Markets reacted poorly to the Fed this afternoon with benchmarks essentially CLOSING on their lows. Again it was the Nasdaq which underperformed falling 100 handles or 2.2%, and the lagging behavior has almost become customary. Of course today it was courtesy of AAPL which contributed to the Nasdaq sinking twice that of the S&P 500. Todays negative earnings reaction of 6.5% was its third drop in its last four (it slipped 4.2 and 1.6% on 7/22 and 4/28). We have been bearish on the name for some time and below is the chart we presented in the first paragraph of our 10/28/15 Game Plan. In ’15 there was an affinity for “old tech” plays, which has since seemed to wane considerably. With AAPL today, INTC declining 9.1% on 1/15 and even a VMW sliding almost 10% today one can see why. Much is expected of MSFT tomorrow after the bell, so lets see if they have anything to say about the tech “dinosaurs”. Of course being hot and heavy into earnings season we are getting a better look at what companies are saying. Consumers are having their say as well and some discretionary names are speaking loudly for them. Former best of breed PII is now 56% off recent 52 week highs and Tuesday fell 9.1% after releasing numbers. A trend is clearly in place with the prior 2 sinking by 10.2 and 3.7% on 10/21 and 7/22 as well. HOG reports tomorrow before the bell and it is lower by 43% from its most recent 52 week high and it dropped 13.9 and 9.8% on 10/20 and 4/21. It did rise 5% on 7/21 but this name has been in a steady downtrend since December ’14 meeting resistance along the way at the round 70, 60, 50 and now 40 figures. Others reacting today were TUP and ETH falling 15 and 2.2% respectively. Even WMT is lower by 28% speaking to the lower end consumer (to be fair ETH PII and HOG cater to the wealthier). The retail giant is closing 269 stores globally with a good chunk in sinking Brazil, (although it will open 300 next year) so perhaps they might not be the best read on the US consumer. But we all know that GDP growth has been anemic and 2/3rd’s of it is consumer spending. We know AMZN is thriving, but that has not translated to the benefit of the paper stocks which box their shipments like IP, and peers PKG and KS are acting as if a recession is near.
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