February 21, 2018.

Most sectors finished down on the day yesterday. IT has done the best over the last 5 trading days (including yesterday’s session), with aggregate gains of 3.71%. The NASDAQ is up 3.15% over the last 5 trading days. Yesterday, it was retailers, grocery store operators, industrial stocks and healthcare companies that were responsible for most of the market’s losses.

Walmart (WMT) was one of the worst performing stocks yesterday, hit by two headwinds. First-off, in its own court, Walmart ran into trouble after misjudging its online holiday season inventory. WMT was clobbered, tumbling 10%, the stock itself losing $31 billion in market cap. The company reported weak online sales, and earnings, that fell short of expectations. Secondly, word broke of Albertson’s deal to buy Rite Aid, creating even more competition for the retail behemoth. Walmart had been in full stride prior to yesterday’s ruffles, having made ground in its titanic battle with Amazon for online dominancy. Few doubt that Amazon will beat out Walmart by a long shot, the question is, “How can Walmart pare Amazon’s gains and deploy its brick and mortar dominancy to catch up in its e-commerce operations?” The Albertsons-Rite Aid move came in large part in response to Amazon swiping up of Whole Foods Markets. The trend in many industries has been to greater consolidation for larger economies of scales – and gaining a competitive edge. CVS Health made the move recently with its purchase of Aetna, which will wrap up later this year.

Oil prices fell today, the U.S. benchmark and Brent falling yesterday. Today, the American Petroleum Institute will release its U.S. crude inventory focus, which we be rounded out by supply data on Thursday from the Energy Information Administration. The data last week showed U.S. reserves rising by 1.8 million barrels – less than expected – in the week ending February 9th.

In another development, steel stocks soared after the U.S. Dept. of Commerce presented options for President Trump to respond to a Section 232 investigation into steel imports. After news broke that tariffs were on the table, United States Steel Corp. (X) and AK Steel Holding Corp. (AKS) saw strong trading, their stocks soaring.

Another company that has been in the news is General Motors (GM), which has opted in recent years to lower scale – and revenue sources – in favor of higher earnings. GM has closed operations in its unprofitable segments worldwide and one of the more interesting developments of late has been its proposal to invest $2.8 billion in South Korea over the next years. According to a senior South Korean government official, it would be part of the American giant’s restructuring plan for its beset unit in the country. GM has also asked South Korea to inject funding into GM Korea; the country’s state bank also has a stake in the company. The South Korean unit is now operating at a loss and the role it plays is key because it’s one of GM’s largest offshore operations. What would GM offer the country? Well, for one, it staying put would preserve 16,000 jobs. With all of this going on, South Korea’s trade minister, Paik Un-gyu, shared that the government has called for an audit into the “opaque” management in the country on the heels of its shutting down a factory in a city southwest of Seoul. “By opaque we mean the high rate of profits to raw material costs, interest payments regarding loans and unfair financial support made to GM’s headquarters,” Paik accentuated.

Daily Summary: All of the major indexes lost ground, the Dow leading the losses with a drop of 1.01%, the S&P 500 falling 0.58% and the NASDAQ, off a smidgen, by 0.07%.

Morgan Stanley’s chief cross-asset strategist, Andrew Sheets, noted that a few market price corrections by year’s end would be entirely within the realm of reasonability: “At present, the strength of current data … is still acting as a counterweight to inflation concerns, as is a strong 1Q results season. Earnings reported so far have beaten estimates by [about] 5% in the US,” said Sheets. “Things get trickier, however, after 1Q. Past March, markets will need to digest rising … core inflation and declining [purchase manager indexes], economic surprises and (quite possibly) earnings revisions.” As for the recent corrections on all of the major indexes, Sheets said that they were just an “appetizer, not the main course.”

On the currency front, the U.S. dollar has weakened over the last few months on fears that the U.S. will purposefully push its currency lower to boost trading. In spite of projected rate hikes to offset inflation, the dollar has not seen strength, the ballooning U.S. budget only serving to exacerbate the situation. The dollar hit a three-year low this past Friday, though traded up 1.8% as of yesterday. Market players attributed the renewed dollar strength to short coverage, Tareck Horchani, head of sales trading in Asia Pacific for Saxo Markets in Singapore weighing in and saying, “It’s mainly a positioning clean-up in my view.” Horchani also related, “Positioning in EM (emerging markets) is quite strong, it’s quite big. We could get a bigger dollar rally against EM.”

What can we expect for volatility from hereon in? Voya Investment Management, chief market strategist, Doug Cote, commented, “Investors have been lulled into a false sense that stock markets are not volatile,” adding, “Last week was one of the best weeks in years, and as we go back to normal volatility, you’re going to see what you would expect: normal ups and downs.”

Obviously, the bond market, too, has a say, investors keeping their eyes on the critical 3% yield level, watching to see whether the 10-year T-bond yield gets any closer. Now it’s at 2.88%, after ending barely up yesterday. Back in September ’17, the yield was at just 2.04%; with bonds now a more reasonable alternative to stocks, major indexes on Wall Street may still face turbulence ahead.

Target (TGT) slid 3%, Ross Stores (ROST) dropping 2.7%. Gap (GPS) fell 5% after announcing that the head of its Gap brand would be leaving the country. Genuine Parts (GPC) tumbled 5.2% after the auto and industrial parts company released a disappointing 2018 earnings forecast.



Daily change

DJX 24,964.75 -254.63 (-1.01%)
SPX 2,716.26 -15.96 (-0.58%)
NASDAQ 7,234.31 -5.16 (-0.07%)


Wednesday’s Hot Stocks: LZB, FLR, TXRH, BYD, DVN, LC, EXR

Today’s Economic Calendar: PMI Composite Flash numbers will be released at 9:45, followed by existing home sales numbers at 10:00.

Have a great trading day!

Economic Calendar

DAY TIME (EST) Event Forecast Impact
Wednesday 9:45 PMI Composite Flash 54.0  Medium
Wednesday 10:00 Existing Home Sales 5.650 M Medium
Thursday 10:00 William Drcudley Speaks bnu Medium
Thursday 10:00 Leading Indicators 0.6 % Medium
Thursday 8:30 Jobless Claims 230 K Medium
Thursday 11:00 Oil Inventories 1.8 M barrels Low
Friday 10:15 William Dudley Speaks Medium



Earning Calendar


Symbol Company AM/PM Day
NBL Noble Energy, Inc. AM Tuesday
WLK Westlake Chemical Corporation AM Tuesday
MGM MGM Resorts International AM Tuesday
DUK Duke Energy Corporation AM Tuesday
HD The Home Depot, Inc. AM Tuesday
WMT Walmart Inc. AM Tuesday
DVN Devon Energy Corporation PM Tuesday
LNG Cheniere Energy, Inc. AM Wednesday
GRMN Garmin Ltd. AM Wednesday
DISH DISH Network Corporation AM Wednesday
CLR Continental Resources, Inc. PM Wednesday
APA Apache Corporation PM Thursday
HCN Welltower Inc. AM Thursday
NEM Newmont Mining Corporation AM Thursday
INTU Intuit Inc. AM Thursday
HPE Hewlett Packard Enterprise Company PM Thursday
HPQ HP Inc. PM Thursday
LBTYK Liberty Global plc PM Thursday
MELI Mercadolibre, Inc. PM Thursday
BMRN BioMarin Pharmaceutical Inc. PM Thursday
COG Cabot Oil & Gas Corporation AM Friday



New York Strategy Swing

# Date Stock Long\


Status Data Close Profit\


1 6.12.2017 SPLK Long Close 8.12.2017 +1.51%
2 11.12.2017 NKTR Long Close 2.1.2017 +4.57%
3 18.12.2017 SYY Long Close 19.12.2017 +0.14%
4 3.1.2018 VOYA Long Close 8.1.2017 +0.67%
5 4.1.2018 TER Long Close 10.1.2017 +0.45%
6 9.1.2018 SCG Long Close 10.1.2017 -3.35%
7 11.1.2018 CREE Long Close 16.1.2018 +1.84%
8 11.1.2018 CF Long Close 16.1.2018 +1.66%
9 18.1.2018 MARK Long Close 22.1.2018 -0.67%
10 1.2.2018 SM Long Close 2.2.2018 -1.06%
11 14.2.2018 HOLX Short Close 15.2.2018 -2.7%