There was interesting action during yesterday’s session, as growth (Technology and Communication Services) enjoyed strong interest and gains. But more conservative sectors (Health Care and Real Estate) really surged.
I found it odd that in the past two days, Financials have struggled to get out of the gate after big earnings beats.
S&P 500 Index | +1.11% | |
Communication Services XLC | +1.28% | |
Consumer Discretionary XLY | +0.72% | |
Consumer Staples XLP | +0.80% | |
Energy XLE | -0.81% | |
Financials XLF | -0.09% | |
Health Care XLV | +1.71% | |
Industrials XLI | +0.40% | |
Materials XLB | +1.18% | |
Real Estate XLRE | +1.90% | |
Technology XLK | +1.72% | |
Utilities XLU | +1.11% |
Market Breadth
The S&P 500 sees 91% of the stocks above their 50-day moving average, which is a very unique situation. There are 450 in the plus column for the year, but the market breadth remains sloppy. It presents a challenge for investors already grappling with chasing or maybe buying something that’s not already at the high.
This is different from the value versus growth debate, as many so-called value names are way overvalued, and many growth names look cheap.
The NASDAQ has reignited, as 685 names are higher on the year against 317 losers. Although the NASDAQ has staged an impressive rebound after being roundly dismissed by Wall Street, there is still a serious bifurcation among the winners and losers.
The internals, which struggled in the NASDAQ, revealed the market breadth saw an equal number of advancers to decliners and higher down volume than up volume.
Market Breadth | NYSE | NASDAQ |
Advancing | 2,022 | 2,106 |
Declining | 1,287 | 2,096 |
52 Week High | 314 | 197 |
52 Week Low | 25 | 59 |
Up Volume | 1.75B | 1.87B |
Down Volume | 1.86B | 2.28B |
Technical View
The magic number for the NASDAQ Composite is 14,175.12, where the index needs to maintain momentum to avoid forming a double top – a very bearish chart formation.
Individual Bulls Keep Being Right
Individual investor bullishness remains elevated and continues to be spot on, as the S&P keeps hitting new highs.
To see the chart, click here.
Portfolio Approach
We took profits in Materials and added to Industrials yesterday in our Hotline Model Portfolio.
Today’s Session
J.B. Hunt Transport Services (JBHT) posted strong results after the close, sending shares to a new high in after-hours trading. The results were foreshadowed by the amazing demand for Class 8 trucks and trailers. According to ACT Research U.S. (ACT), net orders for trucks in March were 40,000; +424% from a year earlier.
Economic momentum is poised to continue.
To see the chart, click here.
Housing
Housing continues to be red hot as more people are still migrating to the suburbs and taking advantage of low interest rates. Housing starts rebounded from February's decline, which was due in large part to unseasonably cold weather and storms in the south. Starts rocketed 19.4% to 1.739 million units in March, well above the expectations of 1.63 million. This is the highest read since June of 2006. Building permits also increased to 1.766 million topping estimates for 1.75 million.
To see the chart, click here.
Housing, especially in the lower end, continues to be in tight supply. Adding to the pressure, is the price of lumber that continues to reach new highs.
The futures are pointing to a positive open across the board, and the DOW is indicating to open above 34,000 for the first time.
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