Tuesday, October 23, 2018

Market Alert - Last Hour

The action is of course promising. From gaps lower and subsequent selloffs through the prior October low to reversals that have the indices flirting with flipping positive by the close. They did turn positive in many instances, just did not hold it and fading int he last half hour of trade. Alas, VIX only hit 24 on the high. 24 measly points, up 4.40 on the high.

SP400 -14.86, -09.52%
NASDAQ -31.00, -0.42%
DJ30 -107.39, -0.42%
SP400 -0.885
RUTX -0.31%
SOX -0.38%
NASDAQ 100 -0.30%

Okay, so not all is perfect; rarely is. The indices were ugly, but the ugliness bottomed at 10:15ET and stocks have steadily recovered the balance of the session.

Pretty much everything is being picked up off the lows with losses roughly in line across the board though, as you would guess, NASDAQ 100 stocks are the relative upside leaders.

Lots of double bottoms forming, that October pattern discussed Monday. We like how TTWO, FFIV, FB are acting. Yes, FB. It has likely put in a double bottom as the 'head' of an inverted head and shoulders. Earnings 10/30 so there is some time to play. TTWO 11/7 earnings. FFIV is 10/24 after, kind of tight and it would take a lot of faith. But, if the reversal holds, we might have enough faith in a partial position.

Like JNJ but it has slipped some after bumping the buy point. Will see how it closes.

Now, there is an undercut of the prior low so for a follow through you start the clock today, particularly if they manage to get back to positive. You can selectively pick up some of the beaten down prior leaders if they have great patterns and earnings are not in a day or two. Unfortunately, most are within a day or two or a week. Very tight, lots of faith, earnings not being treated with love.

IF the character changed today, however, then they could get the love they want. So, we will be poring over possibilities tonight, looking for the select ones that are well-positioned and preferably have some time to earnings.

There is really no hurry; we will look at some if they show life tomorrow. For most, they need to see a follow through and use the time to maybe form quick handles on the double bottoms. Don't forget that: they set up, move up a bit, then stall. Many will say 'it is over.' Perhaps they are right, but so often they form a handle after that initial move off the lows. Then the gains begin.

Jon Johnson, Chief Market Strategist

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