The Stock Market Looks Temporarily Exhausted

“Knowledge born from actual experience is the answer to why one profits; lack of it is the reason one loses.”        Gerald M Loeb

 

Market Commentary:

The rally looks temporarily exhausted. Look for pullback opportunities.

• The Advance/decline trend on the NYSE weakened; the Nasdaq line broke down to a low and is outright scary.
• This week’s 52-week new-high/new-low numbers indicate higher risk as well. Already we are seeing more new lows than new highs.
• The recent price moves on individual stocks are absolutely nonsensical with outrageous gaps up and down. This makes people lose faith in any valuation metrics.
• It is more of a stock pickers' market than usual as momentum factors are currently exaggerated, which is fine by me. It seems like the trading algos are running the show. I believe this to be the cause of the next “flash crash, fairly soon.”

 

Economic data and market clues:

Earnings season remains in full gear this week with all eyes (too many?) on the Grand Dame of this market, Nvidia.

The President-elect’s appointments will continue to be in focus, and you can see reactions around the sectors his team will address. “Big Pharma” got their taste last week.

Housing data is in focus this week. I think the under-supply remains the clear story here.

 

Selected current ideas (It is OK to be holding some cash here)

 

Magnet® : 

Shift4 Payments       FOUR 

Celestica                   CLS

Vistra                         VST

 

FACTS:

HealthEquity                HQY

Clorox                           CLX

Technip FTI                   FTI

 

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Momentum Has Narrowed Again, Significantly