The global equity markets continue higher today on “trade optimism” once again. Equity bullish sentiment has been extreme on the upside and several secondary DeMark Countdown exhaustion signals have recycled and/or have secondary Countdowns triggering 13’s or are quite close. There’s some internals like very low put-call ratios, volume, lack of new 52 week highs, and the McClellan’s Advance-Decline indicator in the negative. I’ve seen this occur in the past and each time it’s very late in an upside move.

Some of the negative catalysts that I listed out a little while back are starting to become clearly less relevant as a risk. The US-China trade war is likely going to end with “Phase 1” and a tariff lift. Brexit risks have been mitigated. Some US Europe auto tariffs look also to be postponed. Q3 earnings were fine and a little better on EPS and inline to slightly better on revenues. A lot of thanks to the continued buyback bid and the Fed’s sudden urgency to not only cut rates at all-time highs but the addition of “Not QE” billions each month.

As I write this I’m listening to President Trump taking the victory lap of TREMENDOUS VICTORY LAPS. Markets have always topped with this type of backdrop of overconfidence and “good news.” With all of the overbought and overloved indicators, the potential for a reversal is highly probable on the smallest of catalysts just back last December when I showed everything was skewed on the opposite side with bullish sentiment under 5% bulls and every indicator oversold and this is when people were panicking. It only took a little comment by Powell to sharply reverse higher.

I’m asked a lot what the catalyst will be and I can’t pinpoint what it will be but perhaps it will be just due to the last buyer buying. Stay defensive as you don’t need to chase this market. No changes to Trade Ideas sheet today. I’ll have some things tomorrow I’m working on.

us market sentiment

S&P and Nasdaq bullish sentiment has dipped a little off the extreme levels over 80%

CNN Fear and Greed Index is at 90% and risk-reward from here is not favorable

My friend Jason at Sentimentrader.com is showing his smart/dumb money confidence at extreme levels. When this was at the opposite end last December we showed this as a strong reason to buy

us indexes

The consistent trend in the last 5 weeks has stretched the DeMark Sequential and has seen 23 days in a row with a Setup 23. This isn’t shown on this chart but let’s just say it’s rare. We need to see a price flip down with a close lower than 4 previous days.

New highs on the S&P but only 7% of the index is making new 52 week highs. Seen this divergence in the past a few times.

SPY vs TLT custom ratio with several new Countdown 13’s. This can work on the upside AND DOWNSIDE as we showed this last December as one on the many indicators that got us to buy when others were selling

NDX also stretched and there’s a Combo 13 not shown here on the QQQ too

NDX vs NDX equal weight ratio DAILY with another daily Countdown 13. This has seen several occurrences with short-lived pullbacks with the mega-cap names like Apple and Microsoft etc

Weekly also has some interesting Countdowns in play and a Setup on week 8 of 9

This chart of NYFANG from GS is showing overbought conditions

The Russell 2000 has moved to the point where it’s failed

demark observations

Within the S&P there are many sell signals on the weekly still triggering and a few new buys but I am always a little concerned buying oversold stuff when the overall market is very overbought

I like ATVI and was long recently and sold it well near 55. I just don’t have the stomach to buy it here with this signal

I also screen over 250 ETF’s and all I see are sell signals

JETS ETF with some signals again

Brazil and Chile were highlighted under DeMark Observations a few weeks ago on this note

Politics with DeMark Indicators

We also track political polls with DeMark Indicators. Elizabeth Warren is slipping after upside Countdown 13’s.

President Trump approval also works well with the indicators at highs and lows.

europe

European bullish sentiment is extreme still and the indexes are stretched

Euro Stoxx 600 with some Countdown 13’s near the wave 5 upside price objective

German DAX with some more Countdown 13’s

We caught the lows with German 10 year bund yield when they broke the trend lines

asia

Japan sentiment has been extreme too. DXJ is a currency hedged ETF with new Countdown 13’s

Japan’s Tokyo TOPIX ditto

Nikkei is out of sync with the others but still stretched and very overbought with RSI at 77%

Hong Kong and China still range-bound

Shanghai getting close to the 13

currencies

Sentiment is mixed at no extreme.

commodities

Gold had a recent Countdown 13 and broke lower after having a neutral bias. Maybe a little more downside.

We showed this when sentiment was extreme recently over 90% and both recent Countdown 13’s worked well

US bonds

Bond sentiment hit 98% at the TLT highs and now it’s getting closer to oversold. Maybe later this week we could see 13’s