Market Action Summary: 9/24/18

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S&P 500 overview

  • SPX holding Aug. 29 high but timing uncertain into Fed, quarter-end.
  • Problems with short-term overbought condition, pushing top of minor channel, Bollinger band.
  • Better to focus on individual stocks as volatility wanes. There may be opportunity to buy a minor SPX dive around Fed, political news.
  • Rotating strength, rolling breakouts consistent with bullish sentiment.
  • Broad Yen weakness implies low volatility, limited selloff risk.
  • Copper (@HG) muscling off lows suggests risk appetite.

Interest Rates in Focus:

  • Fed widely expected to hike 25bp on Thursday, but real story overseas.
  • ECB’s Draghi sees higher inflation after keeping taper.
  • Rising oil could make ECB more hawkish.
  • Emerging-market panic seems to have passed, especially as IMF backs Argentina.
  • Utilities (XLU), REITs (XLRE), Consumer Staples (XLP) at risk.

Value Stocks Gaining Some Favor:

  • Rising rates weigh on high-multiple stocks.
  • IWM double risk of high-valuations, sentiment shift → global.
  • Still, be careful dumping market-leading growth too fast.
  • Industrials (XLI), Financials (XLF), Materials (XLB), Energy (XLE) benefiting.

Don’s Watch List:

  • Nike (NKE)
  • Carnival (CCL)
  • Jabil Circuit (JBL)
  • Bed Bath & Beyond (BBBY)
  • KB Home (KBH)

Russell’s Watch List:

  • Biotech (IBB) coming off 50-day moving average.
  • Financials on bargain menu: Metlife (MET), Deutsche Bank (DB)
  • Bank of America (BAC), Citigroup (C) on breakout watch. Potentially good for options. 
  • Momentum/growth pullbacks: Splunk (SPLK), Nordstrom (JWN), Match (MTCH).
  • TransEnterix (TRXC) potentially accelerating to upside.
  • Cheniere (LNG) potential cup & handle breakout.
  • Momo (MOMO): High-beta China tech holding 50-day MA.
  • American Railcar (ARII) has short-squeeze potential.
  • Monster Beverage (MNST) rolling over as business weakens.
  • Macy’s (M) potential bearish triangle. Good for options.

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David Russell is VP of Content Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.