Things You Need to Know
- Valuations? Now they are concerned?
- Anything Tech gets slammed.
- Crypto’s got slammed, the VIX surged.
- Bonds up, oil flat and gold down.
- And yes – the election went as expected – Dems sweep their races.
- Try the Roast Turkey.
Well – it’s a new world…. PLTR reports BLOWOUT everything and the algo’s go into SELL mode – Selling EVERYTHING Tech – suddenly concerned about valuations! Can you imagine that? Who would have thunk it? The S&P trading at almost 26 x’s earnings, the Nasdaq trading at 38 x’s earnings – levels that scream STRETCHED.
And I guess paying 300 times forward earnings for PLTR isn’t smart either…….…. Funny how it was smart just a week ago…. Analysts calling the situation ‘untenable’ for investors and as the day wore on, the selling intensified…..
Ok, first here’s why that is confusing…paying 300 times forward earnings for PLTR was perfectly fine just days ago, I mean if you want to be in it, you didn’t have a choice – you were ‘fearful of missing out’, …you didn’t want to be the guy at the Christmas party that didn’t own it!
Now the selling in PLTR caused all kinds of anxiousness and did exactly what you would expect – it accentuated the negatives and eliminated any positives (at least yesterday) and it dragged the whole place lower – now the negatives were all about valuations, about how this can’t go on, about how big does the bubble have to get before it pops…..The negatives were also seen in commentary coming out of the banks and large asset managers – telling us that the ‘possibility of a pullback’ was a reality! Can you believe that?? Amazing!
In fact, the headline that famed investor Mikey Burry (Housing Crisis fame) has taken a BIG SHORT position (bet) on PLTR and NVDA did not help the tone. Let’s define it – he made a $1.1 Billion bet AGAINST those two companies by buying PUT options that increase in value exponentially if the stock price falls…and fell they did – PLTR lost 8% and NVDA gave up 4%. Suffice it to say that Mikey had a good day yesterday!
After the bell – AMD reported and disappointed – the media says that ‘failed to impress’ and this morning this stock is down 5.5% – on top of the 3.7% loss yesterday…
The VIX surged by 10.8% yesterday – trading up and thru long term trendline resistance and is up another 3.8% this morning. The surge caused anything TECH (and most anything else) to take it on the chin ….the Nasdaq lost 486 pts or 2%, the Mag 7 gave back 786 pts or 2.3%, Disruptive Tech – ARKK gave up 5.3%, Semi’s lost 4%, Cyber gave up 2.5%, AI and Robotics lost 2.5%, Software lost 3.2%, Expanded Tech gave back 2.6% and the list goes on…..
The Dow gave up 251 pts or 0.5%, the S&P gave up 80 pts or 1.2%, the Russell lost 44 pts or 1.8% (taking that index down and thru its short term trendline), the Equal Weight S&P gave up 48 pts or 0.6%. Interestingly though, the Transports gained 80 pts or 0.5%. Remember – the Transports are flat on the year – so they have been the underperformer – so it is not a surprise to see money move into this sector…it’s cheap compared to its brethren up double digits ytd.
Crypto’s got slammed – Bitcoin trading below $100k to test $98,900 – now down 21% off the October high – and below all 3 trendlines….as it looks for stability…..The chart suggests it might find that at $99k. Ethereum also got clocked – trading down thru all 3 trendlines to test a low of $3,059. This morning Bitcoin is trading at $101k while Ethereum is trading at $3300.
Of the 11 S&P sectors – it was not a disaster…. Financials ended the day higher up 0.5%, Consumer Staples up 0.4%, Healthcare up 0.5% and Real Estate of all things gained 0.3%.
The other 8 S&P sectors ended lower…. Tech – 2.6%, Consumer Discretionary – 1.7%, Industrials – 1.2%, Energy – 1.1%, Communications – 0.7%, Basic Materials – 0.5%, Utilities – 0.4%.
The contra trades had a great day – the DOG + 0.6%, the PSQ + 2%, SH + 1.2%, SPXS + 3.6%, the VIXY +4%.
Bonds gained – reversing their recent string of losses – the TLT and TLH gained 0.2%. Leaving yields in line. The 10 yr is now at 4.08% while the 30 yr is at 4.66%. 30 yr mortgage rates remain at 6.2% while 12-month CDs are paying you 4%…. Your gov’t money fund in your brokerage acct is paying you 3.8%.
Oil continues to churn in line at $60.70…and remains in the $55/$62.50 range. Nothing new to see here…. the Saudi’s will slow production in the new year to manage the glut while prices are expected settle in right here.
Gold fell $72 or 1.8% taking that to a low of $3,937. This as it tries to find a level of stability. Trendline support is $3,880.
On a side note: yesterday was election day and as expected – all of the blue states elected Democrats – that should not surprise anyone. The message was clear – voters are tired of the same ‘old’ people running the show…..…VA & NJ both going to women governors who promise to challenge the status quo while NYC went to a 34 yr old man that has virtually no executive experience, has never had a full time private sector job and has never managed a budget, signed a payroll or been accountable to anything.
It raises real questions — not about background or identity — but about competence, preparedness, and the direction of the city. In any event – NYC is screaming that they are tired of the same old – and if this is any view about what happens next – say goodbye to Chucky as well.
Eco data today includes Mortgage apps – down 1.9% and ADP Employment – expectations are for 30k new jobs to be created. S&P global Services PMI of 55.2 along with the ISM Services PMI of 50.8. ISM Services Prices Paid is also due out and it is expected to show a slight decrease – which should be considered a positive.
The earnings parade continues…and if the trend holds – we can expect 82% of them to beat on the top and bottom lines and offer robust guidance.
US futures remain under pressure….at 7:15 am – Dow futures are -30, S&P’s -20, the Nasdaq -102 and the Russell is +3.
European markets are lower as well…. All down about 0.5% across the board.
The S&P closed at 6,771 – down 80 pts. As always, I wait 24 – 48 hours after we see a move like this – just so I can see how it settles down. Remember – it’s always worse on the way down…..because buyers will step aside to see just how anxious the sellers get…..Yesterday I said that.
‘I suspect that we might test 6775 ish…. down about 1.1%’ –
Well, we tested 6766 before bouncing a bit to end the day at 6775.
The weakness this morning will take us below yesterday’s close in the minutes after the market opens….(if we remain weak) and if that fails to hold then the trendline would be the next logical stop…and that is at 6647….down 1.8 from here. Something that is not out of the question. Now while it did not happen yesterday, I am not ruling it out over the next couple of days…. remember – once they focus on a negative headline – then they ONLY focus on the negative headlines until they don’t.
Remember – we could trade lower and still be in a ‘normal trading pattern’…. It won’t feel normal, it will feel really uncomfortable – but it would be considered normal. Now while I do NOT think that is happening – I’m just making it clear that if the algo’s spin out of control – it could get ugly, quickly.
Bottom line: the ground is shifting just enough to keep everyone on their toes. Stay focused, stay disciplined, and don’t get sucked into the noise. Because in the end, discipline always beats drama.
Countdown
36 days into the Gov’t shutdown
24 days until Official Black Friday
50 days until Christmas
56 days until the ball drops in Times Square
Let’s review your plan. Call me for a complimentary, no-obligation portfolio analysis: 561-931-0190.
Take good care,
Sources: Bloomberg, CNBC, Reuters, Wall Street Journal
Disclosure: The content provided in this material is designed for educational and informational purposes only, and it is important to note that it does not constitute personalized recommendations. This commentary is not nor is it intended to be relied upon as authoritative or taken in substitution for the exercise of judgment. The comments noted herein should not be construed as an offer to sell or the solicitation of an offer to buy or sell any financial product, or an official statement or endorsement of Kenny Polcari or SlateStone Wealth.
The market commentary is the opinion of the author and is based on decades of industry and market experience; however, no guarantee is made or implied with respect to these opinions, which may not necessarily align with our firm’s standpoint.
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Juicy Roast Turkey
Thanksgiving is coming and to celebrate I offer up the Turkey. Turkeys are funny – if you don’t pay attention you will dry it out….so try this on for size.
For this you need: The Turkey, carrots, celery, onions, butter, s&p, an apple and orange, sage, rosemary and thyme, chicken broth, and a splash of champagne.
Begin by rinsing and draining the “defrosted turkey” I say this because – some people think it is ok to cook a frozen turkey – wrong! Be sure to take your turkey out of the freezer on Monday and let it sit in the fridge to defrost. By Wednesday – it should be ready.
Make sure to remove the bag with the giblets and neck from the cavity. Let it dry – or pat it down with paper towels.
On Wednesday evening mix all of your seasonings together set aside.
Place the turkey in a roasting pan.
Next – take some softened butter and massage the turkey – breast, legs and thighs. Now – rub the seasonings into the turkey making sure to season all parts.
Now cut up the apple and the orange into slices and place in the cavity. Rough chop the veggies and place all around the turkey and also in the cavity. Feel free to quarter up some roasting potatoes and include them too.
Now return to the fridge until the morning.
On Thursday – preheat the over to 400 degrees.
Take the Turkey out of the fridge and add the chicken broth and a splash of your favorite champagne – don’t ask why – its champagne – Just enjoy.
Tent the turkey with foil and place in the middle rack and let roast for 30 mins or so…. now reduce heat to 325 degrees and let it cook – 12 – 15 mins per pound. So figure it out….20 lbs. = 240 mins/300 mins. (4 – 4 1/2 hrs.)
When. u have 30 mins left – remove the foil and allow it to crisp up and turn golden brown. Once done – remove from oven and let it rest for 15 mins. Keep it covered to maintain warmth.
Buon Appetito!