Financial News vs. Noise
Another nothing day ahead of Thanksgiving week. Wouldn’t really expect much until NVDA earnings which are Tuesday after hours. It was NVDA earnings in June that changed the entire tenor of this market so I suspect that what they say will be important. There are other important news items that could impact the Magnificent 7, first was Sam Altman being fired from OpenAI unexpectedly towards the end of the day Friday. MSFT, which has 49% stake in OpenAI immediately sold off. This could have ripple effects across the market. Now apparently Microsoft his hiring him, which the stock seems to like. Have to think a lot of people went short on Friday, I almost did The other major story was a tweet that Elon sent that was taken to be supporting an anti-semetic view. Advertisers immediately started removing ads from Twitter. You have to figure this has a ripple effect on TSLA. Turmoil creates trading opportunities so we will be watching to see how this plays out.
As far as the market’s go, the SPX is holding 4500. Coming into this week we will be watching last week’s high of 4521 and Tuesday’s low of 4458 as next support and resistance. My view hasn’t changed, I think the market wants higher but has to consolidate some of these gains. I am seeing a lot of areas that look double toppy so my bias would be for some short term weakness. Again we could see some reshuffling based on the news above and NVDA earnings are a wild card.
On the NDX we are watching the year highs as the next resistance area around 15,932. Tuesday’s low should be the next support level at 15,726. Same deal here, could be setting up a double top so my bias would be towards some sort of downside. MFST up over 2% at the moment doesn’t hurt though.
Small caps continue to be the laggards. IWM briefly popped above it’s 200 day and settled back below. It is holding the 50 day. In between it’s 200 and 50 it could be setting up as a short or a long, depending on how it plays out.
10 yr yields continue to be the tail that wags the dog and they are in a clear downtrend.
We do have a 20 yr bond auction at 1pm today and remember, the last one almost took down the market. Bonds’ Best Month Since March Faces ‘Sanity Check’ in Auction Monday’s 20-year bond auction falls into a potential vacuum Signs of slowing economic growth have boosted demand for bond-Bloomberg
My bias coming into the week will be to look for short term shorts in areas that are double toppy and short term longs in areas still coming off bottoms. I would also like to find a spot to get long volatility as it is getting near the yearly lows, again, short term.
NVDA earnings and the impact of the Altman hiring could change all of this however.
Oil may have found a bottom here. As I mentioned in Friday’s note I went back into CVX as I would rather find stocks and areas coming off bottoms than chase things.
I would like to see WTIC reclaim it’s 10 and 200 day.
CVX did move back above it’s 10 day, which can now be used as a stop. On the upside it could fill the October gap.
Precious metals and miners did nothing on Friday and I’m out over the weekend. With rates and the Dollar coming down and the potential for Middle East turmoil and regional banks going under, this will be my top watch and I will look to buy dips.
Two other areas I have been looking at on the long side where the lithium names and biotech. In lithium I am in ALB, which had a nice day Friday. Biotech I am in the ETF, XBI, which also did well. I also bought the dip in LLY and am looking for a dip to get back into SDGR.
Continue to like the prison stocks GEO and CXW, both were green Friday. Will continue to add to these on dips.
China turned around a bit on Friday and I decided to keep my exposure over the weekend. KWEB was positive. BABA got hit again, but closed way off the lows. Cramer came out very negative on China Friday :)
On watch today will be the metal names, AA and FCX. Both are fiddling around their 50 day’s. Fertilizers got crushed on Friday, but I could look to get back into MOS if it holds support.
Another area of interest could be Argentina Javier Milei, a Self-Described Anarcho-Capitalist, Is Elected President of Argentina The libertarian outsider, who says he will upend years of free-spending populist rule, defeats ruling party candidate Sergio Massa-WSJ. There are a couple of names with set ups I like that also seem to have liquid options, YPF and GGAL. So far though it doesn’t look like the idea of buying Argentine stocks is an original one and they are both ramping.
I continue to be short AX, RILY, and TRUP. Added a TJX short as well. As I said on Friday I think retail and the consumer are in trouble and would look to short pops in these stocks. TJX provided a nice entry when it failed at it’s 50 day. Still watching all the others for spots to short. Also watching COF, which I was hoping would move below the 10 day, instead it bounced and was up over 2.5%. I will also continue to watch the regional banks. KRE is living above it’s 200 day so any break below would trigger a short of either that, or a bank that catches my eye. Unfortunately my 2x inverse regional bank ETF (SKRE) is delayed until 12/12.
Other areas that look double toppy and could morph into shorts are software (watch the Altman news), aerospace, homebuilders, semi conductors (wouldn’t touch until after NVDA), Uranium, communications, financials, and real estate.
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News vs. Noise
Microsoft, in a statement, said the relationship between the two companies would be unaffected by Altman’s departure.
“We have a long-term partnership with OpenAI, and Microsoft remains committed to Mira and their team as we bring this next era of AI to our customers,” a Microsoft spokesman said.
Instead, Drudge Report was running a banner headline naming him the “world’s richest bigot.” Longtime vocal Tesla investors were expressing dismay in their famous CEO. Apple, Disney and other majors advertisers suspended spending on X, opening a major new risk for the company. And the White House was condemning Musk’s “abhorrent promotion of antisemitic and racist hate in the strongest terms, which runs against our core values as Americans.”
Why do I get a feeling that this is a contrary signal? Jim Chanos, Short Seller Who Took on Enron and Tesla, to Close Hedge Funds Chanos & Co. manages less than $200 million, down from $6 billion in 2008-WSJ
Oil Prices Fall for 4th Straight Week. A Rebound May Be Coming.-Barron’s
While some of the drop reflects a real slump in demand and boost in supply, some of it looks technical and possibly temporary. There is a good argument prices could rebound over the coming weeks, although some recent economic data isn’t particularly hopeful for oil bulls.
Still not sold on this. What Recession? Consumers Still Have Plenty to Spend. A resilient labor market and healthy household finances should keep a recession at bay, even if the postpandemic spending boom loses a bit of its vigor.-Barron’s
Matthew Tuttle is the Chief Executive Officer and Chief Investment Officer of Tuttle Capital Management, LLC.
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