WEEKEND NOTES

Greetings from Glasgow airport as we are just about on our way back from Ireland and Scotland. Had a fabulous time. More on that from our travel blog post in a day or so.

Just to get them out of the way, a few negative area notes:

OILS may have topped near term as oil prices may have topped near term.

Same for many commodity names with a few still strong.

Consumer staples not so good. Food, beverage, tobacco, household products.

Utilities still weak as rates have backed up. But thinking short term, the opposite may start to happen.

Drug stores and distributors yonked as rumors of Amazon getting involved. Is Amazon jumping the shark?

Media stocks…yuck.

Lots of retail remains horrid. COST latest to cough one up.

BUT:

In spite of very overbought conditions, have you noticed how recently, market opens flat or weak and rallies into the close? Always a good sign. Most major indices look fine and act fine. Even trhe once lagging small caps and Transports are now in gear. On top of that:

Financials strong with favorite name C best of with others moving to new highs like BAC, JPM and a few others. As we have been saying forever, we have never seen a bear when financials are in gear. Speaking of leading groups:

The Semis are still working. Even the comatose Intel (INTC) has moved into new highs. And to repeat, when both the semis and financials are in gear, there is no chance of any overall trouble so must continue to be watched.

Industrial types (XLI) still working. For whatever reason, economically sensitive stuff on the move. This in spite of the many calls that the economy sucks.

The FANG glamour names are coming on. They have been weak. Most are just back in bases like AMZN, GOOGL and others. But notice NFLX breaks out on strong volume as they are raising prices.

Housing continues to do better with a few names in new high ground. Good reaction to earnings recently.

Sentiment (secondary indicator) now off the charts too bullish. Just keep in mind the fact things have become so overbought tells you how strong the past weeks have been. But a word of caution: now starting to see some assinine, assiten, asseleven predictions and articles like :why the market will go up 35% next year!” Really, only 35%? How about “we may just never have a bear market again!”  Or my favorite: “the fed insures no chance of a big correction!” Maybe they are all correct. We certainly agree this has been a worldwide central bank-induced market. Just find it funny we didn’t see these headlines a few thousand points ago.

The end of this coming week starts earning’s season. It starts with a few big financials. Remember, it is not the news, it is how things react to the news. With things extended and overbought here, will be interested in seeing how things pan out.