Oh My God…Apple $AAPL Is Down!

Stunning to watch many having fits over Apple being down 6-7% this morning. Do they not realize it is just back to where it was after the recent romp to the upside? Living by the laws of the market, unless the stock has a strong reversal today, it just goes back into the trading range it has been in since February. That’s all.  The last primary breakout was at $120…which just held on July 9. A break below would violate the 6 month trading range…and that’s when one should get more worried. If there is one issue that sticks out for us with the stock, it is that everyone on this earth (ok, almost everyone) owns the stock. When everyone owns a stock and things turn south, there is only one thing left to do. We keep watching because in our eyes, it is the most over-owned stock in history and has a large effect on the psychi of the market!

Since the NDX has been leading, we now get to see how ugly it can get off of Apple and also Microsoft, who is also coughing one up.

Most of the rest of the market is blah!

Big cap tech!

More big-cap tech as the NDX outshining the rest by miles. Somehow, we expect this to continue as money piles into a narrow group of names.

We were asked a good question. Why are all these big growth names soaring right before earnings? Who would take such a chance? Answer…no clue. For sure, AMZN, FB, AAPL and others getting a big bid with no let up. But to try and figure out who and try to figure out why takes away from the fact they are moving. If one wants to delve into buying right before earnings, have fun. We just don’t believe there is a great edge in guessing what a reaction will be.

Commodities continue to croak but have to let you know, the selling now feels a little panicky…which often leads to reaction lows. Time will tell. No matter what, the trend is still yuck!

IBM continues to cough it up. Another bad quarter with the stock acting accordingly. We have been bearish on IBM for a long time…and especially bearish on how they report their earnings.

50-60% of the market still aint having it.

 

 

Mega-cap, tech-heavy, nasdaq/ndx types lead the way!

And you wanted to see a lot of changes because of the NDX and to a lesser extent, the NASDAQ flying into new highs? We understand but after doing a big scan this weekend, not much has changed. Of course, the obvious is that some mega-cap, tech-heavy, nasdaq/ndx influence stocks are going en fuego on earnings and a few right before earnings come out. Be careful! Be careful about those who are telling you all this is bearish and that the market is narrow and that this reminds them of 1999 and a crash is coming and this, that and the other thing. The play is to just stick with what is in front of us and that is:

Amazingly, 60% of the market remains in poor shape while these big names are on the move. But don’t get it into your head one way or another what will happen. For months and in some cases, over a year, we have been guiding you away from the many bearish areas that have been in downtrends…with many still in downtrends. Just stick with what is working as the good keeps getting gooder in areas such as biotech, banking, regional banks, oil refining (the rest of oil remains extremely bearish),restaurants, cruise lines, retail-(auto parts,drug stores,internet), s&ls and those big cap names…which are:

Netflix…another big gap off of a 63% drop in earnings.

Google-as the new cfo is controlling costs.

Amazon…which has not reported yet but is slated to report a loss.

Apple…which looked dead a week ago is now back into the upper range with earnings soon.

Tesla…coming on again.

Facebook…in sympathy with Google.

And of course, the biotechs continue to help the nasdaq/ndx as the nonsense continues. We found 2 more names come public this week with no sales. There are now more than 150 public biotech names with no sales. That will end well.

Again, just keep in mind with all the fireworks you are seeing, there still remain a lot that is wrong…but that should not keep you from playing the good as the tape remains split. May be there will be a day where all the divergences come back to haunt things. It just has not happened yet. Thousands more earning’s reports in the next 2 weeks. Stay tuned.

Mega cap Nasdaq Types!

As usual, our award winning weekend report covering everything you need to know about markets will be in your inbox on Monday. To sign up to receive:  go to http://bit.ly/1IuL8zT

Amazon, Netflix, Google…the place to be though Amazon has not reported yet. Apple has not reported yet. Big biotech also. Despite the divergences…that still stand, these big names are doing heavy lifting  for the NDX. We are big believers in major gaps on earnings and will see where they decide to take them. Prayers for those who died as well as the families in Tennessee. I had better stop writing or I may say something I shouldn’t say!

GOOD GETTING GOODER!

AUTO PARTS RETAIL…BIOTECHS…BANKS…CRUISE LINES…CREDIT CARDS…CONSUMER LOANS…DRUG STORES…HOUSING…NETFLIX…OIL REFINERS…REGIONAL BANKS…S&Ls…and now some MEGA-CAP NASDAQ GLAMOURS coming to life right before earnings…AMAZON & GOOGLE come to mind…as the NDX looks to open at new highs this morning.

And Greece will now fall off the front pages as all the lenders did was create more massive debt to take care of earlier massive debt. Remember what we told you, the lenders were in more dire straits than the borrowers.

Don’t worry…there is no bubble!

Markets still act well off of the Greece “deal!” More names are breaking out. 60% of the market is still not working but the 40% is. The good get gooder.

But yesterday, Celgene said it will pay $7.2 billion in cash for Receptos. Terrific! We own neither though we were eyeing Celgene as it headed into earnings. As we write this, Receptos is up $21 and Celgene is actually up $9 as they also pre-announced a higher number for earnings.  But here we go again:

Receptos has no sales. To repeat, they have no sales. Their drug is still in phase 2 trials yet Celgene is paying $7.2 billion in cash. They didn’t buy them when the stock came public at $14. Not at $25…not at $50…not even $100…$150 anyone? Nope! $200…nope! $232 is a good round number. But we just found out an additional item to the story. While the announcement was for cash, it is really not for cash. Celgene is going to raise at least $5 billion in a bond offering to pay for Receptos. Of course, this bond offering will be raised at a rigged, manipulated and fed-induced distorted yield.

We repeat. THESE TYPES OF BUYOUTS DO NOT OCCUR AT BOTTOMS. We will let you extrapolate what that means. For now, don’t worry! There is no bubble!

Relief for now!

We will ignore all the negatives we have been reporting to you on the markets for today. For today, it is time to accentuate the positives. And there are positives. Regardless of the 60% of the market that just ain’t working, the positives are:

For starters, regardless of China…regardless of Greece…regardless of the slowdown in sales and earnings, the major indices have hardly budged from their highs. In fact, the recent drop was approximately a nominal 5%. This is a tiptoe through the tulips. Potentially, this could cause sellers to stop selling as they recognize under the supposed worst of news, that’s all there is.

On top of this, there continues to be that 40% of the market that remains in good shape…and to add a little fuel to the fire, a couple of new areas are showing up and a good amount of breakouts occurred on Monday. The groups include retail-auto parts, retail-drug stores, cruise lines, a few airlines and restaurants. We also think it important that the almighty Apple undercut support but quickly recovered shaking out some late sellers. We do believe Apple is probably the most important bellwether markets have ever seen.

Other notes:

Biotechs continue to lead the pack but are mixed.

Financials, while losing some of their relative bid, are still hanging in there but earnings time. Speaking of earnings, remember, it’s not the news, it’s how things react to the news.

New highs did pick up some on Monday.  This is where you find leadership.

Major indices are back into the nauseating trading range we have talked about for quite a while. Yippee!

Greece and China still remain front so pay attention…especially China. Greece will get swept under the rug again but if China continues to sell off, will not be thrilling.

 

The central bank and government farce continues!

As this is being written, there are four different articles on supposedly four different deals that are happening with the Greece negotiations. Quite amazing! The bottom line and the logical outcome is simple. The math just does not add up and all parties know it. We can bore you to death with the numbers but the numbers change by the hour. What hasn’t changed is that Greece takes in much less than they pay out and what hasn’t changed is the dummies (the lenders) keep feeding what is simply a black hole of socialism. A black hole where a 175 billion euro economy has a public debt of 320 billion euro. Any deal will take weeks, if not months to work out and as of this second, any deal does not include any write-downs of Greek debt. There is just no way anything gets worked out without write-downs as there is no chance of anything being paid back. We will just watch a bigger credit card being issued again. Keep in mind, this is all happening while yields have been rigged and manipulated down to the bone. It is that bad. The manipulators had better continue to contain things. Greece by itself would not end the world but Greece exposes the massive debt and leverage that continues around the globe. In a case of no one learned any lessons from 08, debt and leverage have left the numbers from 08 way behind enabled by maniacal central banks that actually think they are heros.

We could not move to the China farce without mentioning the other farce and that’s us as in the U.S. A man named Jack Lew, the Treasury Secretary, came out this past week preaching to the Greek government about how they have to become more responsible with their debt and deficits. Frankly, I had no idea we even had a Treasury Secretary as I don’t think I have seen this man once front and center. Mr. Lew has obviously forgotten that he represents an administration that has created more than $7 trillion of new debt in 6 years. In other words, this administration gets the championship belt on debt. They have shown they could not give a crap about the taxpayer and could not give a crap about the taxpayer’s kids as they continue to mortgage the future  while telling everyone they have done a wonderful job. Keep in mind, this debt is over and above the approximately $3 trillion they take in every year of earned taxpayer dollars. We get away with it by printing money and our own rigging and manipulating of rates down to the bone. But don’t worry. Krugman says everything is just fine.

China…where do we begin? We think the Chinese government has realized their number is up and that they cannot continue to fake the numbers so do the next thing…the Bernanke dance. That is to try and bubble up asset prices as best as you can in hopes that higher asset prices gets the economy moving again. They simply enabled investors to go into massive debt (margin) in order to get the job done. Margin loans jumped to over $300 billion which was nearly 10% of the whole valuation of Chinese stocks. But China forgot that when bubbles pop, it is just that leverage that does the job in slamming markets back down and quickly. So what does China do? Regardless of reality, regardless of valuation, regardless of fear and greed, China goes all in trying to control all parts of the market. You want to short?  We will arrest you. You want to sell? Ain’t happening! And don’t worry. We will lend an unspecified amount (why name the number) to the state-owned Chinese Securities Finance Corp. which in turn would support the stock market with that money. Add it all up and you get a rally from very oversold conditions.

We won’t even venture to guess how this plays out but there is precedent and ultimate outcomes are never good. When all is said and down, valuation will matter and the real world will matter. While our central banks were printing trillions to bubble up asset prices, we used to joke that they should just print tens of trillions and buy up the whole S&P 500. Looks like China may be headed there.

We will have our market report Monday night as we want to see what happens over the weekend. We actually doubt anything gets done because the Greek people are not going to go for any deal. We would like to say there was improvement in the market but not yet, just a bounce. There are a few areas that are shaping up as drug stores, a few airlines cruise lines and oil refiners are breaking out of range but that’s about it.

Now this is just a comedy act!

One country has to arrest people if they sell short, stop people from selling and prop up markets with borrowed money.

Another country is proposing getting a huge loan to pay off a huge loan with both lenders and borrowers admitting the bucks will never get paid back.

And our country, the one with $18 trillion of debt, who is heading towards the same socialism that is killing the other countries is considered the adult in the room and the sane one.

Ladies and gentlemen, as usual, we will have our award winning, over-the-top, in-depth report on the markets over the weekend but as of this second, our only thought is: SURE…THIS WILL END WELL.

Another gap to the upside this morning after yesterday’s disappointing sell-off from the same type of upside gap. Anyone have a guess about today? We don’t!

You may just want to listen to yesterday’s radio show as I take off the governor on what I am seeing and what I am thinking! http://www.mediafire.com/download/pnjctqvhewqfbt9/150709.output.mp3

 

Another guess the gap day!

“The highlight of the night was China, which after halting half of its stocks, disallowing major stakeholders (5% holding or more) from selling shares for 6 months, and threatening to arrest short sellers, the Shanghai Composite managed to gain nearly 6% on the day. What might be most impressive is that the index was down over 3% in the first hour, before reversing off the lows for the largest 1 day gain since 2009.”

We didn’t write that and there are no typos. You can’t sell and if you short, we are going to arrest you. So of course the market would have a strong rebound rally. Let us be clear. It is normal to have wild swings when you get bubbles popped. The rallies occur just to suck the people in who have a sigh of relief. Some of the biggest rallies we have ever seen occurred in 2000 when the bubble initially popped.  The bottom line, we continue to be in a land where there is constant government and central bank interference in what are supposed to be free markets. We are not talking just Asia. Expect more wild swings. Expect more gaps to the upside and downside. Expect emotions to go from fear to greed and back again on a day to day basis.

We do not usually write to you on Thursday’s but we do write short notes every day that are published at garyk.com. We just wanted to write today to tell you our amazement that major indices here are not even down 10% with so many areas getting hit hard. This is because when markets and risk get in trouble, money flows into some of the biggest and most liquid names that have the most influence on the indices. It is only when there is no place left to go that the indices cave in also.

Another big gap to the upside today. We suggest this is because markets around the globe are waaaaaaay extended and oversold after cliff diving this week and were due to bounce. Leave no doubt there has been more deterioration but also leave no doubt, unlike the recent straight down dive in China, any drop here will tend to have several rallies to the upside just to drive people up a wall. It is also a pain in the rear when markets go from a huge drop into the close to a big gap up the next day and vice-a-versa. Enjoy!