MARKET COMPLEXION CHANGING
——-Maybe it’s the virus. Maybe it’s just overdue. After all, the market has had nary a pullback since October 3rd when the great money printer Powell leaked word of an impending NOT QE. Nevertheless, we think the complexion is changing as price dictates our stance. In no particular order:——-
—–JP MORGAN, our official financial bellwether has broken below support. Other names like BANKAMERICA have done the same. Add in that the REGIONALS are much worse and it is not tough to recognize that when the market loses this area’s uptrend, the market loses some tail wind. The reaction to “supposed” good earnings was to sell off. One can blame the cracking yields for this also.—–
—–ENERGY is getting blasted again. The ENERGY complex never came out of its bear market. It had bounced a bit but not any more. The same goes for most COMMODITY names.—–
—–CHINA-related names and CHINESE-etfs for obvious reasons. We are talking gaming, travel-related and China ADRs. Other foreign markets look to be rolling over also.—–
—–Leading BIG CAP BIOTECHS have broken down. Names like AMGN, REGENERON, BIOGEN come to mind but there are more.—–
—–You combine this and weakness in other areas with all our sentiment indicators we have been telling you about that were way too bullish and way too frothy and you get the condition for some pulling in. We are now getting a bit. We suspect there is more. To what extent? Don’t know. How long? Don’t know.—–
—–The good news is there is still a ton of leadership in growth-land but growth-land has become very over-loved, over-extended and over-bought so we suspect we get some pulling back into moving averages here also. This goes for the mega-caps to the smaller caps.—–
—–REMEMBER…MARKETS DO GO DOWN EVERY NOW AND THEN. We know many have been conditioned because of how persistent the market has been. If indeed the market does correct, the other good news is that we will be able to isolate strength easier as they will act best and hold up best. Remember, a ton of earnings in a ton of important names this week not to mention the maniacs at the fed will be meeting to tell us blah blah blah easy money…blah blah blah NOT QE. And then there is the virus. We are not taking this lightly because you never know.—–
Things with the virus will get worse. This Sunday China confirmed that the virus is contagious during its incubation period, which can be between one to fourteen days. This means the virus can be spread by people who do not have a fever or any other symptoms.
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