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S&P 500 overview
- SPX holding Aug. 29 high but timing uncertain into Fed, quarter-end.
- Problems with short-term overbought condition, pushing top of minor channel, Bollinger band.
- Better to focus on individual stocks as volatility wanes. There may be opportunity to buy a minor SPX dive around Fed, political news.
- Rotating strength, rolling breakouts consistent with bullish sentiment.
- Broad Yen weakness implies low volatility, limited selloff risk.
- Copper (@HG) muscling off lows suggests risk appetite.
Interest Rates in Focus:
- Fed widely expected to hike 25bp on Thursday, but real story overseas.
- ECB’s Draghi sees higher inflation after keeping taper.
- Rising oil could make ECB more hawkish.
- Emerging-market panic seems to have passed, especially as IMF backs Argentina.
- Utilities (XLU), REITs (XLRE), Consumer Staples (XLP) at risk.
Value Stocks Gaining Some Favor:
- Rising rates weigh on high-multiple stocks.
- IWM double risk of high-valuations, sentiment shift → global.
- Still, be careful dumping market-leading growth too fast.
- Industrials (XLI), Financials (XLF), Materials (XLB), Energy (XLE) benefiting.
Don’s Watch List:
- Nike (NKE)
- Carnival (CCL)
- Jabil Circuit (JBL)
- Bed Bath & Beyond (BBBY)
- KB Home (KBH)
Russell’s Watch List:
- Biotech (IBB) coming off 50-day moving average.
- Financials on bargain menu: Metlife (MET), Deutsche Bank (DB)
- Bank of America (BAC), Citigroup (C) on breakout watch. Potentially good for options.
- Momentum/growth pullbacks: Splunk (SPLK), Nordstrom (JWN), Match (MTCH).
- TransEnterix (TRXC) potentially accelerating to upside.
- Cheniere (LNG) potential cup & handle breakout.
- Momo (MOMO): High-beta China tech holding 50-day MA.
- American Railcar (ARII) has short-squeeze potential.
- Monster Beverage (MNST) rolling over as business weakens.
- Macy’s (M) potential bearish triangle. Good for options.
Recent Educational Posts:
- Why Stocks Move: Investor Rotation
- Why Stocks Move: Macro Trends
- Options 101: Hedging With Ratio Spreads
- Options 101: Going ‘In the Money’
Master Class Preview:
- RadarScreen® for sector comprehension.
- Major stock catalysts (volumes, margins, macro trends, strategic actions, credit, transformation, investor rotation).