Friday, April 29, 2016

Bear Market Leadership

In bear markets I watch bear market leadership to spot inflection points.

Small caps

Brokers / Dealers

Transports

VIX weekly


Saturday, April 9, 2016

Rats leave the sinking ship first

 these sneaky insiders know exactly when to leave the ship


And of course, we all know what was scaring the markets at the beginning of the year. High yield bonds.



Insiders

A reliable valuation metric :  Q ratio

Tuesday, April 5, 2016

Thanks for the lift Yellen

If it wasn't for the FED, we wouldn't get the excellent shorting opportunity lately. Without another QE, markets will sink like a cadaver in the water. Rates may stay at zero forever. It will actually make things worse for the financial sector / banks.

This is a kind of bear market no one in this generation has seen. Yes this first sell off may be bought somewhere below the most obvious spot (SPX 2000), but the type of selling climax we will see at the end of the whole intermediate term move will be astonishing imo.

Gold and other PMs are in bull market because there is no place else to hide in for long term and there is not much upside left in USD. Crude and other industrial commodities will stay sluggish because of global slowdown. We may see some upside in agricultural commodities only if El Niño helps.

Bloomberg Grains Subindex


Below is yesterdays "Opening Comments" and todays intraday update posted for xTrends Live members who have been on top of everything in this market.



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Opening Comments 



I was expecting Monday to be a bigger down day but looks like those who stand against the selling and bought the dip will be run over in overnight session. That is why we hold core short position in a confirmed swing sell off. There is just too much money to make in overnight sessions.

This sell off was telegraphed by a few unique indicators we have been following for more than a week now.

First, this MA crossover indicator derived from short-term RSI of McClellan Summation Index. I had explained this before, it is now in free fall and price is following it with a little or no delay.



Secondly we had this indicator that spots extreme contango overshoots. I had also explained what it is and how it works in conjunction with VIX



And today I want to show you another unique indicator that works like a clock in this bear market. As you know, transportation is the leading sector of this bear market. It leads on the downside and on the upside. It shows relative weakness at the tops and relative strength at the bottoms. This indicator measures the correlation between SP500 and Transportation index. When the correlation between the two drops significantly towards the zero line, this means transportation index wants to move in the opposite direction of SP500. Since Transports lead SP500, we can expect the overall market to reverse its direction to the direction of the transportation index when the two indices decouple. As I was pointing out over the last few trading days, transports were showing extreme relative weakness which caused a sell signal measured by this indicator:


Structurally, Transports failed at the horizontal resistance coming from a previous breakdown point and the index jumped back inside the falling wedge.


Of course there are weekly and monthly bearish setups that can dominantly effect any other setup

TRAN weekly

Russell 2K continues to be my favorite short among all major indices

IWM 120m

RUT weekly

Crude oil may find a temporary support right here but this has nothing to do with stocks as they decoupled long time ago.

USO daily

In addition to our core short positions in ES and TF and long position in VX, I will be looking to short more TF and ES on a rebound as we are about to see the initiating power move which is the most lucrative portion of this corrective swing sell off

We will likely open below the red line tomorrow, that gap should take us to the bottom line quickly. In other words today may be a trend day.

SPX 120m


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Intraday Update



Russell 2K is breaking down, I am trying to maximize profits by shorting intraday bounces as I just tweeted another short.

Put/Call ratio for all SP500 constituents is 0.56, this is something you will see at the market tops , not on a down day. Small traders are buying the dip with no fear and that means we will likely see a swoon into the close as they puke.

I will close todays short positions at the close today and keep core shorts.

RUT 30m