Morning Market Thoughts

by DAN Good morning. I don’t have much to say this morning because nothing much happened over the weekend that’s relevant to stocks. Stocks are opening down just slightly this morning as we enter the last week of the third quarter. The last time the S&P 500 and Dow-30 printed a losing quarter was two years ago and the streak will remain intact. This weekend I mentioned that the underlying breadth in the market remains strong. With Friday being the last trading day in September, stocks are likely to tread water this week as traders look forward to a busy earnings season.

Much of the news flow related to non-market issues. None of that interests me.

What is interesting is that all of the FANG stocks are down this morning, which doesn’t bode well for the bulls.

Apple (AAPL) is down this morning and trading at $150/share. This completely fills the gap from early August and puts the stock at a critical technical level. As you probably know, the new Apple watch has an inconsistent cellular connection, and the new iPhone 8 is being purchased by basically…no one. Given the multi-month, sideways trading range between $150-$165, this is a major problem for Apple because investors will be making a judgment about whether this range is merely consolidation before the next move higher. Pay attention; it matters.

Facebook (FB) has opened below its 50-day moving average and I was stopped out of a small position based on the thesis that the stock would hold up at $170. I’m fine with that small loss. Small losses are a part of trading, while large losses are a reflection of a lack of discipline, or failure to have a plan before entering the trade. Mark Zuckerberg’s push to create a separate class of shares to allow him to control the company even though he is a minority shareholder has failed, and that’s kind of a big deal.

Ultimately, a rotation out of the FANG group is a healthy thing for the market, though it is definitely a bad thing for those stocks. I will be watching them closely this week.

See you in the trading forum.

–DAN

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