Friday, October 26, 2018

Market Alert - The Close

Stocks did come off the lows after plumbing to new selloff lows. There was enough of a recovery to close the indices, for the most part, inside the prior selloff lows. So, a decent hold and bounce, but no reversal.

SP500 -46.88, -1.73%

NASDAQ -151.13, -2.07%, 110 POINTS OFF ITS SESSION LOW. It was down big.

DJ30 -296.24, -1.19%

SP400 -1.06%

RUTX -1.10%

SOX -1.72%

NASDAQ 100 -2.34%

Indeed, VIX was a laggard again, reaching just to 27.52 before closing at 25.66. This with the indices sporting losses well above 2% before the recovery. I suppose this would be called an 'orderly' selloff. Lots of orderly selling of late from the look of it.

I guess on the positive side, since it is Friday and perhaps a bit of an upbeat view is needed after this rout, Stocks did come back. Of course, it would have been better if stocks reversed and closed positive. Ah, but there is that looking for a bottom in every session and never finding one, at least for now.

GDP was solid on the headline, had some issues in the internals, but overall solid. Good enough, however, to keep the Fed on its rate hiking move, and Mester was evidence of that when she appeared on CNBC this morning.

Several 'names' are still at the 200 day MA, e.g. TTWO, FFIV, CRM, DATA, perfect position to put in at least a relief bounce, but nothing has triggered a move yet.

Most areas struggled on the session though stocks such as ROST opened lower and rebounded well -- already in good position, it remains solid, but has yet to make the move with all the headwinds. Riding out the storm is, for now, not bad action. That said, some that did ride out the last storm fell to the latest storm. WMT still good, ULTA acting very well, but they are a couple in a sea of not so great patterns.

Perhaps if they hold on and the TTWO's and CRM's of the market make a stand at the 200 day MA, a good bounce can shape up. I know, that is kind of the same as bottom wishing, a common past time in this market, but the patterns are solid and you just wait for a good move that can actually hold. Some people noted to me this week that now they see the importance of a follow through session: this back and forth on a day to day basis shows you need to see a reversal, then after the initial move see the buyers return with strength to show they are still there and still buying. Otherwise it is just a whiplash market, and that is why we have been very, very judicious in picking up new positions.

Have a great weekend!
Jon Johnson, Chief Market Strategist

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