Let’s Keep Going Shall We?

Equities start the day lower as spring finally springs. We got some decent weather coming up, the NCAA tournament is in full effect, Purdue is in the Sweet 16 (as is Wisconsin), and things are generally looking up across the globe so people be like this right now. Let’s keep going shall we? Home sales are still red hot, the UK is going to Brexit that thing, and my WEI screen is still celebrating St Patrick’s day. MMMMM, that’s what I’m talking about people. So look, there’s always one question I ask myself when I sit down to write a recap (no, not how can I get Trump to retweet my links): which way would the market have to move to cause the most pain to the most people? If you know the answer to that question then you have a good feel for sentiment / positioning and that’s what moves us in the very short term. So… dear friends… which way is it? Up or Down? Well, kids, I actually think it’s down. We have a fair amount of people locked into this market thinking Trump and good economic data and TINA and all that jazz (great song). A quick 5% selloff would send shivers thru the market and probably force weak kneed bulls to scurry for the sidelines. A 5-10% selloff would also panic a lot of people who didn’t buy anything until after the election so that’s where I think the most pain lies. But that’s ok! Clearing out dead wood is healthy for a bull market, we could slide in April and May with no serious technical damage. 2,250 will be massive support (we spent two full months there) and the fact that TONS of people are calling for a correction should keep it shallow and mild. Once we get that reset then we have a legit chance to re-test the highs on the heels of a big tax cut? Don’t sleep on that as a catalyst, stock markets love a good tax cut. Anyway, the most pain is probably lower so don’t be caught off guard by a little spring weakness. It happens, people go outside stop looking at their screen and wonder why the heck they chose to live in a  cold weather city (that is apparently good at Basketball, go WI and Purdue).

After the open it was a tiny dip and a whoooooole lotta nothing. I mean if you like 4 handle intraday ranges than do I have a recap for you! Most of the morning was spent watching this congressional hearing that nearly put me to sleep and if this is what the next 4 years has in store for us I’m going to cancel cable. Here’s the problem: as you know, half of the rally is economic facing and the other half is “new shiny administration” facing. If one half of that starts getting bogged down in political quicksand and witch hunts I can tell you what the market reaction will be… not positive. Once that new car smell wears off you do kinda still need the car to function. Ok winners and losers time. Winners: people who like to watch paint dry and grass grow along with ESPR, FEYE, CAT, and AMD. Losers: action junkies, specifically people who have a GoPro and never use it because they thought taking ski videos would be cool (me) along with KSS, M, JWN, and GPS holy cow I’m just changing this section to “retail.” Winners and Retail, that’s how we’re doing this from now on. By lunch the market was nowhere, 2,376, up 1 whole point.

The rest of the day was weak, not “I drank 38 glasses of wine” weak but certainly “I just swam 200 yards without stopping” weak. The market feels exhausted, there’s no other way to describe it. It’s entirely possible we are going thru some kind of time correction but we won’t know until it’s in the rear view mirror. Price action just seems wonky right now, little rallies aren’t turning into big rallies but they also aren’t turning into meaningful downside. It’s almost as if everyone is sitting in passive... hey what were we talking about? Oh yea, this tape feels tired. What does the prescription for a rally look like? Probably something on taxes and another jolt of ridiculously good economic data. I’ll tell you what it doesn’t look like… endless congressional hearings. Final Score:  Dow -4bps, S&P500 -20bps, Nasdaq +1bps, Rus2k -52bps.   

Volume was really low. Our desk was better to buy. Buying in Health Care and Homes. Selling in Banks and Insurance. Shorting in Internet. News Highlights:

Ok we reached the end of another ski year. Did you get out and make some turns? I hope you did, make sure you get your kids on skis it’s an amazing family sport. Anyway, let’s watch a few idiots try and ski over water because it’s awesome.


Have a good night.