WEEKEND NOTES

Maybe if the trade war escalates, the market will really start rallying. (sarcasm)

The most important part of the equation is that all major indices HELD THEIR RESPECTIVE SUPPORT LEVELS:

The strongest NASDAQ/NDX/RUSSELL all held 50 day with NASDAQ/NDX really popping off of it Th and Fri. The NDX held to the penny.

The S&P held the 50 day but not nearly as strong. The DOW is just holding the 200 day along with the NYSE…so there is definitely strong and weak.

Add in the SOX holding the 200 day just like it held in late April and the TRANSPORTS just holding onto the 200 day…again, lots of weakness underneath the strength. BIG FINANCIALS are a part of the weaker areas as the XLF just holding support under the 200 day.

The worst remains other markets like EEM,EFA,FXI,EWZ and others but feels like they may be sold out for this second…but still very bearish.

And they say moving averages do not matter. Leave no doubt, if at any time we get a break of these areas, I think all hell breaks loose but for now…they hold.

BIOTECH wakes up off of BIIB news. Look at the IBB, BIB and some proxies doing better like an AMGN and even weaker GILD, REGN coming off the ugly.

A bunch of OIL names at the tips as oil prices remain strong. Very mixed bag in the group though.

MOST IMPORTANTLY, growth again reasserts itself heading into earnings season. A slew of names held the 50 day this past week with a decent amount of names stronger. Keep in mind, most are just in new bases formed during the corrective work in the markets. The hope is and odds favor a bunch break out again but earning’s reports will have a big say.

PRE MARKET

Tariffs now in play. Good jobs number even though headline number up to 4%. That’s because 601,000 people entered workforce.

Futures mostly flat with NDX up a bit but that is mostly BIIB up $41 on some drug news.

Markets remain in the muck and mire here but the best news is the 50 day still holds for the NASDAQ/NDX. Would also note the SOX bounced off the 200 day yesterday, the same place it bottomed in April. The 200 day is longer term vital.

In-depth report over the weekend.

PRE MARKET

Don’t blink. Reversal up Monday, a reversal down Tuesday culminating with a nauseating drop into the close on Tuesday’s half day. Of course, we walk into a gap to the upside getting back some of the drop from Tuesday.

But nothing has changed. Big picture is still that January 29 was a high that we thought would stand for a while. We thought it felt like a climactic move into the end of January. The thought process was after a big 2013-14 because of QE3, markets went into a 18 month trading range until the breakout the day after the election. We had that feeling we were entering something akin to that period. So far, we stick by that mantra…but knowing the NASDAQ/NDX/RUSSELL have done better than the rest.

There is nothing wrong with long trading ranges after such a move. It is the working off of the last strong move and its froth. Of course, trading ranges can turn into real bearish markets. The range in 15-16 had the RUSSELL drop 30%. This is why we watch areas and levels. In this range, emerging markets are leading down while more than half our market does not act well. Also, the DOW and NYSE are getting the worst of it.

So we are patient and we stay patient. This is part of the process. Earnings up next starting late next week.

PRE MARKET

Half day today. Still don’t know why they have these days.

We told you yesterday that the NASDAQ/NDX were again holding the 50 day average. This led to a strong close…which is now leading to a pre-holiday strong gap. Simple as that. For this second, the leading areas held right where they needed to. This does not change the overall big picture that more than 50% of the market aint happening. But for now, a good hold. Check out the charts of the NASDAQ/NDX and the Russell…and while you are at it, look where AAPL, MSFT held. Same place!

NASDAQ/NDX/SOX

The NASDAQ/NDX held their respective 50 day moving averages today…so far. A good hold goes a long way in this leading area setting up to move again. The SOX not as good but looks like it held the longer term 200 day average…so far. The SEMIS are much weaker and have recently been an anchor.

We now have a decent sized list of growth names sitting or bouncing right off the 50 day. Anything that breaks below gets moved to the side. There have also been quite a few of these names.

Unfortunately, even with the market coming back nicely today, most of the rest of the market just aint happening. Leading areas had better stay leading.

Lastly, we were asked how much weight we give to a shortened, lighter volume holiday week. To us, everything matters.

PRE MARKET

We open a new quarter with more nausea. In spite of the supposed seasonal strength at the end of a quarter as well as the pre-holiday, markets are suspect. Frankly, that is being nice when looking at China and other countries as they are all gapping down again this morning. Our market had better not start looking like China…AND it really had better not look like countries like Brazil and Turkey. Remember, we never rationalize as to why because normally, markets are a forward looking entity. Just recognize that sellers continue to have a bigger upper hand on a daily basis. We now watch vital longer-term support levels. If taken out, what has been a treacherous market since the end of January will become  a lot worse.

Again, pay attention to price. Do not pay attention to how strong GDP was in the 2nd quarter. Do not pay attention to the talk of strong upcoming earnings. We can assure you markets do get into trouble on the best of news…and do top out on the best of news. One only has to look at machinery and industrials swooning while the economy is strong.

If markets break longer-term support levels, expect us to ramp up the writing as the rest of Wall Street will tell you not to worry. We always write more when things go awry in markets. Keep in mind, longer-term support levels have not been broken. They can still hold. We are just giving a warning shot that deteriorating and narrowing markets are the key signs that leads to these breaks.