Equity market action yesterday was interesting in that it felt like the weight of the world fell on Steve Jobs’ frail shoulders…… the market hung in there until it became apparent that AAPL‘s at their WWDC was not going to introduce some new must have gizmo that no one should have expected in the first place…..Chart below shows the intra-day chart of the SPX that traded in a very narrow band after Friday’s shellacking until about 1pm when it Jobs’ keynote was almost done…..[caption id="attachment_2425" align="aligncenter" width="300" caption="Intra-day SPX chart June 6, 2011 Provided by "][/caption]
There was really no leadership from an sectors in the market and as usual Financials stocks were the ugliest, C was down 4.5% closing at 8 month lows! One thing i noticed that was funnier than anything else is that old tech acted fairly well with MSFT, INTC, DELL all up on the day and CSCO unchanged…..this doesn’t say a ton other than that these are cheap stocks and may be viewed as slightly defensive…..
What I think is more interesting is how Chinese Internet names have been acting….SINA was down 10% on Friday, and yesterday saw huge sell-offs in some of its peers; NTES -8%, SOHU -5.5%, BIDU -4.7% and FMCN -6%…….this is very erratic action in a very speculative sector and in my opinion portends similar action throughout the summer. NTES chart below was a massive breakdown on huge volume and looks like a huge head and shoulders top.[caption id="attachment_2426" align="aligncenter" width="300" caption="1 yr NTES chart Provided by Bloomberg LP"][/caption]
Now, let’s get to our own over priced internet names…..my personal favorite NFLX….this stock made new 52 week highs last week only to get smacked yesterday for no apparent reason, stock was down 4%and likely has some more room to go. Again this action off of highs on volume is concerning and if I owned the stock (which I don’t) I would certainly consider taking some profits or looking for ways to protect gains with options.
Energy complex looks interesting to me (yes I just said, complex) as it appears to be on the verge of a breakdown….Last week I highlighted XOM as sitting on support and looks like a could see 75 at some point in the near future….Crude oil is a tough one here around $100 as it appears to be a huge tug of war going on between global growth slowing and tensions in the Middle East getting worse……if we get through the beginning of the summer driving season, or the hurricane season without any big disruptions and demand from emerging markets is in fact slowing… then crude goes lower and the a lot of the related stocks with it….[caption id="attachment_2432" align="aligncenter" width="300" caption="1 Yr XOM chart Provided by Bloomberg LP"][/caption]
SO WHAT TO DO NOW? S&P futures are up 1/2 % on ‘Greece Debt Optimism” or at least that is what the financial press would have you believe…that is stupid in my opinion as we were not down on Greek Debt Negativity….we have been down on growth concerns and nothing that the EU does regarding Greek debt is gonna change the single fact that we are slowing and growth estimates the world over are very likely to be to high….we need a reset of those expectations and at some point, maybe around 1200 in the SPX, those new dampened expectations maybe discounted…….Oh and futures up because Ben Bernanke is speaking today at 3;45pm and for some reason those hoping for new stimulus are expecting something from the chairman, I would say this is very unlikely, this not how the FED works, they usually float trial balloons first……he will not spring anything on the markets out of no where…
I AM STAYING SHORT NAMES LIKE APPL, AMZN, TXN, JPM AS I THINK THEY HAVE PLENTY OF ROOM TO GO, BUT DON’T BE AFRAID TO TAKE PROFITS WHEN YOU THINK INDIVIDUAL NAMES GET OVERSOLD, OR THE MARKET IN GENERAL HAS GONE DOWN TOO MUCH TOO SOON….CORRECTIVE PHASES LIKE WE ARE IN OFTEN HAVE SHARP SNAP-BACK RALLIES…