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Morning Commentary


By Charles Payne, CEO & Principal Analyst
10/5/2021 9:36 AM

Yesterday’s drawdown gaining momentum means market breadth is getting worse, especially the NASDAQ Composite, which saw an almost 3:1 ratio of decliners to advancers.

Market Breadth









52 Week High



52 Week Low



Up Volume



Down Volume



No longer a garden variety drawdown; the decline was still less than four drawdowns last year after the bear market ran its course.


Paging Vanna White

Can I buy a vowel?  I would like to solve the puzzle.

Well, those mega-cap growth names, which lead the market through, with their outsized influence often masked mass weakness and widespread selling. But when these names are down, there is no place to go or hide to make it feel better. It’s just a ‘real pain.’

FAANG lost a combined $243.0 billion in market capitalization yesterday. Adding in additional letters to the mix, it was a tough day for the unstoppable.

FAANG + M + T + N :

Facebook (FB) set the tone after the company whistleblower appeared on 60 Minutes on Sunday, further drawing attention to the company’s business tactics that are said to put people over profits. Compounding Facebook’s embarrassing day, all of its platforms went offline for six hours.


BTW – by the way, that whistleblower will be on Capitol Hill today speaking to lawmakers.

The Rest of the Gang

Buying and riding these high-Beta names on the upside can be euphoric, but momentum works both ways. Because these names are such large components of funds and exchange-traded funds (ETFs), heavy selling can trigger additional selling, which begets more selling…

The NASDAQ-100 took the biggest hit from the swoon. It’s now stuck in that vulnerable area between the 50 and 200-day moving average, and it is right at a trendline that’s held several times in the past 52-weeks.


The S&P 500 is now back to the days before the election. 


Important Charts


With so much going on, the size in the Dollar Index (DXY) is not getting much press, but it’s breaking out and soon could be too strong to ignore. It’s not great news for multinational stocks, but a welcome lift for U.S. consumers delaying-insidious inflation ahead of Christmas.


West Texas Intermediate (WTI) broke above the trendline and key point on the chart that was once more resistance than support than resistance.

The market is a rudderless ship, but it’s not a reflection of fundamentals, which means once the dust settles, we could see strong and swift rebounds. Right now, the bias is to the downside, and we have to respect that, but these are the periods where stocks are on sale.

Portfolio Approach

We added to Financials in our Hotline Model Portfolio this morning.

Today’s Session

Futures are pointing to a positive open.  The dollar is continuing its upward movement and the 10-year treasury yield is up 1.5%.  Oil is also rising, and Bitcoin has once again moved past $50k.

On the economic front, the record trade deficit for August of $73.b vs $70.8B consensus and $70.3 billion in prior months. Imports grew 1.4% while exports rose 0.5%.



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