GWO Daily Note 2/25/2020
Market Strategies Newsletter - Special Daily Edition
For Trading February 26th
RATES FALL TO NEW LOWS
COVID-19 STILL AN ISSUE
CDC “WHEN NOT IF”
IGER STEPS DOWN
Today’s market was much higher on a message from the “Tweeter-in-Chief” late yesterday afternoon, and the fact that it was totally inane pared the gains in those futures well before the NYSE open. In fact, we were up for only a short while and we were back on the downside before 10:25, never to touch higher than -85 and be under constant pressure, only to accelerate after margin calls went out around 2:30. At the lows, we were -1995 for the week, and -2571 (8.7%) off last week’s high, and down on the year. For the day we were -879.44 (3.15%), NASDAQ -255.67 (2.77%), S&P 500 -97.68 (3.03), the Russell -56.21 (3.46%) and the worst loser (having never made a new high) the DJ Transports -447.67 (4.26%). Market internals continued weak and slightly worse than yesterday with NYSE 9:1 and 5.8:1 on the NASDAQ. Weak, but not blow-out, maybe tomorrow morning. The DJIA again, had no stocks up. The biggest losers were UNH -98, BA-94, V -70, AAPL -69 and UTX -53 DPs. Normally I add a comment about double-digit movers but today there were only 7 names that were NOT down double-digits movers, and not by much. While the COVID-19 was a factor, the continued fall of interest rates across the whole duration range seems to be more the issue. Also, as I mentioned above, margin calls will now play an important part. Remember that with the outsized gains in that very narrow group that drove the market now make them more susceptible. While that may seem counter-intuitive, remember that it is human nature to hold the losers for them to come back and sell the ones you have to guarantee your profits. The adage is “If you can’t sell the ones you want, you sell the ones you can.”
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:It’s another difficult day to break down sector action since they were all lower, but I’ll give it a shot. One of the biggest surprises has to be that Bob Iger is stepping down as CEO at DIS. He’s not leaving the company completely and will be the Executive Chairman until 2021. Bob Chapek, one of the two expected replacements got the nod. The stock, which closed $128.19 -4.82, has traded as low as $122.69 and is currently $124.93 -3.36. There will be a web-conference and my guess is that this clears up succession issues while keeping Iger in the mix, and will turn out to be a positive.
Earnings were not great with PANW, the cybersecurity firm missed. It’s a great company, in a great industry, that unfortunately is highly competitive. They had a loss for the Q, and while revenues grew, they did not meet expectations and the company was hit with a combination of downgrades and lowered price objectives. The stock, which is pretty close to its highs around $260 had closed $243 opened lower and fell to a low of $192.18 and finished $196.96 -40.37 (17%).
EXAS reported 2 weeks ago and was trading near its recent highs around $105 announced an $850million convertible and then upsized it last night and after yesterday’s fall to $96, continued today to $86.54 -9.02 (9.44%).
We had earnings after the close for SPCE, and the numbers aren’t really comparable to anything, but the stock had another $4 range for the day followed with a move from $30.25 to $35.60 and is currently $32.30 -1.31. CRM also reported with a beat on top line, bottom line, and inline guidance, but still managed to disappoint the street. Keith Block is also leaving his position of co-CEO, leaving Marc Benioff the sole CEO. The stock made a new all-time high last week at $195.72 fell to close the day today $181.27 -4.67 (2.5%) and continued that decline to $171 and is currently $175.22- another $6.00.
Smile Direct (SDC) also disappointed and missed on all metrics and the stock, beset with customer complaints and bad press has fallen from the first day of trading from $21.10 to a low of $7.56 and managed to rally to close $11.33 but fell to $8.80 and is $9.13 -2.20 (19.4%).
On the plus side, Moderna Inc., (MRNA) shipped its first batch of an experimental vaccine to NIAIC, setting up mRNA-1273 as the first vaccine to be tested on humans in a Phase-1 trial. The stock just came from around $18 and had been trading up and back between $19 and $24 recently and today finished $23.76 +5.17 (27.81%) and is currently $25.40 + another $1.64.
BIOPHARMA:wasLOWERwith the exception of REGN, again, +16.97 (3.99%) and TEVA +.47 (3.7%). The rest were BIIB -.18, ABBV -3.94, ISRG -21.65, MYL -.41, VRTX -5.01, BHC -1.34, INCY -1.35, ICPT -6.21 (6.83%), LABU -4.20, and IBB $116.80 -3.04 (2.54%).
CANNABIS:stocks wereLOWERwith TLRY -.68, CGC -.70, CRON -.27, GWPH -9.72, ACB -.04, PYX -.01, NBEV +.07, CURLF -.32, KERN +.55 (7.72%) and MJ $15.18 -.40 (2.57%). I believe this group is broken and it will be a while before any of these are investable. Not untradeable, but uninvestable!
DEFENSE:wasLOWER AGAINwith most down 5% or more. LMT -18.35 (4.38%), RTN -8.05 (3.73%), GD -8.87 (4.8%), TXT -2.74 (5.97%), NOC -19.19 (5.34%), BWXT -8.62 (12.42%), TDY -12.22 (3.3%) and ITA $215.52 -11.25 (4.96%).
RETAILwasLOWERand earnings for the group started with a beat from M -.85 (5.5%) anyway, and HD -2.32 (.97%), JWN -2.22 (5.7%), KSS -2.01, DDS -.78, JCP +.01, WMT -1.92, TGT -1.98, TJX -1.87, RL -6.85 (6.25%), UAA -.48, LULU -6.23, TPR -1.18, CPRI -.89 and XRT $42.69 -1.48 (3.35%).
FAANG and Big Cap:were LOWERwith GOOGL -33.16, AMZN -32.14, AAPL -9.28, FB -2.02, NFLX -5.50, NVDA -10.28, TSLA -35.53 (4.26%), BABA +.34, BIDU -.53, IBM -4.41, BA -12.40, CAT -2.67, DIS -6.92 (see above), XLK $92.45 -2.88 (3.02%).
FINANCIALS wereLOWERwith the fall in rates and the general market. GS -5.19, JPM -5.55, BAC -1.52, MS -1.47, MS -1.61, C -2.83, PNC -7.47, AIG +.34, TRV -3.11, AXP -7.18 (5.6%), and XLF $29.00 -.77 (2.59%).
OIL, $49.90 -1.53. Friday we were down early and closed better and I thought we had held $52. Today, we were lower again and the close below $50.00 is a disappointment. I’m still bearish, but I can easily see another test of $55.00 and I will look for another opportunity. The stocks wereLOWER with the XLE $49.70 -1.94 (3.76%).
METALS,GOLD: $1,650.00 -26.60.After the expected breakout above the closing high of $1587.90 we rallied hard to move solidly over $1,600. After the high of $1691.70 yesterday it gapped down and traded 1629 before a rally to mid-range. Tonight we are -12.00.
BITCOIN: closed $9320 -280.We broke to the upside to hit $10,620 last week and have had daily rallies and sell-offs, but the weekly is on support and I think we will move higher. Today’s action puts that in question on the Daily, but the weekly is still okay. We own 750 GBTC with an average of $8.89. GBTC closed $10.54 -1.18 today.
Tomorrow is another day.
CAM
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