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North Korea is back in the news, which caused the markets to drop around the world during the US holiday – Labor Day.  On Sunday, North Korea conducted its most powerful nuclear bomb test to date; far more powerful than those dropped during WWII.  

This news, in conjunction with the I.C.B.M that North Korea fired over Japan, has the entire world upset.  The French Ambassador to the UN has called for new sanctions, “It is no longer a regional threat, it is a global threat. It is no longer a virtual threat, it is an imminent threat. It is no longer a serious threat, it is an existential threat.”

But one wonders: Will the world use the lower open on Tuesday, when US traders are back, to buy the dip again?”

Open Position: PRU, TROW, GRUB.  Stocks to Watch: TWTR CTXS NTAP JBL HLF WFC  JPM MS NFLX WDC DIS SBUX STZ NKE LULU CREE VZ T HOG MON YUM LOW HD LEN TOL FEYE PANW FFIV AKAM

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The rally continued today right from the open.  Traders were determined to close the month higher than July’s settlement, which they did.  So what happens when the new month begins in the morning?  Was the latter portion of the bullish extension “noise” in a way – in that it was due to the monthly close and window dressing; or was it legit?  If it was the former, we may call a short trade early in NFLX.

Open Position: PRU, TROW, GRUB.  Stocks to Watch: TWTR CTXS NTAP JBL HLF WFC  JPM MS NFLX WDC DIS SBUX STZ NKE LULU CREE VZ T HOG MON YUM LOW HD LEN TOL FEYE PANW FFIV AKAM

In our trading room the acronym of MoMo is describing “momentum” in the markets, and sometimes, the lack thereof.  I wasn’t surprised to read an article on ZeroHedge that mentions this; however, was surprised to read that some money managers use the idea of “momentum trading/investing” in a cavalier way.  

Bloomberg’s Dani Burger notes that with more than half of their bets on high flyers like technology and online retailers, hedge funds have near-record exposure to momentum trades, a strategy that’s up 2.6 percent in August even as the S&P 500 heads for its worst month since the election. The resiliency of the bet was on display Tuesday, when Alphabet and Amazon opened nearly 1% lower before rebounding along with Apple to deliver the S&P 500’s biggest intraday reversal in 10 months.

“It’s like these things are like gold — it’s almost like a safe haven,” said Mark Connors, the global head of risk advisory at Credit Suisse Group AG.

“This resilient price action in equities is commensurate with the constructive positioning we see across hedge fund strategies and speaks to the persistent positive sentiment in 2017.”

The much-followed FANG Stocks soared over 2.1% off the opening lows…

Almost like GOLD the guy said?  When the global central bankers remove the $Trillions in liquidity support, and FANG stocks (or any stock) are suddenly in a downward MoMo move, I wonder how “golden” his investment thesis will be?

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The North Korean sell-off of the equity futures was used to BUY THE DIP…again. The prior day’s rally extended Wednesday on a low volume one-way escalator. There is overhead resistance in the S&P500 in the 2464.00 area as well as the 2473.00 area; however, there is so much sudden non-stop buying that a move through those areas will have traders salivating to test the “big number” of 2,500.00.

 

Open Position: TROW, GRUB, PRU.  Stocks to Watch: X TWTR CTXS NTAP JBL HLF WFC JPM MS NFLX WDC DIS SBUX STZ NKE LULU CREE VZ T HOG MON YUM LOW HD LEN TOL FEYE PANW FFIV AKAM

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The North Korean sell-off of the equity futures was used to BUY THE DIP.  The reversal back up was huge as the S&P500 actually closed higher. No open positions were exited Tuesday.  I will continue to look at the stock list below for new entries and with the overall reversal higher, the potential short trades should be closer to entries.

Open Position: TROW, GRUB.  Stocks to Watch: X TWTR CTXS NTAP JBL HLF WFC PRU  JPM MS NFLX WDC DIS SBUX STZ NKE LULU CREE VZ T HOG MON YUM LOW HD LEN TOL FEYE PANW FFIV AKAM

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Last night the North Korean fired another rocket to provoke the West, which was purposely shot over Japan. The futures markets had an immediate and bearish initial reaction and could lead to lower prices Tuesday.  I am looking for some short positions (as well as a few well-laced longs) that may be highlighted below.  Moreover, if stocks are very weak Tuesday, expect exits in the remaining long positions.

Open Position: TROW, GRUB.  Stocks to Watch: X TWTR CTXS NTAP JBL HLF WFC PRU  JPM MS NFLX WDC DIS SBUX STZ NKE LULU CREE VZ T HOG MON YUM LOW HD LEN TOL FEYE PANW FFIV AKAM

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Last week I said “Hurricane Harvey on the other hand, will definitely create some waves – both physically and figuratively (in the markets).  Will it destroy oil refineries?  Will it destroy any oil rigs?  We should look in the oil sector for possible short term plays.”  The entire NATION’s oil refining capacity is operating at 15% under capacity and is said to be worse soon.  Moreover, as the storm slams Louisiana, it could affect even more oil refineries. Open Position: ADSK, TROW, BIDU, GRUB.  Stocks to Watch: X INTC BIDU TSLA YELP TWTR CTXS CSCO NTAP JBL HLF BAC PRU WFC GS JPM MS NFLX WDC DIS CROX SBUX STZ NKE UA LULU  CHKP JNPR CREE VZ T HOG MON FSLR YUM MCD LOW HD LEN TOL FEYE PANW FFIV AKAM

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It was a day of choppy action and very light trading volume. We finished up slightly for the trading day, but not without sellers trying to slam the markets lower. I suspect this could be how things finish off the week. The COMP in particular may catch a bid more than the DJI and SPX. With AMZN and GOOG making strong vertical moves after hours thanks to earnings, those two stocks could help influence the gains on Friday. While we may see some weakness to finish off the week, expect the COMP to be the strongest as buyers will fish for new historical highs again. I just don’t see things slowing down unless we have war breaking out. Until then, enjoy the vertical ride. Open Position: RHT CRUS DECK CRM EW W MAR LULU Stocks to Watch: INTC AAPL GOOG IBM AMZN BIDU TSLA YELP LNKD FB  TWTR CTXS CSCO NTAP JBL HLF BAC PRU WFC GS JPM MS NFLX WDC DIS CROX SBUX STZ NKE UA LULU  CHKP JNPR CREE VZ T HOG MON FSLR YUM MCD LOW HD LEN TOL FEYE PANW CYBR FFIV AKAM

 

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