5,440 was our line in the sand.

Since March 21st we’ve been using that line to short the Nasdaq Futures (/NQ) as a move above that line was in no way justified without some real improvements in earnings and now, with earnings season upon us, we’re still not seeing evidence yet that the market should be breaking higher.  

In that same 3/21 post, we had 11,550 on the broader NYSE and now the NYSE is at 11,375 – down 175 (1.5%) while the /NQ is back at 5,415 this morning. Our Long-Term Portfolio was up 148.9% that morning and, as of yesterday’s close, we’re at +162%, gaining $65,402 in less than a month so we certainly aren’t complaining about the extended rally and, as I said at the time, BALANCE is key and we have been using some of those profits to bulk up our hedges into earnings.

Aside from being long on the Nasdaq Ultra-Short ETF (SQQQ), we also have shorts on Nasdaq leaders Amazon (AMZN) and Tesla (TSLA) and neither one of those are doing well at the moment as more and more money has been pouring into the leading stocks while the rest of the Nasdaq has been selling off. Propping up the index leaders while selling the rest keeps the “dumb money” flowing into the Nasdaq while the “smart money” heads for the exits – leaving the dumb money to hold the bag.

The Chaikin Money Flow (CMF) is an oscillator derived from the Accumulation/Distribution Line. CMF values are calculated by adding all the A/D line values for the period and dividing this by the total volume for the period. When there is strong buying pressure with high volume, this pushes the indicator higher and strong selling pressure with reduced volume pushes the indicator lower. The Accumulation/ Distribution line either reaffirms the trend or gives a warning that the trend is about to change direction. 

We had massive inflows into the markets since the election and especially since the beginning of the year but there was a drastic turn in mid-March and money was actually flowing out of the market last week. Seems to me people are getting nervous and the VIX confirms this – the only thing not confirming it is the PRICE (not VALUE) of the Nasdaq because it’s being manipulated to to keep attracting that ETF money – even as the manipulators dump their shares.