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Trend Neutral, Not Bullish or Bearish

WED AM-  3/9/16-  7:45 am

2-3 day trend REMAINS NEUTRAL-  NOT Bearish based on Tuesday, as part of a bullish trend since 2/11-  and no real Top at hand even on short term basis-    Yesterday gave some minor indication of a possible pullback in Equities, but more choppiness and overlapping patterns than any real serious decline and prices held where they needed to , with S&P Above 1970 along with WTI Crude not breaking ITS own uptrend from 2/11 near 36.25, and both since have bounced.   Europe is trading higher this am by over 1%, with the DAX up to the highest levels of the week, while Bond yields have rallied and 10yr back higher to 1.87

OVERALL, S&P, TNX, CRUDE, USDJPY still trading very much together.  And if CRUDE FAILS TO BREAK at these levels and takes out 38.24, I expect S&P to exceed 2004 and move up to 20225-30 before any pullback

 

For now, very much a NEUTRAL/SIDEWAYS pattern over the last day, but a definite stalling in momentum which on a 3-5 day basis, will need to get back to new highs very quickly or else will show some weakness.   Given the weakness in Energy yesterday and Financials and the bounce today.. these are the groups to look at selling into for those looking for trades with stops near early week highs-

Key levels for S&P FUTURES-  S-  1984, 1976, 1970..     R-  1994-5,  2004,  2008-9

Crude oil-  S-  36.22,   R-  38.25

TNX-   1.909, 1.85- support-  R-  1.92

Overall, shorting into today’s early premkt gains makes more sense for those looking to pick spots than trying to follow on yesterday’s close, with tight stops, but for many , awaiting signs of trend breaks -  1984 minimum but 1976, 1970 are the real areas..  is the clearest signal to expect 2-3% additional weakness.  At 1993-5,  One can short with stops at 1996 and targets near 1984, with breaks of that leading down to 1970-6 area the real line in the sand on an hourly basis

However, just to reiterate-  ES-1970 still needs to be broken to suggest that a decline down to 1935-40 can occur, (and as charts show below. Has NOT happened yet, ) (Based primarily on the move in Financials and Energy- and the former could show 1-3 days of weakness in banks- KBE chart below

A few Tactical trades to consider for the days ahead:

1)      Sell(Short) OIH-   26.75-27.75 with stops at 28.05-- 

2)      Underweight OIH vs XLE-   The ratio got right up to key resistance in Relative terms and now looks to be stalling out.  IF stocks fall, then OIH should underperform XLE-  If WTI take out 28.40, this should be closed-

3)      Sell (Short) KBE 30.50-31, with stops 31.17--  Movement down to near 28.80-29.25 looks likely in the next 1-2 days, which could turn out to be much worse on a larger selloff.  For now, I expect 2-3 days of weakness, then stabilization

4)      Short IWM for a move from 106.26 down to 103.50-104, which should be an excellent risk-reward to buy dips- 

5)      Short GDX from 19.42 down to 17..    Alternatively a leveraged play would be to short NUGT, or buy DUST for 1-2 days  

6)      Buy Copper on any move down UNDER 2.17, with ideal area at 2.10-2.15

Not really all that much material weakness yet for S&P-   Futures got down to multi-day lows, but the trend from mid-Feb remains intact-  A break of 1970 should allow for a quick move down to 1935-45 area which should be buyable 4hr Candlestickchart below of S&P March Futures-  (This chart was taken last night and has since rebounded)

Not really all that much material weakness yet for S&P-   Futures got down to multi-day lows, but the trend from mid-Feb remains intact-  A break of 1970 should allow for a quick move down to 1935-45 area which should be buyable

4hr Candlestickchart below of S&P March Futures-  (This chart was taken last night and has since rebounded)

Still very much range-bound than bullish or bearish in the near-term-  One can short from 1992-5 but have to cover over 2006and really proper to await breaks of 1984 at a minimum from a trend following basis

Still very much range-bound than bullish or bearish in the near-term-  One can short from 1992-5 but have to cover over 2006and really proper to await breaks of 1984 at a minimum from a trend following basis

1)      OIH-   WTI Crude reversed course, and while this is gaining ground early Wed am, OIH is also up at key levels shortable for a move down to 24-24.50 from early morning bounces on Wednesday, which would be a 6%+ move within the next couple days.   Sell at current levels and into bounces with stops 28.05

1)      OIH-   WTI Crude reversed course, and while this is gaining ground early Wed am, OIH is also up at key levels shortable for a move down to 24-24.50 from early morning bounces on Wednesday, which would be a 6%+ move within the next couple days.   Sell at current levels and into bounces with stops 28.05

1)      OIH vs XLE has reached key upside -  Look to UNDERWEIGHT OIH for the next few days

1)      OIH vs XLE has reached key upside -  Look to UNDERWEIGHT OIH for the next few days

  1)      KBE-  Banks also look vulnerable in the near-term after Tuesday’s reversal.  While Wed will bounce a bit..  Financials look to back and fill, and early am bounces can be shorted with stops near prior highs

 

1)      KBE-  Banks also look vulnerable in the near-term after Tuesday’s reversal.  While Wed will bounce a bit..  Financials look to back and fill, and early am bounces can be shorted with stops near prior highs

1)      IWM-  Our most recent rally had helped Small caps outperform vs the broader market and caused momentum to reach very high levels.. right near Overbought territory, the highest since at least Spring of last year Now the reversal looks to extend for at least a minor pullback  

1)      IWM-  Our most recent rally had helped Small caps outperform vs the broader market and caused momentum to reach very high levels.. right near Overbought territory, the highest since at least Spring of last year

Now the reversal looks to extend for at least a minor pullback

 

1)      SHORT GDX-     Gold stocks have gotten extended in recent days, and while this move has been a bullish move overall, this could be vulnerable down to near 17 Short with stops above 20.75..  Risking 1.30 to make 2.50  

1)      SHORT GDX-     Gold stocks have gotten extended in recent days, and while this move has been a bullish move overall, this could be vulnerable down to near 17

Short with stops above 20.75..  Risking 1.30 to make 2.50

 

5)      Bullish Breakout in Copper last week showing minor reversal Tuesday-  Move down to 2.17 down to 2.10 possible but should be used to buy dips-  Hold off on buying until 2.17 is hit  

5)      Bullish Breakout in Copper last week showing minor reversal Tuesday-  Move down to 2.17 down to 2.10 possible but should be used to buy dips-  Hold off on buying until 2.17 is hit

 

DOE Crude Oil Inventory data-  Shows a massive massive breakout which has led to near unprecedented Oil Inventories in the last 12 months.  This chart was used by Gundlach in this recent presentation and goes back since 1982

DOE Crude Oil Inventory data-  Shows a massive massive breakout which has led to near unprecedented Oil Inventories in the last 12 months.  This chart was used by Gundlach in this recent presentation and goes back since 1982