Morning Comment: Small-cap problems...Lumber is ripe for a decline (is that a problem for HD & LOW?)



The stock market took it on the chin again yesterday, but this week’s decline is still only a blip on the radar screen of the long-term picture of the stock market. Yes, volume did pick-up, so that’s a concern….but given the fact that the composite volume was still below 3bn shares, it’s hard to make too much of this development. We’d also note the breadth on the S&P 500 was only 1.7 to 1 negative…so yesterday’s action was a long way from being a disaster.

That said, we definitely saw some material weakness in the small-cap sector of the marketplace…as the Russell 2000 declined just under 2%. The breadth was 4 to 1 negative on that index. That’s not good, but it’s not horrible. However, volume rose by more than 40% (on the IWM Russell 2000 ETF)...so the action in this index certainly raises some concerns.

On a technical basis, the Russell seems to be forming a textbook “Head & Shoulders” pattern…so if it sees further downside follow-through over going forward, it’s going to raise a big red warning flag. The “neck-line” of that “H&S” pattern comes-in at the 2,150 level (212.00 on the IWM). Therefore, we will be watching these levels VERY closely. Any meaningful break below these levels will signal as very compelling change in trend (especially since the Russell has already broken below its trend-line from the early November lows). (First chart below.)

NFLX reported earnings last night…and the stock is trading down by 8%-10%. This is a classic example of why it is essential to wait for important support/resistance levels to be broken before one reacts to the development. The fact that a resistance level BECOMES a resistance level is because it is one that is difficult to break! (The same is obviously true for support ...

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Morning Comment: Tech Stocks at a KEY Technical Juncture


We’re heading into earnings season for the tech stocks…and it’s coming at a time that the sector stands at a key technical juncture. IBM reported better-than-expected numbers last night and it is trading 3% higher in the pre-market. However, IBM ...

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Morning Comment: Today is (almost) all about COIN and Bitcoin



We had yet another pretty uneventful day yesterday. Yes, the S&P rallied 13 points and the Nasdaq rose more than 1%, but they both had negative breadth and volume remained very low. (The composite volume was higher than Friday and ...

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Morning Comment: Energy ETF's Testing Key Support...Bitcoin Breaking Out.



We had yet another boring day in the stock market yesterday…as volume continues to come-in at/near the lows of the year….and the intraday range for the S&P 500 has been less than one-half of one percent on four of the ...

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Morning Comment: Financial stocks still look great on a longer-term basis


You can’t get a lot more boring than we got yesterday in the broad stock market….as the major averages finished the day pretty much unchanged on the lowest volume day of the year so far. This action (or non-action) is ...

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Morning Comment: ARKK....AMZN....Mary Jane Bush


  • Some profit taking in front of tomorrow's employment report?
  • $110 is the KEY support level for ARKK
  • Ditto for the $2,950 level on AMZN.
  • A tribute to Mary Jane Bush, Wall Street pioneer.


The stock futures are trading higher this ...

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Morning Comment: Small-caps, Biotechs testing KEY support levels


If history is any guide the market tends to rally at the end of the quarter…as institutional investors mark-up their favorite picks. Thus, with only two days left in the first quarter, maybe it should be no surprise that the ...

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Morning Comment: Several Overseas Markets Showing Some Cracks.


The Treasury market rallied very nicely yesterday, and this obviously led to a rather material drop in long-term interest rates. However, instead of that causing a nice bounce in the stock market, stocks got hit quite hard. In our minds, ...

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Morning Comment: Banks Ripe for a Short-term Pull-back.

In our weekend piece this past weekend, we highlighted that although we expect long-term rates to head higher over time, we also think that they are ripe for a pull-back over the short-term. We showed how the chart on the ...

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Morning Comment: WAKE UP, the FED has become more hawkish!



Despite the consensus narrative after the Fed announcement/press conference yesterday, we would argue that the one thing that everybody is missing is that the Fed keeps confirming lately that it has changed its policy...and has become more hawkish. ...

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Midday Comment: Nasdaq approaching the "neck-line" of an "H&S" pattern


This is a note I posted today late in the morning. If you would like to get posts like these on a more timely basis...as well as receive my daily comments and "The Weekly Top 10" piece, please join us ...

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Midday Comment: Nasdaq approaching the "neck-line" of an "H&S pattern


This is a note I posted today late in the morning. If you would like to get posts like these on a more timely basis...as well as receive my daily comments and "The Weekly Top 10" piece, please join us ...

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