Bad ‘Memory’!; I’m Trimming & Bailing on These Tech Stocks; Peace … Out?

The market sniffed this out well before it was news. Zero dark-thirty. Wednesday morning. The man in the darkened window has bowed his head in sadness. Crude oil prices have spiked higher.

I now see front-month WTI Crude trading with a $74 handle, up from $67 going into the holiday weekend. Bond traders are selling U.S. Treasury debt securities. I have seen the U.S. Ten-Year Note pay as much as 4.58% this morning. That’s up from 4.45% as recently as Monday. Asian stocks are trading lower. European equities are opening lower. U.S. equity index futures are trading lower after what was a sloppy regular session on Tuesday.

War

Speaking from the NATO Summit in Ankara, Turkey, U.S. Pres. Donald Trump told the media that, “As far as I’m concerned, it’s over.”

The word “it” in that statement refers to the memorandum of understanding between the U.S. and Iran. In his talk with a number of reporters, the U.S. president called Iran’s leaders “scum” and “sick people.” He added, “I don’t want to deal with them, it’s a waste of time dealing with them. They’re liars. There’s something wrong with them. They’re cuckoo.”

Late Tuesday evening, the U.S. military’s CENTCOM (central Command) released a statement announcing that U.S. forces had “completed a new round of offensive strikes against Iran.” The statement adds that the U.S. had hit “over 80 targets with precision munitions as an immediate response to Iran’s latest attacks on commercial vessels transiting the Strait of Hormuz.” Earlier in the day, the U.S. Treasury Department had revoked the authorization that had been granted to Iran during the now admittedly failed peace process to legally sell oil for U.S. dollars.

According to the release, “U.S. forces struck Iranian air defense systems, command and control networks, coastal radar sites, anti-ship missile capabilities, and more than 60 Islamic Revolutionary Guard Corps small boats in and near the strait to degrade Iran’s ability to continue attacking international commerce flowing through the international trade corridor.”

Iranian forces, in recent days, had attacked three civilian, commercial vessels, while transiting that passage. Those three ships bore the flags of the Marshall Islands, Saudi Arabia and Liberia.

Iranian forces have “responded” though clearly acting as the provocateur here by firing drones and ballistic missiles at “targets” in Bahrain and Kuwait. The U.S. has large military bases in those nations. Bahrain is host to the U.S. Navy’s Fifth Fleet and the U.S. Naval Forces Central Command. Kuwait is host to the forward headquarters of U.S. Army Central Command and serves a hub for CENTCOM itself. The U.S. Air Force also has a presence in Kuwait. More than 13,000 U.S. troops, all told, are stationed in Kuwait.

But Wait, There’s More…

The U.S. president was on a roll this morning. Let us proceed.

On Spain

President Trump said, “Spain is a terrible partner in NATO. They don’t participate. They don’t pay. I don’t want anything to do with Spain. Cut off all trade with Spain, please, including visits.”

He added, “Don’t even talk to them. They’re hopeless, bad people. There are a couple of others, but in particular Spain.”

On Greenland

This morning, Pres. Trump not only criticized NATO member nations, but also renewed his call for the U.S. to take control of Greenland. He called Greenland “a big problem for us.” The president lamented that the U.S. is spending too much money “to protect these countries from Russia,” but doesn’t get anything in return, and added that the Arctic island is “very important for the U.S., but it’s not important for Denmark.”

Death of the Memory Basket?

Maybe not the death, but the fun is clearly over for now. On Tuesday, I cut my long position in SanDisk (SNDK) in half as that stock lost contact with its 21-day exponential moving average, which was my panic point. I am almost out of Seagate Technology (STX) and probably will be soon. I have continued to day-trade Western Digital (WDC) and probably will for a while. I have not yet reduced my long position in Micron Technology (MU). I may add at the 50-day simple moving average, but if that line is lost, I will turn into a seller quicker than you can say, “Shazam.”

On That Note…

I did indeed increase my long positions in both Lockheed Martin (LMT) and RTX (RTX) on Tuesday as portfolio insurance against what we see unfolding now.

More Trading…

Palantir Technologies (PLTR) failed on Tuesday at its 50-day simple moving average. The stock is lower with the overnight market and could be moving toward developing the right shoulder of the pattern we discussed in yesterday’s note here at TheStreet Pro. I would expect that on this weakness, I will re-initiate that name at some point on Wednesday.

I am also likely to give my long position in Intel (INTC) a haircut as that stock loses its 50-day SMA. Professional managers will likely reduce exposure on that move. See below:

Readers will see that as INTC loses its 50-day SMA, the attempted breakout from the Bull Flag will fail. As that happens, the now visible Rising Wedge pattern of bearish reversal will take precedence over that flag pattern. Both Relative Strength and the daily moving average convergence divergence have turned bearish for INTC.

Readers will see that Advanced Micro Devices (AMD) is also struggling with the technical fallout from a Rising Wedge pattern and weaker indicators. That said, AMD is not yet in trouble with the key moving averages that portfolio managers pay the most attention to. Given this name is trading so far above our net basis, I feel that I can let this one poke around for support above its 50-day SMA, which is still sharply to its south.

Alright, Gang!

I need everyone out on the parade ground in twenty minutes. Full battle rattle. Three sources of water. Clean socks. Gas mask on the hip. I don’t know what’s going to happen in a couple of hours, but the “ugly stick” is out and about and may try to make an impact.

Economics (All Times Eastern)

07:00 – MBA 30 Year Mortgage Rate (Weekly): Last 6.75%.
07:00 – MBA Mortgage Applications (Weekly): Last 0.0% w/w.

10:00 – Wholesale Inventories (May-rev): Flashed 0.3% m/m.

10:30 – Oil Inventories (Weekly): Last -3.775M.
10:30 – Gasoline Stocks (Weekly): Last -2.333M.

1:00 p.m. – Ten-Year Note Auction: $39B.

3:00 – Consumer Credit (May): Last $20.73B.

The Fed (All Times Eastern)

2:00 p.m. – FOMC Minutes.

Today’s Earnings Highlights (Consensus EPS Expectations)

After the Close: AZZ (1.69), LEVI (.24), PSMT (1.19)

At the time of publication, Guilfoyle was long SNDK, MU, STX, WDC, LMT, RTX equity.