PRE MARKET

Here be the deal.

Friday’s late selling put the odds in favor that Friday’s high, give or take, was the high. Use the low of about 23,800 as important low. That was the low of 2/8…not the low of 2/9, which was the big reversal day.

We give it very little chance to revisit those lows right now. The move up was pretty darn good and cut through a lot of technical damage but…we now expect back and forth action as the market decides if it wants to resume the major trend up or start something not so pretty.

Only about 45-50% of stocks in our universe are now in good technical shape…but a sharp improvement from the lows. This number is not very good and tells us to expect a battle from here.

Areas that are strongest are:

STEEL-off of tariff threats.

REGIONAL BANKS (KRE)

DEFENSE- the budget increases for them markedly.

Lastly, we are watching European markets closely as they have hardly been able to rally off the lows . They are very weak and could augur some ugly going forward.

Will have a lot more tonight as we have been traveling extensively the past few days.

SOME MID-DAY NOTES

Anyone thinking we are going to revisit lows, get over it.  Another repair day and this time, the weakest names and areas are now curling up and completing their lows. If the weakest areas are done going down…

STEEL be rumbling because everyone likes a trade war. Rumor out of the WH is that the Trumpster going to slap some serious on foreign steel.

Good reaction to AMAT lifting SEMIS and equipment makers.

OILS (the weak of the weak) turning up after wicked drop. That’s helping today.

In the DOW,   28 up. Look at a weak JNJ turn up.

And since we are being asked,  AAPL had bad reaction to numbers and has V-shaped up. Remember, the bad reaction was right when market was topping to start the 12% nausea to the downside for major indices.

We will have broader thoughts on the weekend but looks like that 12% was a quick event and the wicked reversal up last Friday was it.  And yes, we are amazed on the move back up. Then again, we were amazed at the drop also.

PRE MARKET

Looking for a precedent where after an extended high, major indices drop 12% in days and then it is just forgotten as markets just move back through the resistance like a hot knife in butter. We have only went back to 2000 but so far, cannot find any just yet. Will search more over the weekend. If any of you know of a time, email us.

Markets are now short term, extreme overbought but they were there yesterday. After the early dump, one could have believed the pullback had begun. Not!!!! Ramped into the close and finished at the high of the day.

Will have a big report over the weekend. Noticing another nice open but looks like leader ANET goes bye bye.

 

THE CLOSE

After last Friday’s action, we stated that A low was put in for the market. This means for the near term, the lows of last Friday would hold. We said that because of the high volume reversal that occurred that day combined with the high volume reversal from a couple days before combined with extreme bullishness turning into extreme bearishness in short order. We suspected upside testing.

But this upside testing is much much stronger than we even thought…and by far.  Our thought process had us believing it would only be a matter of time before the lows were revisited and possibly taken out as bear phases usually have three legs down. Maybe the 12% move was just one ugly leg down. We do not believe this is just a bounce from oversold conditions. It feels more like a low of consequence has been put in and think the lows of last Friday will not be revisited not only in the short term but at least in the intermediate term. It is that strong.

Many areas have moved back above the 50 day but what has us more confident is the way the growth leaders are reacting as well as the commodity areas. Add in that the financials (especially regional banks) are on the move again.  Also, do not forget  today was another weak open which was bought up.

Anything is possible when it comes to the recent action we have been seeing but as more cards come out of the deck, most of the cards have been positive. Stay tuned. We  suspect more wild swings ahead.

Finally, prayers go out to all affected by another senseless tragedy in Parkland Florida. We know the area well as we lived right next door in Boca Raton for many years.  A beautiful community that has to experience the unimaginable.

THE WILD PRE-MARKET

WILD SWINGS THIS MORNING AND THE MARKET HAS NOT EVEN OPENED.

Futures have moved almost 500 points this morning. At first, up around 200 Dow points…to down 300…to now down about 130, 140, 120, 150 and 190 as we send this to you.. JUST DON’T BLINK! The culprit, POSSIBLE INFLATION. POSSIBLE SLOWDOWN. The inflation number was higher, the retail sales number lower. Again, just don’t blink as we note how wild the swings have been recently.

WE DO NOT and we repeat WE DO NOT ever want to see or get to the point where our imbecilic central bank is behind the curve…where they are forced to raise rates because of, dare we say, INFLATION. Remember, Economics 101 should state massive money printing, massive easing of monetary policy, 0% rates for 8 years, negative rates and all that crap…should cause serious inflation. So far, it has not.

So far, our thought process that last Friday’s massive, high volume reversal to the upside was A low…just not sure it is THE low. We sit back and think whether markets drop like they just did and everything is just fine. Major indices have bounced back into their respective 50 day averages. One wants to see them leap back above. The good news is that in central-bank-induced markets, we have seen “V-shaped” moves back to the upside. Stay tuned. Need a few more cards coming out of the deck.

Lastly, we have been asked several hundred times why we are so pissed off at what we are seeing out of DC on the budget. It is simple. The Democrats are Socialists and the Republicans are now the old Democrats. You don’t need our opinion though…just look at the numbers. Once again, the taxpayer is screwed.

PRE MARKET

After strong day yesterday with a mystery 150 point close near the close, we have a decent gap to the downside today. TIME AND PRICE! We believe after a drop like we just saw, we are going to get time and price. That means up down, up down, up down. Some good days, some bad days. And as this is happening, we continue to scan to give us clues on whether it is going to roll over again.

When we go home and do our scans, we forget about what has happened and just let our eyes do the work. After scanning, our eyes found nothing more than an oversold bounce with a ton of damaged charts. Hardly any new highs found with the strongest names holding the 50 day on this drop and now bouncing up. Go look at BA and AMZN to see the big strength. We can all but promise you that if they come after those 2 again, look out.

FINANCIALS are still holding up better than most as the port in the storm right now. We suspect higher rates on the long end helping. The only sector with real strength is the DEFENSE sector as everyone likes a good war. (Trump budget has defense spending going up!)

Go ;look where a;; the major indices are at. Go look where all the major countries are at. We call it no man’s land. It ain’t going to get any easier right now.

WB, RNG, UAA gapping up a wee bit on numbers.