We forgot to mention DEFENSE stocks gapping up on the news that President Trump cut deals with countries in the Middle East to buy a bunch of stuff. This gap will take a few names out of trading ranges.
Futures are up a wee bit this morning. We wanted to add some thoughts to our weekend report.
The Euro is now moving higher as it looks like a big bottom has been put in place. If this continues, expect the recent better action in oils and a little bit better in commodities to continue. Dollar down…commodities up. We are not sure to what extent this works and will let you know as things progress. Keep in mind, all these areas are under-owned so need to watch for changes. We do recognize important names like BHP and RIO could be turning the corner here as they have been, as usual, following the price of copper.
Chinese ADRs all gapping a bit today to the upside as they have been strong. Keep in mind, when playing, there is always country risk but for now, a few names on the move.
Other than that, so far, last Wednesday was a one off. We are reading many that are saying that is the shot across the bow and after the holiday, market will crumble. We will let the market decide.
Bottom line, very split tape right now but continue to see fireworks on the Nasdaq/ndx/ China ADRs- type stuff.
Believe it or not, not much has changed. Even with the 350 point down day, not much has changed.
With a few exceptions, the bad got badder and the good pulled in hard. .A decent bounce then started up but the bounce also did not change much.
So, like a broken record, notwithstanding oversold bounces:
We would continue to avoid energy/oil&gas…though we do believe a near term low looks like it is being put in place. We just think it may be a trade but that’s it. We would avoid most commodity names, transports (a couple of airlines act well), retail of all stripes (we have been avoiding for many months), biotech, just about everything auto-related, financials, big telecom, gross names like IBM, GE and the like, many real estate names and now maybe starting to see insurance get in trouble. We also need to mention Brazil as it is not good that evidence shown that the new Prez, like the old Prex, was and is a crook.
An important note on transports and financials. Both looked ready to break another level to the downside after the recent carnage. Both bounced past couple of days. Just letting you know both continue to act poorly and have to be watch for a break. If it occurs, market worsens. Watch the 20 day average for the transports as well as the week’s lows and for the xlf, watch the $22.90 level. On top of that, watch the KRE support at $51-$51.50.
Home builders remain in good shape, big cap tech/internet BUT and a big BUT…they have come a long way and now may be starting to trade wide and loose. The same goes for the very strong semis. Other areas are aerospace/defense, China ADRs, European markets and ADRs, managed care, home improvement retail and credit card cos (not the lenders).
Greetings from out west where one falls asleep late and wakes up at 4 am. Yippee!
Futures are up as the bounce off of Wednesday’s nausea continues.
Brazil bounces back a bit off of yesterday’s drubbing. We almost was thinking about probing the drop but no thanks.
NASDAQ/NDX/SOX remain the strongest but leave no doubt a crowded trade. That’s how you get a 150+ down day in the Nasdaq. But you can see on any up day, market is back into these areas.
Gaps this morning…
ADSK…big losses, gap up…go figure. DE another gap to upside off of a nice range. Others are MCK and to lesser extent, ROST and GPS.
CPB and FL gapping down.
We will have a complete report on the weekend as well as the vile reaction by some on social media to someone’s death. What is the matter with these people?
As we said earlier, things going to get random. At 1035 am, NASDAQ up 48…at noon, only up 15. But don’t blink.
We do not like micromanaging. We just wanted to point out what typically happens after a day like yesterday.
Take your time here.
Remember what we said. Things will get random after a day like yesterday. Big leaders are indeed bouncing after one big ugly day. This is random but somewhat normal. We will know a lot more as to how and where they bounce…which we won’t know for a bit.
One casualty today is Brazil with reports that President Michel Temer of Brazil might have paid potential witness to remain silent in graft probe. The Brazil ETF (EWZ) is actually down a whopping $5.70 to $33.40 as we write this. This is a huge drop. Seeing a couple of Brazilian banks down 15-20%. Wow! Brazil had been a strong area of the market.
Again, and we emphasize, things will get random in here. More later!
Futures down but off lows. After yesterday’s ugly, things may get a little random here. Watching most closely how the leaders act after knifing down yesterday.
Gappers on earnings: PLCE, LB, RL on the upside. CSCO, BABA on the downside.
More to come.
Well, that wasn’t funny. How dare the market go down? And go down nastily! Let’s back up!
We have reported to you that about 40% of the market was already in bearish phases of differing ugliness. Because of that, we reported to you to avoid retail, biotech, commodities, energy, oil&gas, autos, transports and financials. Financials had not been hit hard but were under-performing under resistance and the 50 day average. Today, the bad got badder and the good came in hard as the complacency that has pervaded the air was unwound and quickly. The big leaders are hit harder because they get over-owned late in the move.
We report to you the outcome of the day. Things worsened. On top of all the troubled areas, the transports and the financials have a chance here to complete major tops put in place for a bunch of months. This would be very important. We now have a skeptical eye towards even more names and areas. Keep in mind, we have not had a decent correction since before the election. It has been overdue. Stay tuned. Things are getting interesting…and not in a good way.