GWO Daily Note 2/20/2020
Market Strategies Newsletter - Special Daily Edition
For Trading February 21st
MAJOR SELL-OFF MIDDAY
NASDAQ HURT MOST
RATES FALL
Today’s market was lower from the start and accelerated into the morning until just before noon we made a low of -388 before we started to see any support. I didn’t see any specific news other than the overall set-up of strong US$, weak Yen, falling interest rates and over valuation. We spent the rest of the day fighting back to finish -128.05 (.44%), NASDAQ -66.22 (.67%), S&P 500 -12.92 (.38%), the Russell +3.50 (.21%) and DJ Transports +89.72 (.82%). All of the indexes finished ¾ up on their ranges. Amazingly, the market internals were positive, and not just small, with NYSE 1.7:1 and NASDAQ a bit less so at 1.3:1. The DJIA was not so great with 21 down, 8 up, and WMT unchanged. The biggest losers were GS -31, AAPL -23, UNH -22, MSFT -20 and BA-14DPs. The only double-digit gainer was HD +23. While all this includes some major divergences, you need to remember that it’s still “earnings season,” and the strength may look good now, but its continued gains is absolutely harmful to all companies with international exposure. It will be the new “excuse” for CEO’s to lower guidance to set the bar lower. Another issue that is perplexing is the relationship of strong economic numbers and falling yields. Relative strength in bonds and proxies like utilities and real estate is not a great sign, regardless of what Mr. Trump thinks it is better for the DJIA, his sole barometer of his success.
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:The early news was the MS deal to buy E-Trade for stock. It gives MS access to a much broader base of customers (although I think MS will be surprised to see how many of their clients also did business “away” from them) and the opportunity to capture more “Wealth management” business. MS finished $43.75 -2.56 (4.6%) and ETFC was $54.73 +9.80 (21.8%). As mentioned here last night, Viacom’s poor earnings made it the biggest loser in the S&P, finishing $29.29 -6.38 (17.9%).
Evidently, the sale of only 55% of Victoria’s Secret disappointed holders of LBrands, but the departure of the CEO, Les Wexler is probably also a loss. Wexler owns 70% of LB shares and the company’s retention of 45% of VS will allow them to benefit from the private equity firm Sycamore’s ability to right that brand. Last night I covered the earnings for SEDG and the move it made from $108 to $128, but there was more to come today. The stock opened $138.39 and finished the day $142.20 +14.38 (11.25%), for a 2-day gain of 32%.
Also on the earnings front we had Six Flags (SIX) with a surprise miss in earnings, revenues, guidance, and a cut of its dividend by 70%. After peaking over $73 in mid-2018 it has steadily declined $38.02 and opened today $30.50, hit $29.96 and closed near the high at $31.89 -6.13 (16.12%). Also on the bad side of earnings was First Solar (FSLR) was halted for its numbers and when they reported a surprise loss of $ .56 vs an expected profit of .49 the stock, which closed $59.32 gapped down to $48.80 and is currently $50.80 -8.52 (14.4%).
We had 2 solid beats, Domino’s (DPZ) which beat on all metric, including same store sales, revenues and earnings had a 10-year move from $8.15 to close yesterday $297.10 opened $365 and after a new all-time high of $381.86, finished $373.16 (25.06%). DPZ has been at the forefront on digital ordering, delivery and has dramatically enhanced the way it does business. Also reporting was DropBox (DBX) which has had a very disappointing downtrend since peaking at $43.50 in 2018 after its IPO. The decline has been persistent and the stock closed $18.72 before beating numbers, on earnings, revenues, paying customer count and guidance. The stock traded as high as $21.95 and is currently $20.85 +2.13 (11.3%). Unfortunately, the company is in the very competitive “cloud storage” space and has disappointed repeatedly. I would expect the move higher to be met with some selling.
BIOPHARMA:wasMIXED TO HIGHERwith BIIB -4.40, ABBV +.09, REGN -1.67, ISRG +3.41, MYL +.02, TEVA -.17, VRTX +6.22, BHC -.05, INCY +.35, ICPT -2.33, LABU -1.67, and IBB $123.56 +.08 (.06%).
CANNABIS:stocks wereHIGHERbut well off the highs with TLRY +.64, CGC +.43, CRON +.01, GWPH +2.06, ACB -.02, PYX +.22, NBEV +.34, CURLF -.13, KERN +.10 and MJ $16.69 +.16 (.97%).
DEFENSE:wasLOWERwith LMT -9.98, RTN -2.03, GD -.60, TXT +.40, UTX -1.18, NOC -3.15, BWXT +.62, TDY -1.91 and ITA $234.47 -1.51 (.64%).
RETAILwasHIGHERwith M +.31, JWN +.23, KSS +.66, DDS +.72, JCP +.047 (6.65%), WMT unch., TGT +.87, TJX +.06, RL +2.06, UAA -.07, LULU +1.28, TPR -.12, CPRI +1.21 and XRT $46.10 +.99 (2.19%).
FAANG and Big Cap:were LOWERwith GOOGL -7.88, AMZN -27.72, AAPL -5.22, FB -4.34, NVDA -9.11, TSLA -24.12, BABA -5.09, BIDU -3.79, IBM -.01, BA -3.30, CAT +.07, DIS -1.30 and XLK $101.09 -1.70 (1.65%).
FINANCIALS wereLOWERwith the fall in rates and the news of the MS deal for ETFC. GS -4.86, JPM -.49, BAC +.02, MS -2.57, C -.10, PNC +1.13, AIG +.39, TRV -.53, AXP -.35, and XLF $30.99 -.14 (.45%).
OIL, $53.88 +.39. Last night I said after yesterday’s bounce and a rally all the way back to close near the highs, today’s follow-thru we are set up to try the $54 -$55 area, and I am still bearish, I’ll use SCO, the inverse ETF. Unfortunately, I missed the chance to buy some SCO when Oil hit $54.66 today. I will look for another opportunity. The stocks wereLOWER with the XLE $54.57 -.28 (.51%).
METALS,GOLD: $1,620.50 +8.70.After the expected breakout above the closing high of $1587.90 we rallied hard to move solidly over $1,600. Today we got off to a quiet start, but after a brief fall back to unchanged in GLD we moved higher. On Tuesday we bought the GLD 3/6 152 calls @ $1.10 and they were closed out today at $1.75.
BITCOIN: closed $9615 -610.We broke to the upside to hit $10,620 last week and on Monday the international traders drove BTC down to $9,505 but we rallied back to just over $10,000. Today was a major disappointment, although after trading down to support at $9405 we did manage a small rally to 9600. We own 750 GBTC with an average of $8.89. GBTC closed $12.35 -.78 today.
Tomorrow is another day.
CAM
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