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2023 April 14th EST Memorandum

Disclaimer:

Nothing contained in the following content constitutes an offer, solicitation, or recommendation regarding any investment management product or service, or the offer to sell or the solicitation of an offer to buy any security; The following content is purely for information only and is based on information available at the time it was created. It does not take your financial situation or goals into consideration, and may not be suited for you.


Table of Content
  1. Current Thesis

  2. Executive Summary

  3. Expectations & Analysis for Tomorrow

Current Thesis

Based on current data, inflation and rate hike dilemma has eased for now. A mild recession could ideally take some work off the Fed's table. However, some core measures remain sticky with minor signs of easing. Things to consider:


1. How mild the recession/downturn will be: Core retail MoM data slid into negative in March, and the demand side is under pressure. But on the YoY basis, retail sales growth remains positive. Industrial production increased on MoM and YoY basis. The story behind current data, for now, is that inflation comes down, the economy is intact, and the unemployment rate is in a reasonable range.


2. The risks come down to the earnings if the downward pressure on the demand side negatively impacts earning season.


3. Regardless of Macro, Nas, SPX, and Dow have reached exhaustion based on DeMark on daily charts. Nas has experienced a slight pullback. But for SPX and Dow, we have not experienced a real pullback yet. The Index is still trending up in exhaustion with some limited signs of momentum fading on 2D and W charts. We may have to wait until the end or mid-next week for confirmation. The current question is if the last leg up in the current trend will be more of a horizontal move or is a mild leg up.


4. If the crisis is genuinely contained as the Fed and Yellen have expressed? Although multiple facilities have indicated money inflow into the banking sector, indicating increasing investor confidence, who knows? Fed has been team transitory before. However, the likelihood of a black swan event is very low based on the current data stream.

Executive Summary

We may have to wait until the end or mid-next week for confirmation. The current question is if the last leg up in the current trend will be more of a horizontal move or is a mild leg up.


For setup tomorrow:

Close all MT long positions and hedge for a mild leg up only. Ideally, an Empty Lot and wait as we enter May.


Expectations & Analysis for Tomorrow

SPX/E_Mini

Technicals have pointed to exhaustion on the daily chart. But ML algo has not capitulated for SPX and the general Momentum is up. However, with DeMark and exhaustion, we are closing all MT long positions and wait for the last few counts on DeMark Indicator.


DJI/E_Mini


Technicals have pointed to exhaustion on the daily chart. ML algo has not capitulated for DJI. General Momentum shows early signs of fading on the daily chart. The situation is a tiny bit worse compared to SPX. However, with DeMark and exhaustion, we may want to close all MT long positions. Furthermore, the chart is meeting resistance since 2022 with a DeMark countdown of 10 on the 2D chart. The high likelihood is a mild leg up or attempts to meet the resistance to give a count down of 13 and then a major leg down or a pullback. How far the pullback will be will depend on the incoming data.



QQQ/E_Mini

Technicals have pointed to exhaustion on the daily chart. ML algo capitulated a couple of days ago. General Momentum is Down. However, the downward pressure has eased at the market close (April 15th). The index may re-synchronize with the other two indexes for a mild leg-up or horizontal move to 1. test or 2. attempt to test the 13273/13643(E_Mini) above.


At the current stage, it is ideal to close all positions regardless of long and short. The exhaustion may continue in a trending market but is unlikely with a full DeMark countdown. The new short position needs to see a rejection of the resistance above with confirmed exhaustion, and it will unfold in a few days.


Disclaimer:

Nothing contained in the proceeding content constitutes an offer, solicitation, or recommendation regarding any investment management product or service, or the offer to sell or the solicitation of an offer to buy any security; The above content is purely for information only and is based on information available at the time it was created. It does not take your financial situation or goals into consideration, and may not be suited for you.


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