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Afternoon Note

Movement and Speculation

By Charles Payne, CEO & Principal Analyst
8/7/2019 1:36 PM

The market was swamped with a lot of movement and speculation that turned a potential early bounce into an avalanche of selling, sending equities substantially lower. 

The panic was swift:

Dow Jones Industrial Average

Once selling was exhausted, some buyers materialized. Then a report from the South China Morning Post quoted the former vice-minister of commerce saying the trade meeting in September was likely to happen as planned.  Those comments added more urgency for those looking to buy weakness.

Just as upside momentum was building, news came out the administration is going to order all agencies not to directly buy Huawei equipment.  Considering what has been said about Huawei, the news shouldn’t be a surprise, but the timing during such a sensitive session sent buyers back to the sidelines.  

For the remainder of the session, watch 25,793 up to 25,814 as resistance.  Through there, the index begins the arduous task of filling a huge upside gap (yesterday’s close). 

DJIA one-day chart

Flight to Winners

There has been much talk about stock market rotation into would-be value names, but it still hasn’t materialized as much as one would have assumed.  In fact, today the earliest bouncers have been the biggest winners, not just this year, but over the last three years.

Chasing Winners

YTD

3 Year

ROKU

231%

282%

ADBE

28%

185%

OLED

122%

246%

NOW

47%

246%

SHOP

144%

757%

More Intrigue

I like the action in chip names, and China stocks listed on US exchanges, and even brick and mortar retailers.   Consumer Staples are higher along with Materials (lead by gold –related stocks) and Real Estate (can get best of both worlds yield and stock appreciation).

S&P 500 Index

 

-0.74%

Communication Services (XLC)

 

-0.71%

Consumer Discretionary (XLY)

 

-0.52%

Consumer Staples (XLP)

+0.41%

 

Energy (XLE)

 

-1.76%

Financials (XLF)

 

-2.23%

Health Care (XLV)

 

-0.52%

Industrials (XLI)

 

-0.91%

Materials (XLB)

+0.50%

 

Real Estate (XLRE)

+0.27%

 

Technology (XLK)

 

-0.37%

Utilities (XLU)

 

-0.27%

Now more than ever, you have to rely on fundamentals, and when everyone else is panicking, use it to make money.   At the very least, do not get spooked out of something you should be holding.


 

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