Mr.Market Has Caught A Cold

(Nov. 3, 2018 Update) TREND TRADING UPDATE

This update marks the end of the first month of Q4 2018. We are in the home stretch as active speculators with near-term time frames wonder if we have “bottomed" out”. This is not for me to say. I can only report the current results from a long-running “experiment” in sharing trend-trading observations with weekly prices.

My limited experience (in point of fact everyone has limited experience due to lifespans and actual real investment experience) tells me that this is a rough Q4.

Time for another massive update. If you rely upon these reports, please take your time. Ordinarily, the standings don’t change much from week to week but over the past few weeks as the leaves turned for autumn, so did Mr. Market turn over in sentiment.

Let’s begin with the STOPPED OUT weekly updates and relevant charts. Frankly, I’m not “happy” about it but this is what has been unfolding and we should treat all price action with equanimity.

Time for another very long update. (Pardon the formatting of the “spreadsheets” shared, I have edited them down and did my best to load them for your review.)

If you would rather look at them in chart form, they are shared afterwards.

Most have hit a suggested stop loss price target and a handful survived, including two “favorites”, AAPL and MSFT, Apple and Microsoft, two stalwarts and former “rivals”, founded by young drop-outs in the 1970s, which have since matured into dividend platforms we all can’t live without for life and work.

As an investor, I would pay more attention to them, and begin to consider putting them on watch and wish lists for accumulation at some point - in fact, some folks are likely doing just that.

$FTNT $AAPL $MSFT $SEAS $CF $SNE

Let’s move past the damaged STOPPED OUT charts and move on to the LAGGARD updates, same format, with “spreadsheets” and charts. I will post first the LAGGARD “SELLS” - these are sell/short/avoid ideas which have “underperformed” - which means they are in fact rising. Then I will post the LAGGARD “LONGS” - these are long ideas which have a notional negative return, meaning they have gone down since the week they were added to the Rooster360 master ideas universe. The reason is that you may have “shopping” ideas from the "Laggard SELLS”, which might become potential buy ideas. In a market like this, we are looking for trend changes and these lists can help provide an early “heads up” about what might be unfolding. No promises, no holy grails but we can use this information to provide notes.

This week’s takeaway from LAGGARD SELLS includes KO, UUP, XLP, XLU and AU among others. Consumer staples, utilities, gold may be coming back to favor since they’re not working out as “SELLS”. Judge from the charts and you’ll be able to form your own biases and judgements.

On to the LAGGARD LONGS notes and charts. As we see, underperforming LONGS include XOP, LIT, PTR, and more. My top-down takeaway is energy has softened.

The Top 20 leaderboard is so different from what was reported when summer began and Q2 turned into Q3 2018. Gone are all the 200% plays that dominated the upper half of the Top 20 leaderboard. There are no “FANGS” to be seen on the list, and techs are closer to OEMs and vendors, pharma and health is on the list and Mcdonalds is a Top 20. Quite a shift in sentiment and leadership.

And now the “Top 20 SELL” list. This is the most dismal of the lists reported. These are the falling knives which never quite seem to touch bottom and turn or disappear. A cautionary list of market pariahs. That said, here may reside the best potential value plays only to be discovered perhaps many months later - hope springs eternal.

And now for ideas which are in the running for LONGS and SELLS which continue to do well, culled from the last few months in Q3 and Q4 2018. What stands out for me? Verizon (VZ), Church & Dwight (CHD) and McKesson (MKC) are some ideas, all these kind of “homey” plays. Mr. Market seems like a house-bound shut-in with these ideas. (well, if you don’t count the airlines, some of which are picking up, as energy softens.)