Kiss of Death?

So it was only last week - when we were celebrating the breakout by the Nasdaq mkt - a breakout that took 15 yrs to accomplish....On April 24th - My Morning Thoughts started out like this and asked that age old question:

Oh.....now it is getting interesting.....but is it getting a bit 'bubbly'?

Nasdaq made history yesterday....breaking out of its 15 yr purgatory....but the breakout did not come with any fanfare, or bells and whistles.......Yesterday at 11:55 am....traders took the Nasdaq up and thru its former high of 5048 - as it ticked at 5049......... and shift into overdrive....the algo's kicked in forcing it to a new all time intraday high of 5069. At the closing bell - Nasdaq ended the day at 5056....signaling a 'new dawn'....and this during what many would consider the worst earnings season in recent memory (negative 4% growth) ....

And that was the 'kiss of death' - Just a few days ago we were celebrating - Nasdaq was the new darling child, the S&P was at an all-time new high and the Dow and Russell were teasing with their all time highs.........but today - the Dow 30 is now flat for the year and both the S&P and Nasdaq have closed below their 50 dma's and the small cap Russell - well that broke its 50 & is now sitting right on its 100 dma at 1217.

In the past week - stocks have reversed course giving back all of the April gains.....There was not one sector left standing as investors did a little 'window undressing' at the end of the qtr....or as the incomparable Arthur Cashin of UBS and worldwide fame said:

"Today's action looks like end of month window BREAKING"

And so it was.....you could hear the smashing glass as investors started throwing everything out the window - the only thing left was the kitchen sink....but hold on - that may be next....

We can credit the 'usual suspects'.........ongoing uncertainty about the outlook for interest rates, the pending Greek Tragedy, key weak earnings, weakening macro data and the tensions building in the Persian Gulf as the Iranians try to bully the international community causing us to send warships to 'accompany US ships thru the Strait of Hormuz.....as one 'unidentified' US Official put it:

"Out of abundance of caution, because of the unpredictability of our Iranian friends, we're now positioned so that, should the Iranians decide that they're going to be stupid, we're ready to respond...." (Iranian officials have yet to comment...)

So after you turn on the lights and look back- you will see that we haven’t gone anywhere in the broad market so far this year. Yesterday, we got confirmation that the economy is not growing...... 4 months ago the GDP was 'supposedly' growing at 5.0% and now the GDP is growing at 0.02%. - Yes - that is NOT a typo.....a 4.98% reversal in activity......and this as all of the major indexes were making all time highs. (There's that whole disconnect thing again......)

But you say - "Why the negative - we knew this...The Atlanta fed's forecasting model actually called for growth of 0.01% - so in fact - we beat it! Where are the party hats? What does the Atlanta Fed say about this qtr? Their initial forecast calls for growth of 0.9% - a far cry from the consensus estimates of 3% - so the reality of the robust recovery......well - ain't so robust. These are recession numbers....Hey...I'm just sayin.....

Over the last 2 weeks - we have seen the dollar get clobbered (not such a bad thing for the multinationals)...it is down 5% - this though has been good for oil...(dollar down/oil up) and prices ended the month of April up another $1.05 closing at $59.63/barrel or up 17% in that same time. And with tensions building in the gulf - you can rest assured that there is now a floor under the price of oil....(could this whole Iranian thing be a set up to goose oil?)

Yesterday we heard from some of the big oil companies....XOM, CHV, COP, - while the plunge in oil prices has caused some heartburn for the oil producers it has created a boom for the refiners.....and in fact American refiners are laughing all the way to the bank....because US crude - cheaper than Brent - has given them the competitive advantage over their European and Mid East rivals.......and the plot thickens.....

After the bell - LinkedIn (LKND) slashed guidance - blaming the strong dollar and weaker demand for its problems.....the stock was down 5 pts during the trading day and then got slammed in the afterhours session......dropping more than 20%....this morning in early pre-mkt trading it is hovering around $201....There we go again with these 'high growth stocks'......(Recall Twitter) - it is difficult to forecast and guide - so when they do they set themselves up for failure - but anyone trading these names understands that.....and if they don't - they do now.....

US futures are up 6 pts....not surprising after being down 21 pts yesterday.....with the S&P now broken its short term support at 2090 - look for that to become resistance again......support is now at 2070ish......

It is May 1st...so expect to hear the 'sell in May and go away' mantra - as historians come out of the woodwork telling us about this phenomenon......This is a well known trading adage - essentially telling investors to take the summer off......

Eco data today includes ISM Manf - exp of 52. Construction Spending of +0.5% and U of Mich Sentiment survey...exp of 96...on the earnings front - look for WY, CVS, LM, VFC to name just a few.

Watch for 2 Fed speakers today....Loretta Mester (Cleveland Fed) at 8:30 and John Williams (San Francisco) at 3:20 pm - of the two - Williams is the one that has the potential to create more noise.....

Steak Florentine

Steak...for the meat lovers - this is a great dish.....and brings me back to the days when I studied in Florence during fall semester of Jr. year. Aug 1981 - Dec 1981.

Start with a nice cut T-Bone or Rib Eye - always on the bone as the bone provides so much more flavor and makes a nicer presentation for your dinner guests.

You will need: The steaks, 10 cloves of Garlic, Pork fatback, dried rosemary, coarse salt (kosher salt works nicely) and pepper. Remove steaks from fridge - rinse under cold water and pat dry with a paper towel. Leave on a platter for about 20 mins so that they get to room temp. In a food processor blend the pork fatback, garlic, rosemary to a paste like consistency. Next - wash your hands and massage this mixture into the steaks - taking time to make sure that you have worked the meat and the mixture well. Now season with S&P. Set aside.

Light the grill and turn the heat to high and allow the grill time heat up - it has to be nice and hot. Place the steaks on the grill and cook for about 5 min/side - depending on thickness - This will result in a med rare steak...so if you add a couple more mins on each side you will get a more cooked center. Remember though - when you remove the steaks from the grill - you will cover and let them rest for 4 mins allowing them time to continue cooking and allowing for the juice to flow. Once ready serve immediately on warmed plates. Accompanied by both a starch and a vegetable. Garlic herb rice and brussel sprouts* are a good option or mashed potatoes and peas - along with a mixed green salad with red wine vinaigrette dressing.

This meal deserves a robust red wine - my favorite is Brunello di Montalcino - like velvet.


Buon Appetito.