Folks want to assign blame to anything and everything
regarding the market’s decline today. If you think it was
the Bank of Japan’s lack of further easing policies, then
would ask why it was that the market shrugged it off and
rallied from the minute the market opened?
If you think it was Carl Icahn coming on CNBC to tell us
sold Apple, then I would ask why that discussion about
stock would matter today when it had been beaten up for
several days now?
I can’t say exactly what it was that turned the market,
I know the signs have been there for several weeks. The
market has been overbought—and with the Oscillator at a
lower high. In mid-March, the number of NYSE stocks
new highs was the largest number that I’ve ever managed
see. So, it’s been six weeks of fewer new highs. And
not forget that the Nasdaq is down handily in the month
April. If it cannot rally 70 points on Friday, then it
be a down month. Why isn’t anyone discussing this? I
they are not discussing it because of all the complacency
that is out there.
And I continue to see it. The four-week moving average of
bears in the American Association of Individual
poll has fallen like a rock. If that’s not enough for
then what about that put/call ratio on the VIX yesterday?
Someone is obviously placing a very large bet that
volatility will go down, not up. So, it’s not one thing
tipped us, but several. And these things have been
Yet, for such a big down day of 1%, breadth was not
terrible. For example, yesterday with the S&P up three
points, net breadth on the NYSE was plus 1220. Today,
the S&P down 20 points, net breadth was -975. That adds
to a net loss of 17 points for the S&P and breadth was
positive by about 250 issues.
However, something is a bit different in the market
lot of stocks that were up big yesterday gave it all back
today. I have not seen that since the January to February
period. I believe corrections are healthy, and it serves
a way for the market to reset itself. But, when all that
trash was rallying early today, it told me that it was a
case of traders running amok. I’d like to think the
correction is not yet over, but with the exception of the
Nasdaq in April, I have been proven wrong this month.
The S&P has shown resilience by not breaking under this
area, since it exceeded that point three weeks ago. If
breaks, it changes the pattern.
Note: I am speaking at the National Association of Active
Investment Managers (NAAIM) Conference on Monday morning.
There will be no Letter this weekend, nor Monday evening.
I’ll be back at my desk Tuesday.
Whole Foods Market (WFM) has been trying to form a
bottom for months now. I’ve looked at this chart several
times of late, with that same note. It has not been able
lift itself up off the mat. There was quite a pickup in
volume today though, so I wanted to highlight it once
I’d prefer that it does not break under $29.
The 10-day moving average of the put/call ratio is
turning upward (bearish for stocks).
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Lockheed Martin (LMT) has been terrific and hasn’t
done a thing wrong. The issue is that it has a measured
target of around $240, so it’s awfully close to it.
Raytheon (RTN) had a nice breakout yesterday. I
like that it’s giving so much back today, but if it can
over $125 then it has a chance at a measured target of
around $136. Be careful of charts that breakout and then
retreat. It often means that the rally was shorts
and not new buyers, thus there can be little support to
the stock on the retreat.
General Dynamics (GD) has made its first higher
in almost a year. I consider that a positive. I’d love to
see it consolidate in this $140 to $144 area, before it
makes another move higher. There is a measured target in
$150 to $155 area. I will say I am surprised that these
high-priced stocks don’t have higher targets, but I just
the math and this is what came up.
Despite the Nasdaq’s decline for so much of the day, breadth was impressive
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