Morning Commentary
The market reminds me of those old ‘Punch Me’ plastic punching bags, advertised for their vulnerability to wobble but resolve not to stay down.
The harder you punch, the faster they bounce back. There was a lot of pressure yesterday to see if the market could once again bounce back because something spooked investors enough to trigger last-hour selling.
The selling was in direct proportion to 2021 gains, with the biggest winning sectors being hit the hardest:
NASDAQ & S&P 500 March 2nd Chart
Profit-Taking?
This has been a marvelous earnings season with massive beats and strong guidance. But most of the time, that news has been greeted with selling pressure.
That scenario played out once again yesterday in a delayed and very perverse manner.
Zoom Video Communications (ZM) posted what could be considered the best quarter possible. Yes, there are extenuating circumstances, but the first-mover advantage has held up against deep-pocketed rivals.
In fact, a parade of market watchers sang the praises of the company all morning long, especially before the open when it looked as if the stock could open up 40 points higher. It opened higher, rallying 7% before abruptly reversing and drifting into the close like the proverbial snowball into a boulder scenario.
Target Corp. (TGT) enjoyed a similar situation, as the company popped and rallied higher among cascading accolades from Wall Street. I did find it odd the stock got pumped up when management did not offer guidance. Be that as it may, the shares rallied 4% before stumbling and limping out a 7% decline.
Zoom & Target March 2nd Chart
There was a time when the fear of missing out (FOMO) meant not selling good news, but the pendulum has shifted - and now, it looks as if getting out is the better part of valor. I should note both ZM and TGT hit all-time highs last year, so “strong hands” gave up the ghost on possible near-term retracements.
Rocket Love
Rocket Mortgage (RKT) posted a solid financial report last Friday. Jan Farner, CEO of Rocket Companies, was on TV, and he received a lot of accolades for his stewardship and vision. Jay Farner is indeed the kind of corporate CEO who transcends the investing world and will leave a mark on society at large.
But Rocket Mortgage struggled with meeting the hype, having rallied strongly since its initial public offering (IPO) but not holding those gains. In fact, the execution had been inconsistent enough to convince them the shorts in this stock were easy pickings. So, that layered on the shorts:
Something happened on Friday that was more than just a reaction to good earnings and a great TV interview. It looks as though the short squeeze crowd found their next target. Word got around yesterday, sending the shares to the moon on mind-boggling volume.
Session |
Close |
Volume |
Feb 24 |
$20.32 |
8.7 million |
Feb 25 |
$19.90 |
15.2 million |
Feb 26 |
$21.85 |
50.3 million |
Mar 1 |
$24.30 |
34.2 million |
Mar 2 |
$41.60 |
356.8 million |
For me, there is no love lost when almost half the float of a stock is short. That is predatory, and at some point, it would be fair for all market participants if there was greater transparency.
Meanwhile, those that keep thinking the Reddit investing crowd has moved on to Roblox (RBLX), keep underestimating the revolution.
Portfolio Approach
We took no new action yesterday and our cash remains at 10%.
Today’s Session
SAN FRANCISCO TO RE-OPEN INDOOR DINING, FITNESS, MUSEUMS
SOUTH CAROLINA TO END RESTRICTIONS ON LARGE GATHERINGS MONDAY
VA GOV WILL LIFT STAY-AT-HOME CURFEW
NYC MIDDLE SCHOOLS TO OPEN ON THURSDAY FOR IN-PERSON LEARNING
The Centers for Disease Control and Prevention (CDC) is expected to issue new guidelines for folks with Covid-19 vaccinations that will allow gatherings. Meanwhile, more states and cities are removing restrictions. However, Texas took it to a whole different level. The Lone Star State is open for business and rescinding its mask mandate as well.
But yesterday evening, President Biden said while we could see all Americans vaccinated this summer, he hopes the nation will be back to normal “within the next year.”
Jobs Report Lays an Egg
There were 117,000 jobs created in February against consensus 200,000+, as goods producing was a major disappointment.
Change in Nonfarm Private Employment by Industry
Small business created more jobs than large and very large (1,000 employee saw 5,000 losses)
Change in Nonfarm Private Employment by Company Size
Yields Spiking Again
Major Equity Indices were higher, although drifting from highest overnight levels at around 4am. Then they took a serious dive lower after the release of the ADP report, which coincided with a spike in interest rates. I’m using the overnight S&P high of 3,898 as a reversal breakout point.
Comments |
Nice concise review Gary Mitchell on 3/3/2021 10:46:15 AM |
Charles, your "Desk of Charles Payne "We noticed you were having trouble logging in to www.wstreet.com. Have you lost your password? We would be happy to help you. You can reset your password by clicking this link. ........" - Thank you for the efficacy of your system to notice I was having trouble logging in. - THAT tells the world something good about the competency of your whole operation. SMART! - Daliah Amar got the issue fixed for me [via WStreet Customer Service Robert Fay on 3/3/2021 10:56:07 AM |
Well well, one day up the next day down! Thanks Charles. Beautiful weather in the Northwest, in spite of having to be part of the Left Coast! Lorin K on 3/3/2021 11:05:48 AM |
I really enjoyed taking all that Reddit money on RKT yesterday. Can’t wait to grab the top candlestick the next time they pump a stonk! Mark on 3/3/2021 1:14:10 PM |
Good information on RKT Charles. You are 100% right. Dennis & Judie Reitman on 3/4/2021 12:05:51 PM |
Tweet |
3/28/2024 1:39 PM | Fruitful Quarter |
3/28/2024 9:50 AM | LISTEN TO THE MARKET |
3/27/2024 1:40 PM | Mostly Higher |
3/27/2024 9:32 AM | U-TURN? |
3/26/2024 1:08 PM | Everything Is Up |
3/26/2024 9:42 AM | TAPPED OUT (I HOPE YOU AT LEAST GOT A T-SHIRT) |
3/25/2024 1:33 PM | Not A Mutiny |
3/25/2024 9:35 AM | STAYING THE COURSE…BEYOND TECH |
3/22/2024 12:56 PM | Toll on Americans |
3/22/2024 9:38 AM | A TAD TIRED |
3/21/2024 1:55 PM | Building on Gains |
3/21/2024 9:30 AM | A COMFORTING FED |
3/20/2024 1:33 PM | Pivotal Moment |
3/20/2024 10:00 AM | HERE COMES THE FED |
3/19/2024 1:33 PM | Picking Up Steam |
3/19/2024 9:35 AM | RUMBLINGS IN THE BOND MARKET |
3/18/2024 1:48 PM | Mag 7 is Back |
3/18/2024 9:39 AM | THE PARTY IN SAN JOSE WILL BE LIT |
3/15/2024 1:38 PM | Realtors Settle |
3/15/2024 9:33 AM | AN UNEASY PAUSE |
3/14/2024 1:43 PM | Sticky Inflation |
3/14/2024 9:48 AM | GOING TO A GO-GO |
3/13/2024 2:16 PM | Taking a Breather |
3/13/2024 9:51 AM | ALL SO EPIC |
3/12/2024 1:42 PM | Marching Higher |
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