Monday, April 2, 2018

Strong Approval For The Wrecking-Ball-In-Chief

David Rosenberg says that every Trump tweet is worth -70 points on the Dow. Considering that these selloffs appear to be enhancing his approval rating, don't expect any ratcheting down in policy by Twitter:

Further to the point, Trump has been pounding tech and trade on Twitter, so this week he combined both into one.

Tariffs on tech.
Just in case anyone was tempted to step in front of the bus ahead of the "unveiling":

Which explains why institutions are dumping technology stocks with both hands. But instead of my usual rant, why not allow Carter Worth to explain the bifurcated nature of this market. Saves me some typing...

Here is my version of what he just said:

The largest internet stocks are well above their nearest support lines, while the average stock is already imploding. Therefore there is nothing to stop free-fall to the 200 day and below:

Institutions are selling on ~2x average volume, however selling is orderly. For now...

The largest cap stocks are in the most trouble right now. The top three stocks in the S&P 500 are larger than the entire Russell 2000 small cap index. Therefore large caps breaking their 200 day moving average is significant: 

Dow Transports traded below their Feb. low today triggering potential Dow Theory violation, however, they pulled back above the prior low into the close. But the damage was done...

The S&P/Treasury ratio definitively broke support today. Forcing accelerated rotation out of stocks into bonds...

The stock buyback portfolio, net recipient of the majority of inbound liquidity, broke key support today:

The Dow itself is technically damaged at a scale last seen in 2015 and before that 2011:

The ratio of damaged large caps / small caps keeps growing: