T3’s Take 3: Bulls go 5 for 5 in All-Time Highs, but the Picture Gets Muddy


1) 5 Days, 5 All-Time Highs 

For the fifth day in a row, the S&P 500 managed to make a new all-time high, something that hasn't happened since 1998.

The index hit a peak of 2169.05 just after the open before selling off to 2155.79, and closing down 0.1% at 2161.74.

Earnings were a culprit.

Traders were disappointed with Wells Fargo's (WFC) numbers, which were held down from exposure to bad oil and gas loans. Fellow bank Citigroup (C) also lowered its margin growth forecasts.

And European watch/luxury play Swatch reported a major decline in profit, extending the long streak of disappointing earnings numbers from consumer stocks.

But from a bigger-picture perspective, the action feels like necessary digestion after the huge post-Brexit rally.

2) Kurt Capra on SPY

This afternoon, my colleague Kurt provided the following analysis of SPY on the Virtual Trading Floor:

Below is an hourly chart of SPY:

Today it's down, but right into support. If you look, the 60-minute trend has been the general of this move higher.

There has not been a single break of key support throughout this move up.

Today, the SPY is right into the gap fill area.

So while the SPY is beginning to move down, we may see an attempt to move higher first and then form a lower high.

The other possibility is that the SPY will gap under this support level and that will get price moving lower more quickly.

3) Nintendo Power!

Shares of Nintendo Nintendo are up 93% in a week following the release of its blockbuster Pokemon Go app.

It's so big that Presidential candidates Donald Trump and Hillary Clinton are both using it as part of their campaign platforms.

Ad agencies are racing to use it as a marketing platform.

And it hasn't even had a complete global launch yet!

It's generally not good practice to short parabolic moves, but the masochist in me wonders if Hillary Clinton's particularly awkward Pokemon joke is a sign that this whole thing is getting out of hand.

This is a chart of Nintendo (Japan shares):

And here I show the chart of Nintendo ADRs (NTDOY):

They went from trading less than 50K shares a day to millions/day in the past 4 days!

Generally speaking, fads and crazes tend to go a little further than seems reasonable, so it's usually better to short AFTER the trend breaks — not before.