• This week will be critical for the equities markets: FB, AMZN and GOOG will tell us all.

    At the close of Wednesday last week, I published the following comment, which showed a list of very bearish Effective Volume patterns:

    http://www.effectivevolume.com/conte...-April-19-2018

    1. All the Index futures








    2. All major ETFs






    3. The Cumulative Tick



    4. The Small caps MF






    5. The defensive sectors



    6. The financial sector (But it bounced on Friday as a reaction to higher rates)




    7. The market weighted average Total Effective Volume




    Conclusion of last Wednesday:

    In the short term, the market (algos) is trading the boost of strong earnings on the NQ8 stocks.
    In the long term, the market expects higher rates and is basically getting out of equities, except for the NQ8 and energy sectors.

    I would not short here as we are still in a bullish combination of good earnings/options expiration. However, most EV Figures display so much negativity that I would basically stay neutral until we are out of these two bullish influences... or until the IWM/SPY ratio spikes higher.


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    What happened since Thursday?

    1. The 10 Y Treasuries were heavily sold as rates moved higher on inflation fear.



    This greatly helped the US$ against the Yen, the Euro but also gold.









    The PM miners and materials stocks also moved down.





    2. The NQ8 sector is down due to AAPL's fall

    As we can see below, The NQ8 has been attracting most of the money for weeks and is the only reason why the markets have stayed high even though funds have been selling everything else.



    The one trick pony market broke down when news came out regarding possible iPhone X sales weakness. In two days, AAPL lost 17b$ in valuation. This is 12.6% of the total S&P500 135 B$ valuation loss of the past two days.



    Conclusion:

    What happens when AMZN, GOOG and FB issue their earnings this week? Investors could take any bad news as a selling opportunity, knowing that AAPL could miss big time on May 1rst. I however believe that except for FB whose guidance will be somewhat negative, the other two (AMZN/GOOGL) will publish rather acceptable earnings.

    The NK issue will help creating a positive narrative around the equities markets until AMZN's earnings on April 26. But there is no way that markets will move higher after that and until May 1rst.