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.