Market Action Summary: 11/19/18


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S&P 500 Overview: Direction Unclear as Negativity Builds

  • Extreme negativity in tech dominating sentiment.
  • Upside risk if 2700 holds. Otherwise 2018 low around 2530 potentially in play.
  • Watching 20DMA, 30DMA for direction as index chops around 2700.
  • Market still in longer-term uptrend.
  • Transports not confirming bearishness.
  • Is negativity too extreme?

Company & Sector News More Bearish Than Economy

  • Energy / oil is down because of U.S. production, OPEC missteps — not just weak demand/recession.
  • Tech is down for a series of its own reasons.
  • Tech factoid: Data-center REITs (DLR, EQIX) lagging despite REIT strength.
  • Jobless claims still near long-term lows. Manufacturing still positive.
  • Fed may be turning dovish.

Noteworthy Calls:

  • Bob Doll of Nuveen, Michael Hartnett of BAML see more downside in S&P 500.
  • Steve Cohen: Bear market coming as economy slows
  • Chintawongvanich of Wells: Need to see more panic for this to be bottom.
  • Conference Board: CEOs don’t see economic slowdown yet.
  • Hatzius of GS: US to slow amid less stimulus but avoid recession.
  • Warren Buffett amassing banks.

Don’s Watch List:

  • Manufactured housing in focus: Cavco Industries (CVCO), Patrick Industries (PATK), Sun Communities (SUI)
  • Campbell Soup (CPB) reports tomorrow morning, November 20.
  • BJ’s Wholesale (BJ) reports tomorrow afternoon, November 20.

Russell’s Watch List:

  • Tesla Motors (TSLA): Lone gainer in the tech world.
  • Apple (AAPL) holding $190 zone. Wal-Mart Stores (WMT) at 50-day MA.
  • Johnson & Johnson (JNJ), Pfizer (PFE), Merck (MRK), Eli Lilly (LLY) impervious to selloff.
  • Survival of the dullest: Coca Cola (KO), Procter & Gamble (PG), Verizon (VZ), Starbucks (SBUX), PepsiCo (PEP)
  • Gold miners (GDX) may turn higher as Fed gets dovish.
  • Homebuilders (ITB) holding long-term support. Rose on bad news today.
  • Wireless tower REITs outperforming since October crash: AMT, CCI, SBAC
  • CubeSmart (CUBE) is a long-term mover no one’s ever heard of.

Items to Watch Going Forward:

  • 11/28: GDP revision, Jerome Powell speech.
  • 11/27: Potential Brexit ruling.
  • 11/30-12/1: G20 meeting.
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David Russell is Global Head of Market Strategy at TradeStation. 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.