The Morning Look

Market Update:
Futures are lower ahead of Thursday’s open as investors digest another volatile week on Wall Street. Stocks were up big on Monday, down big on Tuesday, then were up most of Wednesday before turning lower after the Fed minutes were released. Lots of areas of the market are beginning to roll over and any further selling will signal real trouble for the market. And airplane crash (most likely terrorism) does not help.

Gary’s Thoughts:

  • Jobless Claims 8:30 AM ET
  • Philadelphia Fed Business Outlook Survey 8:30 AM ET
  • Chicago Fed National Activity Index 8:30 AM ET
  • Bloomberg Consumer Comfort Index 9:45 AM ET
  • Leading Indicators 10:00 AM ET
  • EIA Natural Gas Report 10:30 AM ET
  • William Dudley Speaks 10:30 AM ET
  • Fed Balance Sheet 4:30 PM ET
  • Money Supply 4:30 PM ET

Highlights:

  • The US dollar rallied after the Fed minutes left the door open for a June hike
    Gary’s Thoughts: Enough on the Fed this morning.
  • Wells Fargo Cuts Target on Valeant Citing Potentially ‘Brazen’ Executive Pay Packages
    Gary’s Thoughts: Valeant a criminal operation.

The Morning Look

Market Update:
Futures are lower ahead of Wednesday’s open as investors pause to digest Monday’s strong rally and Tuesday’s steep decline. Lots of areas of the market are beginning to roll over and any further selling will signal real trouble for the market.

Gary’s Thoughts: Nothing thrilling to talk about this morning and now another retailer (Target) coughs one up.

  • MBA Mortgage Applications 7:00 AM ET
  • Atlanta Fed Business Inflation Expectations 10:00 AM ET
  • EIA Petroleum Status Report 10:30 AM ET
  • FOMC Minutes 2:00 PM ET

Highlights:

  • LendingClub Tumbles After Investors Suspend Debt Purchases
    Gary’s Thoughts: Party over. We have been skeptical of these types of companies for a couple of years.
  • Bill Clinton Says He’s Asked for Role in Wife’s Administration
    Gary’s Thoughts: Go away!

The Closing Look

Stocks ended lower on Tuesday as investors continue to digest the latest round of economic and earnings data. On the economic front, the consumer price index (CPI) rose to 0.4%, beating estimates for 0.3%. That was the highest increase since 2013 and was the first real sign that inflation may be increasing. If inflation accelerates from here, that may put pressure on the Fed to raise rates at some distant point in the future. A separate report showed that housing starts picked up at a moderate pace in April and rose to 1.172M, beating estimates for 1.135M. Meanwhile, earnings failed to impress as Home Depot (HD) fell after reporting Q1 results.

Gary’s Thoughts: Ick! Not sure it is good news when market bounces back and forth 200 points each day. Not a good day technically. Even the Transports, which were up 160, finished only up in the 40s. And do not believe any noise about good economy. And really do not believe a fedhead coming out saying they will raise rates 3 times this year. No chance.

The Closing Look

Stocks rallied nicely on Monday as investors showed up and defended key levels of support (50 DMA line) for the Dow Jones Industrial Average, the S&P 500 and several other important sectors. Overnight, China said industrial production, retail sales and investment data all missed estimates. China also said that measures of money creation and credit growth also came in below estimates. Separately, in his quarterly filings, Warren Buffet said he bought $1 billion of Apple (average price $102) in Q1 2015.

Gary’s Thoughts: Good up day after a bad down day. Seems we are getting a lot of this. But still running in place with a decent amount of areas that had just broken support.

The Morning Look

Market Update:
Futures are lower ahead of Tuesday’s open as investors pause to digest Monday’s strong rally. Lots of areas of the market were beginning to roll over last week so yesterday was an important day for the bulls to defend support.

Gary’s Thoughts: Watch the 50 day on the Dow and S&P. Watch them financials at support.

Economic Data:

  • Consumer Price Index 8:30 AM ET
  • Housing Starts 8:30 AM ET
  • Redbook 8:55 AM ET
  • Industrial Production 9:15 AM ET
  • E-Commerce Retail Sales 10:00 AM ET
  • John Williams Speaks 12:00 PM ET
  • Robert Kaplan Speaks 1:15 PM ET

Highlights:

  • ‘Captain America: Civil War’ Gives Disney Fifth Straight Win
    Gary’s Thoughts: Everyone loves superheroes.
  • Sheldon Adelson may spend more than $100M to boost Trump campaign
    Gary’s Thoughts: The dude throws around the cash!

Thine weekend report!

First…the Trumpster. We will say it again…and will report why in a future report…but unless it is found out Donald Trump is a member of Isis, like it or not, get used to “President Trump” for the next few years. And every time another celebrity says they are moving out of the U.S. is Trump wins, he gets more votes.
And the market:
On April 21, we started thinking and reported to you that the markets were hitting their highs for now. Since, nothing has happened to change that stance. In fact, everything that has happened has confirmed that stance as more and more areas and more and more stocks are breaking down.

For starters, retail, which we have been bearish on even during the rally…is crashing. We do not use a word like that lightly. Retail stocks are simply crashing.

On top of that, the all important semiconductors topped on April 28th and broke down badly the next day.

Biotechs, which never got going, are crumbling with many close to new yearly lows.

Small caps continue to under-perform large caps. This seems to have been going on forever.

The transports have rolled over badly and broke badly below the 50 day average.

The strongest groups remain the most defensive of areas in utilities, reits and consumer staples.

Other problems:

Foreign markets have completely under-performed with many breaking down.

New yearly highs never got going. In fact, there have been more yearly lows than yearly highs on the Nasdaq the past few days.

Financials, which also have lagged, have been rolling over a bit the past few days. If they head lower, markets will head lower.

The Dow and S&P just broke a midge below the 50 day. A goal-line stand is quite needed here.

All this and the same Dow and S&P are just off their highs telling you that again, underneath the surface, the internals have been deteriorating rapidly.

Have we thrilled you yet? Stay tuned! Markets are shorter-term oversold with bearishness picking up, so bounces are due…but this second, that’s all the market has going for it right now. Of course, QE4 can be announced at any time. No…not kidding!

The Closing Look

It was an ugly day and week on Wall Street. Stocks fell hard on Friday and several important areas of the market broke below important levels of support. Before Friday’s open, the government said Retail Sales rose by 1.3%, which was the highest jump since March 2015. Meanwhile, in the real-world, retail stocks are getting mauled. Elsewhere, The Dow, S&P 500, and a slew of financials, broke below their respective 50 DMA lines.

Gary’s Thoughts: TEETERING!

The Closing Look

Thursday was another volatile day on Wall Street as the bulls showed up and defended the 50 DMA line for the Dow Jones Industrial Average and the benchmark S&P 500. The action beneath the surface remains sloppy at best. Shortly after the open, we saw several important areas of the market break below support before the bulls showed up and did their best to save the day. Shares of: Apple $AAPL, Netflix $NFLX, The Philly Semiconductor index $SMH, and Tesla $TSLA were some big names that broke below key levels of support before the bulls showed up. If the Dow and S&P 500 break below their respective 50 DMA lines, look out below.

Gary’s Thoughts: Semis gone. Biotech gone. Retail crashes. Watch the 50 day on the Dow and S&P. A loss of this important area and …get the fork!

REITERATING BAD APPLE!

As you know, we have been bearish on Apple stock since last July when it gapped down off of a decelerating earning’s report. We were going to write you another report but we think the report we sent out several week’s ago says it all. Currently, Apple stock is breaking new yearly lows that only invites more selling. Next huge support is down at the $80 level from April 2014. Keep in mind, that is a lot of market cap!  Here is that report:
 
 

“BAD APPLE!”
By Gary Kaltbaum

For the better part of a year, there really has not been a reason to be bullish on shares of Apple. The fact is for the better part of a year, the stock has been an under-performer…thus not much to do. We think Apple has bigger problems now.

Over-owned and over-loved!

The stock remains one of the most over-owned and over-loved stock in history. This is the culmination of years of great performance and is quite normal. As the stock goes higher, more and more jump on board. Investors are used to making money. Nothing could go wrong. The problem is when a great stock finally tops out because that great company finally tops out, there is a lot of selling left to be done as owners become more disappointed with the performance.

Victim of its own greatness!

Apple is a victim of its own greatness. All great companies hit a wall. It is a wall of getting too big. Once a company gets too big, it is tougher to grow that business in ways and in numbers it used to grow. The fact is the main reason a stock price goes up is growing earnings and growing sales…the stronger the better, the longer the better. Once you are everywhere, once you are gargantuan, growth eventually stalls out which typically means the stock stalls out. This has happened to every great company throughout the years. Coke is trading now where it traded in 1997. Walmart is trading where it traded in 1999. Both businesses got to the size where they are not growing their business any more. Their businesses are not bad. Their businesses just cannot grow because of their size.

Disappointing Wall Street

Apple used to be very good at guiding Wall Street with their numbers. It is well known on Wall Street how well Apple sandbagged earnings every quarter. They would always lower guidance and then beat guidance handily. Not any more! Apple cannot even beat their own lowered guidance. Trust by Wall Street is quite a fine line. Apple is now losing the trust of Wall Street.

Decelerating sales and earnings

In the past four quarters, earnings +45, +38, +7 and now an ugly – 18 percent. Sales +33, +22, +2 and now an ugly -13 percent. Forward guidance did not make things better.

Just visit the stores!

We were just in China for 16 days. We visited several HUGE Apple stores. Business was not brisk! Stores that we have visited in the U.S. show a marked decrease in traffic…at least to our eyes.

Did Tim Cook really say that?

Tim Cook stated that it was the early innings for the I-Phone. Mr. Cook… early innings were in 2004-2005.

Cool?

At what point does it become not cool to get the next phone? We have been asking that question for quite a while. We are not sure we are there yet as Apple can come out with a phone that people go nuts for. But Apple is a much larger company and the next great phone will not have the influence the last great phone had on their numbers and stock price.

Bottom line:

Apple stock remains in its own private bear market which only worsened! We suspect long-term holders will continue to hold on but every day that Apple stock goes down is a bad day because it gets others to make the decision to sell. We can also safely tell you that growth stock managers will continue to sell as Apple no longer fits the moniker of growth stock. At this juncture, it is a value stock with many considering it cheap. But cheap is in the eye of the beholder and with decelerating earnings and sales, cheap can get cheaper. Apple’s next important line of support is the yearly lows at about $92.50. A break below would be even more negative than things already are.

Original story published here: http://garykaltbaum.com/bad-apple/

The Closing Look

Stocks fell hard on Wednesday, erasing most of Tuesday’s gains after the latest round of tepid earnings data was released. Stocks fell hard after shares of: Disney ($D), Macys ($M), Fossil ($FOSL) and Wendys ($WEN) gapped down after reporting lousy earnings. The weak action dragged a slew of retail and restaurant stocks even lower which put pressure on the broader indices.

Gary’s Thoughts: 200 up…200 down…don’t worry, time to gap up tomorrow.