Well, I was wrong about thinking yesterday would extend further right away. As prices have snapped right back pretty violently and S&P has regained the area of its breakdown.. A very tricky tape indeed- volume had been quite heavy on yesterday’s breakdown.. but breadth however was lackluster and maybe this was important to emphasize more strongly. There didn’t seem to be any evidence of fear, despite Credit starting to widen out.. and no real grab for Puts.. so Sentiment has gradually gotten more bullish and today will help this turn even more so. But important to recognize the divergences out there, as Small caps moving to new highs has not been followed by NDX, or TRAN, or SPX getting anywhere near former highs.. and DJIA pattern, despite how many joke about this.. IS important and tends to correlate well over time with SPX and is in pretty poor shape in the near-term. Yields also have NOT recovered the area of the breakdown. However, for now. Tech has proven resilient.. and now evidence of healthcare services and device stocks strengthening while Financials starts to stabilize
There remain some great technical names breaking out to new highs, and wanted to share these.. since today’s early commentary proved wrong.. and provide some ways that look attractive to make some money on the long side while this rally lasts. A few new names have come on the radar today: HCA, LHCG, DCT, FRGI, while a couple shorts ive been recommending are now basing and look like they can bounce.. ABC, and CAH.. so these should be covered if short and aggressive traders could attempt to buy dips.
Into mid-day, S&P getting over 2709 has provided a squeeze as prices got back into the prior consolidation.. And breadth about 4/1 positive is much better today than was seen yesterday on the pullback. Small-caps moving back to new high territory, TRAN also higher by 1.2% and Crude oil is snapping back 2.5% today- Treasury yields at 2.85% not making the same progress as equities in regaining prior breakdown, but a near 2% rally back in Financials is helpful for markets today- Energy leading , up nearly 3%, while Healthcare, Industrials, Staples and Real estate also rebound- Overall, a very tricky tape in short run. Tech has been resilient while Financials have not- Both industrials and Transports have consolidated their breakouts over last 5 days, but failed to give back enough to think these groups have to move lower. The Dollar starting to retreat should be good for commodity based stocks, while Energy pullback got a bit ahead of itself and now trying to bounce- Overall it’s worth being selective here as markets near the end of May, as June historically has been quite negative in Mid-Term election years, the worst month of all 12.. Averaging -1.79% since 1950- Whether or not markets are capable of following the same patterns that have taken place since February is unclear. But we've seen a pronounced pattern of bottoming in early month, peaking in mid-Month and then selling off into end of month, in February, March, April and now May- So watching carefully to see if this pattern repeats- For now, being back over 2709 is a positive for today.. And this whipsaw in the last 48 hours has produced a few POSITIVES.. Like Healthcare Services & Device stocks today.. While other groups like FANG/Tech have ignored the decline altogether and remain an area to watch carefully into mid-June, as NASDAQ should have much more difficulty moving back to new highs than Russell 2k
S&P- tricky tape as markets just broke down yesterday.. and now Getting over 2709 earlier this morning was key in producing a squeeze .. Breadth has been constructive thus far today
It will be tough to maintain a short stance with S&P back over 2709 and prices need to breach 2698 to put this back again on the front burner.
HCA- Great breakout back to new highs technically- I own this and expect movement up to 115
LHC Group- Another HC Services name which is breaking out to new highs. Very constructive price action.
I like this technically and expect a move into the mid-80s
CAH- Former short idea now looks to be stabilizing. And has triggered Demark buys which could be confirmed in the next couple days.
This should be bullish for this to bounce to 54.74-55 at a minimum.. so I like covering all shorts and being long CAH here
DCT Industrial Trust- A very boring name that many don’t know.. but the technical pattern on this is attractive
Its’ been basing and now is pushing up to multi-day highs. Volume is a bit less than desired so far.. so a Half-unit long until this can pick up a bit.
But I like to move up to the high 60s
FRGI- Fiesta Restaurant group- this also fits the profile of one to own after having gapped higher on heavy volume, consolidated
And now pushing back up above mid-May highs. Volume here also will need to pick up a bit, but an attractive name off the radar which is moving to new weekly highs