It was another intriguing session yesterday, where overall angst and pockets of serious selling were not reflected in the quotes of the major indices. The S&P 500 was down fractionally, as five of the eleven sectors eked out gains, while profit-taking hit Energy stocks (crude was higher), and the Archegos fallout pressured the Financial sector.
S&P 500 Index | -0.09% | |
Communication Services XLC | +1.02% | |
Consumer Discretionary XLY | -0.55% | |
Consumer Staples XLP | +1.01% | |
Energy XLE | -1.19% | |
Financials XLF | -0.87% | |
Health Care XLV | +0.47% | |
Industrials XLI | +0.02% | |
Materials XLB | -0.34% | |
Real Estate XLRE | -0.23% | |
Technology XLK | -0.52% | |
Utilities XLU | +1.07% |
Market Breadth
A look under the hood reveals the degree of pressure the market truly faced yesterday. Declining issues on the NASDAQ were three to one to advancers, and down volume was significantly higher on both major exchanges.
Market Breadth | NYSE | NASDAQ |
Advancing | 1,145 | 1,070 |
Declining | 2,193 | 3,114 |
52 Week High | 211 | 127 |
52 Week Low | 20 | 71 |
Up Volume | 1.08B | 1.41B |
Down Volume | 3.03B | 3.01B |
Individual Names
At the close yesterday, there were 403 winners in the S&P 500 with an average gain of 15.5%.
The damage is in the NASDAQ, which now has 398 losers for the year with an average decline of 15.48%. The high-flyers that have come down hard are the real issue. The twenty worst performers on the NASDAQ are down an average of 48.25%.
As you know, many of the stocks under the most pressure also have outsized influence on major indices.
Safe Haven
Early in yesterday’s session, Consumer Staples was the best performing sector. It finished higher, and it beginning to build momentum since breaking through key resistance. The sector was briefly the big pandemic winner last spring, as investors that didn’t sell and head for the hills, dove into these solid names. In the past six months, I have watched a lot of value stocks, typically low Beta names, take off like mega growth high Beta names (see VIAC).
Could Staples not only be a great place to chill for a moment but also outperform while investors wait for a number of issues to settle down?
We added a Consumer Staple name on Friday in the Hotline Model portfolio and have others high up on our potential buy list.
Portfolio Approach
There were no changes to our Hotline Model Portfolio yesterday.
Today’s Session
The ten-year yield is creeping higher once again, and the NASDAQ Composite is looking lower once again. The yield is taking out the recent high point, and while it doesn’t feel like an eruption, it’s a reminder that the bias is to the upside. The question is how high it goes from here?
Voice of Optimism
Yesterday, President Biden spoke about mask mandates and echoed comments from the head of the CDC, Janet Walensky, who shares her feeling of impending doom.
I get her heartfelt comments, but I’m from the school of optimism. I think politicians in general are far too pessimism, especially when they are out of power.
I’m not doctor or scientist, but I think its time to look to optimism on Covid-19, and the rebound of the United States, and even the rest of the world.
To see the chart, click here.
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