The “Easy” Trade in Apple
On January 3 Tim Cook shocked the investment by pre-announcing earnings problems and slowing iPhone sales. Fundamental analysis is above my pay grade so I am not going to go any further. It was shocking because I couldn’t find any other pre-announcement since 2002. There may have been one, but it wasn’t easily found. The stock had already collapsed from $233 to $147 before the warning. That magnitude, 37%, is not what you normally see even during a 20% decline […]
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Date: January 30, 2019
Semis & Junk Bonds Say the Bears Are Wrong
After trying to score new recovery highs late last week, stocks are set to open modestly lower to begin the week full of earnings and the first FOMC meeting of the year. For now, I am sticking with the same theme from last week. The market is in pause or pullback mode. So far, stocks have done nothing wrong. Leadership has been strong and constructive with all four key sectors contributing. I have to say; behavior in the semis is […]
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Date: January 28, 2019
Risk in Both Directions is Small
In Monday’s post, I briefly discussed “V” bottoms and their rarity. I also mentioned that stocks had come very far, very fast and that a pullback or pause was due right about now. So far, stocks have perfectly paused and mildly pulled back. If the rally from the Christmas low remains fully intact, the pullback should be over with either some additional sideways action for the market or a return to new recovery highs next week. It’s that easy right […]
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Date: January 24, 2019
“V” Bottom But Pullback Due Right About Now
Stocks closed at their highest levels since December 6th on Friday, wiping out 100% of the vicious and relentless selling wave I wrote about for so long. So far, the bottom has had the shape of a “V” which is not only rare, but generally uncomfortable for me as “V” bottoms are more characteristic of bear market than bulls. To counter that, there have been numerous confirmations that the rally since the Christmas low is a blast off of a […]
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Date: January 21, 2019
Bulls Continue to Do Nothing Wrong, Yet
Stocks continue to do nothing wrong as they bounce sharply from the epic selling wave in December. On Tuesday most of the major stock market indices made new recovery highs. Leadership has been constructive, meaning the more aggressive sectors have been leading. Risk on, if you will. However, stocks have also rallied right into the zone I first mentioned on December 21 as the most logical area where the bears could put up a fight. From here we will see […]
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Date: January 16, 2019
Equilibrium or End of Rally?
Almost on cue, stocks began to either stall out or moderate as they entered the lower end of the zone I first offered on December 21. That is a logical place for some to takes chips off the table if a revisiting of the Christmas lows is going to happen sooner than later. So far, stocks have done nothing wrong, especially with high yield bonds and bank loans snapping back so strongly in 2019, but I am not going to […]
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Date: January 14, 2019
Stocks into Zone Where Rally May Stall or End
It’s been one heckuva start to 2019. Just listen to the media and pundits tell you how stocks have rocketed 7, 10, even 12% since Christmas. While that is true, it’s a bit misleading as they forget the carnage from Q4. As I wrote about here and here late last year, there was certainly a preponderance of evidence to suggest a bottom and vicious bounce. That has come to fruition and I am glad the market is cooperating with the […]
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Date: January 11, 2019
Manic Market
It really is amazing how stocks go from never being able to rally to never being able to decline. After the stock market hammered out the bottom on December 26, the reaction by bulls has been easy to predict. I only wish I did a better job leading up to that low in December. Live and learn which I always do. At this point, we have seen epic buying since December 26 with all kinds of very positive indicators triggering […]
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Date: January 10, 2019
My Oh My. That was Quick
In my last blog post, Apple had pre-announced less than expected earnings news and stocks were looking sharply lower on Thursday morning. Besides commenting that it was probably a day to just sit back and watch, I also offered that historically, news like this from Apple usually comes near stock market lows.Thursday had an unusually dour feel to it. It seemed like the parade of pundits were all talking about an immediate retest of the Christmas week lows and that […]
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Date: January 7, 2019
Santa Claus Came a Callin’
The media spent the period from just after Thanksgiving to mid-December parading out pundits to talk about the Santa Claus Rally (SCR). Most of those pundits said the SCR was failing and it meant trouble for the stock market in 2019. I wrote several times that the traditional SCR, pioneered by Yale Hirsch of the Stock trader’s Almanac, was simply the last five trading days of the year and the first two days of the new year. An up SCR […]
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Date: January 4, 2019
Bulls Fighting to Begin the Year But Apple, Apple, Apple
After opening down 400 points on the first trading day of 2019, the bulls fought back really hard to erase 100% of that loss by the close and eke out a small gain. That was very impressive. Leadership came from the most beaten down sectors from 2018, energy and financials. That’s not surprising. So many investors sold those names during Q4 for tax loss reasons as well as window dressing to make their portfolio holdings look better than they actually […]
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Date: January 3, 2019
Big Gains to Close the Year But the Bulls Remain on Their Heels
Welcome to 2019! I hope you had an enjoyable and safe New Year’s. We had an absolutely wild and crazy one. It was one for the ages! I think my wife and I were fast asleep by 11pm although I am told that the kids were up until 1am. It’s good to be young. We were in Vermont and had some folks over for a very low key evening as yet another non snow producing winter storm came through as […]
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Date: January 1, 2019
Bulls and Santa Claus Making a Stand. One Indicator for the All Clear
December has already set all kinds of precedents going back to the 1800s, including depth of decline, speed of decline, length of decline and intensity of decline. Remember, stocks just don’t decline all that often in December, ESPECIALLY during a mid-term election year where Q4 and December has almost always been like shooting fish in a barrel. I had to go all the way back to 1931 to find anything remotely similar, but let’s face it, price analogs that old […]
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Date: December 30, 2018
Extreme Selling Leads to Rare & Immediate Reaction
After already discussing the legendary selling wave stocks experienced this month through December 24th, one of the sub models within our big stock market model triggered a scenario based on historic levels of overdone selling that has only been seen a handful of times since 1980. Each and every time, stocks saw significant gains almost immediately, even when in the context of a bear market. You can see all of these on the charts below with the arrows pointing to […]
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Date: December 25, 2018
The REAL Santa Claus Rally
All month I have heard the pundits say that the Santa Claus Rally has failed or that Santa failed to call so bears will come to Broad and Wall, popularized by Yale Hirsch of Stocks Trader’s Almanac fame. What incenses me is that those people just blurted and babbled nonsense. The Santa Claus Rally (SCR) doesn’t begin until the last five days of the year and continues for the first two days of the next year. In other words, it […]
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Date: December 24, 2018
From Lower Levels, a Bottom Coming
After last week, I am running out of adjectives to describe the stock market decline since December 3. Relentless seemed like the best word a week ago, but now it’s almost an understatement. Although I thought I had written my last long update before the Fed meeting, I had also thought that stocks would at least see a temporary low. I was wrong on both counts and am working on another update now. Almost every day last week looked similar. […]
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Date: December 23, 2018
Relentless Selling Wave Continues
It seems like every time I sit down to start a new post over the past few weeks, I am looking at the same data, indicators and price behavior. Stocks closed the day before lower and look like they have a chance to bounce but end up closing lower yet again. I thought when I started writing about relentless selling, it would end sooner than later. And here we are again; stocks fell hard on Thursday with the glimmer of […]
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Date: December 21, 2018
The Absolute Arrogance, Ignorance & Incompetence of the Fed
Here we go. Cue the media’s hype. “The single most important Fed meeting, perhaps of All-TIME!” Oh brother. Model for the Day Let’s start with the model for the day. As with every Fed statement day, 90% of the time stocks stay in a plus or minus .50% range until 2pm before the fireworks take place. With pre-market action indicating a much higher open, the opportunity is there for a momentum trade to the upside from the open until 2pm […]
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Date: December 19, 2018
Ugliness for the Bulls Rolls On. May Need More Panic
Most of the past few weeks when I sat down to start a new post I thought, “well, yesterday wasn’t very nice for the bulls”. Today, as I sit on the train to New York, I am thinking that Friday and Monday were downright ugly for the bulls. The bad Friday, bad Monday combination, regardless of whether this remains a bull market or not is something typically seen near lows which is where I think the market is. Similar to […]
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Date: December 18, 2018
Is It a Bear Market???
In rare fashion, the bears are certainly in charge this quarter, but especially this month. Historically, it’s very difficult to see stocks under constant pressure during Q4, let alone December. The usual catalysts for decline are typically seasonally absent. While that doesn’t mean that stocks can’t decline this late in the year, a decline of the magnitude we are currently experiencing is very rare. 2002 saw a 6% decline in December and 1968 and 1957 had 4% declines, but that’s […]
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Date: December 17, 2018
