Regaining The Swagger

The Dow Jones Industrial Average rallied to its third-best point gain in history as stocks rejoiced at the possibility of a better trading relationship with China and South Korea. Future deals that wouldn’t force joint ventures and curb the theft of trade secrets would be worth billions to American businesses while giving greater access to 1.3 billion people.

Technology was the best performing sector, where even Facebook was able to climb off the canvas into the plus column by the closing bell on Monday.  Financials rebounded with Comerica, Inc (CMA) and KeyBank (KEY), the biggest winners.

Consumer discretionary names popped, led by Lowe’s (LOW) after the CEO called it quits, and it was another strong session for Netflix (NFLX).

Last Friday, the Dow Jones Industrial Average failed at a key support point, but the more widely used S&P 500 close held, closing at a perfect double bottom, which is the most bullish of all chart formations.  

Key Resistance Points:

• S&P 500 2,790
• NASDAQ 7, 430
• Dow Jones 24,730

Regaining the Swagger

Now, the question is whether individual investors can regain their bullish swagger.

According to the American Association of Individual Investors, bullishness dropped 3.6 percentage points to 33.2%, which is well below the historical norm of 38.5%, and a million miles below the January 4^th reading of 59.8%.

I continue to say, please don’t get whipsawed out of this market. It’s obvious the wild swings and all the doom & gloom have taken a toll on investors.  Investors yanked $24.4 billion from ETFs just one week after plowing in more than $44 billion. 

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Related:

FACEBOOK NETFLIX STOCK MARKET STOCKS

• -$27.7 Billion U.S. Equity
• + $493 Million International Equity
• +1.6 Billion of U.S. Fixed Income

Message of Market

The light volume on Monday underscores that there remains a high level of anxiety over two things that I think will be fine:

• The Trade War Negotiation
• The Federal Reserve

The economy looks amazing, and stocks have actually gotten cheap on a historical basis when they should be trading near historically high valuation metrics. 

I think you should have over-exposure to industrials and technology names.

I’m fine-tuning a special report on Spotify; make sure to get a free copy or ask your rep or email  research@wstreet.com.

Today’s Session

Equity futures pointed higher all morning as we see more details from the White House on tariffs.  Moreover, we are waiting for the latest on consumer confidence and the most recent economic read from the Richmond Fed.