Markets started the week off on a sour note closing near session lows with the S&P 500 dropping .5% and the Nasdaq by .2%. Every one of the major S&P sectors were in the red with healthcare the “best” performing group losing .2% and energy falling the hardest, down 1.4%. The latter industry did see some merger activity which failed to excite as NBL looks to swallow ROSE. NBL slumped 6% on the day and the name has been lagging and looking at a potential fourth consecutive weekly loss. ROSE rallied more than 27%. The best of breed names in the group like EOG and PXD have really been struggling lately. EOG recorded a bearish engulfing week last week declining 5.5% in heavy trade. When viewing the weekly chart take notice of the small real bodies between the weeks ending 4/17-5/1. Those candles generally let you know the preceding move is weakening. PXD has been roughed up a bit more now down 11% the last 3 weeks, with last weeks 7% plus drop accompanied by more than double average weekly volume. For now looks like Einhorn was smart in recommending shorts in both those aforementioned names. Perhaps it is time to take the foot off the gas pedal and get smaller and more defensive. Below is a name we profiled in our Thursday 4/23 Game Plan that Warren Buffett took a big position in, AXTA. The paint play may be boring as watching it dry, but the name is up almost 7% since the highlighted entry.
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