Sentiment & Selling Pressure update

VIX Future - Vix SPREAD: Q2 END action in full swing.....

SUSI WEEKLY UPDATE: Retest or Continuation?

(due to technical constraints related to our travel activity we run SUSI on a smaller UNIVERSE then usually but still hope to offer a representative sample)

• Mr Maket is retesting the Exhustion levels of the previous signals, which has led to a host of (weak) buy Signals.
  
  
• If Mr Market is taking out these upside Exhaustion levels (on the SUSI INDICATOR) then we could see another leg up even a "melt up" to 1050-1100 (S&P500) , ...
  
• ..if "he" fails then SUSI could trigger a series of SUSI Sell Signals (lower Indicator peaks) on the heels of the previous exhaustion signals. This would be very bearish.
  
  
• Pls also be alerted that this week is Q2 end, meaning most institutional participants will try to defend strong levels.
  
  
• Even more interesting is the fact that most charts show a TimeCluster (TC) around June 10 (+/-) which indicates a high probability pivot. If a HIGH or LOW we don't know at this point in time. (..or whether the MOMO is so strong that it will overrun the TC cluster...)
  
  This can mean that the market runs for another week and set a HIGH or that we see a sharp sell off next week into a swing LOW (Buy opportunity ?). Today's action indicates the former.
  
  
• Beyond that we notice a bounce of the zero level (not shown) by our VIX OSC, which further supports some positive Q2 end action

out on the road.... up until JUL20....

Your blogger is out on the road for the next couple of weeks and will post unregularly.

We will try to produce the weekly SUSI update from the road....but can't promise....

We will return towards the end of JULY.

thx for your understanding

New SUSI CHART

This chart shows how important it is to cluster. SUSI is just a high probability Indicator that needs support from other approaches....

VIX OSC- It's crunch time..

Volume confirms new distribution phase

20day LOWS and Selling Pressure hit trigger levels!

(Institutional Money portfolio )

• 20d Lows hit 20% trigger level (200 on the rescaled chart) for a change from a bullish to a bearish bias (see (1))
• Selling pressure is also hitting 20% trigger (see (2))

Conclusion:

• We have now officially (confirmed) entered the correction after yesterday's major distribution day
• The above chart indicates that this (double) confirmed situation can last for a couple of weeks before we see the next bullish confirmation or bearish re-confirmation
  
  

Elliott Wave update

The key question is now whether we see an ...

• A-B=C-D or ABC elliott pattern with a tendency to symmetry which can be interpreted as an Correction (=bullish) or ...
• an extended WAVE 3 (asymmetric structure) that could indicate an intermediate trendchange (=bearish)

Tonight we will also have a close look at our 20day Low run as well as our Vix_OSC and the Volume picture to gage whether today qualifies as a confirmation day to the bearish case.

SUSI WEEKLY UPDATE

SUSI is full of surprises.....

• So let's observe that SUSI is across the board bearish on commodities
• In the fixed income space she sees the recent sell off as exhausted and expects rates to come in
• FX on the other side is full of contradictions. You have the bearish exhaustion on the EURYEN (Proxy for reflation, and raising asset prices) vs. a more bullish call on Dollar weakness. I presume we have to wait for Mr. Market....
• The growth Geographies also seem vulnerable next to Europe and Japan
• The Nasdaq also is in a limbo with his relative strength on the one side and his complete exhaustion on the other.
• The precious metals seem to follow SUSI's Dollar call.....
• Last but not least (did you see FEDEX outlook this week...?) SUSI expects a bearish set up in the different sectors.

With lagging Commodities, Sectors & Oversees it is next to impossible to paint a bullish picture here. We could interpret this as a transitional picture that clearly needs more consisitency across the board and also more confirmations from the GOLDEN5.

Breadth & Volume update

The Breadth develops as projected in our last update.

Pls bear in mind that Volume as well as Breadth indicators like the % of stock above 50MA or 200MA have a tendency to either spike and turn or to spike and retest (with a spike of lesser intensity).

Summary:

• the correction has started
• the correction can develop into a retest with higher Prices and lower Indicator readings (divergence), which ultimately would be bearish
• the intensity of the earlier spikes alludes to a late summer retest of the highs (medium term bullish). In order for this scenario to materialize the market has to defend the march lows (i.e. no waterfall crash in the summer)
• the depth of the correction at this point is uncertain
• Once the correction gets confirmed and develops real momentum (20d Lows spikes, 10:1 Volume down days etc) a better assessment of potential targets is possible
  
  

Textbook Elloittwave Wave2

You rarely find such a clear cut wave structure. I know Elliottwave will be for most readers a more exotic form of analysis and the interpretation doesn't always seem conclusive, but a fair amount of participants apply these tools......

One of the most useful concepts of EW is the idea of SOCIONOMICS with tries to deal with Sentiments and Emotions as endogeneous factors of economic analysis, rather then exogeneous ones.

In plain english, Socionomics always starts with People/ Emotions and Sentiment as driving factors that later translate into stock prices and real event like wars, elctions etc. rather then the other way round where events like a 9-11 trigger the emotional change that triggers ....

for more info pls go to

http://www.elliottwave.com/

Todd Harrison's Minyanville and there particularly the daily 5 things series goes into the same directions....and also is really hillarious....

What makes the Guy from TRIMTABS so bearish ?

Question: What does it mean when Insiders are selling at record amounts, Companies are raising equity like there is no tomorrow and Liquidity flows into equities languish.....?

Answer: confidence in green shoots

from the always excellent chartstore.com

Zerohedge's Tyler Durden posted:

TrimTabs CEO Provides Realistic View On Economy

If the graphs don't tell the story try the video interview ....

...and now it's the NIKKEI's turn to exhaust...

Sentiment scenarios as guide to the next 6 weeks

How the correction will play out is uncertain, but our VIX gages like our Summation Index and our Vix_OSC might provide some scenario framing.....

The Breakout is here....

This must have been a field day for the bears, because we saw the break down yesterday with a late sign of indecision (throwback into the range) which has been convincingly followed through on the downside (aka CONFIRMATION) today with a late day push down.

This all is pattern textbook stuff and sets up for further downside (next target 880) and creates a preliminary bias to the downside that has the potential to run some weeks......

MARK FABER - The Frame of Mind of American Economic Policymakers

A though provoking article..

The Frame of Mind of American Economic Policymakers, Part I

The Frame of Mind of American Economic Policymakers, Part II

My only comment to Mark Faber's POW (prisoners of war) economy with respect to Inflation and Deflation is that in our real economy money is credit, which means that a reduction in Velocity (credit contraction) offsets some of the growth in high powered money (reserves). In plain english the money expansion goes straight to increased savings (debt repayment is also a form of savings) or demand for cash rather than into consumption or leverage. It's not all cigarettes in CREDIT ECONOMY. There will be a tipping point down the road which could flip deflation into (potentially uncontrolled <> HYPERINFLATION) Inflation.

And then in this week's ECONOMIST you read the lead article and you wonder whether politicians will really start to tell people that..

1. they have to work longer,
2. will have less pensions and
3. less healthcare.

....and you hope and pray that the answer will be yes and that they don't care about the next election and that the time has come for change.

SUSI WEEKLY UPDATE

The tide seems to turn in the near-term. The overall picture is certainly bearish for most of the Commodities, key Sectors and the EURO.

Mr. Market also might have overshot with the selldown in Treasuries, which seems to offer a tradeable bounce.

Further find some of the most extremes in Europe, China and the Nasdaq.

We find a major bear theme here continued and confirmed namely the fact that all markets still perform as one.

Whether this will lead to a waterfall of just a correction is uncertain at this point and has to evolve over the next 2-3 month.

pls also see Fari Hamzei one of the leading market timers on this....

MESSY Breadth Picture

The IM Portfolio is showing a messy breadth picture for this last leg of the rally.

(1) messy - green McClellan Oscilator with no clear broad participation

(2) a lower low in the green OSC as highlighed by the signal

(3) a fallin purple McClellan Summation Index

Breadth can be messy for some tim but tends resolve into a trend .....

Overall short term bias: BEARISH

Sentiment update

Pls see this post from the sentiment trader on the VIX futures which is consistent with our VIX OSC

http://sentimentrader.blogspot.com/2009/06/speculators-betting-on-spike-in-vix.html



The VIX OSC usually leads 1-2 months on average and we are getting close to the 2 months as can be nicely observed on the chart....