TODAY’S MARKET – Morons Make Markets Like These
Morons are apparently making this market. Today I read that the Federal Reserve meeting is now dictating trade. Since Friday’s jobs report I’ve been notifying my readers that the Fed meeting has been dictating trade. Apparently the morons don’t read me. That’s lucky for me, and even luckier that they don’t figure things out too quickly, giving my lazy fingers a few extra days to jot down aging ideas. We’re heading to a market correction folks. Wednesday’s pause was simply a test of the 50-day moving average that will not hold. I’m not sure the 200-day moving average will either by next Wednesday’s close, or next week’s end considering we’re dealing with some slow folks here. Today’s economic and corporate factors are highlighted below, so keep reading. Please do follow our stock market blog on Twitter.
Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.
Stocks closed lower on Wednesday despite trading in the green off and on during the day. In my work published on Wednesday, I indicated that the day’s show of strength was a temporary bounce off the 50-day moving average. I continue to expect stocks to test even lower bars for support and not find it as we head for our first market correction in 41 months. This market run is 240% or so deep and well overdue for a 10% retest. The right catalyst is here to cause it.
Investors are keenly focused on the Federal Open Market Committee (FOMC) meeting due next week and its poor excuse for a policy statement. It will likely say less about Fed patience, and that will allow the dollar to mark parity with the euro before burying it. Needless to say, it will sink stocks as well, as will the build up to the event.
I’ve written extensively on the subject at this point, but for those just tuning in… Rate hikes are bad because they raise the cost of capital for corporate America, thereby raising the bar for economic value creation, which in turn makes market value creation harder to achieve. Even though the Fed has indicated it is mindful of the strong dollar and it will not raise rates immediately, panicked investors who never saw the freight train coming will fear a June rate hike that never comes. It’ll come in September most likely. And when it comes, it’s not expected to be followed by a steep course of action by the Fed, but rather a long drawn out path. Still, even as the cost of capital will remain relatively low for corporate America, most of the morons on the market won’t realize that right away. We need to see a selloff first… FYI, my biggest problem is that I give the market too much credit and sometimes am too early with my forecasts due to my misjudgment of morons as mavens.
In that regard, there is still some concern about Greece leaving the euro-zone because morons are not limited to this side of the Atlantic Ocean. The bigger problem is that morons have enough trouble figuring out their own market, let alone understand the dynamics of another, so media pundits keep counter-productively misleading U.S. investors about Greece. I don’t mind though, as I’ll be buying real estate cheap soon because of it all.
Just one figure matters Thursday really, or is capable of moving the market anyway; it’s the retail sales data. Pay attention to the figure ex-autos and gasoline for obvious reasons. Let me spell it out for the morons: Gas prices have been extremely volatile lately and will cause confusion about the real state of consumer spending if we don’t look past its impact. Retail Sales excluding autos and gasoline is expected to have grown by 0.5% in February, up from the 0.2% growth seen in January. As long as the result is in line it will support stocks, but it’s probably of no matter considering the much greater weight being given to the upcoming Fed meeting.
The Fed released the results of the second round of stress tests, which are relatively insignificant folks except for that they keep some banks from returning enough return to shareholders for the sake of the possibility of a catastrophe. Alas, we have seen that catastrophes are all too common, I suppose because of the morons devising exotic leveraged investment instruments… Anyway, it appears Citigroup (NYSE: C) will get the biggest lift from the data release based on what I’ve heard and the fact that it’s up more than 3% in the after-hours. Bank of America (NYSE: BAC) is down, but the stock is so deeply discounted it should not drop too far. Buy it on weakness friends, considering the Federal Reserve is about to remove critical language that will drive interest rates higher ahead of Fed rate action.
In my report published Wednesday I said sell Shake Shak (Nasdaq: SHAK) ahead of its report because it was overvalued and its inexperienced corporate management team would disappoint a critical marketplace. It happened, and those of you shorted its stock or are using derivatives to bet against it are rejoicing I suppose. SHAK is down 6% in after-hour trading. Thursday you’ll want to buy Ulta Salon (Nasdaq: ULTA) ahead of its report. Thank me later. The options are too expensive though, and considering a market correction is coming, you had better be willing to be a long-term stakeholder in anything you buy now.
DISCLOSURES: Kaminis is long BAC. Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.
Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.
Security
|
03-11-15
|
YTD
|
TTM
|
SPDR S&P 500 (NYSE: SPY)
|
-0.2%
|
-0.3%
|
+11.6%
|
SPDR Dow Jones (NYSE: DIA)
|
-0.2%
|
-0.3%
|
+10.5%
|
PowerShares QQQ (Nasdaq: QQQ)
|
-0.6%
|
+2.1%
|
-17.8%
|
SPDR Gold Shares (NYSE: GLD)
|
-0.7%
|
-2.9%
|
-14.7%
|
iPath S&P Crude Oil (NYSE: OIL)
|
-0.8%
|
-12.4%
|
-54.4%
|
PIMCO Total Return (NYSE: BOND)
|
+0.2%
|
+1.8%
|
+7.2%
|
PowerShares DB US $ Bullish (NYSE: UUP)
|
+1.1%
|
+8.9%
|
+23.3%
|
iPath S&P VIX ST Futures (NYSE: VXX)
|
+2.5%
|
-34.1%
|
-5.7%
|
Stocks closed lower on Wednesday despite trading in the green off and on during the day. In my work published on Wednesday, I indicated that the day’s show of strength was a temporary bounce off the 50-day moving average. I continue to expect stocks to test even lower bars for support and not find it as we head for our first market correction in 41 months. This market run is 240% or so deep and well overdue for a 10% retest. The right catalyst is here to cause it.
Today’s Stock Market
Investors are keenly focused on the Federal Open Market Committee (FOMC) meeting due next week and its poor excuse for a policy statement. It will likely say less about Fed patience, and that will allow the dollar to mark parity with the euro before burying it. Needless to say, it will sink stocks as well, as will the build up to the event.
I’ve written extensively on the subject at this point, but for those just tuning in… Rate hikes are bad because they raise the cost of capital for corporate America, thereby raising the bar for economic value creation, which in turn makes market value creation harder to achieve. Even though the Fed has indicated it is mindful of the strong dollar and it will not raise rates immediately, panicked investors who never saw the freight train coming will fear a June rate hike that never comes. It’ll come in September most likely. And when it comes, it’s not expected to be followed by a steep course of action by the Fed, but rather a long drawn out path. Still, even as the cost of capital will remain relatively low for corporate America, most of the morons on the market won’t realize that right away. We need to see a selloff first… FYI, my biggest problem is that I give the market too much credit and sometimes am too early with my forecasts due to my misjudgment of morons as mavens.
In that regard, there is still some concern about Greece leaving the euro-zone because morons are not limited to this side of the Atlantic Ocean. The bigger problem is that morons have enough trouble figuring out their own market, let alone understand the dynamics of another, so media pundits keep counter-productively misleading U.S. investors about Greece. I don’t mind though, as I’ll be buying real estate cheap soon because of it all.
Economic Reports
Just one figure matters Thursday really, or is capable of moving the market anyway; it’s the retail sales data. Pay attention to the figure ex-autos and gasoline for obvious reasons. Let me spell it out for the morons: Gas prices have been extremely volatile lately and will cause confusion about the real state of consumer spending if we don’t look past its impact. Retail Sales excluding autos and gasoline is expected to have grown by 0.5% in February, up from the 0.2% growth seen in January. As long as the result is in line it will support stocks, but it’s probably of no matter considering the much greater weight being given to the upcoming Fed meeting.
THURSDAY’S ECONOMIC REPORT
SCHEDULE
|
||
Economic Data Point
|
Prior
|
Expected
|
THURSDAY
|
|
|
320K
|
309K
|
|
-0.8%
|
0.3%
|
|
-Ex Autos & Gasoline
|
0.2%
|
0.5%
|
43.5
|
|
|
-228 bcf
|
|
|
-2.0%
|
-0.1%
|
|
-Import Prices
|
-2.8%
|
0.2%
|
Business Trade (Sales)
|
|
|
-Inventories
|
0.1%
|
0.1%
|
Corporate Factors
The Fed released the results of the second round of stress tests, which are relatively insignificant folks except for that they keep some banks from returning enough return to shareholders for the sake of the possibility of a catastrophe. Alas, we have seen that catastrophes are all too common, I suppose because of the morons devising exotic leveraged investment instruments… Anyway, it appears Citigroup (NYSE: C) will get the biggest lift from the data release based on what I’ve heard and the fact that it’s up more than 3% in the after-hours. Bank of America (NYSE: BAC) is down, but the stock is so deeply discounted it should not drop too far. Buy it on weakness friends, considering the Federal Reserve is about to remove critical language that will drive interest rates higher ahead of Fed rate action.
In my report published Wednesday I said sell Shake Shak (Nasdaq: SHAK) ahead of its report because it was overvalued and its inexperienced corporate management team would disappoint a critical marketplace. It happened, and those of you shorted its stock or are using derivatives to bet against it are rejoicing I suppose. SHAK is down 6% in after-hour trading. Thursday you’ll want to buy Ulta Salon (Nasdaq: ULTA) ahead of its report. Thank me later. The options are too expensive though, and considering a market correction is coming, you had better be willing to be a long-term stakeholder in anything you buy now.
HIGHLIGHTED EPS REPORTS
|
|
Company
|
Ticker
|
THURSDAY
|
|
Aeropostale
|
NYSE: ARO
|
Allied Motion Technology
|
Nasdaq: AMOT
|
Anacor Pharmaceuticals
|
Nasdaq: ANAC
|
Antares Pharma
|
Nasdaq: ATRS
|
Athersys
|
Nasdaq: ATHX
|
BioAmber
|
Nasdaq: BIOA
|
BioDelivery Sciences
|
Nasdaq: BDSI
|
Bon-Ton
|
Nasdaq: BONT
|
CAMAC Energy
|
NYSE: CAK
|
Cantel Medical
|
NYSE: CMN
|
Central European Media Ent
|
Nasdaq: CETV
|
Children’s Place
|
Nasdaq: PLCE
|
Chinacache Int’l
|
Nasdaq: CCIH
|
ChipMOS Technologies
|
Nasdaq: IMOS
|
Clubcorp
|
Nasdaq: MYCC
|
Constellium
|
Nasdaq: CSTM
|
CTI BioPharma
|
Nasdaq: CTIC
|
CTPartners Executive Search
|
NYSE: CTP
|
Cytori Therapeutics
|
Nasdaq: CYTX
|
Derma Sciences
|
Nasdaq: DSCI
|
Dex Media
|
NYSE: DXM
|
Dollar General
|
NYSE: DG
|
E Commerce China Dangdang
|
Nasdaq: DANG
|
El Pollo Loco
|
Nasdaq: LOCO
|
eMagin
|
Nasdaq: EMAN
|
Epizyme
|
Nasdaq: EPZM
|
FutureFuel
|
NYSE: FF
|
Gas Natural
|
Nasdaq: EGAS
|
Gastar Exploration
|
NYSE: GST
|
Genesco
|
NYSE: GCO
|
Global Partners
|
NYSE: GLP
|
GSV Capital
|
Nasdaq: GSVC
|
Hawaiian Telcom
|
Nasdaq: HCOM
|
Hill Int’l
|
NYSE: HIL
|
Houston Wire & Cable
|
Nasdaq: HWCC
|
Hovnanian
|
NYSE: HOV
|
Ignite Restaurant
|
NYSE: IRG
|
InspireMD
|
Nasdaq: NSPR
|
Investors Real Estate Trust
|
Nasdaq: IRET
|
JA Solar
|
Nasdaq: JASO
|
Jamba
|
Nasdaq: JMBA
|
JG Wentworth
|
NYSE: JGW
|
Journal Communications
|
NYSE: JRN
|
Kirkland’s
|
Nasdaq: KIRK
|
KMG Chemicals
|
NYSE: KMG
|
Kratos Defense
|
Nasdaq: KTOS
|
LGI Homes
|
Nasdaq: LGIH
|
Lifetime Brands
|
Nasdaq: LCUT
|
Luna Innovations
|
Nasdaq: LUNA
|
Magnetek
|
NYSE: MAG
|
Medifast
|
NYSE: MED
|
Metaldyne Performance
|
NYSE: MPG
|
Natural Gas Services
|
NYSE: NGS
|
OHA Inestment
|
Nasdaq: OHAI
|
OncoMed
|
Nasdaq: OMED
|
ORBCOMM
|
Nasdaq: ORBC
|
Peregrine Pharmaceuticals
|
Nasdaq: PPHM
|
Ply Gem
|
Nasdaq: PGEM
|
Protalix Biotherapeutics
|
NYSE: PLX
|
Qiwi
|
Nasdaq: QIWI
|
Re/Max
|
Nasdaq: RMAX
|
Revlon
|
NYSE: REV
|
Rice Energy
|
Nasdaq: RICE
|
Rice Midstream
|
NYSE: RMP
|
Shanda Games
|
Nasdaq: GAME
|
Springleaf
|
Nasdaq: LEAF
|
Stein Mart
|
Nasdaq: SMRT
|
Straight Path Communications
|
Nasdaq: STRP
|
Sunesis Pharmaceuticals
|
Nasdaq: SNSS
|
Synta Pharmaceuticals
|
Nasdaq: SNTA
|
Tekmira
|
Nasdaq: TKMR
|
Towerstream
|
Nasdaq: TWER
|
Trovagene
|
Nasdaq: TROV
|
Ulta Salon
|
Nasdaq: ULTA
|
Vail Resorts
|
NYSE: MTN
|
Zumiez
|
Nasdaq: ZUMZ
|
DISCLOSURES: Kaminis is long BAC. Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.
Labels: Market-Outlook, Market-Outlook-2015-Q1
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