Hi Traders,
The index got hit this week. Most of the stocks in it didn’t.
That’s the whole read, and it’s the one reason I have a long on a week like this.
Wednesday the market ripped on the midterms. Thursday Qualcomm (QCOM) put out a bad report and the whole thing came back and then some. The S&P 500 (SPY) fell 4.4 percent, the Nasdaq 100 (QQQ) fell 6.5 percent, the chip stocks (SMH) dropped about 11 percent, and the VIX jumped 70 percent, its third biggest one-day move since 1990.
When everything’s red, I sort it three ways. What did a stock do today, what did it do this week, and where does it sit in its 15-day range.
SPY closed Friday down 2.7 percent on the week, sitting near the bottom of its range. Meanwhile half the stocks in the S&P 500 are still above their 10-day moving average, and 61 percent are above their 50-day. The index is on the lows and the average stock isn’t.
The index and the average stock are telling two different stories, and the gap is two crowded trades coming out: AI and oil, the darlings of 2026. SMH is down 11 percent on the week and energy (XLE) is down 12, and you’d never see energy on a one-day screen because it closed flat.
So the long comes from the pile that’s up on the day and up on the week, a name the market’s still buying through the mess. The short comes from the pile that’s up on the day and down on the week, a bounce inside a fall.
The Long: Harley-Davidson (HOG)
Up 0.25 percent on the day, up 4.6 percent on the week, sitting at the 74th percentile of its range. That’s a stock nobody has to sell.
The news is already out. Harley reported October 29th and missed, with revenue down 10 percent. Then you read the rest of it.
North America retail was up 9 percent, dealer inventory was down 26 percent, and they raised guidance. The stock closed up 2.7 percent on the miss and made a 52-week high at 34.84 on Thursday, the same day the rest of the market was getting its teeth kicked in.
That’s the tell: bad headline, and the market bought it anyway. The crowd was positioned for a bad quarter, and the bad quarter came with a clean dealer channel and a raise.
Add crude coming off, which takes pressure off rates and off the consumer, and the stuff that got sold all year to fund AI and oil has room to catch a bid. Harley’s one of those.
It’s extended, 12 percent over its 21-day average, so I want a pullback for location, not a chase. I’m wrong on a close under 31.22, last Friday’s close.
The Short: CVS Health (CVS)
Up 3.1 percent on the day, down 7.1 percent on the week, sitting in the bottom third of its range. That’s a bounce inside a fall.
On November 4th, CVS beat, raised guidance, and announced it’s splitting into two companies by 2028. Good quarter, good news, big strategic move. The stock fell 12.5 percent, from 91.41 to 79.96, while the rest of health care held up fine.
A stock that can’t rally on good news is telling you the holders wanted out and the announcement gave them the exit. My read is they didn’t get enough detail on the split to stay. Whatever the reason, the market voted with its feet and the vote was no.
Since the low at 77.33, it’s bounced 8.4 percent, right up to the bottom of the gap at 85.30 (the hole the stock left on the chart when it dropped). That’s where I’d short it, 85 to 89, and I’m wrong on a close over the 200-day at 88.89.
The risk is real. Breakups get bought once the first wave of sellers is done, and if the stock closes above that gap I’m looking at a reversal and I’m out.
Both picks come off the same sort.
One is a stock the market kept buying when it had every excuse to sell.
The other is a stock the market sold when it had every excuse to buy.
With the big market question looming for Monday (will stocks crash after what we saw Thursday and Friday)… it’s hard to tell what the crew will choose to do on Monday's Ticker Highlight Show.
Tap this link to join before then.
Enjoy the journey,
Tim