Weekend notes!
We actually wrote the following on November 20th. We reprint them again because not much has changed:
“We continue to believe this remains a very split tape…regardless that some major indices are in new high ground.
Bounces aside…and to be clear, all these areas are deeply oversold…we continue to avoid:
Gold/silver, real estate, utilities, beverages, food, household products, tobacco,emerging markets, apparel, medical supplies,medical equipment, pharma, solar, big telecom, big cap tech/internet (Facebook, Google, Alibaba, Amazon and throw in Tesla.) On top of that, many foreign countries continue to under-perform and lastly our technical call on the bond market remains in force as the bond bear remains in force.
But…notwithstanding pullbacks (which eventually will happen), extended financials, insurance, managed care, investment brokers, steel, airlines, transports, rails, industrials and semiconductors remain the bull of the woods. Just keep in mind, they are quite overdue to pull in where one can take a look at them.
Lastly, watch them oils…not all but many are sitting in what we believe are great looking bases. A breakout of range will add another group to the positive column.”
Fast forward to now:
Oils have broken out. Financials still lead but now thinking they start consolidating. Big cap tech/internet are still under pressure. All the poor areas have remained poor while all the good areas have remained good…except for one area. The SEMICONDUCTORS took a huge hit Thursday with many names giving back several weeks of gains in one day. The good news is that the Sox held the 50 day and bounced. It will need to continue to hold there. If it gets taken out, that’s one heck of an important area going bye bye. You can also now see the NASDAQ and NDX underperforming, especially the NDX.
Lastly, there was another so-called “the world is going to end” vote in Italy that has supposedly gone the wrong way. In spite of all the babbling, futures have hardly budged.