stock market correction (4)


Reasons the market looks ready to pull back May-July:

  1. Treasuries have a relentless bid recently, and as I have discussed recently there was major accumulation of 80,000 Treasury (TLT) July $113 calls. Although this is just one large position, action in the TLT has tended to be right, and can see my call from 2013 to short the TLT in the 120's before it crashed to below 105.
  2. Sector flows showing a flight to safety. The consumer staple names and large caps are starting to outperform, a risk-off market, and options action dictating the same with most of the sizable call buying occurring in boring large cap names like McDonald's, Wal-Mart, Pepsi, along with Energy.
  3. Seasonality - The market tends to struggle in the May-July period, and although I do not have the numbers on me, @RyanDetrick is always posting great data, and also aligns with the Presidential cycle.
  4. Price-Action in Momentum - I am watching a premiere growth name like Under Armour (UA) post a fantastic quarter and trade down 1

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Easter Weekend Reads

  • Energy is better than technology Stocktwits1290590?profile=RESIZE_320x320
  • State Department indefinitely postpones the Keystone pipeline (obviously waiting for November mid-terms or if all else fails, a new, hopefully more persuasive President in 2016) Ecowatch
  • General Mills pulls a fast one (I'm sure more will follow) using the fine print when you "like" a page on Facebook ($FB) thereby agreeing to forced arbitration.  In simple terms, you won't sue them for product recalls, mis-labeling, you name it.  Pretty slick, I must say. Rawstory 
  • Money rotation into late cycle names continues Stocktwits

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Good Friday Reading

  • 1290621?profile=RESIZE_320x320"We're obviously in the throes of what feels like a correction for the small-cap and growth-equity companies," said David Golden.  (ya think?! LOL)  Not good news for start ups such as BOX who has filed for IPO and will begin their road show shortly seeking (they hope) high end of the range valuation.  Good news for the investor however as we'll be able to scoop up names at lower (not peak) levels.  Full story at  WSJ
  • Due to tighter regulation, banks have reverted back to the use of block trades.  There were 48 such deals in the U.S. ust in the first three months of this year, more than in any first quarter since 1998, according to Dealogic.   Full story at WSJ
  • Markets are instrumental, not intrinsic, for human flourishing. As with any tool, wielding capitalism for good requires deep moral awareness. Only activities motivated by a concern for others’ well-being, he declared, could be truly “constructive.”"Washington needs to be more like the Dalai Lama. Without abandoning princi

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