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.
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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.
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