PRE MARKET NOTES

After a wild swing Thursday with a strong finish, this morning:

President Trump moving to block shipments of semiconductors to Huawei from global chip companies, which could increase tensions with China, according to Reuters 

China’s Global Times editor tweets “Based on what I know, if the US further blocks key technology supply to Huawei, China will activate the “unreliable entity list”, restrict or investigate US companies such as Qualcomm (QCOM), Cisco (CSCO) and Apple (AAPL), and suspend the purchase of Boeing (BA) airplanes” 

So Apple down $8.

The SEMIS that were strong off of what we thought was BS news yesterday…all down…LRCX down $16, KLAC down $9 and so on. Not so worried about Boeing as who is going to buy Boeing airplanes anyhow…

We suspect the White House will try and roll some of this back as we know they watch every tick in the market and don’t like it when the Dow drops 10 points. Without taking sides, if the U.S. does block shipments, China will surely retaliate. Needless to say, this would not be good news on top of a pandemic. But it is not even 830 am so things could change throughout the day. The DOW moved from trough to peak 850 points yesterday

MARKET WRAP/PRE MARKET

Sell them into the close and just gap them back up.

We remain in the most divergent and narrow market we have seen since 99. We remain in a market where growth versus value is at a record extreme. We do not know how long it lasts but it is still going. The NDX is only down 7% from highs while RUSSELL 2000 is down 27%, TRANSPORTS 30%, REGIONAL BANKS 40%, BIG BANKS 31%.

TECH, SOFTWARE, INTERNET, STAY AT HOME STUFF, BIG CAP OVER SMALL CAP.

MARKET WRAP/PRE MARKET

The market was working on a very strong day until late day selling came in. Blame was on a fedhead who said something…blah blah blah. We do not rationalize why! Of course, futures, which were down nicely last night are now up nicely, though off their highs.

There remain 2 major worries.

The FINANCIALS continue to act like crap.

The market advance is the most narrow market advance we have ever seen. Narrow markets are just much easier to sell off.

This morning, ADP numbers show a loss of over 20 million jobs…expected but still wow! Most jobs lost are in the service sector.