Market Strategies Newsletter - Special Daily Edition
For Trading November 20th
HD & KSS Miss
Is the Consumer REALLY Healthy?
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Today’s market made another new high but the DJIA couldn’t hold on and finished at the lows of the day -102 (.36%) while the NASDAQ held its gain and finished at another new high +20.72 (.24%), the S&P 500 -1.05 (.06%) following the DJIA but closing mid-range. The Russell + 5.95 (.37%), and the DJ Transports was -31.46 (.29%) but nowhere near the highs, 6.67% off that number. The DJIA was split 50/50 with the biggest loser, HD -88 DPs and BA- 17. There was only one stock up double-digits was V +21DPs. Advance declines were negative on the NYSE 13:15 while the NAZ was 3:2 positive. I find it very hard to be a buyer of anything here, considering the contraction in both volume and the number of “leadership” names. The supposedly strong and healthy consumer is clearly showing signs of pulling back, as you will see in the SECTORS below.
Our “open forum” on Discord, which allows me to interact with subscribers and others to allow direct questions and chart opinions on just about any stock, continues to grow with more participants every day. It is informative and allows me to share insights as the market is open and moving. The link is:https://discord.gg/ATvC7YZ and I will be there and active from before the open and all day. It’s a great place to share ideas and gain some insights.
SECTORS: Other names in the news:Earnings (or lack of earnings) took center stage today as HD reported and nobody wanted to own the shares. The stock, up from $20 after the 2008 crash managed a new all-time high yesterday after a run of 1200% from its 2009 low of 20 to trade $240 this week, the stock reversed and finished on the low -12.99 (2.65%). Unless we turn right here and move higher by weeks-end, everyone and their brother will point out the major reversal in this name. Less of a name, but still a major player in retail, Kohl’s: KSS also missed, by a mile, with continuing weakness and a new surprise; their deal with AMZN for returns might be bringing in shoppers, but they’re not buying enough to cover the increased costs in time and personnel that the service is costing. The stock, well off its recent highs last Xmas season $82.38, fell to $47.02 -11.38 (19.49%). Urban Outfitters: URBN also missed with a decline in profits, based mostly non increased discounting. The stock traded $52.50 last year and had declined to a low of $19.63 in August but had recovered to close $31.06 Friday. It had already traded lower to close $28.79 -1.37 (4.5%) before the numbers and then fell to $23.90 and was last $24.35 – 4.44. Macy’s, which doesn’t report until Thursday finished the day $15.04 -1.84 (10.9%).
While Jim Cramer (whom I consider one of the most overrated talking heads) has a new grouping that he calls WATCH, Walmart, Amazon, Target, Costco, and HD, and lauds it as proof that “retail is doing great.” He doesn’t seem to remember that these companies are the DISCOUNTretailers, and as such represent ONLYthose who are exempt from the kind of discounting that regular retail, and also LOCAL, INDEPENDENT retail, who makeup many small businesses. These are the companies that put the independents out of business.
TJX was the only bright spot in retail today, beating expectations and finished at another new all-time high at $60.64 +1.09 (1.83%). I might point out, again, that the ease of movement in this market for earnings is clearly to the downside. All-time beats +1.83%, misses, anywhere from 10-19% down. At least in retail.
On the upside, Jinko Solar: JKS beat both top and bottom and gave upbeat guidance, and the stock, down from $24.84 in June had declined to close yesterday 14.87 gapped up and traded $17.74 before closing $16.44 +1.57 (10.56%). Also on the upside were Myovant Sciences: MYOV, on Phase 3 HERO results for oral Relugolix, for Prostate cancer. The stock closed $6.06 yesterday opened $13.37, traded $17.17 and finished $12.92 +113.2%). The Medicines Company: MDCO, which was already up from its Xmas eve low of $16.69 to close yesterday $51.98 has drawn the attention of Novartis (NVS), who would like to buy MDCO, according to Bloomberg, sent the stock to $73.85 before closing $70.21 +11.56 (19.71%).
Yesterday’s HOME RUN OF THE DAY, Karuna Therapeutics: KRTX, who announced a positive result on their Phase 2 trial for their schizophrenia treatment. The stock had an average daily volume of about 70,000 / day and ballooned to 6.5 million by noon as the stock exploded higher. The company came public this June @ $16.00 and closed Friday $17.68. It opened $32.50 on the news and traded to $102.50 before finishing $89.78 + 72.10 (408%). Today it continued to trade higher to hit $152 before closing $123.99 + 27.99 (29.16%), making it the #1 IPO of the year with a move from $16 to $123 or 668%.
BIOPHARMA:wasHIGHERwith CELG -1.07, BIIB +3.08, ABBV +.13, REGN +4.27, ISRG +8.71, MYL +.04, TEVA -.07, VRTX +5.00, BHC -.20, INCY +.45, ICPT +2.54, LABU +3.19, and IBB $113.44 +2.20 (1.98%).
CANNABIS:stocks wereHIGHERagain with TLRY +.12, CGC +1.08 (7.59%), CRON +.46, GWPH +1.09, PYX +.02, APHA +.46 (12.04%), NBEV +.12, ACRGF -.25 (5.68%), CURLF -.20 (3.47%), KERN -.18. and MJ $16.63 +.56 (3.48%).
DEFENSE:wasLOWER with LMT -1.95, RTN -1.20, GD -1.63, TXT +.09, UTX -1.61, NOC -3.16, BWXT +.23, TDY +.60, and ITA $232.55 -.84 (.26%).
RETAILwasLOWER (SEE ABOVE)with M -1.80 (10.66%), JWN -2.34 (6.18%), KSS -11.55 (19.79%), DDS -3.85 (4.97%), WMT -.44, TGT +.,38, TJX +.85, KR -.14, RL -2.89 (2.55%), UAA -.03, LULU -2.09, NKE -.57, and XRT $43.95 -.87 (1.94%).
FAANG and Big Cap:were LOWERwith GOOGL -10.51, AMZN -2.53, AAPL -1.33, FB +1.50, NFLX +.43, NVDA -4.53, TSLA +9.02 (2.58%), BABA -.61, BIDU -.87, BOX +.18, IBM -.07, BA -2.76, CAT -.59, and XLK $87.67 +.17 (.19%).
FINANCIALS wereMIXEDwith GS -.90, JPM -.31, BAC -.04, MS +.33, C +.20, PNC +.01, AIG -.74, TRV +1.17, AXP +.34, and XLF $29.87 +.06 (.20%).
OIL, $55.35 – 1.79. Today’s action was a test of $58 (58.09), followed by a decline back into the range and a close nearer the low than the high. As I said in last night’s Weekly letter, I would favor the short side for a move back into support around $55 or so. Today we got the move toward that support, and we’ll have to see what happens now. The stocks were lower with the XLE finishing $5958.47 - .88 (1.48%).
Prices for Natural gas were much lower today and closed $2.576 -.054 and have come down from the recent peaks. As of today, the contract shifted to the new month, which was priced about $ .06 higher. We have already tested support on the bounce from 2.40 and we have rallied to hit just under $2.90 and now we’re testing the support around $2.46.
METALS,GOLD: $1,474.30 + 2.40.We were stopped out of our long position last week and we have fallen right back down to the most recent, and most important area of support around $1,450. We re-entered the 11/22 138 calls right at that $1450 level for $ .60 and sold the first half of the position today on the 100% Up Rule. Gold was also outside the Bollinger Bands for a couple of days, an occurrence that rarely lasts long. On Friday we added the $139 calls @ $ .66 since if the metal holds the gains, I think we can see another test of $1,490 -$1,500 again. We have spent 3 days (including tonight, so far) with highs of 1475.50, 1475.80, and 1475.70, We need a move solidly over this level with a close over $1,480.
BITCOIN: closed $8,110 -95.We broke to the downside today and as I have said since we sold the GBTC, I’ve been awaiting this kind of move to be a buyer again. After having a GTC order @ $9.85 since we sold on 11/5, we finally got filled on the first 350 shares. I will add another 400 either higher or lower. GBTC closed $9.61 -.49 today.
Tomorrow is another day.
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