 3.5 percent to 19660, for a bullish marubozu weekly candle. This was the second consecutive up week – and 7th in the last eight. From last October’s low through Friday’s high (19665), the tech-heavy index surged 39.9 percent – and 88.3 percent from the October 2022 low of 10441!
History has shown us time and again that bubbles only get bigger until some catalysts act as a pricking pin. For now, tech bulls seem to be sitting pretty, even though some of the moves defy logic. AAPL’s 7.9-percent jump – was up 11.8 percent at Wednesday’s high – breaking out of $197 resistance was one such event this week. It is a $3-trillion-plus company and is a stock followed by nearly every major brokerage house. Not a biotech company, for instance, that suddenly achieves a major milestone and the stock reacts, AAPL’s business is well known. A double-digit move in a single week in a stock like this is a sign of the ebullient times.
Russell 2000 mini-index: Currently net short 38.3k, up 3.9k.
For the second consecutive week, small-caps diverged with red-hot large-caps. The Russell 2000 gave back one percent this week, coming on the heels of last week’s 2.1-percent downdraft.
It was a wild week, with a high of 2089 (Wednesday) and a low of 1999 (Friday), closing at 2006 – near the weekly low and at/near dual support.
The small cap index has been trading within a descending channel since May 15th when it tagged 2112; Friday’s low tested that support. The index has also traded above 2000 since early May.
Repeated failure at 2100 since early March raises the odds 2000 will be compromised sooner than later. If this scenario comes to pass, then breakout retest at 1900 is just a matter of time. The Russell 2000 broke out of that level last December. Before that, the index went back and forth between 1700 and 1900 going back to January 2022.
US Dollar Index: Currently net long 5k, up 126.
Last week, a rising trendline from last December when the US dollar index bottomed at 100.32 was breached intraweek but saved by the end. This occurred again this week as Wednesday’s low of 104.23 would have breached that support but only for bids to show up on time to push the index up 0.3 percent to 105.17.
In the end, dollar bulls managed to save both the trendline in question and horizontal support at 103-104, which goes back to December 2016.
VIX: Currently net short 48.4k, up 7.2k.
VIX dropped as low as 11.88 intraday Thursday, although it did not undercut the May 23rd low of 11.52. When it was all said and done, the volatility index rallied 0.44 points to 12.66 for the week. This does not happen often – going hand to hand with the S&P 500, that is. The two tend to go in opposite directions.
Going back six years, volatility bulls have repeatedly defended 12, and this seems to be happening again. This is taking place at a time when traders are aggressively snapping up calls; the CBOE equity-only put-to-call ratio produced readings of 0.50s in six of the last seven sessions.
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S&P 500 Index (SPX) »» Weekly Summary Analysis
By: Marty Armstrong | June 15, 2024
S&P 500 Cash Index closed today at 543160 and is trading up about 13% for the year from last year's settlement of 476983. Presently, this market has been rising for 7 months going into June suggesting that this has been a bull market trend on the monthly time level which has been confirmed by electing all of our model's long-term Bullish Reversals from the key low. As we stand right now, this market has made a new high exceeding the previous month's high reaching thus far 544725 while it has not broken last month's low so far of 501105. Nevertheless, this market is still trading above last month's high of 534188.
ECONOMIC CONFIDENCE MODEL CORRELATION
Here in S&P 500 Cash Index, we do find that this particular market has correlated with our Economic Confidence Model in the past. The Last turning point on the ECM cycle low to line up with this market was 2009 and 2002. The Last turning point on the ECM cycle high to line up with this market was 2022 and 2007 and 2000.
MARKET OVERVIEW
NEAR-TERM OUTLOOK
The S&P 500 Cash Index has continued to make new historical highs over the course of the rally from 1974 moving into 2024. We have elected two Bullish Reversals to date.
This market remains in a positive position on the weekly to yearly levels of our indicating models. Pay attention to the Monthly level for any serious change in long-term trend ahead.
The perspective using the indicating ranges on the Daily level in the S&P 500 Cash Index, this market remains in a bullish position at this time with the underlying support beginning at 536579.
On the weekly level, the last important high was established the week of June 10th at 544725, which was up 33 weeks from the low made back during the week of October 23rd. So far, this week is trading within last week's range of 544725 to 532725. Nevertheless, the market is still trading upward more toward resistance than support. A closing beneath last week's low would be a technical signal for a correction to retest support.
When we look deeply into the underlying tone of this immediate market, we see it is currently still in a semi neutral posture despite declining from the previous high at 544725 made 0 week ago. This market has made a new historical high this past week reaching 544725. Here the market is trading positive gravitating more toward resistance than support. We have technical support lying at 535069 which we are still currently trading above for now.
Right now, the market is above momentum on our weekly models hinting this is still bullish for now as well as trend, long-term trend. Looking at this from a wider perspective, this market has been trading up for the past 2 weeks overall.
INTERMEDIATE-TERM OUTLOOK
YEARLY MOMENTUM MODEL INDICATOR
Our Momentum Models are rising at this time with the previous low made 2022 while the last high formed on 2023. However, this market has rallied in price with the last cyclical high formed on 2022 warning that this market remains strong at this time on a correlation perspective as it has moved higher with the Momentum Model.
Interestingly, the S&P 500 Cash Index has been in a bullish phase for the past 14 months since the low established back in March 2023.
Critical support still underlies this market at 468200 and a break of that level on a monthly closing basis would warn that a sustainable decline ahead becomes possible. Nevertheless, the market is trading above last month's high showing some strength.
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