Yesterday, the market was nice and steady all session long, as equities bolted out of the gate and refused to move lower. The only problem is while buyers emerged at any hint of weakening, fence-sitters couldn’t be seduced off the sidelines.
I guess there was this “Waiting for Godot” aspect to the session. But this act is getting old. And today we’ll see how serious lawmakers are about helping the American public before they rush home to enjoy chestnuts roasting over an open fire – and Jack Frost nipping at their collective noses.
It's going to be a great Christmas for politicians as the election dust settles, and they don't have to face angry town halls. So, it was nice and steady for establishment politicians and establishment stocks in the S&P 500, but a little more raucous for new names and hot industries.
Some of these names are in the Russell 2000, which is up +18.6% for the year - stretching its performance lead of the S&P 500 +15.2%, and trailing only the NASDAQ Composite, which is +42.3%. They are all leaving the stodgy Dow Jones Industrials (DJA) in the dust by +6.2%.
Message of the Market
It’s an interesting picture when looking at the top performers. Newer publicly traded names, such as Etsy (ETSY), PayPal (PYPL), and ServiceNow (NOW), are rocking as they upend their industries.
The same is true for Nvidia (NVDA) and Advanced Micro Devices (AMD). Both have eclipsed the supremacy of Intel (INTC) in industry stature and stock performance.
L Brands (LB) is the story of survival being rewarded while Freeport-McMoRan (FCX) is riding the rally in commodities.
Carrier Global (CARR) is a spinoff, and FedEx (FDX) went from a serious laggard that was being pushed around by Amazon (AMZN), to a world-beater that returned to its competitive roots. After the bell, the company posted strong financial results, but failure to provide guidance sent the shares lower:
1) Etsy, Inc. (ETSY)
- Price Gain: 301.35% 2020 year-to-date
2) Carrier Global Corporation (CARR)
- Price Gain: 213.92% 2020 year-to-date
3) Nvidia Corporation (NVDA)
- Price Gain: 127.12% 2020 year-to-date
4) L Brands Inc. (LB)
- Price Gain: 117.00% 2020 year-to-date
5) Advanced Micro Devices Inc (AMD)
- Price Gain: 111.77% 2020 year-to-date
6) PayPal (PYPL)
- Price Gain: 104.86% 2020 year-to-date
7) FedEx Corporation (FDX)
- Price Gain: 88.97% 2020 year-to-date
8) Albemarle Corp (ALB)
- Price Gain: 88.86% 2020 year-to-date
9) ServiceNow, Inc. (NOW)
- Price Gain: 86.80% 2020 year-to-date
10) Freeport-McMoRan Inc. (FCX)
- Price Gain: 85.21% 2020 year-to-date
Yesterday, the big winner was Lennar (LEN), which continues to knock the cover off the ball with its earnings report (joined by Pulte Homes (PHM) with D.R. Horton (DHI) in the top ten), as the housing boom picks up even greater momentum.
Only two sectors finished lower. Communication Services was weighed down by AT&T (T), which caught a downgrade from Morgan Stanely (MS), and Energy, which gave up some profits.
S&P 500 Index | +0.58% | |
Communication Services XLC | -0.25% | |
Consumer Discretionary XLY | +0.68% | |
Consumer Staples XLP | +0.64% | |
Energy XLE | -0.47% | |
Financials XLF | +0.28% | |
Health Care XLV | +1.07% | |
Industrials XLI | +0.61% | |
Materials XLB | +1.15% | |
Real Estate XLRE | +1.17% | |
Technology XLK | +0.79% | |
Utilities XLU | +0.67% |
Market Breadth
Market breadth was also much stronger than headline moves in major equity indices. There are some sizzling stocks pulling in buyers from major names like Microsoft (MSFT).
Market Breadth | NYSE | NASDAQ |
Advancing | 2,090 | 2,530 |
Declining | 1,044 | 1,172 |
52 Week High | 246 | 425 |
52 Week Low | 6 | 11 |
Up Volume | 246 | 3.29B |
Down Volume | 1.23B | 1.62B |
Year-End Tax Loss Selling
It’s that time again. Time for investors to consider taking losses that could offset tax liabilities. It has been a great year for us, but we are closing several names in the Hotline Model Portfolio. Each subscriber is urged to speak with their accountant or tax professional for specific benefits.
Watch for alerts this morning and details in the weekly Portfolio Approach Report.
KEY TAKEAWAYS
- Tax selling is when an investor sells an asset at a capital loss in order to lower or eliminate the capital gain realized by other investments, for income tax purposes.
- A wash sale is when an investor sells an asset through a broker in order to realize a loss, but simultaneously repurchases the same asset from another broker within 30 days of the sale.
- The IRS prohibits wash sales
-Investopedia
Portfolio Approach
There will be exits today in the Hotline Model Portfolio, as we take losses on ideas, where risks have changed enough that it would be worth the tax advantage and the ability to potentially buy back in 30 days.
Today's Session
We do not believe there will be a stimulus deal today. We are waiting for smattering of second tier data. We are watching oil to see if it can break through a huge resistance point (rig count later today).
Upside bias is strong. Let's see if there is any profit-taking pressure early in session.
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