Equities Start The Day Nowhere

Equities start the day nowhere as this continues.   Look, I’ve run out of ways to describe sideways price action, my creativity has been tapped by the month long doldrums so instead of boring you with another analogy let’s discuss WHY the market is going nowhere.  In the very short term markets are dominated by emotions, sentiment, random tweets, stupid seasonal indicators, and whichever way the wind is blowing.   Of those sentiment is the easiest to talk about because we get weekly surveys about what people think.   Newsletter writers, Asset Managers, Individual Investors, Dennis Gartman, all of these are good guideposts to what the market is thinking in the very, very short term (some of them are AMAZING fades).   Every Wednesday we get the Investors Intelligence poll which is “a reflection of the recommendations of over 130 independent stock market newsletter editors”.   So….now that we’ve done a whole lot of word-smithing what did they report this morning?   “Bullish Sentiment increased to 60.6% from 58.6%, the highest level in 18 months.  Bearish sentiment decreased to 17.3% from 18.3%, the lowest reading since Aug 2015”.   Hmmm, that seems important to me.  At this point you know where I’m going but the reason the market is stuck here is that everyone is all bulled up right now.   Trump, earnings, de regulation, lower taxes, better growth abroad, gamma, vega, delta, theta, whatever the reasons to be bullish are they are priced in, well known to the world.  Markets correct these kind of conditions thru either time or price and right now it’s doing it thru time.   Given where sentiment readings are we could have a lot more boring ahead my friends (absent a price correction).  Hey, did you follow my NFL picks last weekend?  I know a few of you laughed at them but I went 3 for 4!  How about them apples?  Stay tuned later this week when I Iet you know what Super bowl you will be witnessing.

After the open the market was listless and uninspired.  In fact, if I had to sum up the first half of the day I’d point to any number of sewing circles in retirement homes or basket weaving classes at local community colleges to give you a good idea of how it felt.   Retail, have we talked retail in a while?  Yes?  Well we’re doing it again.  TGT pre announced and fell 5.8%.  Target people, a place EVERYONE I KNOW GOES TO.  Toilet paper, socks, shampoo, I mean the majority of my peers shop there and even they are struggling?   Oh the humanity.  Nordstroms got an upgrade today from the good people at Credit Suisse and the stock FELL.   Fell….after an upgrade.   Other losers in that space were M, UA, DLTR, DG, JCP, KSS the usual suspects.  I wonder….when does this trade get over its skis?  I mean it eventually has to right?  Energy stocks went straight down until they didn’t you’re telling me retail stocks won’t ever bounce?   Winners were URI, NUE, SWK, VIAB, and FAST.  Remember FAST?   They who spoke of the great Industrial Recession of 2015?   Yea the stock is at a 52wk high, how fast did that cycle turn!  By lunch nearly every index was trading unchanged.   Come on, this is getting a bit ridiculous don’t you think?  Someone tell Trump the S&P500 spoke badly of him, make volatility great again!

We got a massive rally in the afternoon, I’m talking rocket ship straight up to close at 2,271!  That’s 4 whole S&P points my friends, start lighting your cigars with $100 bills because Santa Claus showed up a month late!   So yea, the market is a little over loved and there just isn’t anything to get excited about.  This is like eating peanut butter and jelly for a month straight.  Sure, it’s a good sandwich made from strong component parts but eventually you get sick of it and want something new.  Can I get some turkey maybe?   Chicken salad and avocado?  So much stale information right now…ugh.  Final Score:  Dow -11bps, S&P500 +18bps, Nasdaq +31bps, Rus2k +46bps.   

Volume was low.  Our desk was better to sell.   Buying in Industrials and Energy.  Selling in pretty much everything.  Shorting in Tech.  News Highlights:

So apparently Portland got some snow, big whoop.  You’d think it was the first time humans have ever seen the stuff by the way my parents were talking (they live in Tigard).  Anyway, I’m a sucker for city skiing videos so let’s visit Rip City shall we?


Have a good night.