PRE MARKET

Futures be down. Weak Europe doing the trick.

TESLA down $38 as the SEC looks to bar Musk from serving on board or any capacity with a public company FOR LIFE. This is a WOW moment because we have seen worse where the SEC was not looking to ban for life…but we think that this violation in PLAIN SIGHT moved them to be tough. Also, the SEC moved quickly…normally it would take longer…telling us they believe this is open and shut. We told you on day one this was fraud and that if it wasn’t Elon Musk, any board would have removed him but Elon Musk IS TESLA…so a lot tougher.

Continues to be a very narrow market. We are amazed just off highs, more new lows than new highs. Also, seeing divergences in advance/declines.

We need to add the continued relative weakness in the SEMIS and now FINANCIALS. TO BE WATCHED CLOSELY.

 

PRE MARKET

Markets reversed down yesterday off the fed as financials led down. This is to be watched. Very poor action combined with the poor action in the semis give us pause.

BUT most indices remain fine…most. A glance at the mid caps and small caps (MDY and IWM) show both breaking slightly below the 50 day moving average. This showing under-performance in these areas. Paty attention to this.

S&P futures about flat…NASDAQ better as AAPL gets analyst bump.

Off tv today as Kavanaugh stuff front and center.

PRE MARKET

Futures are up after a good reversal for the NASDAQ/NDX off the 50 day moving average…AGAIN. This most important moving average has contained downside since late June. Many growth names held support/50 day yesterday. Some of the stronger names only pulled back to the 21 day. This keeps the market in good stead though we think this hold needs more time before things can move out.

The DOW/S&P had a pullback but see nothing untoward about it.

We do make note oil prices breaking out to new highs with a few energy names near highs. We actually put a few names on our front screen.

Again, if we can get past Sept and Oct earnings, think a decent chance of a good end of year…but as always, will handle day by day.

WEEKEND NOTES

Futures down…NASDAQ worse than DOW. Foreign markets pulling back after good week of gains.
The thought process has not changed from anything we have been seeing. Two weeks ago, we wrote the report about “changing of the guard” in the market..and since, this is exactly what has happened. Relative strength in the market has been turned on its head. What was lagging is now leading and what was leading is now lagging. How long this lasts is anyone’s guess. In that report, we started seeing money flows out of growth and into low beta. Most growth names have now put in near term tops, if not more while the DOW now leads the way. Friday was just another day as the DOW was up 86 while the NASDAQ was down 41. For the week, the DOW was up 588 points, a 2.25% gain but the S&P was only up 24, a .85% gain. The NASDAQ, NDX and the RUSSELL were all down.  With the DOW up that 588, important names like AMAZON and APPLE were both down almost 3%. AMAZON is on the verge of breaking the 50 day. A break would be negative for growth is this is the leading name. It is important to recognize growth has had its way for quite a while becoming a bigger and bigger percentage of the S&P while value continued to shrink.
The other part of our “changing of the guard” theme is the rest of the world putting in hopefully, a decent low. This is still not 100% sure and as of this second is a counter-trend rally in an overall bearish trend. Countries like CHINA, RUSSIA, BRAZIL, EMERGING MARKETS are already overbought from the recent move so suspect some retesting here. We will watch the retest closely.
We have been saying if we can get past September and October earnings that we could get a good end of year. But so far, rallies have been narrow and disjointed. A sustained move needs to have broad based participation…which ain’t happening just yet. We also have to make note that oil prices are breaking out of range. Not sure it is good news for markets as this is a huge “tax” on consumers and business.
Lastly, we have been inundated with a news report highlighting some “experts” saying a crash is overdue as well as a deep recession, if not a depression. We have no interest in arguing as anything is possible, especially with the massive debt and deficits, both here and around the globe. Of course, all this being enabled by maniacal central banks. We just wanted to make sure you knew that these “experts” have been calling for doom for about 16,000 DOW points yet somehow get front and center in an article and are still called “experts”. In case you did not know, everything about the market is timing. Broken clocks are right twice each day.