News:
On Wednesday, buyers stepped back and started to assess the recent bull run.
The S&P 500 peaked with a gain of 11% from its low on October 13 to yesterday’s high.
Markets settled well off their highs as big tech and the communication sector continue to reel.
- Dow Jones +0.0%
- Nasdaq -2.0%
- S&P 500 -0.7%
- Russell 2000 +0.5%
Despite the indexes’ lackluster performance, there were many bright spots as 59% of stocks advanced, and only 38% declined.
Sector Round Up
6 of 11 sectors managed to end the day higher. Although the losers fell harder than the winners advanced.
At the top…
- Energy (XLE) +1.4%
- Healthcare (XLV) +1.1
At the bottom…
- Communications (XLC) -3.2%
- Technology (XLK) -2.2%
Notable Names
Elon Musk released a video of himself walking into Twitter headquarters carrying a porcelain sink.
The pun lover captioned the video, “Entering Twitter HQ – let that sink in!”
- Shares of Twitter (TWTR^) rose 1% during the day and another 1% after hours.
- At writing, the stock is trading just 28 cents below the agreed buyout price of $54.20
- The Wall Street Journal reported that banks have begun the transfer of cash to close Musk’s buyout of the company this week.
- We remain long the stock with a sell order at $54.15
Risk On…
Intel (INTC) spinoff Mobileye (MBLY), an autonomous driving tech company, popped 38% after debuting at $21 per share.
- Shares settled at $28.97, giving the company a valuation of $23 billion
- The Mobileye IPO is one of the first signs of life the IPO market has seen in quite some time.
Risk Off…
The communications sector is collapsing. And we’re avoiding it like the plague.
Zuckerberg’s Meta Platforms (META) fell 6% during yesterday’s trading session and another 20% after hours.
- Blame another round of lousy earnings and guidance.
- The stock is trading at its lowest level since 2016.
- Shares are down 73% from the September 2021 peak.
- Meta bet big on the Metaverse … investors don’t trust them to deliver.
Technicals:
The Dow Jones has reached overbought RSI conditions.
Nothing too concerning but this is the first sign that the current rally needs to cool down.
Our outlook remains bullish but we’d prefer to see some sideways price action to keep the market balanced.
Our signals indicate the markets are healthy…
- The VIX continues to fall
- RSI levels 3 of 4 are neutral
- The Put-to-Call Ratio is neutral
Timing:
Today, preliminary Q3 GDP data will drop at 8:30 AM.
The economy has already seen two consecutive quarters of contraction. A third could remove any question of whether or not we’re in a recession.
As always, we’re more interested in the market’s reaction than the data itself.
Watchlist:
*Low Float
^Open Position
*SOBRresistance at $4
*KLXEsupport at $14
*^RELL resistance at $24
*NINE support at $5
SLS resistance at $4
IMRA support at $4, resistance at $4.5
MEDP on watch
AEHR support at $19
WING on watch
ASC support at $12
ETNB support at $8
^IMVT support $10
GMTX support at $12
WNC resistance at $19
PCVX on watch
CALX support at $65
PARR support at $20 or $21
VIST support at $13
ADEA support at $10, resistance at $11
HLIT support at $15
HLX support at $5.50
CHX on watch
ROL support at $39
NFLX^ support at $250 or $280