Opinion

Despite Delta Fears, Stay-At-Home Stocks Struggle

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Posted: Aug 12, 2021 1:42 PM
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Despite Delta Fears, Stay-At-Home Stocks Struggle

Source: AP Photo/Eugene Hoshiko

Wednesday was another solid session for cyclical names, particularly Materials (XLB) on movement with infrastructure. However, after a strong bond auction, the session got an extra boost, which says foreigner demand pushed yields lower.

To see the chart, click here.


Sector Watch

Keep an eye on Materials - to rally to form a double top -a breakout there would be monumental and spark a much higher move.


Industrials ,also sporting an intriguing chart, has come on strong. The sector has significantly underperformed the S&P over the past six months.


Internals Still Lousy

Market breadth was strong on the New York Stock Exchange (NYSE), reflecting a shift to value, quality, and cyclical names, while the NASDAQ Composite struggled in all measures.

Market Breadth

NYSE

NASDAQ

Advancing

2,205

2,319    

Declining

1,084

2,024

52 Week High

180

144

52 Week Low

34

117

Up Volume

2.30B

2.13B

Down Volume

1.18B

1.75B

FDA Booster Shot

The U.S. Food and Drug Administration (FDA) is ready to authorize a Covid-19 booster shot. Perhaps that’s why so-called stay-at-home or work-from-home names took it on the chin. And reopening stocks found buyers even with elevated Delta variant cases and increased hospitalizations.

Portfolio Approach

We took profits in Healthcare this morning in our Hotline Model Portfolio.

Inflation Picture / Core PPI

For the fifth month in a row, PPI core has come in much hotter than Wall Street consensus – this time twice the consensus of +0.5% - matching the second highest number ever. 

Producer prices continued marching higher – climbing 7.8% from 7.3% - hitting the higher level ever (data kept since Nov 2010).

Lots of noise in the PPI report we need to comb through…but the bias remains to the upside.