{"id":45064,"date":"2018-09-05T01:59:40","date_gmt":"2018-09-05T08:59:40","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=45064"},"modified":"2018-10-08T09:30:42","modified_gmt":"2018-10-08T16:30:42","slug":"t2108-update-180904","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2018\/09\/05\/t2108-update-180904\/","title":{"rendered":"Above the 40 (September 4, 2018) – Fading Prospects for FOMO With A Borderline Bearish Divergence"},"content":{"rendered":"

AT40<\/strong> = 57.1% of stocks are trading above their respective 40-day moving averages (DMAs)
\nAT200<\/strong> = 57.5% of stocks are trading above their respective 200DMAs
\nVIX<\/strong> = 12.9
\nShort-term Trading Call<\/strong>: neutral<\/p>\n

Commentary<\/strong>
\nThe momentum for FOMO (fear-of-missing-out) on the major indices<\/a> effectively fizzled out with the start of post-summer trading.<\/p>\n

At one point, the S&P 500 (SPY) traded through the bottom of its upper Bollinger Band (BB) channel. Buyers were able to neatly bounce the index off its intraday low for a close that looks like it is part of a very orderly and benign pullback.<\/p>\n


\n
\"The<\/a>
The S&P 500 (SPY) closed neatly right on the bottom of its upper Bollinger Band channel.<\/figcaption><\/figure>
\n<\/center><\/p>\n

The tech-laden indices are idling away.<\/p>\n


\n
\"The<\/a>
The NASDAQ rallied from its intraday low to close steady with the last three closes and right under its all-time high.<\/figcaption><\/figure><\/p>\n

\"The<\/a>
The Invesco QQQ Trust (QQQ) bounced neatly off the lower part of its upper Bollinger Band channel but still closed a bit lower from the previous three days.<\/figcaption><\/figure>
\n<\/center><\/p>\n

This lackluster moves are of course hardly the signatures of a market warming up for FOMO. So I more and more turn toward a read of the contrary signals.<\/p>\n

The real story is AT40 (T2108)<\/a>, the percentage of stocks trading above their respective 40-day moving averages (DMAs). AT40 fell all the way to 52.9% and erased its August breakout. AT40 is exposing underlying weakness in the market that is being masked by the few stocks attracting a large portion of the market’s buying power. The trading action is a borderline bearish divergence. AT200 (T2107), the percentage of stocks trading above their respective 200-day moving averages (DMAs), tumbled in similar fashion to AT40.<\/p>\n

The Australian dollar (FXA) added its own confirmation of wariness as fresh selling pressure in emerging markets invaded what I saw as bullish talking points from the Reserve Bank of Australia (RBA)<\/a>. At the time of typing, the Australian dollar finished reversing all its post-RBA gains against the Japanese yen (FXY). I am staying long AUD\/JPY for now as my trading thesis remains intact despite the setback. Still, this pressure makes me incrementally less convinced that the U.S. stock market is on the edge of going FOMO.<\/p>\n


\n
\"AUD\/JPY<\/a>
AUD\/JPY is right back to scraping at its 10-month lows.<\/figcaption><\/figure>
\nSource: Trading View<\/a><\/strong>
\n<\/center><\/p>\n

CHART REVIEWS<\/strong><\/p>\n

Advanced Micro Devices<\/strong> (AMD)
\nThe AMD march higher looks far from over all over again. Analysts upgraded AMD and saved the day from a confirmation of a blow-off top. I was forced to flip from bearish to bullish by adding a calendar spread to my mix. Much to my surprise, my sell target, a near double, was hit within 90 minutes. I calculated the upside target of the calendar spread when AMD traded at $26.5; I concluded that the options market was anticipating a $28 close by the end of the week. I pinned my calendar call spread there. The stock hit that target by the close of the day and another all-time high.<\/p>\n


\n
\"Advanced<\/a>
Advanced Micro Devices (AMD) received analyst upgrades and launched right past last week’s potential blow-off top.<\/figcaption><\/figure>
\n<\/center><\/p>\n

Amazon.com<\/strong> (AMZN)
\nA chart review for today has to include Amazon.com which celebrated hitting the $1 trillion mark. With my expectations for FOMO (fear of missing out) launching in earnest in September, I intended to be positioned for today’s latest AMZN surge. However, the calendar call spreads I put in place last week actually closed out at my first sell targets. I actually wanted at least one of them to experience the expiration of the short side leaving me with an unhedged call option to start this week.<\/p>\n

I am not interested in chasing further, especially without enough of the market in FOMO mode. Fast Money’s resident technician Carter Worth anticipates an imminent pullback…the case makes plenty of sense to me.<\/p>\n

<\/p>\n
\n

Will $AMZN<\/a>'s amazing run come to an end? Chart Master Carter Worth takes a look at its technical picture. pic.twitter.com\/E0fLKKydn3<\/a><\/p>\n

— CNBC's Fast Money (@CNBCFastMoney) September 4, 2018<\/a><\/p><\/blockquote>\n