- S&P 500 +0.72%
- NASDAQ +0.71%
- Dow Jones +0.55%
- Oil +2.05%
- 10-Yr Yield +2.1 bps
It was another compelling session for the market, which overcame a series of negatives from economic data, to hits on very influential companies, only to see buyers materialize into the close. I’m impressed with the resolve of the market, as buyers stepped in at the perfect time to sell or stay on the sidelines.
The 3:00 PM selloff began on cue, but with 15 minutes remaining in trading, there was a rush to get in, not to get out, which resulted in major indices rocketing higher. The volume is where you must focus, as that was the real conviction. There was no obvious trigger for this action. I think it simply reflects pent up demand and anxiety from the buy-on-dips crowd.
Dow Jones Industrial Average One-Day Chart
Riding the Wave
I think smart buyers are nibbling on these dips knowing the longer term back drop is a growing economy, corporate revenue and earnings that should accelerate through the year, friendly central bank(s) and reasonable valuations.
This is a good time to take profits on moves that are exhausted and the underlying value proposition isn’t as good as it once was considering the change in share price. By the same token, there is value out there that makes for a good portfolio mix with momentum names.
Message from the Session
Energy was the best performing sector, but Financials were the most impressive, led by regional bank stocks. Consumer Staples also performed well led by Constellation Brands (STZ and Monster (MNST). In both sectors, I think investors are looking for value. I agree investors should have larger-than-normal exposure to Staples, but I’m not forcing it with banks just yet.
S&P 500 Index | +0.72% |
Communication Services (XLC) | +0.49% |
Consumer Discretionary (XLY) | +0.43% |
Consumer Staples (XLP) | +0.85% |
Energy (XLE) | +1.44% |
Financials (XLF) | +1.19% |
Health Care (XLV) | +0.68% |
Industrials (XLI) | +0.67% |
Materials (XLB) | +0.61% |
Real Estate (XLRE) | +0.61% |
Technology (XLK) | +0.55% |
Utilities (XLU) | +0.72% |
Portfolio Approach
Communication Services 1 | Consumer Discretionary 5 | Consumer Staples 1 |
Energy 1 | Financials 1 | Healthcare 2 |
Industrial 3 | Materials 3 | Real Estate 0 |
Technology 2 | Utilities 0 | Cash 1 |
Today’s Session
Equity futures have traded in a narrow range all morning long with all eyes on Boeing (BA), which fought off lots of pressure yesterday; but then got hit after the close when a Southwest 737 Max had to make an emergency landing. There were no passengers onboard, which would have amplified the news and pressure on the stock.
Speaking of Boeing shares, two Wall Street firms are saying it’s a Buy.
- Citibank resumed its “Buy” rating on the stock after the close.
- Baird is calling Boeing an “Aggressive Buy.”
With the FAA heading to Capitol Hill today, expect shares of Boeing to remain volatile.
Deal News
Centene (CNC) is buying WellCare Health Plans (WCG) for $305 a share via $120 in cash and 3.38 CNC shares. This sector is extremely oversold, especially Molina Healthcare (MOH).
Industry of the Day: Homebuilders
Lennar (LEN) posted mixed results, but new orders climbed 24% and management is voicing greater confidence.
KB Homes (KBH) saw sequential improvement in January and February, and management sees higher average home prices in the current quarter.