“Experience is what you got when you didn’t get what you wanted.” – Howard Marks
As we have been discussing, these low volume equity ramps on far from impressive breadth are far from what you would expect to see in a strong/healthy market phase. Furthermore, apart from the weakness we have been discussing and reviewing in sectors like Transports, Retail, Health Care, Real Estate, don’t forget to note that apart from the usual suspect in the FANG+ club, we have seen a lot of far from impressive earnings and revised guidance releases. Also, once again and not to sound like a broken record, keep an eye on high yield and metals…
Today’s action should be extremely interesting as we will finally see the market reaction to both the appointment of the new Fed Chair and the Tax Plan. Needless to say, it is hard to see what could come out that would suddenly want to spark a buying frenzy (would take a miracle out of Washington) but as we have said before, these are far from ‘normal’ markets. Bottom line, we still feel this market is due for a healthy correction and even if most have lost hope, there is a good chance that yesterday’s action was a sign that we are ready to see some downside.
A good way to get an intraday feel for possible acceleration is to keep an eye on USDJPY. No matter what metals or equities are doing, unless yen can get some momo, then the move will likely not manage to stick.
Don’t forget to keep an eye on crude; extremely interesting failure at the 55 mark as we enter weak seasonal months.
Last but not least, we will be keeping a close eye on how individual names open post yesterday’s earning releases as we wait for Apple to report today. No change to our Tesla outlook, since the double failure at the 380s. We have nothing against Elon but since we continue to refuse to believe that he can walk on water, we are looking for a healthy dose of reality and a move back below the 300s into the 280s (and this is purely a conservative technical target).
As always there is no substitute for real-time/live action; if you are interested in attending a daily morning call into NY with a more detailed live discussion on all the charts and ideas we highlight/review in the outlook video and here on the blog, you should check out our Daily Webinar Group.