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.

 

TRANSPORTS

Very notable…the TRANSPORTS trade easily and up through the 50 day. This is important as it gives better odds for the major indices to follow. JBHT doing the trick even though they only beat by 1 cent. It’s not the news, its how things react to the news. Other names in the group soaring. Could be a very important clue for market.

PRE MARKET

Another gap up this morning…so with the late rally Friday and today’s gap, all losses have been recovered from Friday’s open…or something like that.

Earnings of note this week:

Monday

BAC, JBHT, SCHW and the almighty NFLX after the close.

Tuesday

CMA, GS, JNJ, NTRS, UNH, CSX, IBM, IBKR, ISRG, LRCX, UAL

Wednesday

ABT, ASML, HBAN, USB, AXP, AA, EBAY, SEIC, URI

Thursday

BBT, BX, BK, DHR, DOV, DHI, GWW, MS, NUE, PM, PPG, DGX, SWK, TSM, ETFC, SKX

Friday

GE, GNTX, HON, KSU, STI, WM