Just letting you know a bunch of growth leaders have recently been hammered on volume. But many were so extended, all they have done is fall down to their respective 50 day/10 week moving averages. It is this are that will be vital to hold. We will know more on any bounce, how they bounce, if the bounce is anemic and if they roll over breaking the 50 day. It is too early to tell. A few are green today off this line of support but tepidly so. There are a few just below this area and will need to see if they get back above. It is December, a month which usually has a positive tone.
Futures only down a wee bit but lots of jello moving on the plate.
Yesterday, NASDAQ up 60, finishes down. Need we say more…just more distribution. Again, does not have to mean the end of the world, Just recognize things have changed in that space. This includes semis/tech/internet and all that stuff. Seeing some pretty good looking tops…for now. Remember what we said. The SOX on 11/29 looks like June 9th. At that time, it took 3 months to get going again. But this time it is farther along. Time will tell…pay attention.
Also of note:
HANG SENG whacked over night giving back all gains from past months. The Japan Nikkei also looks toppy in here.
As far as the areas jammed to the upside recently like TRANSPORTS, RETAIL, FINANCIALS…watching how and where they pull back to as all broke out on volume.
More of the same this morning. DOW futures up 80…S&P only about 3 and NDX futures hardly up. NDX futures were down decently about an hour ago but have since bounced.
Reading many saying these divergences augur trouble to come. They could be right but we are not there yet. We would rather just stay in tune with what is and what isn’t. If what is joins in the downside, then we can talk. But so far, even with yesterday’s DOW reversal, FINANCIALS, TRANSPORTS, RETAIL, HOUSING-related still very strong off the tax bill…
BUT…them are some ugly patterns in big name growth/tech/semis and all that stuff. Keep in mind what we told you about the SEMIS. Look at June 9th for a possible precedent. Big ugly down day followed by 3 months of range-bound before breaking out again. Nov 29 down day looks about the same. We are not saying the same thing happens. We could have seen the final top. Just outlining possibilities. We always adhere with what is in front of us.
We outlined for you this morning to watch for a ‘sell the news” day. This was not just selling. Leading growth/tech/internet/semis and all that stuff was mauled. To be clear, anything is possible but this does not look like ordinary selling or an ordinary pullback in these areas. To our eyes, this selling looks consequential for these areas. Due to the fact many have had long runs, we would be doubly careful.
On top of that, a frothed up open in the DOW/S&P was sold and closed at the lows with the S&P down on the day. Tax reform beneficiaries were still up nicely but also came in a decent amount of the way. Our “changing of the guard” theme remains in force and for the growth/tech/internet/semis, we would be more than cautious.
It’s up nicely…and my President refuses to shut up about investigations that may put himself and people of his administration in harm’s way…
As we write this, DOW futures are up over 200 off of the Senate bill. It is quite interesting to read that the average effective corporate tax rate is already at 22%. So why would a small drop be such a good thing for markets? Of course, futures can change overnight.
Friday was influenced by a jackass report from ABC. In seconds, markets fell through the floor but when all was said and done, a 350 point Dow drop turned into a 40 point drop. We never like calling for anyone’s firing unless they are politicians or my favorite sport’s team coach…but this Ross guy is a professional at trying to rip one side of the aisle. After the Colorado theater tragedy, he had no problem linking the murderer to the Tea Party without doing any legwork. We certainly hope he gets his act together as he has done some great reporting in the past.
At this point, we just want to report the news.
Last week, the DOW was up 673 points…about 2.5%. The S&P was up about 1.5%. But to go along with our “changing of the guard” thoughts, both the TRANSPORTS and FINANCIALS were up over 5% but the SOX was down 5%. On top of that, the NASDAQ and NDX were both down. We also make note that a bunch of CHINESE growth ADRs have rolled over as well as some growth names here in the US.
We also needed to mention the ugly patterns in both the GERMAN DAX and the LONDON FTSE. We suspect the FTSE has some BREXIT issues but not sure on the DAX. The good news is we are into December where bad patterns can turn up but as of this second, something to watch.
CHINA is on a normal pullback but the rigged JAPAN market is just sitting after a big move up.
Lastly, as we have said recently, watch the OILS. Looks like they are trying to turn up off of strengthening oil prices.
Before more comment, we want to see what happens tomorrow and whether we get a “sell the news!”
Lastly, memo to the Trump administration! Please please please please yell and scream because the tweets are now going to put the President in harm’s way. For some unknown reason, he thinks he is playing some sort of game but we have news for him…the other side is not playing games. Tweet about markets. Tweet about football. Tweet about media. Tweet about anything your heart’s desire. Just stop tweeting about an investigation that potentially has you or others in your administration in the cross hairs.