The market couldn’t hold on to gains from yesterday morning in part because Marco Rubio threw a wrench into the tax bill declaring his non-support unless there was more money carved out for childcare. But even before that news hit the wires, stocks had given up much of their gains as large funds and investors released their 13D filings.
According to the SEC, Schedule 13D is commonly referred to as a “beneficial ownership report.” It includes any person who directly or indirectly owns shares with voting power or investment power. When a person or group of persons acquires beneficial ownership of more than 5% of a voting class of a company’s equity security, they are required to file with the SEC.
We learned big funds sold a lot of big portions of positions, including many in the retail space. This helps to explain the weakness in retailers after a spectacular report on November sales. I think the knee-jerk reactions to 13D filings hurt individual investors more than they help.
Yesterday also saw CNBC go on a shorting conversation rampage that hit a number of sectors. I get that money managers with long positions tout them all the time, so there should be a place and time for the shorts, but a platform with no pushback is dangerous. Keep watching the Russell 2000 as a barometer for the GOP tax plan and its domestic benefits. The index continues to trail others and seems most vulnerable.
The strength on consumer discretionary names belies the singular focus on retail while reminding investors that the consumer is alive and well.
Market Breadth
NYSE
- Advancing issues 1,044
- Decliners 1,935
- New highs 81
- New lows 50
NASDAQ
- Advancing issues 904
- Decliners 2,036
- New highs 92
- New lows 69
Today’s Session
Stocks are poised to bounce this morning as word is leaking of compromise with Senator Rubio. Be that as it may, the market has exhibited more vulnerable signs but not panic. I’m not willing to chase the opening gap, but ready to add positions during any tumult.
Manufacturing
There is a slew of data out this morning on manufacturing. The Empire State Fed Manufacturing report came in about as expected, lower month to month, but the longer term up channel is intact.
The most important aspect of this is manufacturing report is that the last month of the year remains strong and close to max levels.
Make no mistake, this economy is on the move, but investors are rightfully salivating for an instant jump in corporate earnings.
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