Morning Minutes 11/19/2018

Retailers Under Pressure; Natural Gas on the Rise Again

November 19, 2018
8:45 am EDT

At SIA Wealth Management everything we do is based on Relative Strength Analysis. We evaluate the Relative Strength between asset classes giving us insight into money flows on a large scale, and from this select top ranked investments.

Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

Despite a fractured APEC summit, where China was unable to get other leaders to agree on a communique or anything on trade with US President Trump and Russian President Putin not in attendance, overseas stock markets around the world are up to start the new trading week. The Hang Seng, Nikkei and FTSE have all gained about 0.7%, while the Dax is down slightly.

US investors, however, have not been as enthusiastic. Dow futures are down 82 points this morning, giving back most of Friday’s 123-point gain. The VIX is up this morning but remains below 20. US treasury yields are also slipping back with the 10-year yield now closer to 3.00% than its recent peak which was above 3.20%, which could help to shore up support for bonds and interest sensitive stocks.

Natural Gas has shrugged off a recent trading correction and is on the move back upward today, gaining 2.6% to trade back up near $4.50/mmbtu. The combination of an early arrival to winter in many consuming regions and lower than average stockpiles heading into to peak demand season continues to stoke interest from traders and investors.

 

Relative Strength and Sector Rotation Report:

Twin takedowns Friday had a significant knock on impact on their sectors, dragging their peers down the relative strength rankings. A 13.6% plunge for Nordstrom (22.2% for the week) dragged on retail stocks as we move into the second week of their earnings season. An 18.5% Friday selloff for Nvidia (20.0% for the week) indicates that investors remain wary toward semiconductors, and likely technology stocks in general.

Both of these plunges remind us that investors still don’t appear to be in a forgiving or patient mood and seem to be ready to run for the door at the drop of a hat. This suggests that higher levels of fear, volatility and uncertainty could stick around for a while yet.

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