The collision of global markets and social mood

Friday, May 1, 2015

Friday -- The Top That May Not Be In, Plus Social Mood

ES Futures:
Rallying after a tough previous day.

This could be a light day due to so many market closures worldwide. The big news may be how many people are proclaiming the top is in.

LNKD -- Linked In -- is the latest social media to get taken to the woodshed (-20% pre-mkt), and another example of a fad in search of a business model.

USD has a Fib extension target at 93.16 -- equates roughly to EUR 1.15. JPY has held better than expected.

2s showed positive divergence yesterday amid broad weakness by not breaking its swing point. This may be a bullish non-confirmation for treasury prices (resulting in lower yields).

WTI crude is not showing escape velocity from the 23.6% level that it needs to. NG got above 2.69 and did so with volume and impulsive waves. So far so good, yet maybe not out of the woods just yet (see below).

Gold just broke 1774.10 and could freak people out.

S&P Outlook:
Overheard some traders talking yesterday on a radio show, an amateur and a host who is also a trader, but one whom I often fade.

The amateur was going nuts over natural gas, speaking of "a buy Gartley" pattern that occurred, giving him the signal to get long . . . on UNG.

First, do not do technical analysis on derivatives. The "market" is the underlying. In this case, the natural gas contract, and preferably the cash settled. I see newer CTAs and CMTs commit this error all the time as well.

ETFs such as UNG, QQQ, TLY, SPY -- they're derivatives, derived from price, and subject to dividends, fees, tracking error. The market doesn't care that there's a gap on UNG or SPY.

Second, the best trades are the hardest trades -- not the ones that make you excited. The best trades tend to keep you guessing and wrestle with the urge to take profits.

Back to the story.

Then the amateur went through the litany of reasons he was bearish SPX, and there were a ton of them (and good ones too) . . . but then he screamed, "It's got it all man! It's got it all!"

As in a Sure Thing.

They each were projecting 181 on SPY & 1980.66 on SPX to happen soon.

They may be right. I am generally bearish, too. But there is a time and a place for acting on it. I merely think that now is not yet the time. 2039.69 has to break first -- not an arbitrary trend line from the October 2014 lows, but a pattern has to break. And in this case, I don't think it's happened yet.

Also, I'm not seeing impulsive waves yet. In fact, I'm seeing waves that suggest that it would be very easy to break the bearish case. How easy? How about getting above 2091.11 today.

I kind of want the market to get a bit lower to suck in more bears like these. Then I want to get long against my UVXY position.

Social Mood:
Way back in The Socionomic Implications Of September Vogue 2011, there was a message that we were "somewhere in the ‘70s headed for the unrest of the ‘60s."

Then Ferguson happened.

Now TIME has chimed in.

I bring this up to show the power of socionomics. I didn't predict it; social mood did.

If the chart below is correct, social mood (as viewed by The Socionomic Implications Of September Vogue 2014) projects that there will be use of the word reset or reboot somewhere in the media around the time of the larger wave four low.

I do not think that the October 2014 mini crash was the reboot, even though the timing was great, coming right after the Vogue write up. It was far too brief, in my opinion.

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