THEM MARKETS

We know. At any moment, the war can end. We know. It can go on for weeks. We know. If the war ends tomorrow, the chalk is we get a good gap to the upside but let us not forget that before the war, jobs were being lost, the economy was softening, productivity was dropping and quite the few inflation numbers were ticking up. Taking away all the noise and just dealing with real time and to repeat a bunch from our last report::

Crypto broke support Nov 4 and has not looked back. Dropped, bear flagged for weeks, broke down out of that bear flag and so far, bear flagging again. Names like COIN, MSTR destroyed along with a bunch of weird names that came out for crypto. Do not forget. No sales, no earnings, no product, no services. Amazingly, the is the most asked about area telling us the many are still in this area as it wanes.

One never knows. We remain stunned by some of the drops. ORACLE gaps up on a monster announcement in September, rolls over in October, breaks the 50 day moving average in late October and has been destroyed. MICROSOFT and the SOFTWARE complex also break the 50 day on November 4th. We called the top that day. Little did we know. Nothing but downside. We called for a counter trend in early March which did not last long as the weakening market took everything down. The market clipped the whole group again as nothing will work when the overall market is taken down. Other bigs like SAP, ADOBE, SALESFORCE destroyed. Many blaming AI.

FINANCIALS of all stripes…ugh. Let’s start with the private equity/credit stuff. Some topped out last summer, others a little later but they have been bludgeoned. No respite. Hardly any bounces. Credit cards, brokers, investment managers…you name it, going deeper into their bear phase. BIG BANKS finally succumbed breaking support with some now living below longer term moving averages. This is our 2nd most important area. Let’s throw INSURANCE into this area in a bear market.

RETAIL blah. We have a few names and just a few names in shape like FIVE, ROST, TJX but on the other end, you have crashes in names like Lululemon.
RESTAURANTS, AIRLINES, CRUISE LINES, HOTELS, AUTOS, AUTO DEALERS all with big tops and now bear phases for the many. Cause and effect with a slower economy but them OIL PRICES. Everything CONSUMER DISCRETIONARY in a bear.

We have no idea what is going on in the MEDICAL industry but bear markets pervade in RESEARCH, PRODUCTS, many PHARMA and don’t get us started in MANAGED CARE led by the UNH crash. 2 DOW names in JNJ and Merck continue to act well…so far.

CONSUMER STAPLES with big bear markets in many names of FOOD, BEVERAGE, HOUSEHOLD PRODUCTS and all that.

TRANSPORTS were in great shape. Not any more. Oil prices! Will keep a close watch because they were strong before the war started.

FOREIGN MARKETS were strong. Were! Do not forget, when things go awry, they are less liquid.
This includes foreign banks that had been strong.

Our lesser TECH screen destroyed. These are names in TECH that topped out a while back and have done nothing but drift lower or get smoked lower. Many a SOFTWARE name on this screen.

The BOND MARKET down. Yields up. You know what the market thinks of that.

GOLD and SILVER…big climactic tops but near term, may be trying to carve something out. Need some more cards coming out of the deck. GLD at $400 so far holding.

The MAG 7 or MAG 8…worsening. In fact, META, GOOGLE and AMAZON just broke down again out of very bearish patterns. META especially. The only bigger name in shape currently is DELL. And then there is the biggest name in NVIDIA. It just broke below big time support and we mean big time support going back many months at about $170. This occurring while their numbers have been terrific and their CEO talking up a storm. A big hmmm! Needs to very much retake that $170 and quickly.

And the most important group in the SEMICONDUCTORS…now living below the 50 day moving average with quite the few important names below. Still, very strong on a relative basis but if it worsens, will not be good news. Recent cracks in Micron and Taiwan Semi not good to see as well as some important equipment names.

The very narrow strength is in the whole OIL complex of DRILLING, EQUIPMENT, EXPLORATION, PRODUCTION, REFINING and SHIPPING. Obvious reasons there. On that front, FERTILIZERS, AGRICULTURE PRODUCTS and some DEFENSIVE names in UTILITIES and TELCOM SERVICES remain in shape.
There remains a narrow list of strength in AI OPTICAL, DATA, STORAGE, ENERGY, CONSTRUCTION, ELECTRONICS but even this strong area wasn’t immune this past week but from a relative strength point of view, much, much better than most.

So…not much left standing. New highs have contracted and are limited to just a few areas. New yearly lows have really picked up. Advance/decline figures have been in freefall. The only decent positive we are seeing near term is that sentiment has gone coast to coast from very bullish to very bearish. Duh! Markets move emotions. We do not know how long this lasts or how far it goes but one must be careful. There is still too much talk of just buy and everything will be ok. Many have said to just buy all the way down. We’ll let the market decide. You cannot hide bullish action and so far, except for those few areas, it has been nothing but bearish.

The big indices are now living below the longer term 200 day moving average. As we have stated, nothing good can happen if price lives below this all important area of longer term support. Price must get back above. This is a fact of life in the market.

Lastly, thinking about last April when they were forced to get out of the crazy “liberation day” tariffs that would have taxed triple digits on a ton of stuff.  Already a weak market led into a double digit, 2 day drop into the weekend. On that Monday, they were forced to roll it back because of the markets but also commerce was stalling. Just the rumor leaking had the DOW move 2000+ points in minutes. They denied because of the leak and went right back down. They finally relented that Wednesday and on the change, the DOW did that 2,000+ point dance to the upside again. That was the low being put in. Will an end to the war cause the same effect? We are keeping that in mind but again, will let the market decide and again, there were already issues before the war began.