Market Action Summary: 11/12/18


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S&P Overview: Downside Bias as Ranges Emerge

  • S&P 500 may need to test 2700 after successful 2815 test.
  • Lasting rallies may be difficult until 20DMA rises above 30DMA
  • Calendar more bearish with Brexit ruling (11/27), G20 (11/30), Fed hike (12/19) on tap. Italy budget drama not done, either.
  • Potentially bearish that bonds and USD are rising in tandem.
  • Sector mix bearish as safe havens lead.
  • Expect significant chopping, with narrow ranges growing into wider ranges.
  • Potential for 2700-2815 channel.

Tech Tales Worsen:

  • 11/1: DOJ accuses Chinese companies of stealing chip technology.
  • 11/3: Counterpoint of HK sees India iPhone weakness
  • 11/5: Nikkei says iPhone XR volume ramp up canceled.
  • 11/7: Square (SQ) weak guidance. Follows less-than-stellar results from MA, V, FDC, WP. Digital payment space under pressure.
  • 11/8: Activision (ATVI) weak outlook highlights slowing video-game space.
  • 11/9: Apple warns (6pm on Friday) of quality issues with iPhone X, MacBook Pro.
  • 11/12: LITE guidance suggests weak iPhone production.
  • 11/12: Ad wars on the Internet?

Between the Charts:

  • Notice Nasdaq-100 lower high as Dow Jones Industrials made a higher high.
  • Notice 2815 double top, broken trend line on S&P 500. Churning at 200-day MA.
  • Philadelphia Semiconductor index ($SOX) finding resistance at old support.
  • Is Nasdaq-100 slipping under 7000?
  • U.S. market outperforming by wide margin.
  • Careful not to get too bearish too fast. Money can rotate into health care, staples, REITs, utilities for the time being.
  • S&P 500 may have begun longer consolidation phase lasting well into next year.

Don’s Watch List:

  • Tomorrow: Advance Auto (AAP), Home Depot (HD)
  • 11/14: Cisco Systems (CSCO), Macy’s (M)
  • 11/15: Nvidia (NVDA)

Russell’s Watch List:

  • Pfizer (PFE) breakout potential. Good for options.
  • Apple (AAPL) nearing last week’s trendline support around $190.
  • Twitter (TWTR) $28-36 channel forming.
  • Don’t forget about retail into Black Friday.
  • L Brands (LB) turnaround story building after comps surprise.
  • Gold miners ETF (GDX) at risk of bearish continuation into year end, Fed meeting.
  • General Motors (GM), Ford Motor (F) have stealth-rally potential after positive news events.
  • Twilio (TWLO), FireEye (FEYE), Etsy (ETSY), Glu Mobile (GLUU): Not dead yet.
  • Wireless towers stand out in REIT space: AMT, CCI, SBAC
  • Use RadarScreen® to find “boring” stocks near highs.
  • Airlines may have upside potential on strong economy, energy selloff.

Options Activity:

  • 11/6: Marriott (MAR) April 110 puts rolled → April 100 puts.
  • 11/12: Barrick Gold (ABX) Dec 11 puts bought for $0.10 to $0.12. (Story coming tomorrow.)
  • 11/12: Itau Unibanco (ITUB) Dec 13-15 strangle sold for $0.70.

Forward Calendar:

  • Tomorrow: Cannabis earnings (CRON, TLRY), HD
  • Wednesday: CPI, CSCO, CGC
  • Thursday: Retail sales, WMT, chips: NVDA AMAT. Oil inventories.
  • 11/20: Housing data. Watch for signs of buying on bad news.
  • 11/21: Busy with events but early Turkey Day exits likely.
  • 11/27: Potential Brexit ruling by Brussels court. (Scottish challenge)
  • 11/30-12/1 (weekend): G-20 meeting between Trump, Xi
  • 12/6: OPEC meeting. Careful of overnight Saudi jawboning.
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David Russell is VP of Market Intelligence at TradeStation Group. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.