Those that follow our work know much much the SEMICONDUCTORS matter to us. It is not very often the market is not in sync with this all-important area. The SEMIS have had some decent pressure recently with the result of many names breaking support. With this recent rally, the SOX bounced up but to our eyes, nothing in the way of a bullish manner. Today, another pin was pulled as TSM warned. This comes after the poor reactions in LRCX and ASML to their numbers. We are now left with just a handful of names that are above support in INTC, MU, CREE, SMTC and that’s about it. At the very least, under-weigh the area for now. Just take a gander of the charts in names like MXIM, XLNX, AMAT, TER, TSM, KLAC and others. Something that must be watched.
All about the commods yesterday. OIL, STEEL, COPPER, ALUMINUM, PALLADIUM and all that stuff. Oil prices continue to rise and are up again nicely this morning. All very extended here but leave no doubt, money flows continue. But not going to be fun at the pump.
TSM warns this morning and says it is all about weak smart phones so AAPL down $3 with the SEMIS also hit. A lot of SEMIS have been suspect with LRCX hit yesterday as well as ASML on numbers. Also need to add FINANCIALS remain weak. If we were only looking at financials, we would be worrying about the market.
Few other notes:
Bond market looks like it has topped again after bouncing. 10 year now at 2.9%.
Markets near term overbought but overbought can become more overbought if it wanted to.
TRANSPORTS veryt strong move through the 50 day. Good reactions to JBHT and CSX did the trick…as well as UAL.
We are now just back into the middle of the range which started Jan 29 at the highs as well as the recent lows.
First, a few notes:
OIL PRICES again strong this morning. OILS are now extended from this recent move. Look at OIH, XLE, XOP for the recent moves off lows. A decent amount of names are at new highs.
BETA was strong yesterday. My beta page lit up like a pinball machine.
Major indices back above all-important 50 day average but heed the warning…does not mean they do not tuck their head in like a frightened turtle…but most definitely important.
FINANCIALS continue to act poorly. Many blaming the yield curve tightening. Just go look at PNC, CMA, STI, GS, C, WFC. The KRE and XLF continue to act suspect…but more earnings to come out.
Futures up this morning in spite of IBM, LRCX, ASML…but again word to the wise, the best thing market can do is hit a wall into this resistance…sit a bit and then get moving again.
A ton…and we mean a ton of more earnings to come out.
And lastly…and most importantly to us…as one of the brilliant minds in the business Kevin Marder just said…THE BASES ARE MANY AND CONSPICUOUS. This is all we ask for. Stocks that are setting up properly to bust out and move out. We are seeing the same thing. It does not mean they break out. It just means the opportunity is there. Holding support and time set the bases up. Now we want to see them report earnings and bust out of range. We will alert you if we start to get them.
TRANSPORTS were indeed a very good clue yesterday and today we get another gap to the upside. The TRANSPORTS broke through the 50 day average like a hot knife in butter as JB Hunt reacts well to earnings. Other names in the area followed suit. Today, we gap up again as UNH, GS, JNJ in the DOW gap up a bit and high beta name NETFLIX moves up about 7%…which gets the juices flowing in beta.
Major indices will gap above the declining 50 day moving average. As we have told you, nothing good can happen when trading below this line. If the line can be held on the upside, the market gets the opportunity to build on the recent move off the vital longer-term support we outlined for you.
Keep in mind, this is all happening while there is an amazing amount of what could be perceived bad news. Remember, it’s not the news. It’s how things react to the news and right now, there continues to be a change in complexion. But also keep in mind, we are just back into the middle of the range that started with the highs on January 29th and the lows of February 9 and April 2.
Very notable…the TRANSPORTS trade easily and up through the 50 day. This is important as it gives better odds for the major indices to follow. JBHT doing the trick even though they only beat by 1 cent. It’s not the news, its how things react to the news. Other names in the group soaring. Could be a very important clue for market.
Another gap up this morning…so with the late rally Friday and today’s gap, all losses have been recovered from Friday’s open…or something like that.
Earnings of note this week:
BAC, JBHT, SCHW and the almighty NFLX after the close.
CMA, GS, JNJ, NTRS, UNH, CSX, IBM, IBKR, ISRG, LRCX, UAL
ABT, ASML, HBAN, USB, AXP, AA, EBAY, SEIC, URI
BBT, BX, BK, DHR, DOV, DHI, GWW, MS, NUE, PM, PPG, DGX, SWK, TSM, ETFC, SKX
GE, GNTX, HON, KSU, STI, WM
Our job is to report on the big picture and the major trend. Right now, there isn’t any major trend. The market is in the soup trapped between the highs and the recent lows. The major trend to the upside ended January 29 and in time, we will find out if this is just an intermediate term correction or something worse. It is simple to lay down the markers. The recent lows are vital. Not only are they support areas but longer-term support areas in and around the all-important 200 day average. So far, they hold. But as we have stated, we are doubtful as to how far markets can get going because there are just too many names and too many areas not bullish.
On the upside, major indices have rallied up and into the 50 day average but just when you think they can go topside, we get another big gap Friday only to sell down hard…until a decent move in the final few minutes.
We are now into earnings season. If we see more of what we saw Friday with some important financials selling down after strong opens, then get out the worry stick. JPM reversed on big volume. WFC is dead. PNC falls off a bearish flag and C reverses also. More of that will be a serious problem.
As we have stated, the only area really emerging is OILS/ENERGY as oil prices have gone topside. OPEC has been lowering production. Venezuelan production is back to where it was 70 years ago (not kidding). And lastly, geopolitical crap does not help. We would also make note that a few GOLD names are now hitting the screen as GOLD prices hover near yearly highs. Other than that, stay tuned as a few thousand names report. We suspect markets will show their hand in the next few weeks…if not sooner…and also expect many more gaps and reversals as markets are somewhat insane not only during the day but overnight.