PRE MARKET

Markets may be in sit mode now. This is not a bad thing. IF MARKETS ARE GOING HIGHER, sitting for a bit or (hold your breath) actually pulling back is a good thing. It works off froth, puts some doubt back into the game and elongates bases. Of course, IF MARKETS ARE GOING LOWER, we will start to see a bunch of important areas roll over. So far, just a few areas have trouble. We have mentioned areas like MANAGED CARE but other areas that are pulling back (like FINANCIALS) are just pulling back. We are seeing no real breaking down. If that changes, we will let you know. The quiet pullback has been so nominal that one good day would take care of it.

 

PRE MARKET

Futures flattish.

Yesterday…the good news, after reversing down hard, indices finished half way on the day’s bar. The bad news, decent reversal off the high. The good news, it’s just one day.

But it’s just one day.

Of note:

Leading SOFTWARE names raided. This is to be watched. Maybe they are just pulling them in from extended conditions. Not thrilled to see leading names hit so hard.

KSS and TGT gapping up this morning on some more not so great earnings.

More fedheads around the globe calling for easier money, including one from our shop. Most economic numbers around the globe continue to be soft.

We would be thrilled to see a couple weeks of nothingness as it sets things up better. Maybe that started yesterday or maybe it was just one day.

 

 

 

 

 

THE COMPLEXION CHANGES

-We believe the complexion of the market is changing. The market has had its way since the lows with nary a pullback. The move has been calm and the move has been persistent. The move has occurred even though most data points around the globe have been heading south. (The US. remains the bull of the woods!) The move has been accompanied by more and more easy money and more and more easy money rhetoric. The move has been helped by a constant string of “China trade negotiations are going splendidly” talk out of the White House almost daily.-
-But that’s all noise. As we write this, the leading SOFTWARE group is being pummeled. One of our simple rules is that when the leading group is taken out to the woodshed, markets often follow. But it is not just software. We have been seeing deterioration in RETAIL, AIRLINES, MANAGED CARE, ENERGY, GOLD/SILVER, HOUSING and HOUSING-RELATED before today. And now we get today…some serious distribution and some serious reversals.-
-Do not look for reasons why. Markets do correct. You do know that? Any corrective work would be overdue and frankly, welcome. Markets need to bring doubt and sometimes wipe the smiles off the faces of the bulls.  Sentiment has gone coast to coast. What was quite dire sentiment has turned into quite the bullish sentiment. A ton of money losing IPOs are in the offing, no sales BIOTECHS are being bought and calls for 30,000 by the end of the year are showing up daily, just two months after many calling for a depression.-
-This does not mean the end of the world is at hand. It just means we suspect there is going to be some corrective work of unknown price and time coming up.-

 

PRE MARKET

Don’t worry about yesterday. Don’t worry about the past few days. Markets just gapping up today.  The all-important German Dax moving above resistance today doing the trick. When markets pull back for a few days and get a lot of it back on one gap to the upside, that is not bearish.

A few TECH names gapping up to a certain extent…ADSK, SPLK, VMW, WDAY. FL also and GPS splitting the company. Full thoughts over the weekend.

PRE MARKET/GAPS TO THE DOWNSIDE

AYX, CROX, SYNH, WING, PRAH, WIFI, FIT, HPQ, CELG, AAOI, BKNG, SQ, TDOC. In this list, BKNG and SQ stick out…but what sticks out more is a decent amount of gaps to the downside. Maybe it is nothing. We just wanted to point it out out.

Our thoughts from a couple of days back that markets may have hit a near term wall is coming to fruition. So far, it is nothing more than a pullback. The only group that is really rolling over is the MANAGED CARE with names like UNH, WCG, HUM, CI, CNC breaking down. ANTM gapped up on numbers and is just pulling back. After this group, not seeing anything that looks like it…yet.

The SOX should continue to be watched. They are pulling back bu notice they were down much worse during the day yesterday.

Futures are hardly down on the S&P after being down markedly overnight. NASDAQ futures a little bit worse because of BKNG.

Gapping to the upside are JD, CVNA, MNST, BILI,