To state the obvious facts, for the past 3 weeks, groups like semis, China ADRs, tech, internet have been en fuego. Normally, you get ebb and flow, which means pullbacks and rallies. This is the definition of persistence that does not allow entry. On top of that, it is all occurring pre-earnings reports.
We have seen this before and to be blunt, it can last in spite of calls it can’t. So just follow price…which will always dictate. Just know when earnings are coming out for names you own or names you are looking at.
Futures up with NDX futures up better.
Also need to make note to put commodities on your screen. Seeing steel, metals/mining showing up. Keep in mind, they are commodities, all based on price of the underlying commodity.
If you owned MEDIA, DRUG STORES, BIG TELCOM, LOTS OF RETAIL, AUTO PARTS RETAIL,MANAGED CARE, BEVERAGES, FOOD, HEALTHCARE DISTRIBUTORS,SUPERMARKETS,TOBACCO, DEPT STORES, ADVERTISING, LOTS OF ENERGY and a few big names like the GE, IBM, DIS and a bunch others…you are not a happy camper. We bring this up first while the market is strong because it is imperative you know there is still plenty not working. This is why we always emphasizes sectors because very often, bull and bear sit side by side.
THAT SAID…the market remains strong, not only here but worldwide…which is usually the best type of markets.
So on the other end:
AEROSPACE/DEFENSE, AIR FREIGHT, BIOTECH, CHEMICALS, CONSTRUCTION and CONSTRUCTION MACHINERY, ELECTRONICS,HOUSING, INDUSTRIALS, INSURANCE BROKERS, INSURANCE, INTERNET, INVESTMENT BANKING, OIL REFINERS, PAPER, PHARMA, SEMICONDUCTORS and now lets add a few things that may be coming on:
REITS…as we are seeing the worst of bottom and the best of breaking out, STEEL as a few names move out of range, AGRICULTURE and other COMMODITIES.
Areas that have been working that may be losing some steam are: RAILS, some of the BIOTECH, TRUCKERS and UTILITIES.
There is little reason to mention major indices as the rotations are more important. We continue to be amazed what easy money has done to the market as a 3% correction has been out of the question. Keep in mind, this has caused massive complacency, bullish sentiment that is off the charts and articles calling for outlandish moves going forward with some calling for melt-ups. You mean the past 8 years wasn’t a melt up?
Just recognize it is out of this complacency that (when markets decide to correct) leads to corrections of magnitude that are uglier than normal but with trillions still being printed, rates still negative, rates near zero and our fedheads keeping rates down, maybe we won’t ever have another bear market. (Bazinga!) Some people are actually saying that.
A ton of earnings this week…and next.
GOOD LOOKING OPEN.
Seeing beta up as targets get raised for names like NVDA, NFLX. NFLX reports Monday.
Seeing better action in weaker dollar plays. OILS strong this morning…been range-bound past couple of weeks. Seeing some STEEL names setting up.
Keep in mind, this has all happened pre-earnings. Earnings will change the playing field. CITI (C) hit yesterday but BLACKROCK (BLK) strong past two days.
This morning, BAC flat on numbers…WFC hit a bit. A ton of names next week. Pay attention.
Lastly, Fedhead Rosengren says he is concerned prolonged low rates spurs a reach for yield! I am beside myself reading this. After 8 years of $trillions of printed money, 0% rates, negative rates, and assinine yields on income investments, HE IS NOW WORRIED? Have any of you seen yields on European junk debt? Have any of you seen what rates are in Europe and Japan? My goodness. These easy money dolts!