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.

 

WEEKEND NOTES

A friendly reminder that while masses protest the Trump administration for many of the policies Obama had in force, while the media who turned a blind eye to anything negative on Obama and only covers negative on Trump, while the right looks for another judge, while the left tries to block that judge, while Trump continues to nonsensically go after allies but kisses the rear of foes, while Trump continues to put tariffs or threatens tariffs on anything that moves, while Kudlow makes up a story out of thin air that deficits are dropping markedly, while the left and the media celebrate a socialist winning a primary, while the left continues to have no game whatsoever, while the Mets can hardly win a game, do not forget that in the past week, ANOTHER $21 BILLION OF DEBT WAS PILED ONTO THE TAXPAYER BY ALL THESE LOVELY HUMAN BEINGS THAT ARE SUPPOSED TO BE LEADING THIS COUNTRY INTO THE PROMISE LAND. And of course, hardly anyone and certainly no one does anything about it. $21 billion next week, the week after, the week after…AND IT ONLY GETS WORSE. But don’t worry, debt and deficits do not matter.

 

Markets deteriorated last week even though it is supposed to be the seasonally strong, end-of-quarter, pre-holiday week. This deterioration came off of an already troubled market. We have been alerting this to you for weeks as fewer and fewer sectors and fewer and fewer areas are working. The latest to join the yuck is the TRANSPORTS and the SEMIS as both were down 4%+ last week. It is less than thrilling when a market that was already in trouble gets those two all-important areas to follow down.  But that’s not all. The REGIONALS (KRE) were also down almost 4%, another area that was holding up…no longer holding up. But that’s not all. A bunch of high beta, leading growth names also came in hard with quite a few breaking support. All this adds up to a troubled market. Before all of this happened, we have been reporting to you:

Bearish areas include HOUSING, HOUSING-RELATED, DEFENSE, AIRLINES, CRUISE LINES, CHEMICALS, MACHINERY, INDUSTRIALS, STEEL, COPPER, ALUMINUM, METALS/MINING, INSURANCE, FOOD, DRUGS, BEVERAGE, TOBACCO, HOUSEHOLD PRODUCTS, ALCOHOL, BIG BANKS, SEMI-EQUIPMENT, AIR FREIGHT, AUTOS, CASINOS/GAMING, GOLD, SILVER, SOLAR, HOTELS/MOTELS…and that’s for starters because we have also reported the carnage in EMERGING MARKETS and many other countries.

The DOW now trades a little below the 200 day average. The NYSE is below by a decent amount. The S&P is having trouble around the 50 day. The strongest areas, the NASDAQ, NDX and the RUSSELL all now looked to have topped. Other things sticking out:

There were more new lows than new highs on the NYSE every day last week while on the NASDAQ, 4 out of 5 days.

We are now seeing a series of strong opens and very weak closes. Those that have followed us for years no a major characteristic of a bull market is weak opens and strong closes…thus…

Areas that remain relatively strong are RESTAURANTS, RAILS, RETAIL, TECHNOLOGY, INTERNET, SOFTWARE but in all cases, are in pullback mode.

We head into the holiday week and then earnings season. We continue to hear how strong earnings will be. Just be careful because markets may have already accounted for it.

Lastly, the coins continue to head into the abyss with many coins going to zero. (very unreported) We continue to be amazed how so many are still clinging to the hope that this whole ASSet class was not a sham.

PRE MARKET- ONE MORE NOTE ON FINANCIALS

FINANCIALS will bounce today off of the fake stress tests. This enables some to raise dividends and buybacks….which indeed, some have already announced. FINANCIALS undercut support but will open on support this morning.

PRE MARKET

End of quarter, oversold, massive put buying and important support levels won the day yesterday and continue this morning.

We have been telling you all week that it was end-of-quarter window dressing week. Of course, window dressing is illegal so does not happen. It finally hit yesterday and right where it was needed.

The NASDAQ 100 to the penny…and we mean to the penny…at the 50 day moving average. The NASDAQ right at the 50 day average. The RUSSELL just above. On top of that, there was massive put buying (the wrong way crowd) AFTER the recent drubbing. Digging deeper, many growth names pulled right into the 50 day and bounced. And lastly, the worst of the worst, emerging markets and other countries were due to bounce after mini-meltdowns…thus the bounce.

The DOW will open back at the 200 day with the S&P at the 50 day.

The question is how well and how long the bounce goes. Answer…don’t know. But it enables us to see which names are really the strongest, the strong and the not so strong.

This does not change that more than 50% of the market is in bearish mode of different levels depending on which sector you are looking at. It does not change the overall bearish look on all those other countries.

For now, the end-of-quarter bounce.

Lastly, AMAZON (AMZN) continues to take over the world. Bezos is amazing.

 

YESTERDAY AND PRE-MARKET

The DOW had a chance to hold the 200 day. The S&P had a chance to hold the 50 day. In fact, markets were very strong out of the box yesterday…but that big reversal changed it up.

AS WE HAVE TOLD YOU, more than half the market was already in different stages of bearishness with many other countries in dire straights. The question was which side would blink. Would the worst turn up or would the divergences lead to the best coming down. Unfortunately, they are now coming after the strong stuff.

On top of that, the financials are breaking the important lows we have talked about, the semis are melting down, foreign markets just worsen and the Mets still suck.

Whatever is going on is going on. Be very careful of the normal “everything is ok” talk as the market has never cared about opinion. The big money, institutional crowd votes not with opinion but with their selling or buying. They continue to be sellers as markets have deteriorated….especially around the globe.

Near term, maybe, maybe not we get a bounce. We are still in the end-of-quarter window dressing period as well as pre-holiday. Usually, this week is supposed to have some seasonal strength. So far, ain’t happening.

Lastly, our theme on the “coins” continues to come to fruition as they are now taking a “slow death”  move down below support. We continue to be amazed as to how many charlatans are still out telling us to buy even though the “coins” are down 70%+ with many much much worse. Remember, these are the same people that told us price would go to $100,000 with one predicting $1,000,000. We still haven’t heard one logical explanation why these coins have any benefit economically.