WEEKEND NOTES- LOTS OF SLOP!

-Our main theme continues. January 29th will be the highs for a  while while the recent lows/Feb lows provide a floor. So far, back and forth we go.-
-Still a ton of earnings to come out in next 3 weeks so be patient. There have been a few decent reactions like NFLX, CSX, TXT, ETFC and a few others but less than thrilled with so many blow-ups.-
-We scan approximately 1500-2000 stocks each weekend. Counting only about 35% in decent shape…which means 65% of the market is not.-
-OILS/ENERGY are easily the strongest area now. We saw them emerging but they are tough to play. Technically, they seem to be tired, extended and overbought here so will watch on pullbacks. A ton of that 35% is this area. Keep in mind, the RUSSELL is outperforming right now because it is laden with small OILS.-
-Seeing a few COMMODITY names emerge…FCX, MT, SCCO, VALE sticking out.-
-TRANSPORTS better after a couple strong days but not much better.-
-All important AAPL not helping…all the way down to the 200 day. Don’t have to tell you the influence it has. Guidance continues to come down as a slew of analysts lowered on weak stuff out of Taiwan Semi.-
-SEMIS are toast right now.  Wide and loose trading has lead to  SOX back at recent lows. A break of 1260 and then the 1200 gargantuan support is in play. Along with FINANCIALS, the most important area of the market as it has led up and down for ages.-
-The CONSUMER STAPLES (XLP) have basically crashed. We have been saying avoid for quite a while. Food, beverage, tobacco, household products, drugs. Tobacco was blasted this week.-
-HOUSING own private bear…as well as a slew of housing -related names.-
-REITS and UTILITIES have been drifting higher in their bearish phase but with BONDS looking in trouble again, they will most likely roll over again. 10 year yields very close to 3%.-
-Not thrilled that a bunch of IPOs coming out while market is under pressure. Would rather see lots of worry.-
-There are more new yearly lows than new yearly highs on all three indices.-
-Major indices pushed above the 50 day and immediately came back below. Does not mean the end of the world but nothing good can happen if it stays below.-
-FINANCIALS are blah…and mostly sitting below 50 day. Do make note ETFC, AMTD, SCHW act well.-
-While there are bases forming in some growth names, not trusting much right now and would cast a wary eye until a few things start working.-
-Other areas still in shape are DEFENSE, some RETAIL, some TECH.-
-And lastly, we do not think lows will break right now. In order for that to happen, we would need to see the financials XLF/KRE break support. TECH (XLK) would have to break. Just letting you know we think we will have a good idea if it decides to happen and our best guess that if it does happen…since the major support areas have held twice right at definable long term support, a break would lead to waterfall-type action as the big money would be yelling that they gave in. SO PAY ATTENTION IN THE COMING WEEKS. While we are not big on the “sell in May and go away” mantra, we recognize it is out there.-
-Will have a lot more as the reactions to earnings come out.-

PRE MARKET

Earnings:

GE surprises…actually up but meaningless to the DOW as it is low priced.

Leading names SKX, TEAM go bye bye.

Futures down but not a ton but:

Yesterday:

HOUSING looks like it is rolling over gain…from lower levels.

CONSUMER STAPLES new yearly lows. TOBACCO smoked (pun intended) as well as food, beverage, household priducts.

AUTOS look topped.

And the all-important SEMIS mauled yesterday as TSM lowers and giving overall poor SEMI guidance…hitting most names in the group hard. This is not good news for a market that has just bounced back into the middle of the range. The SEMIS have been a leader both up and down for a couple decades so something to watch closely.  The news from TSM hit AAPL as they stated smart phones weakening.

OILS remain with the bid but Trump is ripping OPEC today. Doubt it has an effect. Better action in COMMODITIES also.

FINANCIALS bounce every time long rates move up…exactly what happened yesterday.

They ain’t going to make things easy now. Just into the ping pong, back and forth again.

THE SOX

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.

PRE MARKET

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.

PREMARKET

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.

RECAP OF YESTERDAY AND PRE MARKET

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.