Market Action Summary: 3/18/19


S&P 500 Overview: Quiet melt-up continues

  • Volatility low as money shifts between sectors.
  • Defeated at 2800, what can bears do now?
  • At current pace, “golden cross” in seven sessions.
  • Lyft, Uber, Pinterest IPOs will likely draw Main Street attention to stock market.
  • Don’t forget about Apple (AAPL) event next Monday, March 25.

Several Big Stories in Big Companies

  • Facebook (FB): Credibility gap widens again. Business model potentially in question after New Zealand incident.
  • Boeing (BA): A once-bulletproof name facing potentially unquantifiable risk. Bearish triangle on chart.
  • Tesla (TSLA): Elon Musk’s star has lost its luster. Plus, potential threat from Kandi Technologies (KNDI).
  • Deutsche Bank (DB): Potential relief for financial giant trading at 1/4 book value?

Energy on the Move as OPEC Falls into Line

  • OPEC cancels April meeting, may extend cuts
  • Russia united with Riyadh. Does Moscow have any reason to accommodate Trump amid Venezuela situation?
  • Here come the frackers: EMES, SND, HCLP, CRR, CVIA, FRAC, NINE, CJ
  • Servicers and drillers leading. Refiners and integrateds lagging.
  • Domestics cutting back: Baker Hughes rig count at 11-month low.

Master Class Case Study: Kraft Heinz (KHC) Negative at S&P

  • Bearish things can happen when a balance sheet goes bad.
  • Credit is one of our seven catalysts taught at Master Class next week.

‘Nirvana Week’ for Volatility, Consumer Just ended

  • Began with strong January retail sales, ended with strong March consumer sentiment.
  • Government shutdown quickly forgotten, attention focuses on lower tier of income scale. Wage gains bullish over longer-term for both consumer sector and equities.
  • Will take time for Powell to change tune, especially after recent pivot AND dovish central banks overseas.
  • Fed balance sheet now in focus.

Russell’s Watch List:

  • Netflix (NFLX) trying to break above recent range.
  • Careful of rally in chips. NVDA/MLNX deal may have spurred knee-jerk buyers.
  • Financials may have more upside based on economy, potential for oil bulls to steepen yield curve.
  • DVA, RMD: Health-care names looking sickly as Buffett calls for overhaul.
  • Match (MTCH), Splunk (SPLK) and Plural Sight (PS) coming off 50-day MAs.
  • Television stocks, overbought now, getting interest into elections: GTN, SBGI, NXST. NYT similar. Pullbacks may draw buying.
  • Aurora Cannabis (ACB) still 25% below $14 Cowen target price after Peltz joined team.

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