Psychology vs. Disagreement?

Mkts were pressured lower again yesterday - weighed down by continued broader macro global concerns and a weaker than expected ADP employment report.....Biotech's, Financials, Energy all under pressure while Utilities outperformed..and that makes sense - right.....These companies tend to be boring, yet stable, they are not real sexy at all yet they pay solid, high dividends that appeal to investors during times of uncertainty.......yesterday's action suggests that investors are not expecting any move on rates anytime in the 'near future'.

Technology continued to get banged up......the Nasdaq composite index closing at levels not seen since late March.....as the frustration grows.....the Nasdaq is now down 5.5% off of the April highs as investors use these names as a source of cash in a nervous mkt. They have caused it to break all of its supports - 50,100 & 200 dma's......will we see a swift selloff once again? Look - the technology index had rallied 17% off of the February lows.......so when traders are looking for the action or when investors are looking to take cash off the table (for whatever reason) - it makes perfect sense that they would look to issues that have had decent price swings......

Apple - is another perfect example......traders/investors couldn't get enough of it from the lows of February thru the highs of early April - taking it up 21.5% - everyone seeming to love it...I mean its Apple.....did not hear anyone complaining at all on the way up......(fyi - you hardly ever do)......but then it hit rocks - earnings a bit of a disappointment (analysts missed that one) and then news that Uncle Carl bailed...........and those same trader types ran for the door - all screaming that the end was near....OMG - how could Apple disappoint? Why would Carl get out? It MUST mean that the world is coming to an end......I mean - the chatter has been ridiculous - sellers couldn't hit the sell button fast enough and the buyers sat back....letting it come in..........but now it looks like it is beginning to stabilize - the seller aren't so sure anymore...........it has tested support at the $92 ish level and held....the spike in volume that we saw last week on the earnings & Icahn news has subsided - which tells me that investors are in 'less disagreement' over value. You see - volume is a funny thing right.....what does it really suggest?

It suggest disagreement - disagreement over current value or what investors/traders perceive as current value.....and so for some it is a change in psychology (sellers) and for others it is an opportunity (buyers)....... Clearly after the news last week - there were many people in 'disagreement' and thus the spike in volumes and the move lower - because buyers while happy to buy stock - do not need to defend it at higher prices if the sellers are clearly willing to let the stock go at lower prices....Econ 101 - Simple Supply and Demand. And that is true for the broader mkt as well.......

As the first week of May comes to a close - the "Sell in May" crowd seems to taking center stage...- bad news is bad news (again), continued threats of higher rates dominate the conversation which causes more confusion and angst creating a new level of 'disagreement' among the paparazzi. Yesterday at the Sohn Conference in NY - Stanley Druckenmiller - one of the most successful hedge fund mangers of all time - got up and said that

"The bull mkt in stocks has exhausted itself" - in fact he said - What? "Get out of the stock mkt isn't clear enough?"

He is now betting on Gold as he is disgusted with current FED and global central bank policy......Will he prove to be the mkt sage that many think he is? Is this the high? Will investors pull the plug sending the message to central bankers that it is 'game over'?

US futures are now up 8 pts....but that is down from earlier when futures were up 12 pts....As discussed - we have traded down to and test the 2050 level on the S&P and we have held.....now we had every reason to break down but as of now - we have not...and we remain in the 2050/2080 trading range until tomorrow's NFP report. For now, it appears that the mkt is adjusting or digesting which is causing a short term intermediate correction after that powerful rally off of the February lows....the Russell 2000 index broke its down trending 200 dma and is about to test its upgrading 50 dma.......if it holds then it is only days away before we see the Golden Cross - when the shorter term moving avg (50) pierces UP and thru the longer term moving avg (200) - and this usually indicates a turn in the trend - if so - we should see higher volumes - which signals a change in psychology or 'disagreement'.

By now you know the NFP expectations call for +200k jobs to be created and after yesterdays disappointing ADP report - the smart money is looking for a bit of a disappointment - not huge - but certainly not an upside surprise. I mean it is almost impossible for any upside surprise - the other data does not support that at all.....an inline number will have no reaction - an upside surprise will not be believed and a disappointment will cause initial pressure on the mkt possibly testing longer term support at 2015 ish. -( bad news is bad news) - but then look for calming commentary from the FED.....and those 2 definite rate hikes that Lockhart and others have been screaming about will fade to black.....and the mkt will stabilize.....

Alibaba - BABA - just reported earnings of $3.02 vs. exp of $3.60.....not good right??? Well - not so fast cowboy..... - Revs were 24.2 bil Yuan vs. the 23.2 bil est- Chinese retail space explodes to the upside by 24% and mobile usage up by 42% - the stock is now trading up $4 or 5% in pre-mkt trading..... and so it begins....

 

Spaghetti w/Asparagus

Here is another great Spring time dish.... Looks great on the plate and is pleasing to the eye and pallet.

For this you need:
1/2 Pound Fresh Asparagus Spears, Diced Pancetta, sliced Garlic, 1/2 Cup White Wine, Grated Pecorino Romano Cheese, Finely Chopped Fresh Parsley, 1 lb of Spaghetti.

Begin by trimming asparagus, and cut into 2 inch pieces, Cut the white end of the stalk off and discard. Blanch the asparagus in boiling water until tender crisp, then drop into a bowl of ice water. Do not overcook - you want the asparagus to be firm not limp. Once cooled - cut into bite size pieces - saving the flower aside.

In a lg sauté pan - sauté the pancetta and garlic in some olive oil. do not burn.... Add in the asparagus and stir. Add the wine and cook until it has been almost completely absorbed.

Bring a lg pot of salted water to a rolling boil and add the spaghetti. Cook for 8 - 10 mins or until "al dente", then drain and add to the saute pan with the pancetta and asparagus. - Reserve a mugful of the pasta water. Add back a bit to moisten...do not leave a puddle.... stir to mix well.

Serve in individual warmed bowls, adorning with the flower - offering extra grated Pecorino cheese at the table for your guests. Compliment with your favorite white wine....Nothing too fruity.


Buon Appetito.