WEEKEND NOTES AND PRE MARKET
Futures are down a wee bit after being down much more over night. OIL and GOLD strong out of the gate. We have believed there is a good chance GOLD has turned a corner off of its recent lows.
WEEKEND REPORT
Two cents on what was said about Kanye. Do these people on a certain network who snickered, made fun of and amateurishly diagnosed a man and his past mental issues on numerous occasions even begin to realize that just months before, one of their own who they mourned on air, Anthony Bourdain, committed suicide? Guess not! We also guess they did not play back the tape of themselves or they wouldn’t have repeated their folly the next night. Let us also not forget these same people kissed Kanye’s a— when he want after Bush years ago. Poltics! Makes hypocrites out of many and it is not just one side.
Comedic headline of the week from the NY Times and it was not political:
“INTEREST RATES ARE RISING. THAT’S OK!”
Don’t tell that to the $233 trillion of global debt which includes the $63 trillion of government debt. We cannot begin to tell you how foolish this headline and article is. Remember what we have been telling you for years. It is the easy money brought to you by the maniacs at the central banks that have enabled all of this debt as well as cover up the eventual downside of all this debt. It is the ever more easy money which cover up the early easy money. Eventually you run out of big enough credit cards to cover the previous credit cards.
Well, that was an interesting week.
Since the 4 big indices, DOW, S&P, NASDAQ, NDX were holding up so well along with many growth names, our hope was if we could get past the dreaded SEPT/OCT period, we could have a good end of year rally, albeit a narrow rally. Narrow is ok while things are working. Narrow is a warning sign when things start to head south. Something was up as soon as the RUSSELL and the MID CAPS broke support. Something was up as soon as our proprietary growth list started to give way. Something was up because even when those 4 main indices were still holding up, new yearly lows started to swamp the new highs, indicating a narrow market was heading south. Something was definitely up…which put us on higher alert on October 4th. Simply put, narrow markets are easier to sell off when markets decide to sell off.
We do not agree with so many that say this is just a blip and that the bottom is in. We do not agree with those that say this drop came out of thin air. We have highlighted for many weeks how underneath the surface, it was less than meets the eye. To our eyes, the only thing this market has going for it is on a short-term basis, it is beyond stretched, extended and oversold On top of that, there was some sizable put volume late in the week indicating very bearish sentiment. But:
The short term is the trees. The forest is that our market is now starting to join the nausea of most world markets. The forest is that every major index has broke support and the 50 day moving average with
some below the longer term 200 day average.
Less than 3 out of 10 stocks in our universe are still in shape. This is a horrid number.
Even with Friday’s bump, 24 new highs, 690 new lows. Speaks for itself. The depths of some of the new lows like a Whirlpool (WHR) just amazing.
Both the FINANCIALS and the SEMIS now trade way below longer term averages and must make note that PNC BANK imploded on earnings while JP Morgan finished down on Friday. These two areas are the most important to our work. Right behind are the TRANSPORTS which also melted down.
Sectors in good shape can be counted on one hand.
Sentiment has been frothy. 80% of recent IPOs lose money. Marijuana stocks with hardly any sales trade with $15 billion market caps. Margin is at all time highs. Remember, margin is the best friend of a bull market the worst enemy when markets turn down as margin comes off first before the real selling begins.
Many are saying this drop reminds them of what happened early in the year. On the surface, we can agree but when looking beneath the surface, it is much much worse. Worse in the world markets. Worse in the FINANCIALS and SEMIS. Worse in the new highs/new lows. Worse in advance/declines. Worse in almost every way. Do we dare say it reminds more of —-? Ok…we won’t say! Those “things” just do not happen often!