strategy session march 27th
TRANSCRIPT
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8/12/2019 Strategy Session March 27th
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FusionIQ Strategy SessionMarch 27th2014
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8/12/2019 Strategy Session March 27th
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Summary Comments
Recent market activity has been rather quiet of late as what appeared to be a renewed upside breakout by
several indices quickly reversed course. Subsequently markets have been range bound, with a slightly lower
bias, since the failed breakouts. That said, the recent sluggish trading activity hasnt caused any major trend
violations on any major indices yet. Key levels for us remain 1,740 on the S&P 500 and 4,000 on the NASDAQComposite. Only violations of those levels would concern us that a deeper correction was about to ensue.
The negatives if anyone is looking for them are clearly the divergences between the price action on several
major indices relative to their underlying breadth and momentum metrics. The problem is that these
divergences can continue for quite sometime before they become troublesome. To me these divergences are
like a weakened leg on a stool. The stool is clearly vulnerable, however, it may be like that for quite some time
before it gives way. Itsa condition that clearly needs to be constantly monitored as its stability has become
compromised.
One other observation to note is the rotational shift away from higher beta names such as biotechs and small
caps. The aforementioned market sectors have been suffering more than larger cap peers, suggesting that there
is a rotation away from risk and towards larger, more stable names.
In conclusion the trends remain up, though breadth has been weakening, and we suggest remaining
constructive as long as key S&P 500 and NASDAQ supports are not broken.
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8/12/2019 Strategy Session March 27th
3/13
S&P 500 Index Weekly chart with technical overlays
The S&P 500 is still above trend, however divergences
between momentum and price continues to widen. We
remain constructive unless 1,740 is violated.
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8/12/2019 Strategy Session March 27th
4/13
NASDAQ Composite Index Weekly chart with technical overlays
Similar to the S&P 500, the NASDAQ is still above trend, with
divergences between momentum and price continuing to
widen. We remain constructive unless 4,000 is violated.
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8/12/2019 Strategy Session March 27th
5/13
Russell 2000 Index Daily chart
The recent breakout to new highs by the Russell 2000, then
the quick and sudden reversal back below that high,
suggesting a false breakout. While not alarming yet it is
something to watch.
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8/12/2019 Strategy Session March 27th
6/13
NYSE/Arca Biotech index (BTK) Daily chart
As we had mentioned on the last Strategy Session call
biotechs had gone parabolic and were very likely due for acorrection. The recent 14% correction from the peak suggest
market participants scaling back on risk.
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8/12/2019 Strategy Session March 27th
7/13
NYSE/Arca Biotech index (BTK) Daily chart
BTK correction on 14% suggest pretty sold distribution.
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8/12/2019 Strategy Session March 27th
8/13
SPDR Homebuilder ETF (XHB) Daily chart
The homebuilders recent breakout to new highs, followed bya quick breakdown has the look of a head fake.
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8/12/2019 Strategy Session March 27th
9/13
SPDR Homebuilder ETF (XHB) Weekly chart
The homebuilders recent breakout to new
highs, followed by a quick breakdown has
the look of a head fake.
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8/12/2019 Strategy Session March 27th
10/13
Fusion Risk On/Risk Off Index Daily chart with technical overlays
Risk On is starting to underperform riskoff a sign the market may be changing
its outlook towards risk.
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8/12/2019 Strategy Session March 27th
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NYSE New Highs minus New lows - Daily chart
NYSE New Highs less new lows is continuing todeteriorate. While this is not alarming it is
something to certainly take note of as eventually
falling new highs is a big problem.
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8/12/2019 Strategy Session March 27th
12/13
Ebay Inc. (EBAY) Weekly chart
Back in 2012 we cited that EBAY was breaking out over a resistance
area that it had failed to eclipse on numerous occasions (red linesand arrows) near $ 35. We suggested that once a stock can breakout
above stubborn resistance that usually portends a big move as seen
EBAY did in fact take off.
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8/12/2019 Strategy Session March 27th
13/13
Schlumberger LTD. (SLB) Weekly chart
Currently we look to SLB shares as a modern day comp of EBAY (circa
2012) and see tthat SLB is trying to breakout above stubborn
resistance near $ 95 (red lines and arrows). Given $95 has been a
sticking point since 2008 we suggest any breakout above $95 would
be very bullish.