Let’s See What Happened On This Fine Taco Tuesday

Equities start the day lower as SNAP breaks the market.  Actually SNAP didn’t break the market but the fact that it puked up a ton of gains yesterday makes my narrative easier.   Hey, you know what won’t signal the market top?  An IPO of a company specializing in dog face filters and a UI so byzantine that no one over the age of 21 can figure it out (I think they actually cited this as a competitive strength).  SNAP good or bad?  Don’t care, not one bit.  Wanna know the sum total of my Snapchat usage?  Zero minutes but my 9yr old loves to use it while we wait for mediocre casual food at the mall CPK.     Where was I going with this….oh yea….while SNAP isn’t THE top that doesn’t mean SNAP’s debut won’t signal a NEAR term market top.  A lot of hype goes into stuff like this and it can get the wrong people excited about something they don’t understand.  Imagine you read all about the company over the weekend and bought some on Monday’s open because your idiot friend mentioned it in passing.  By the time the bell rang you lost 12% which can dampen your enthusiasm for the broader market.  We’re coasting on buy fumes right now and any change in sentiment will be magnified tremendously.   Imagine if Trump starting using Snapchat from Mar a Lago…how awesome would that be?  Is every future President going to have to have a massive social media presence going forward?   I’m guessing yes, there probably isn’t a voter under the age of 26 that watches TV or reads a newspaper anymore.  Ok, let’s see what happened on this fine taco Tuesday.

After the open SNAP lost another 10% bringing its two day losses to a grand total of 25% (from Monday’s high).   You know what’s really bad at pricing things?  Stock Markets.  Ironic huh?  $28 on Monday and $21 on Tuesday with absolutely zero news / mgmt. comments / anything.  Sure, makes sense.  No economic data and very little earnings so we are going to have to craft some magic here.  NMBL got bought by HPE for $1B, apparently flash storage is all the rage.  WFT jumped 13% after hiring a new CEO.   Interesting company this WFT, still has a 12% short interest and is only just now breaking a 1yr sideways trend. Things that make you go “hmmmm”.  Speaking of texas tea, guess what’s starting to contribute to earnings again?  Energy stocks, check out this chart courtesy of @pragcap to feel good about the turn.   Other winners included PSTG (NMBL sympathy), PIR (wicker so hot right now), and LGIH (all about those new homes down south).  Losers were SNAP, DKS (they are retail after all), THO, and P (so many places for music now).  By lunch the market continued to act weak trading around 2,369 down 0.2%.   I wonder…..do you think this guy wears any other pants?   Like is that his goto outfit for strolling down the street?  Oh well, at least his shirt isn’t button down, that’s a real fashion disaster. 

The rest of the day was, well, just more downside.   Random selling here and there for no other reason than we’re up 84% since the election.  We closed at 2,368 down 30bps but I’ll tell you what, we’ve gotten so used to late day rallies that 30bps feels like 100.   I guess the market wants to re test that 2,350 area because that’s where we churned before the SOTU speech.  Where is real support?  Way way further lower, likely right around 2,300.   NFP is Friday and about the only thing that could de rail a March hike would be 10k jobs and a drop in wages.  96% chance of a hike as of the close…96%....roughly my body fat levels.   Final Score:  Dow -14bps, S&P500 -29bps, Nasdaq -26bps, Rus2k -69bps. 

Volume was average.  Our desk was better for sale.  Buying in Tech and Energy.   Selling in Software and Staples.   Shorting in REITs.  News Highlights:

Tonight we’re going to end with a bike video.   Not your normal “spin around do fancy bike tricks” thing but a guy who rides his bike on the edge of a dam.   Like the very edge.