WEEKEND NOTES

After the action of the week ending July 27, we penned a report titled ‘Changing of the Guard!” We thought at the time we were starting to see money flows out of “growth” and into “value!” This is not necessarily negative…just that some way overdue changes were in the offing. After all, value had been left for dead while growth was the place to be.  For a very long time, our mantra was to avoid utilities, reits, drugs, food, beverage and other consumer staples. For a very long time, we were against lower beta. We now think that report was prescient as the money flows we started to see and feel are playing out. Lower beta names are continuing to get money flows. A glance at ETFs like XLU, IYR, XLP show this.

Our screens have been changing a bit. A bunch of growth names like ADBE, DATA, FB, NFLX, NVDA, TSLA, TWTR and a few others came off. Some have broken hard like FB, NFLX and TWTR. Others have just broke below the 50 day like an ADBE. We are even seeing some issues with a GOOG but remains above. We are not saying these names will not hit lows and start coming back. We are just telling you what is going on now. Just keep in mind, a name like FB is a broken stock right now. A name like TSLA has its own set of issues with the CEO. We have also taken most OILS off our screens as most trade below resistance and moving averages. We can also say the same about the all-important SEMIS. The SOX is actually trading below the 200 day.

We also just wanted to mention there is a chance GOLD and SILVER had selling climaxes this week…but not 100% sure. A selling climax occurs after a miserable drop, massive volume occurs creating the last of the sellers being picked off by buyers…finally! Again, bear market….but big bounces do happen in bear markets.

Major indices act fine. Watching for the S&P to move first above 2863 and then 2873. Watching for the RUSSELL to move above 1708. The NASDAQ and the NDX are just ascending off of pullbacks to the 50 day average…the 3rd time in past 7 weeks revisited.

Foreign markets remain much much weaker than the U.S. Some have been mauled. About the only good news is that it “feels” like they may have been washed out for now this past week but no need to go there just yet.

And TESLA! (TSLA). Let us not forget, on top of some weird behavior, on top of what we consider to be knowingly misleading tweets, on top of the class action lawsuits, on top of any new regulatory risk, do not forget Elon Musk also made promises during the latest earning’s call that Tesla “can be sustainably profitable and cash flow positive in Q3 and going forward onwards.” We have been doubtful of these promises and continue to be doubtful. This morning, the stock is now trading at $289…a measly $131 below the “supposed” buyout price, equivalent to approximately $22 billion.