Financial News vs. Noise
I knew the S&P was going to want to test 4400 at some point. Friday it shook off Thursday’s weak bond auction and ripped right through. Next levels we are looking for on the upside are 4450 and 4500. On the downside it’s the 50 day around 4338.
On the QQQs you have the 380 level on the upside and around 370 on the downside. The QQQs look the most extended of all the indices, but that’s because of the Magnificent 7.
Small caps (IWM) are still the weakest index, but it did pull a U&R at it’s 10 day, which could be used as a stop for a long entry.
The NYSE Composite and/or the equal weight S&P continue to be a better representation of what’s really going on. they are both off the lows, but neither would be described as bullish.
The wildcard now is the Moody’s debt downgrade, which I don’t think will end up being a big deal. This weak also has CPI and PPI. A surprise either way could be market moving, but barring that I think the path of least resistance is up.
Sentiment has now also completely flipped with institutional and retail investors back to the bullish side.
At this point I am mostly looking for longs that I don’t have to chase and only selective shorts. An old favorite that I bought on Friday is SDGR, which combines health care and AI. It rallied big on the AI boom and then came all the way back down. Technically it’s in short sale position until it breaks above the 50 day.
I am back into NVO as it had U&Rs at two moving averages on Friday.
SMCI is a retail favorite that can really move if this market moves. It had an U&R at it’s 50 day that was buyable.
Precious metals miners haven’t been doing anything, not sure why with rates coming down and global turmoil. I did buy GFI into the close as it held it’s 50 day, just in case.
On the short side I added RILY towards the end of the day. It’s a name I have been short recently and unfortunately fell off my watchlist. I normally would not chase something like this but it looks like it is circling the drain.
AX is related, I have been and continue to be short this.
TRUP is my only other short as I took advantage of the pop to reload.
My sense is that if they rally this into year end that they will try to broaden it out. Doesn’t mean they will, we could still see the Magnificent 7 stocks continue to run while everything else stagnates, but I don’t think so.
This week I will continue to look for spots to get back into GEO and CXW as I love the border, crime, personal safety theme. AXON is another one that I should have bought on Friday when it pulled a U&R at a couple of MAs.
Will continue to watch a couple of names I was in last week also—KTOS, CCJ, and SE
Some other areas that stick out as potential longs are Airlines and Coal. Oil names are interesting, just not sure which direction yet. I was short PARR on Friday which I covered before it completely blew up in my face. HAL looks like it could be a long here for example.
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News vs. Noise
If you know what you are doing not sure bond funds make a lot of sense, except the single bond ETFs. Bonds vs. Bond Funds: How Higher Rates Are Changing the Calculation Many investors are taking a second look at bonds. Here are some options to consider.-WSJ
This doesn’t hurt my NVO long. Novo Nordisk’s Wegovy cuts risk of heart attack and stroke by 20% among people without diabetes, study finds-MarketWatch
Have to think theft is going to continue to be a big deal. Retail earnings begin this week. ‘It’s getting worse,’ an analyst says.-MarketWatch
Matthew Tuttle is the Chief Executive Officer and Chief Investment Officer of Tuttle Capital Management, LLC.
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