Market Alert - The Close

Listening to the afterhours shows you would think the indices were cranking hard to new highs with big moves. The reality is Wednesday was mostly a pause session with 3 indices modestly higher, 4 indices modestly lower.

SP500 -0.75, -0.03%
NASDAQ 4.67, 0.06%
DJ30 -45.16, -0.18%
SP400 -0.26%
RUTX -0.08%
SOX 0.27%
NASDAQ 100 0.09%

A pause is not bad, and the indices did bounce Monday and Tuesday, continuing the late week break higher from the prior week. Relatively, however, the moves were much more subdued. As the growth indices tap at new highs, once again their moves are tailing. More New High Anxiety from the look of it (I hope everyone gets the pseudo-joke -- a takeoff from Mel Brooks' 'High Anxiety' that was a spoof of the great Alfred Hitchcock and his superlative 'Vertigo').

While DJ30 has cracked through the late July highs, it cannot get through the last February highs. SP500 is close to its all-time high and slowing.

The real high anxiety indices, however, are the growth indices. NASDAQ volatility spiked in late July as it hit new highs and it sold quickly form those highs. It has recovered to near new highs, but as noted the past few sessions, those leader stocks such as ADBE, VRSN, MSFT, NVDA are up, but the recovery moves are very slow with small steps on light volume. Very pensive rebound with no rush of buyers. Perhaps they come: AMZN sported the same pattern, that slow creep on no volume, and then Wednesday it broke to a new high on rising trade.

SP400 is also back at the prior highs, indeed moving to a new closing high Tuesday, but it faded Wednesday. Not breaking down, but it has to prove that this time it can hold a new high after the July attempts all failed.

RUTX is lagging the other two, but it is still working quietly, trying to set up a triangle consolidation and break higher off the 50 day MA just as SOX has done.

None of these patterns are dogs. The indices still hold uptrends. The sellers caused some upheaval in late July, but they have since been scarce. Buyers may not be rushing back in, but the sellers, after making themselves known in late July, have not shown up again, at least yet.

Thus the 'new high anxiety' and why we are watching these moves carefully. Moving higher, NASDAQ up 7 straight sessions off the late July selling, still in the uptrends. Leader patterns are less than great, however, and the indices are just now getting back to those levels to try for those new highs. Watching to see if the sellers show up; they have not as of yet.

Going nowhere slowly.

With the indices continuing in their uptrends of course the primary plays are upside. The maddening thing is, this is a 1 step forward, half step back trend. Slow, slow, and slower moves, slowing even more as the indices approach the old highs. Nothing wrong with slow and steady, but that still keeps you watching over your shoulder if these less than grand moves are suddenly high with selling after a week of quiet gains.


Even so, there were some good moves that we bought. BMY, C, CNI were added. Most everything else we left alone for now.

Moreover, it was not just warmed over leftover beans for the current positions. TTWO shows some good life. HD not bad in its rebound. DOCU still rallying. Some good moves for certain, but most of the market was sluggish.


Trade was blamed but not. When China announced $16B in new 25% tariffs on US goods such as oil, autos and other more singular items SPY futures fell from positive to negative. A nice recovery intraday but a last hour flop took the indices back to the morning lows, at least on SP500.

Earnings were mixed with beats (KORS, CVS, SNAP, DDD) and misses (DIS, PZZA top and bottom line; WEN bottom line; WWW top line). Those top line misses are still concerning.

More earnings are to come and indeed afterhours ROKU beat and is up nicely as is JACK. Have you read the story about the new JACK commercials being too risqu ? JACK has always used clever wording to catch your attention and make you smile. Now Jack is talking about his great new pair of bowls. Others comment about Jack's bowls and Jack comments about other's good looking bowls. Humorous, slightly edgy, but funny and harmless. They worry about Jack's bowls as an extension of TWTR, FB, AAPL and others censoring at will. It is that slippery slope and where does it stop? Over the past year many comedians have noted you cannot be a comedian any more because the younger generations in particular are too sensitive. As one of my friends put it, not a pair between them. I am sure he is talking about bowls.

Looking out to Thursday, it is a case of watching for the return of New High Anxiety. As noted, the sellers vacated after driving stocks lower late July. Now that the indices are bumping at new highs or at key resistance and many of the leaders that were slammed have crept back up, will some serious bids show up versus the tepid creep or will the sellers reappear? Nothing overt suggests the latter is happening, just the upside moves slowing, struggling just a bit.
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Jon Johnson, Chief Market Strategist
InvestmentHouse.com

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