As of 4:20 p.m.:

Closing Breadth

S&P Sectors

% Movers

Nasdaq 100 Heat Map

Advance-Decline Intraday vs SPY

From Charlie!

7 Lessons From 2024 - Charlie Bilello's Blog

JPMorgan Chase JPM has reversed its early morning weakness after the company's management (at a banking conference) suggested that net interest income is firming up.

I added to my short at $247.45 just now — on the gap higher.

Remember, as noted yesterday, I lost most of my short position on Friday's expiration.

* But sometimes at market tops!!

Bill Gates Could Go Bankrupt If Tesla Stock Surges 200% To Become The Top Company, Says Elon Musk - Alphabet (NASDAQ:GOOG), Apple (NASDAQ:AAPL)

I suspect the market is changing its complexion:

* Equity market participants appear complacent — almost universally expecting a year-end rally.

* My CNBC Blather Index is signaling extreme greed.

* Market breadth continues to deteriorate.

* RSP (the equal weighted S&P Index) is weakening and diverging from both the ascending S&P and Nasdaq Indices.

* The market fell quickly from its heights about an hour ago — thus far, limited "bottom fishing." (Like yesterday?)

* Rising bond yields may prove to be a headwind to stocks.

Perhaps its wishful thinking from my part!

That said, machines and algos are in control.

With coffee prices soaring, will Starbucks SBUX face margin pressure in the current quarter?

I expect the company to miss consensus estimates and I remain short.

Adding to TSLA ($403.13) and AXP ($303.73) shorts.

Buying more ELAN at $12.62.

I added to my ELAN long at $12.60 just now.

I am a scale buyer lower.

^* And why MSTR is an investment short to me...

From Byron Gilliam:

At the MicroStrategy table, shareholders are the sucker 

Every pyramid scheme requires a good story, ideally one with an element of truth to it. 

Michael Saylor’s story for MicroStrategy has always been that it provides exposure to bitcoin for investors who can’t otherwise access it.

That is still a little bit true, but less so than before spot ETFs became widely available and increasingly less so with each convertible bond that MicroStrategy issues, as Mark Meldrum explains here with irrefutable logic.

For the rest go to: At the MicroStrategy table, shareholders are the sucker

I have a helluva week on tap.

This afternoon I have meetings outside the office at 2 p.m., 3:30 p.m. and dinner.

Tomorrow I will be leaving at about 2 p.m. for a meeting in Miami.

On Thursday I again will be in Miami on business for the afternoon.

And on Friday I will be out of the office from 1 p.m. to 4 p.m. for a  board meeting.

A heads up!

Indexes higher despite 2.5-1 negative breadth on the NYSE and 2-1 negative breadth on the Nasdaq:

- New York Stock Exchange volume is 5% below its one-month average;

- Nasdaq volume is 17% below its one-month average

Boeing BA, a long, is +5% or +$8/share on positive news.

Now trading above $165.

The shares are now +$26 in the last few weeks and I am taking off most of the position at $165.15.

Down to tagends.

* Added to TSLA short $405.01

* Added to WMT short $95.01

* Added to AXP short $301.44

* Another divergence is developing...

She's a witch of trouble in electric blue

In her own mad mind she's in love with you

With you

Now what you gonna do?

Strange brew - killin' what's inside of you



She's some kind of demon messin' in the glue

If you don't watch out it'll stick to you

To you

What kind of fool are you?

Strange brew - killin' what's inside of you



On a boat in the middle of a raging sea

She would make a scene for it all to be

Ignored

And wouldn't you be bored?

Strange brew - killin' what's inside of you- Cream, Strange Brew Cream - Strange Brew (1967) - YouTube

The indexes are higher but RSP (equal weighted S&P Index) is -0.82%.

Strange brew!

This is a valuable chart for momentum-based short term traders:

From JPMorgan:

US: Futs are flat as bond yields gain 1-2bps and the USD is bid. Pre-mkt, Mag7 names are mostly higher as other Large Cap Tech names are hit post-earnings. The cmdty complex is weaker as energy items fail to hold yesterday’s gains. Today shapes up to be a quiet macro day ahead of CPI, with full scenario analysis below.

and...

EQUITY AND MACRO NARRATIVE: Yesterday saw a significant Momentum factor unwind. My colleague Juliet Gillam provides some color, “A painful start to a new week with the S&P closing down -60bps, most sectors finishing in the red and on elevated volumes vs. the 5 day avg. Our strategists have warned for some time that crowded positioning in Momentum could trigger a momentum unwind and that’s exactly what we saw today with JPM’s Momentum L/S basket closing down -5.4% (huge -3.7z move), Crowded longs -3.3% whilst Crowded shorts squeezed +1.4% higher. A confluence of smaller catalysts contributed to this extreme move with people pointing to: (i) positive stimulus headlines out of China potentially triggering a quant / macro unwind (KWEB finished +10%); (ii) idiosyncratic movements in heavily crowded stocks (APP fell -14.7% with WDAY/APO being added into the S&P); (iii) M&A in sleepy parts of the market (HSY/MDLZ , IPG/ OMC deal) where positioning was either short both or short IPG/long OMC pair; and (iv) futs selling (-$7.3bln net sold by 3.50pm ET) ...The question now is whether this is just a one-day event or the start of a bigger rotation out of factors that have dominated this market YTD. Outside of the momentum decline, it was relatively quiet; Focus at the macro level will be on Wednesday’s CPI data whilst at the micro we wait for earnings from ADBE (Wed 11^th Dec), AVGO and COST (both Thurs 12^th Dec).”

Upside:

-CMRX +164% (to submit Dordaviprone for Accelerated Approval to U.S. FDA for Patients with Recurrent H3 K27M-Mutant Diffuse Glioma before year-end)

-CPIX +145% (US FDA approved Acetadote (N-acetylcysteine for injection) sNDA)

-QURE +106% (aligns with FDA on key elements of Accelerated Approval Pathway for AMT-130 in Huntington’s Disease)

-CRDF +43% (announces Positive Initial Data from First-line RAS-mutated mCRC Clinical Trial; prices oversubscribed Underwritten Registered Direct Offering of 15.4M shares at $2.60/shr)

-ALK +12% (guidance ahead of Investor Day)

-ML +11% (to be acquired at $82.00/shr in cash in ~$1.0B deal)

-BMEA +10% (preliminary data supports BMF-500’s potential as a transformative therapy for patients with FLT3 mutated relapsed or refractory (R/R) acute leukemia BMF-500 showed a favorable safety and tolerability profile, with no dose-limiting toxicities observed across all dose levels)

-UNFI +8.2% (earnings, guidance)

-LSTA +5.7% (completes enrollment in CENDIFOX Trial)

-MIRA +5.3% (validates Ketamir-2's Safety Profile with no adverse findings, paving the way for IND Submission by year-end)

-BYRN +4.4% (reports prelim Q4 revenue)

-MTN +4.3% (earnings, guidance)

-AAL +4.0% (Bernstein SocGen Group Raised AAL to Outperform from Market Perform, price target: $24)

-ATXS +3.4% (US FDA clears IND application for STAR-0310 for treatment of Atopic Dermatitis)

-CLNN +2.1% (US FDA Provides Roadmap for Accelerated Approval Pathway Through Submission of Additional CNM-Au8 Biomarker Data in ALS)

-MU +2.1% (receives finalized >$6.1B investment via CHIPS and Science Act - statement by US VP Harris)

-BA +1.9% (said to have restarted 737 Max production last week)

Downside:

-CRVO -72% (announces topline data from RewinD-LB Phase 2b Clinical Trial in Patients with Dementia with Lewy Bodies; Neflamapimod did not demonstrate statistically significant effects versus placebo on primary and secondary endpoints at 16 weeks)

-YEXT -15% (earnings, guidance)

-ASYS -11% (earnings, guidance)

-FLNC -11% (announces Convertible Notes Offering and Intention to Enter into Capped Call Transactions)

-TRML -9.3% (Phase 2 TRANQUILITY trial surpasses enrollment target, with 143 total patients enrolled)

-MDB -8.9% (earnings, guidance; CFO, COO to step down)

-HQY -7.8% (earnings, guidance)

-FERG -7.4% (earnings, guidance)

-GNSS -6.8% (earnings)

-SEI -6.8% (files to sell underwritten public offering of 6.5M shares of Class A Common Stock)

-AI -6.7% (earnings, guidance)

-ORCL -6.2% (earnings, guidance)

-BTDR -5.4% (increases amount under ATM issuance sales agreement to $578M)

-TOL -4.6% (earnings, guidance)

-ASO -4.2% (earnings, guidance)

-CASY -2.9% (earnings, guidance)

-BRZE -2.8% (earnings, guidance)

-GIII -2.8% (earnings, guidance)

-DOC -1.9% (extends its $3B revolving credit facility)

-TARA -1.8% (prices ~13.7M shares at $6.25/share; for gross proceeds ~$100M)

Added to shorts in AAPL $247.53 and TSLA $393.77.

Chart from 8:30 a.m. ET:

From Peter Boockvar

How can the Fed cut again in the face of this?/Do you drink coffee each day?/A few earnings comments

In a post election boost, the November NFIB Small Business Optimism index jumped 8 pts m/o/m, a rather large one month move to 101.7. That's the highest since June 2021. Where the lift was most notable was in the outlook as the 'Expect Better Economy' component spiked to +36% from -5%. Also, Expect Higher Sales went from -4% to +14% and Good Time to Expand rose 8 pts m/o/m to 14%. Capital spending plans rose by 6 pts to 28%, the most since January 2022 and there was a 3 pt gain in Plan to Increase Inventory.

On the labor market, there was a 3 pt rise in Plan to Hire to 18%, matching the highest since May 2023 and a 5 pt increase in compensation plans to 28%, the highest since December 2023. 'Positions not able to fill' rose 1 pt. The earnings trend gained 7 pts to -26% and credit conditions eased by 1 pt. There was a 3 pt rise in Higher Selling Prices to a 5 month high. Lastly, the average interest rate paid on a loan fell to 8.8% from 9.7%.

The NFIB said "The election results signal a major shift in economic policy, leading to a surge in optimism among small business owners. Main Street also became more certain about future business conditions following the election, breaking a nearly three year streak of record high uncertainty. Owners are particularly hopeful for tax and regulation policies that favor strong economic growth as well as relief from inflationary pressures. In addition, small business owners are eager to expand their operations."

Now I'm not sure if this survey on small business is going to make it into the deliberations at the Federal Reserve but it should because how can they cut interest rates next week in the face of this burst of economic optimism post election, whether that optimism is realized or not? Shouldn't the Fed at least take a pause and wait and see? Yes they should.

NFIB

Expect Better Economy

On the consumer, the NY Fed's Expectations survey for November saw a one tenth rise in inflation expectations across the time spectrum with the one yr in particular at 3%. Price expectations fell for gasoline, food and rent but rose for medical care and the cost of college.

On the labor market, unemployment expectations did rise but still remains muted. Of note, "The mean perceived probability of finding a job (if one's current job was lost) decreased by 1.9 percentage points to 54.1%. The decrease was broad based across age and education groups." This squares with the elevated level of continuing jobless claims and the moderation in the pace of hiring's. Income expectations rose a touch.

On household spending and ahead of the holidays, "growth expectations declined by .2 percentage point to 4.7%, the lowest reading since April 2021, but above pre-pandemic levels."

Finally of note, while perceptions of households' current financial situation were little changed vs a year ago, "year-ahead expectations about households' financial situations improved considerably in November" and rose to the best level since February 2020, obviously right before Covid hit in earnest.

Do you drink coffee each day? If so, you should be aware that the price of coffee futures is jumping to a record high today at $3.47 per pound.

Coffee

From Toll Brothers earnings release and ahead of the call this morning:

"Since the start of our fiscal 2025 six weeks ago we have seen strong demand, which is encouraging as we approach the beginning of the spring selling season in mid January. We are well positioned with communities in over 60 markets across 24 states featuring the widest offering of luxury homes and serving the most affluent customers in our industry."

I believe the stock is trading down pre market though because they missed gross margin expectations in their Q1 guide and we'll hear to the extent they are discounting in the call as average selling prices fell too.

From Vail Resorts and ahead of the ski season, so only a very early read on the ski business:

"For the upcoming 2024/2025 North American ski season, pass product sales through December 3, 2024, decreased approximately 2% in units and increased approximately 4% in sales dollars as compared to the period in the prior year through December 4, 2023. This year's results benefited from an 8% price increase partially offset by unit growth among lower priced Epic Day Pass products."

So no disinflation when it comes to lift tickets/season passes.

Early snow has allowed them to open up their western resorts "earlier than anticipated...including the opening of the legendary back bowls at Vail Mountain, opening the earliest since 2018." I look forward to skiing those in January.

"Lodging bookings at our US resorts for the upcoming season are consistent with last year."

Oracle's earnings bar was pretty high and they didn't clear it but they of course spoke very positively about its AI driven cloud business.

The Reserve Bank of Australia held its cash rate at 4.35% as expected but hinted at an upcoming rate cut as "some of the upside risks to inflation appear to have eased" and bond yields and the Aussie$ moved lower in response. Governor Michele Bullock is a hawk still but a bit less so. "Recent economic data have been mixed and some indicators are softening in line with our forecasts. This has given the board some confidence that inflationary pressures are declining, but risks remain."

Intraday 2 yr yield move post statement and press conference

China exports in November rose 6.7% y/o/y, following a lift of almost 13% in October as companies pull forward what they can get ahead of expected tariffs. That though was below the estimate of an 8.7% gain. Imports, many of which end up in exports, fell 3.9% y/o/y unexpectedly vs the estimated rise of .9% and also reflects punk Chinese consumer demand for stuff. Chinese stocks took a breather after yesterday's jump stimulated by the politburo meeting comments.

While it looks like the S&P 500 will outperform the Hang Seng this year, opposite of my contrarian call entering the year, there remains bargains there and we own some of them.

* And to the uncritical questioning (and implicit support) from the business media who missed the FTX fraud when it was right in front of their eyes.

* As MicroStrategy's shares fall, the company continues to sell $1 bills for $3.

 * Meanwhile, a cryptocurrency named Luigi (after UnitedHealthcare CEO murder suspect Luigi Mangione) has risen by 8,500% in the last 24 hours. 

* Bookmark this column/analysis!

Coincident with a recent $2 billion equity offering, MicroStrategy's MSTR Michael Saylor recently went on the (predictable) business media tour.

Saylor was interviewed by commentators who (unfortunately and) consistently threw him softballs — reminiscent of when Sam "SBF" Bankman Fried (formerly known as "The White Knight of Crypto") was interviewed by Kate Rooney on CNBC only one month before he was indicted. 

Here was the same commentator's CNBC segment weeks later when FTX imploded and went bankdrupt!

Here are two good example of Saylor's questionable investing logic and capital market jibberish which is at the core of MicroStrategy's financing (and very existence) — with little or no pushback from the interviewers:

* CNBC Michael Saylor on Citron's short bet on MicroStrategy

* CNBC MicroStrategy's Michael Saylor: We want to bridge traditional capital markets with crypto economy

Of course the difference between MicroStrategy and FTX is that MSTR is not a fraud — it is simply an Enron-like math scheme that will likely eventually eviscerate much of the money invested in the company (imho).

I remain short MicroStrategy.

In late November I shorted MSTR at $533.87. The shares closed yesterday at $365.

My MSTR Cost Basis Comment

My (MSTR) short basis is $533.87 - keeping it very small.

Position: Short MSTR (VS)

By Doug Kass Nov 21, 2024 9:41 AM EST

And, as I have written, MicroStratetgy (with its "math" in expressing the case of buying $1 bills for $3 and MSTR's multiple derivative plays), is the standard bearer of the digital speculation today:

MicroStrategy Is Selling $1 Bills for $3

* To you!

* By issuing equity at a 300% premium to bitcoin.

* It is complicated, but delta trading provides random returns, though gamma trading provides steady returns.

MicroStrategy's (MSTR) Mike Saylor is sprouting a heavy dose of misinformation and Enron-style math in expressing the reason to own shares of MicroStrategy.

What Saylor is selling is volatility —with an operational asset (the MicroStrategy investor).

To summarize, when volatility is trending lower, problems arise. Moreover, the company prints shares for itself (share-based compensation) — another dilutive element to the MicroStrategy story.

Without getting too complicated, there is a useful life (and a depreciated asset associate with that) to produce a salvage value. (Maybe you should listen to the discussion.)

So, if you want to understand why I write this, listen to the complicated explanation:

MicroStrategy's real game is gamma not delta

Position: Short MSTR (VS)

By Doug Kass Nov 25, 2024 3:30 PM EST

Here is what I wrote about the hidden risks associated with the cryptocurrency market in A Cause for Concern: The Unexpected and Leveraged Corners of Speculation: 

* An extremely leveraged cryptocurrency market represents potential systemic risks. It is my view that cryptocurrency is "the mother of all bubbles" perpetuated by a number of factors (including the rejection of fiat money) and developing digital narratives — many of which have a weak foundation of logic. The absurd notion that the limiting of supply of bitcoin is as stupid as it is damning — as there is no limit to the supply of other cryptocurrencies. To this observer, the sheet market size of bitcoin and other cryptocurrencies is a manifestation of the risks.

Finally, the cryptocurrency craziness continues daily — with Luigi Coin, a meme cryptocurrency named after United Healthcare CEO murder suspect Luigi Magione, surging by over 8,500% in the last few hours, reaching a market capitalization in excess of $25 million:

Bookmark this column.

To follow up on my UBER post, this is an excellent read!

Bonus — Here are some risks:

Opposite Day to Start the Week

Today's Number Is 500

The January Effect - Three Times a Charm?

Chinese Equities Posed to Rise?

Is There A Reset Lower for Bitcoin? 

* Uber's shares are -$20 below their 52-week high.

I remain short a much-beloved stock in the business media and in portfolios — Uber UBER.

With self-driving cars making further progress — especially with Waymo bringing self-driving taxis to Miami in early 2025 — I see continued pressure on the shares.

The S&P Short Range Oscillator has slipped from 2.84% to 1.19%.

In other words, the market is less overbought.