PRE MARKET-MORE NAUSEA

As we were pre-taping radio yesterday and telling everyone we thought another A LOW was put in yesterday, AMAT, JWN and NVDA reported earnings. May we say that was three giant matzoh balls. The A LOW call is still in tact but markets, especially SEMIS and TECH not going to help the cause. That was some ugly out of NVDA and AMAT.

So nothing changes except that rally in SEMIS yesterday is coming right back down…and with just about everything still trading below the 200 day average, we would continue to just sit back and put the feet up. Going to be quite interesting to see if SEMIS/TECH can rebound some off the open today.

A few other notes:

NATURAL GAS (UNG) trading like a penny stock.

ENERGY remains waaaaay extended to the downside and due to bounce but trend down.

Sick to my stomach that a certain network brought on another BITCOIN genius yesterday. Guess what he said. In case you did not know, the scum came out with over 2400 different coins in past couple of years, with many gone and most down in the 90s. As we stated since the frenzy last December, this was going to turn to dust as there is no economic value behind this nonsense.

PRE MARKET AND MORE NAUSEA

Another rough day. Any more and you will see many pundits that have been bullish and fighting the ugly all the way down…all of a sudden, be bearish. Coming to a theater near you soon.

“GLOBAL ECONOMIC SLOWDOWN DEEPENS!”

That’s the headline on the front page of the WSJ this morning. But not sure we have read articles telling us that the global economy had even topped…but all of a sudden, it has deepened. We have been bearish on world markets since February. Some areas we have been bearish for years. NOW…we are getting the news that Japan and Germany contracted in the 3rd quarter. In case you don’t know, Germany has been the engine of Europe. As it goes, the rest usually go. The important point we want to make is that those markets forecasted the slowdowns way in advance. We are of the belief that the action we are seeing here is doing the same. We believe in the months ahead that even our GDP is going to slow. You just do not get new yearly lows in CHEMICALS, INDUSTRIAL, AUTOS, HOUSING, HOUSING-RELATED and so many other areas AND EVERYTHING IS GOING TO BE JUST FINE. Slowdowns do happen. Bearish phases do happen. We continue to believe we are in one and continue to believe it is folly to think this is just garden variety. Our rusty abacus says more than 50% of the stocks in our universe are already in “bear market” territory.

Time and price. It is going to take time and price to wade through the market we are in now. How much time? How much price? We do not have a clue. Maybe the worst is over soon but so far we have seen nothing to change our stance.  But we do know what the big picture looks like and right now the big picture is:

Just about everything is trading below longer term support and the all-important 200 day average.

FINANCIALS and SEMIS continue to be bearish. People who have followed us for years know how important these two areas are to our work and the markets.

Leadership remains defensive. As we look at the names with the strongest relative strength, we find UTILITIES, CONSUMER STAPLES, a few REITS, DISCOUNT RETAIL and not much more…all areas that usually show leadership during an economic slowdown.

FAANG continues to be DE-FAANGed. It is not good news when the leaders of the bull are being smoked. It is not just these names. Most TECH/BETA and all that crap remain under serious pressure. We have never seen a bull market without TECH and leading growth names.

GE…We have not mentioned GE much but in case you did not know, we are finding out just how much leverage this company has. If their bonds gets downgraded…let’s just say that will not help.

After a 1200 point drop since last Thursday, markets are again very oversold but have you noticed we are now getting strong opens, strong intraday bounces…only to finish poorly. That’s just another symptom of a rough market. A strong bounce could come at any time.

The good news is that eventually this will end…but when and from where is anyone’s guess. We would rather be a little late than too early. Why? Just buy something. You will be down almost immediately. We suggest you let that dynamic change first. And if the A LOW we called three weeks ago gets taken out, we will then be talking about not just the average stock but the major indices are also in a bear market. The hope is the A LOW turns into THE LOW…not out of the question but every ugly day that goes by adds to the worry it gets taken out.

Again, the good news is that all bearish markets in history have always ended. When they do, markets soar. Names you have never heard of will  double, triple, go up 5-fold, 10-fold. We just think continued patience is a must.

And lastly, we first started talking “the coins” on tv last December in the midst of the “melt up.” We urged everyone to realize it was just another mania and told everyone that eventually (and we used this word) all the coins would turn to “DUST!” Many coins are already dust as the crooks came out with over 2,500 coins, trying to foist them upon an unwary and greedy public. Fortunately, last December was the end even though we continue to be touted on the coins by the crooked tout artists that still own a ton of them and are now praying the public takes them out. We are still seeing calls for $25,000 bitcoin BY THE END OF THIS YEAR. We would like to smack those people in the jowls. Remember, all one had to ask…”what economic value did any of these coins have?” We suggest even the almighty bitcoin is even at these prices because it is now down to a few hands. If they sell, they kill each other…thus the slow bleed.

PRE MARKET AND MORE NAUSEA

The market had a good chance for a good day yesterday but fumbled the ball. The DOW was up 125 but finished down 100. The NASDAQ was up a whopping 120 but finished flat. We are never thrilled when markets reverse down but today is another day.

Futures have moved up nicely in the past hour after being down to flat. As we write this, the DOW is up 160 with the NDX up 50.

There are a few things the market has going for it.

Firstly, the DOW dropped 1,000 points and the NASDAQ dropped 366 points since Thursday. Stocks do not go down forever…we think.

Secondly, our A LOW call from 3 Wednesdays ago still stands. Those lows have not been broken.

Thirdly, we are in a seasonal strength period. This does not guarantee a good market but in the past, the end of year action has a good record.

Lastly, seeing some decently high bearish readings indicating AFTER the drop, the masses are finally getting worried.

Combine and at any random time, we can bounce. Today’s open is as good as any time but just remember, they reversed yesterday to the downside.

The big picture has not changed. Most everything continues to trade below the 200 day average and what leadership there is remains defensive. Let’s just hope the A LOW turns into THE LOW but expect a lot more back and forth before any real attempt to get going.

And Germany just announced a shrinking economy…9 months after the German Dax topped with just about all of Europe. Remember the thesis that markets are pretty darn good at telegraphing the shape of things to come.

https://www.zerohedge.com/news/2018-11-14/german-economy-shrinks-first-time-3-years-car-production-collapses

NAUSEA AND THE PRE MARKET

Hey…the Giants won!

We heard yesterday:

One pundit say the action in the market doesn’t worry him a bit.

One pundit say this is how a bottoming process works.

One pundit say it is good news when they get names like AAPL and GS.

Our take:

Except for the DOW, all major indices and most countries trade below the longer-term 200 day moving average with many trading way below.

Many “death crosses” are now occurring. That’s where the 50 crosses the 200 day…a sign of even more weakening conditions.

Some of the 200 day averages are now turning down indicating price staying below longer.

Leadership remains defensive and few and far between.

Growth continues to act horrid.

Good news is sold. Bad news is sold hard.

Recent strong gaps to the upside off of earnings have been sold.

We do not need to predict. We deal with the evidence and facts at hand.

Markets are probably a little short-term oversold off of the recent drop…not sure what that will mean. Notice the NASDAQ/NDX failed in and around the 200 day average late last week. That must change.

WEEKEND NOTES AND PRE MARKET

As we write this now, futures nicely down. LITE just warned and warned badly. The stock is down over 30% in pre market:

Lumentum cut its fiscal second quarter earnings and revenue guidance sharply today, saying one of its largest Industrial and Consumer customers for laser diodes for 3D sensing requested Lumentum materially reduce shipments to them for previously placed orders scheduled for delivery in Lumentum’s fiscal second quarter.Per Lumentum’s 10K filing, Apple (AAPL) was the company’s biggest customer in fiscal 2018, accounting for 30% of total net revenue.  Huawei accounted for 11.0% of total net revenue, as did Ciena (CIEN). It will be assumed that Apple is the customer in question.  Accordingly, look for a trickle down effect in Apple supplier stocks today. AAPL is down almost $5 this morning on the news.  Not helping futures with NDX futures down decently.

WE WROTE THIS YESTERDAY ON OUR WAY BACK HOME!

To all the the veterans of the U.S. Armed Forces and active duty members of the military, from 38,000 feet on our way back home to the great USA, we honor and thank you for your service, not only today but every day.
To the firefighters in California, to all affected by the fires, all our prayers. We know the areas well and cannot fathom what is happening or what we are seeing on the tv.
To Pete Davidson and Rep.elect, retired Lieutenant Commander and former Navy Seal Dan Crenshaw, THANK YOU THANK YOU. Thank you for just throwing a little harmony back into the realm. From afar, all we saw last week was both left and right pissing all over each other. Amazingly, in a week leading up to Veterans Day as well as the 100 year anniversary of Armistice day, both spent days whining and crying over whether a reporter touched an intern’s arm. We know. There is some serious shenanigans again going on in my home state of Florida but good to see a little respite.
To anyone who lives in Central Florida, this Wednesday is the 15th (maybe 16th or 17th, who’s counting) Kaltbaum family Thanksgiving dinner for kids and young adults from the Boys and Girls Clubs of Central Florida. Over those years, we have served somewhere in the neighborhood of 5,000-6,000 Thanksgiving dinners to these great kids. If you would like to volunteer, just email  at gkaltbaum@kaltbaum.net. Famed magician Kostya Kimlat and a few of his friends will be performing and you never know who else will show up.  https://www.youtube.com/watch?v=SCFXV6o7cro
And the markets:
From some of the deepest stretched, extended and oversold conditions, markets rallied. We had thought A LOW was put in 2 wednesday’s ago, but as usual, stronger than most expected. But outcome is what matters and while we think markets can still go a bit higher:
The transports, russell 2000, small-caps,  mid-caps, nyse, sox, nasdaq, nasdaq 100, industrials, financials, regionals, materials, biotech, gold, silver, commodities, chemicals, autos, housing, housing-related, just about every foreign market and junk bonds ALL REMAIN BELOW THE ALL-IMPORTANT 200 DAY MOVING AVERAGE. Again, even with the rally off the lows…this tells you how deep the correction has been. The DOW remains the best index but this is not what we want to see. When markets go defensive, they usually buy up the DOW. A few DOW names are at new yearly highs.
On top of that, GROWTH continues to act horrid with growth’s rally looking like it ended during the day on Thursday. FAANG is now ———
Where’s the beef? Utilities, a few selective REITS, soft drinks, drugs, other consumer staples, discount retail, drug stores, managed care, …have we thrilled you yet? Sure, there are few growth names sticking out, coming off earnings reports. We just don’t think the market is conducive here…and certainly do not believe what is leading is the cream of the crop.
We do not think the next sell-off can take us down to the lows or break the lows. (later is another story)  We just think this is going to be a “pain in the a–” market for now. Remember, it is our job to get THE BIG PICTURE correct. The minor stuff is what gets one in trouble. It is protecting capital and keeping good psychology during these times that saves the day for when great fat pitches are again available. We can promise you that fat pitches are few and far between in here.