Posts by Rod David
CANCELLED — Saturday Review — CANCELLED
The eSignal data manager or password authentication function (or both) are not responding this morning. So, today’s Saturday Review is cancelled. I will record a bigger picture analysis if/when charts are restored.
One item I had planned to explore was this interesting observation by John Hussman:
Presently, Apple is valued at 5.1% of GDP, Amazon at 4.8%, Alphabet (Google) at 4.6%, Facebook at 3.3%, and Netflix at 0.8% of GDP. That’s a total market capitalization of nearly 20% of GDP across 5 stocks. It’s worth remembering that historically, the pre-bubble norm for market capitalization to GDP, adding up every nonfinancial company in the stock market, was only about 60%. At secular lows like 1974 and 1982, the ratio fell to 30% of GDP – for the entire market.
A similar observation could have been made with equal concern at any time during the past many months, regardless of the different percentages. So, the reading doesn’t have much timing value, and it may be greater months from now. Although, I doubt that. As I began noting about FAANGS with the NFLX earnings plunge, and reiterated with the FB and TWTR plunges: Growth expectations and valuations aside, these price reactions are at the very least, raising concerns among so-called “hedge fund hotels” that more attractive pricing may lie ahead.
And the FAANGS market segment losing buying demand at the margins can be magnified to great effect. Which may be happening already. But the death of leadership tends to be the penultimate victim. Outperforming laggards often defines the last upleg before the greater fall. Rotation is not the smoothest gear change — Friday’s reaction to last week’s new recovery highs exemplifies would fit that description.
[Presumably, eSignal’s international customer service and technical support will become available Sunday night to correct the issue in time for the U.S. open. If not, then I’ll initiate an alternative overnight.]
Saturday Review Link
[NOTE THE NEW LINK ADDRESS]
Be sure to join us by 9:30am ET for this weekend’s Saturday Review. After discussing the bigger picture and gaming out strategies for playing next week’s likelier opening setups, we’ll do instant analysis of any stock charts that you request… See you there!
Morning Bias
| MON morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2824.00 | 2824.25 |
| …would target | 2831.25 | 2831.50 |
| Bias-down: under | 2814.75 | 2815.00 |
| …would target | 2808.75 | 2809.00 |
| Signal status: LATE NO-BIAS, TESTED BIAS-DOWN SIGNAL | FAQ | |
| Flowcharts: Bias-UP // Bias-DN INTRO VIDEOS #1 and #2 |
||
1. At 10:15, trading above the bias-up signal or under the bias-down signal would put into play a test of its bias-up or bias-down target.
2. Not triggering either bias signal at 10:15 would be “no-bias,” and the bias signals should define the bias environment’s range.
— A test of the opposite bias signal would be targeted if one bias signal was tested before triggering no-bias.
3. Touching the bias signal within 3 minutes either way of 10:15 would invoke a grace period through 10:30 to trigger a late signal.
— “Late” signals don’t require testing the opposite bias signal, but it’s still likely.
4. Still testing the bias signal at 10:30 after invoking the grace period would trigger “noN-bias,” with no bias influence.
Market Wrap (recording & summary)
Thursday night’s relentless rally was shallow, but nevertheless productive since it probed Thursday’s 2846.50 high. The proximity to “unfinished business above” at 2848.75 had opened the door wide for its retest. But the GDP reaction slammed the door shut. The upside potential could have reopened had the GDP reaction’s 2839.00 low held its retest. But it didn’t, and that was the sound of the slammed door being locked shut.
Extending down wasn’t required, since only noN-bias had triggered. But the pre-open low’s retest extended down to within 2-3 ticks of the morning’s 2829.50 bias-down target. Extending that drop wasn’t required, either. But it extended at the morning bias environment exit, and at a much steeper slope.
The 2818.00 prior high was retested, including unfinished business below at 2813.75. And that was probed by 5 points as the noon hour ended. The balance of the session ranged back up to 2821.00, exiting the bias environment too low to trigger a short-squeeze, but somehow avoiding another downleg targeting 2801.50. Monday’s open should either take care of that, or else be well on its way to recovering 2828.50.
Details and other markets coverage are discussed in the post-market Wrap recording here.
JOIN US AT 9:30 ET FOR THIS WEEKEND’S SATURDAY REVIEW.
Daily Spot…
A daily summary of high-profile members of several complexes… View a more detailed discussion of each chart at the end of today’s Market Wrap.
Eurodollar Sep Contract (EC, ETF: (FXE, UUP))
Thursday’s drop extended down overnight to gap down Friday. Reacting up into positive territory ranged narrowly sideways. The pattern won’t create a new buy signal until after Monday morning.
Gold Aug Contract (GC, ETF: (GLD))
Extending Thursday’s drop overnight attacked the prior week’s 1215.00 gap open low. Friday’s gap down bounced to fill the gap back up to Thursday’s close, which held as resistance. The lower attraction remains intact.
Silver Sep Contract (SI, ETF: (SLV))
15.40 support was retested again Friday, and held again, although chipping away at support for so long without launching an upleg makes the prior week’s low likely to be tested.
30-year Treasury Sep Contract (US, ETF: (TLT))
Thursday’s retest of Tuesday’s 142-21 low was pierced by several ticks in reaction to Friday’s GDP. The low held, but only to range sideways forming an otherwise inside day. The resemblance to stability is misleading, since the burden of proof at this stage is for a rally to establish itself. The decline’s momentum meanwhile remains intact.
Crude Oil Sep Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Regardless of its degree, Friday’s slide back down to 68.25 comes too late to invalidate Thursday’s confirmation of Wednesday’s breakout from a multi-session range. At least an eventual third higher close is required, potentially up to 71.75.
Natural Gas Sep Contract (NG, ETF: (UNG, UNL))
Friday’s gap up is too aggressive at this stage to qualify as launching a new upleg. Closing back under 2.75 would target a retest of the lows.