Despite stellar earnings, indices made a reversal on Friday.
INTC gave up all gains and closed red
AMZN gave up majority of its gains
Before we do further analysis, let us look @ key metrics in indices / sectors :
TAN RSI 53.06 above 50 DMA
RUT RSI 51.35 above 50 DMA
S&P 500 RSI 50.40 below 50DMA
Nasdaq RSI 49.14 below 50 DMA
SOX RSI 40.89 below 50 DMA and near 200 DMA
Stat for RSI & moving averages is not healthy for SOX @ all, this despite a major beat by AMD & INTC.....this does not bode well for Nasdaq, as they as goes Nasdaq, so goes market.
S&P 500 is below 50 DMA
Nasdaq came very close to taking out 50 DMA on Friday...but turned south right then.....
Russell is behaving well and staying above 50 DMA...gives some hope for US market....
TAN is the best behaving sector in the market which is Solar stocks, FSLR had a multi year high breakout on Friday and is poised to do the same in short order.
Caution is required until we clear 50 DMA in a decisive manner, meaning must stay above 50 DMA for @ least 3 consecutive trading days.
IF we do not break above 50 DMA, there is a chance we could dip below 200 DMA....
That may be a major trendline breakdown and must be taken seriously.
AAPL reports Tuesday...extremely critical report for this TAPE..as goes AAPL so goes Nasdaq and market......
Good luck with your own analysis and comfort level.
BLOG does NOT give buy or sell.
Saleem
4 comments:
Hi Saleem,
Last week:
Performance: -0.21% (YTD: +15.82%)
Notable Winners: VICR BOOM SOXS NSP OPTN
Notable Losers: FARO TRIL GTLS TWTR SPLK
As earnings season hits full speed, there were some big winners and losers in the portfolio, but they washed to produce a nearly flat week. There will be more earnings this week for my portfolio, but I'm more concerned about the general market status.
I think there are many industries that have hit peak growth, thereby seeing peak P/E. And although earnings estimates could still rise from here, the headwind of contracting P/E is tough to overcome. Some industries like chips could see both lower estimates and lower P/E in coming quarters, and therefore makes up my favorite short currently (long SOXS), although admittedly there are many chip stocks already down significantly from the highs, making a big relief rally a risk to the short thesis.
I also think we are in a stage where the Fed is on full raise mode while the global growth indicators are showing early signs of sluggishness. Therefore, another of my worries is a Fed that makes a "mistake" in raising too much while growth is slowing. Even if growth remains steady here, a raising Fed will reduce liquidity throughout the world, and leads to my small caps short thesis (long TZA) as they are usually the most vulnerable in this kind of environment. The risk to the short thesis is that small caps have yet to fully price in tax benefits or that growth remains strong enough to propel them higher still. We'll see if the small underperformance last week after many outperforming weeks in a row is the start of a new trend.
At this juncture, I will likely look to selectively add some long specific stock exposure as my shorts are probably at the proper relative exposure pending further developments.
Holdings: TZA BABA SOXS NSP VRNS SPLK VICR EBS MHO APPN TRIL, cash 29.3%
Good luck to all during another big earnings week!
Stocktrader
Hi Saleem,
Bought BOOM @ 38.67
I felt like I needed an energy play still given the oil supply/demand dynamic continues to be favorable. After huge earnings and guidance last week, I wonder if BOOM can get more analyst coverage and institutional flow.
Stocktrader
Hi Saleem,
Bought GTLS @ 57.68
I continue to love this story although the valuation is pretty rich. With the major play here being the making of equipment to turn natural gas into LNG, a substitute for oil in many cases, the rise in oil with the relative flatness of nat gas provides a consistent tailwind.
Stocktrader
Hi Stocktrader,
Today was tax filing deadline in Canada....was tied up in filling some backup forms.
My weekly loss was 6.49%
YTD loss 20.70%....
Good luck with BOOM & GTLS....
Saleem
Post a Comment