The Gilmo Report

August 20, 2017

August 20, 2017

Wednesday’s churning action turned out to be the turning point for the market after the reflex relief rally we saw earlier in the week. As I discussed in detail in Wednesday’s report, the relief rally was a simple function of the phenomenon of alibied selling. The initial NoKo news the prior week was served up as the justification for the selling.

Once the rhetoric cooled off over last weekend, we saw the market rally sharply as it started the week off with a big upside gap-up move that took the NASDAQ back above the 50-day moving average. On Wednesday, however, I noted that the action had the clear look of churning action after a typical reflex rally and that was enough to tip us off to Thursday’s sharp sell-off.

Of course, that sell-off was attributed to news about the Trump Administration coming apart amidst the President’s alleged increasing isolation. In the same way that I tend to view the prior week’s “NoKo” sell-off as alibied selling, it seems to me that Thursday’s news was another round of the same thing but with a different news excuse.

The rest of this report is available for Gilmo Report Members only.
The full report will be available 45 days after it is posted. For immediate access: login or subscribe

Gil Morales & Company, LLC (“GMC”), 8033 Sunset Boulevard, Suite 830, Los Angeles, California, 90046. GMC is a Registered Investment Adviser. This information is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to GMC, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Gil Morales & Company, LLC. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2008-2017 Gil Morales & Company, LLC. All rights reserved.