Futures are lower to start todays session, this comes on the heels of another afternoon swoon that saw stocks give up most of yesterdays early gains.
A last minute buying frenzy took the averages well off their lows masking what was another rather ugly afternoon sell off. And yet, despite these sell-offs, the market continues to paint more record highs with yesterdays rally printing a new high for the Nasdaq.
This morning the weakness is being blamed on more Italy woes.
The last time Italy was the excuse for a sell off... it ended up being a great buying opportunity.
Will this time be different?
I don't think this time will be any different. The trend remains up and until that changes, all these excuses to sell remain a long term reason to buy.
Small caps have been leading the charge. And while yesterdays weakness foreshadowed the late day pull back and this mornings negative sentiment, we are nearing a key momentum shift, that could spark a rally in small caps.
as such, a small cap recovery could spark more gains for the overall market as well. It sounds like an easy thing to say, "gains and the market", however it is days like today, when the market is down .4% early in the morning, people forget just how strong this market has been since the election in 2016.
Despite all the headwinds, tariffs, trade wars, and excuses to sell, the market has gone up the majority of the last 24 months. Why fight this trend. As such I remain in longer term calls on a host of names:
The stock again was rejected at $17, and dipped briefly under $15 yesterday. I still think there is a good chance the company gets bought out by Sycamore Partners and that the price will be for over $20 a share. However buyout or not, I think the stock is heading back over $20 a share.
The price action has been erratic, however on the monthly time frame you can see the price is grinding higher.
The stock is making the move after coming down to 12+ year support.
I am in the calls for a mover higher this year and next. I think the move is still in its early stages and I am trading for a long term move back into double digits.
The stock has seen a rather nasty reversal from multi year highs. I still think that 2nd earnings gap is going to get filled, and I remain in calls for that move. The latest short report showed short interest growing again. I wouldn't be surprised if the short interest has grown even more after the most recent leg lower. As such this will just add more fuel to the upside when the stock rallies.
I remain in long term calls. I think this breakout is just the beginning of the move higher. This morning the stock saw its target raised to $40 at one firm. I think it has a good chance of getting there by years end.
What an ugly day yesterday. This is why I have long term calls on this stock. I think it will recover, but I am not going to day trade it. I still think it will break to the upside out of the wedge, and if that happens it will trade in the double digits before years end.
The FDA approval at months end could help spark the rally. I think recent insider sales have spooked investors into selling. And the massive record short interest, continues to grow, aiding to the downside pressure on shares.
A great read from yesterday on it:
and my thoughts as well
Let's watch the small caps early today, a reversal higher, could help lift the rest of the market today, and into weeks end.
Have a great day!