Things you need to know.
– Stocks continue to retreat – giving back 60% of the election gains.
– Trump making a range of cabinet nominations – mkts assess.
– Bond yields kiss 4.5%, oil under pressure.
– Goldman pushing Gold for 2025.
– NVDA earnings are the focus for Wednesday.
– Try the Stuffed Chicken ‘Balls’
Stocks fell again – marking the worst week in over two months as all the excitement of the Trump trade fades and investors now have to reconsider the pace and timing of any further rate cuts along with all of the cabinet nominations that have been proposed. Eco data showed us that Retail sales came in stronger than expected – something that it has been doing for months now – Industrial Production was unchanged m/m at -0.3% while Capacity Utilization was a bit weaker at 77.1 vs last months 77.5.
The Dow lost 305 pts or 0.7%, the S&P lost 80 pts or 1.3%, the Nasdaq dropped 428 pts or 2.25%, the Russell fell 34 pts or 1.4%, the Transports lost 198 pts or 1.1% while the Equal Weighted S&P gave up 56 pts or 0.8%.
For the week – the Dow gave up 2.3%, the S&P lost 2.1%, the Nasdaq down more than 3%, the Russell off 5.5%, the Transports down 2.5% while the Equal Weighted S&P gave up 2.1%.
Leading the declines on Friday was TECH – the XLK down 2.6% on the day…. The Magnificent 7 except for TSLA +3% were all lower. Amazon -4.2%, Nvidia -3.25%, MSFT – 2.8%, META -4%, AAPL -1.4%, GOOG – 1.9%, Applied Materials – A semiconductor manufacturer suffered a 9% drop due to a disappointing revenue forecast – which contrasts with what others have been saying. The move taking AMAT below the August/September low of $173 to end the day at $168.88 – a level last seen in January 2024 – a level that was resistance at year end 2023 but hopefully become support for this latest move down.
Typically – when a stock has such a negative reaction to a headline – I usually wait 2 – 3 days to let it settle down and get a better sense of what investors really think. The chart says that if it fails to hold here – then we can expect it to trade to the mid $140’s…. But let’s see what happens.
Utilities on the other hand were up nicely…. +1.5%, Financials + 0.5% while Real Estate gained 0.1% on the back of all of the noise. Communications and Healthcare joined Tech losing 2% and 1.8% respectively. The RFK nomination as HHS Secretary caused all kinds of angst amongst the Pharma industry.
And as you can imagine with all of the selling the VIX raised its head – rising 12.8% to end the day at 16.15 – now it blasted up and thru long term resistance at 15.55, kissed intermediate term resistance at 17.75 before settling just below….and while the move was interesting it is still a level that does not reflect a lot of fear –
This morning – the VIX is trading up 3% at 16.72…. Now, the level to watch is 18.25 – if we pierce that, then I would expect we test the early November high of 23.40…a move that would put some more pressure on stocks.
The contra trades had a good day – the DOG + 0.7%, SH + 1.4% and the PSQ + 2.5%, while the SPXS gained 4% and the VIXY surged by 7%.
Word out of the FED was mixed…. on the one hand Boston’s Suzy Collins – who is not a voting member – told us that a December cut is on the table while Chicago’s Austan Goolsbee thinks rates will be ‘a lot lower’ over the next 12 – 18 months. (I think he needs his head examined….) this in contrast to what we heard from both Neely Kashkari and Fed Chair JJ Powell. Both of them were much more cautious when talking about a December cut – recall that on Thursday JJ said he was in ‘no rush to cut’ it appears that someone didn’t get the memo….
Bonds lost ground when we got the Retail Sales data and that sent the 10 yr to 4.5% in the morning…. but by the end of day yields retreated ending the day at 4.44%. The TLT lost 0.3% and TLH – 0.2%. This morning – bonds continue to struggle a bit and that is supporting higher yields. The 2 yr is yielding 4.3% while the 10 yr is yielding 4.46%.
Oil lost 2.5% to end the day at $66.95 – testing the October low…. this is as the story remains an oversupply of oil and a weakening China demand story. If oil fails to hold here, then a test of the September low ($64.70) would not be out of the question. This morning – oil is up 0.7% – rising tensions in the Russia/Ukraine war only intensifying after Vlad launches its biggest missile and drone attack on Ukrainian infrastructure over the weekend….On Sunday we learned that JoJo has now approved the use of US long range missiles to assist Zelensky in this fight – something that would elevate this war into a new phase. Recall, that Vlad said that if the US allows Ukraine to use US missiles in this conflict – that essentially puts the US at war with Russia. More of this story to follow….
Gold was all over the place on Friday….it traded as high at $2582 and as low as $2558 – before settling at $2567. Over the weekend – our friends at Goldman are now pushing Gold as an investment in 2025 (where were they in 2024? Gold is up 21% ytd) putting a $3000 price tag on it ( a gain of 15%)….citing global central bank buying (something that has been happening all year – so this is not new) and the idea that US interest rates will be decidedly lower…(Again, something I do not believe). Ok, whatever…. it’s Goldman, what do you expect?
Friday’s move saw gold breach intermediate support at $2574 – to trade down to $2558. This morning it has taken back the trendline, the question now is, can we hold it? A failure would see gold test $2500 – but with Goldmans recommendation – you can be sure they won’t let that happen….!
US futures are mixed…. Dow futures down 80 pts, S&P’s +5, Nasdaq +88 and the Russell is ahead by 16. Investors now assessing the weekend news – at home and abroad – and are looking for new clues as to what’s next. Concerns continue to weigh on investors’ minds about what the new Trump policies will mean for inflation and the economy. While he has nominated a number of cabinet posts, we are still waiting on who will be Treasury Secretary – a post that now has 4 names in the running.
It will be a quieter week – on the economic front – but we will get reports on Housing Starts and Building Permits, along with Existing Home Sales and S&P Services and Manufacturing PMI’s.
It will be an exciting week for Tech – NVDA reports on Wednesday afternoon…..and the speculation is really heating up now…..Last week – it made a new high at $149.77 but has since given back about 8 pts….this morning it is trading down another 3.5% at $139.25 ish on a negative Blackwell Chip story….Apparently CEO Huang is asking suppliers to change the design of the server racks due to an ‘overheating problem’ – this request comes late in the process – and is causing some concern amongst investors. Short term trendline support is at $131 while Intermediate support is at $125. Remember – NVDA is up 187% ytd….a pullback to $131 represents a 13% move off the November high while a pullback to $125 represents a 17% move….neither would be a reason to panic – unless of course Jensen tells us something negative that no one expects – I’m in the camp that he will surprise to the upside – but that’s me.
European markets are all lower…. Retail leading the way lower…. This week includes several key data points…. Eurozone CPI and a range of individual country PMIs are also due. We will also hear from the ECB’s Christine Lagarde – on whether she is considering another interest rate cut in December.
The S&P closed at 5870 – down 80 pts….and we are getting closer to filling that gap created on November 6th… (5782/5864). We are in the 5772 (trendline support) and 6000 (most recently high) trading range. As an investor – you want to see the market consolidate and trade a bit lower while as a day trader – you want more volatility…. My sense is that we will fill the gap and test trendline support before we make a renewed move higher. I suspect that we will be in the 6000 range by year end.
Remember – Successful investing is a marathon not a sprint. Click on the link to send me a message – I’m happy to discuss.
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Take good care.
kpolcari@slatestone.com
Sources: Bloomberg, CNBC, Reuters, Wall Street Journal
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Stuffed Chicken Breast ‘Balls’.
This is a great way to serve chicken – it’s easy and exciting.
For this you need ‘thin sliced’ chicken breasts, sliced garlic, fresh spinach, mushrooms, onions, butter, fresh shredded Fontina Cheese, s&p.
Preheat your oven to 375.
Now make sure you have thin sliced breasts – season with s&p. Set aside.
In a large saute pan – saute the sliced garlic & onions for 10 mins, now add in the sliced mushrooms – saute until soft. Now add the fresh spinach – saute until wilted. Season with s&p – set aside.
Now take out cookie sheet and spray it with a cooking spray (something like PAM).
Using a large ladle – place the chicken in the ladle forming a cup. Now stuff with the onions, mushrooms and spinach. Fold the chicken over to form a ‘ball’. Place it on the cookie sheet (folded side down).
Melt a stick of butter – brush the chicken ‘balls with the melted butter and then top with the shredded Fontina Cheese. (you can use any cheese of your choice – Fontina adds a different depth – but you can use mozz, or even asiago if you like).
Place in the oven and cook for 30 – 40 mins…. or until the cheese is nice and golden. Serve with a mixed green salad – tomatoes, cucumbers, scallions, Romaine lettuce (is always my go to). Season with s&p, oregano, fresh lemon juice and a splash of olive oil.
Buon Appetito
