Market Action Summary: 12/10/18

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S&P 500 Overview: Rebound Possible as Range Holds

  • Channel between 2640ish and 2800ish.
  • Index swings from best week in seven years to worst week since March.
  • We don’t know worst-case scenarios will play out with China. Still have months before trade talks run out of time.
  • Waiting for @ES 50-hour MA confirmation potentially the best course.
  • Economy not clearly a negative yet. Brexit an added uncertainty. Market is holding its breath with potential for push toward 2500 or rebound.
  • Break under 2620ish could trigger more selling.

Workspace of the Week: Momentum Pullbacks

  • Finds potential bullish flags by spotting 6-month winners that are down in the last week.

Don’s Watch List:

  • Pfizer (PFE) may hike dividend this week.
  • Abbot Laboratories (ABT) strong dividend history.
  • Tomorrow afternoon: Dave & Busters (PLAY), American Eagle (AEO) report tomorrow afternoon.
  • Thursday afternoon: Adobe Systems (ADBE), Costco (COST) report.

News of Note:

  • October semiconductor sales have smallest gain since December 2016, up 12.7 percent.
  • CNBC: Hedge Funds swap from Tech, Media to Utilities, Health Care.
  • Paul Tudor Jones, Natixis, Ned Davis: More downside in S&P 500.
  • Bank of France halves Q4 GDP estimate.
  • Last week’s initial jobless claims worst since July, rail traffic slowing.
  • Safe havens, including REITs, and pharma still outperform as risk-on sectors struggle.

Fed in Focus:

  • WSJ: Fed may go “data dependent” after Dec. 19 meeting.
  • Raphael Bostic swings from hawk to dove.
  • James Bullard suggests no hike in December.
  • ECB expected to end stimulus on Dec. 13 but may float new policies.
  • Goldman Sachs changes view, ruling out March rate hike.

Russell’s Watch List:

  • Tesla Motors (TSLA): Golden cross as analysts turn more bullish.
  • Software makers like SPLK, CRM, VEEV, TTD, OKTA DATA, even MSFT relatively unscathed by selloff in Tech.
  • TWTR in narrow range, outperforming other Tech/Nasdaq.
  • HOLX pulls back following revenue beat.
  • PFE, LLY, VZ holding 50-day MAs.
  • DECK, ETSY under-the-radar retail names.

Options Recap:

  • Today: XLE 28-Dec 63.50 – 28-Dec 66 call spread bought for $0.79, on 11,000 contracts.
  • Today: EEM December 36 short puts rolled → February 36 for $0.56 net credit.
  • Dec. 4: SPY 28-Dec 286 – 28-Dec 287 bullish call spread bought for $0.10.

Coming up:

  • Brexit news possible any morning.
  • Tuesday: GOOGL CEO Pichai in Congress
  • Wednesday: Oil inventories.
  • Thursday: ECB early, China industrial/retail/investment data late
  • Friday: Retail sales
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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.