What a Summer

Equities start the day higher as summer finally, officially comes to an end! Hoo boy, what a summer that was right? Olympics, Brexit, Pokemon Go, really awful movies (Suicide squad bummed me out so much), and a market that went absolutely NOWHERE. I haven’t written in ages and you know why? Because literally nothing has happened. We haven’t had a 1% move in SPX since July 8. Yep, you read that right, July 8. That’s 60 calendar days of a market that looks like the Bonneville salt flats. Guess what? August was the slowest volume month in 2 years. 24 months baby. So is this all a big deal? Should we be concerned about the fact that the market has been abandoned for nearly two months? I don’t think so because 1) it was summer, no one was even around to care  2) pausing after a breakout can’t be considered poor price action, digesting a move higher is always welcome 3) plenty of people have been calling top 4) neutrality seems to reign (AAII neutrals is still near 40%) and 5) the longer it stays here (especially as year-end approaches) the higher the probability that towels will be thrown in. I don’t see this summer lull as a negative and I don’t think sentiment / positioning is bearish either. The story of 2016 has been “we are due for a pullback because valuations are stretched”. That’s all the bears have anymore, that’s the one thing you can say day or night and make people think “hmmm, he sounds pretty smart about this stuff, maybe he’s right”. As people filter back to their desks today they are going to see a market that is not overbought and not over believed, where do you think markets like that usually go in the near term?

After the open it felt like summer never ended! Volume continued to be challenged and “unchanged” continued to act like a magnet. ISM Services missed badly (51.4 vs 54.9) and that caused a pretty steep selloff in the first hour of the day. But apparently “bad news is good news” again because things like ISM services whiffing makes people think the Fed is less likely to hike (only 25% for Sep now). Crude was up then down then flat then up because oil traders are partying like its 2011. I swear we get a “we are thinking of cutting production / reducing investment / freezing output” rumour every other day now. It reminds me of the heady days of 2011 when a Belgian or Dutch Finance minister could move every single market by hinting at backstopping European debt (which they ended up doing anyway…sigh…what a buying oppty that was). Today was the last trading day for EMC! Say goodbye the once great storage company as they fold into DELL.   CPHD got an offer from DHR and promptly rallied 51%! The company that sounds like a bug name could be joining the good people at Danaher in Washington DC. Other winners:  SE, EOG, MNK, AES.  Losers CNC, CMI, HES, QRVO, and DISCA. By lunch we were heading higher because, like I said, we basically want all economic data to miss from now on (why do we always have to come back to this?)

The rest of the day was grinding on the highs and a close around 2,186. No new highs, no new lows, just more of the same sideways trend (albeit with a close on the highs…) Now this recap loves a good prediction, there’s nothing better than going out on a ledge for absolutely no gain and potentially looking like a total idiot to an unlimited people (or 300, whatever). AAPL is set to introduce their new iPhone tomorrow and it looks like they are going to remove the headphone jack completely. Prediction: The unbridled outrage when the mass public finds out about it will make their decision to change the charging port look like a home run in comparison.  I for one think it’s the most anti-consumer thing the company has ever / will ever do.   It bums me out to no end because 1)  we don’t need the phone to be thinner.  Stop it.   2) Bluetooth headphones have a delay when you watch videos and generally suck  3)  no one wants a dongle.  I’m pre releasing my misery surrounding this event, ugh. Where hast thou magic gone Harry?  

Final Score:  Dow +25bps, S&P500 +30bps, Nasdaq +50bps, Rus2k +12bps.

News Highlights:

Tonight we’ll end with one of my all-time favorite kinds of videos:  People walking a slack line 2,000 feet above the ground.  


Have a good night