We took profits on Burlington Stores (BURL) this morning because it popped almost 18% in a short period of time. The goal isn't to trade on Hotline. By the same token, violent swings of 1,000 Dow points mean the better part of valor would be to have cash on hand and not squander huge gains.
On that note, I love how the market is being challenged today. These are the kind of tests that absolutely must happen to achieve the ultimate market bottom.
The buy list continues to be refined, and investment themes to go along with our normal decision-making process include:
- Domestic businesses that are less labor-intensive businesses that will benefit from new ways of working and living; businesses that dominate their industry and had fundamental momentum.
- Housing boom & household formation was big for me coming into the year, and I think it gets better in the second half of the year, as I'm reading where rich folks are moving into places like the Hamptons are not only paying asking price but skipping the inspection.
This will trickle down to other price brackets, as more people, including millennials, will find single family homes more attractive.
While many are focused-on downside tests for the all-clear, I'm focused on key resistance points on the upside, beginning with today’s early high point for the Dow 21,441; which was completely erased, and the index slipped into negative territory.
This rebound is impressive and closing above there would be huge. The next test would be 21,769.
Message of the market
The most oversold names are still the biggest winners. At 10:57, the biggest S&P gainers included some of the most devasted stocks of 2020.
- Boeing (BA) -50%
- Norwegian Cruise Line (NCL) -71%
- Humana (HUM)
- American Airline (AAL) -45%
- Royal Caribbean (RCL) -70%
- Nike (NKE)
- United Airlines (UAL) -59%
- Darden Restaurants (DRI)
- MGM Resorts International (MGM) -60%
- Wynn Resorts (WYNN) -46%
- Delta Airlines (DAL) -48%
This continues the trend we saw yesterday where the biggest losers since tumbling from the market on February 21 are higher and have been the biggest percentage winners. Note, most are still down dramatically for the year.
Broad Market View
More broadly, Utilities continue to trail the market, but Real Estate is enjoying a strong session. Bottom fishing continues to elevate beaten down Industrials and Energy names.
S&P 500 Index | +1.42% | |
Communication Services (XLC) | -1.16% | |
Consumer Discretionary (XLY) | +2.64% | |
Consumer Staples (XLP) | -0.16% | |
Energy (XLE) | +3.55% | |
Financials (XLF) | +1.54% | |
Health Care (XLV) | +1.22% | |
Industrials (XLI) | +5.01% | |
Materials (XLB) | +2.33% | |
Real Estate (XLRE) | +5.46% | |
Technology (XLK) | +1.35% | |
Utilities (XLU) | +0.86% |
And don’t miss that this market is also reacting to positive news on human lives. Right now, the focus is on Italy, particularly the Lombardy region, which was the epicenter of that country’s outbreak. The market was directionless and looking vulnerable when word came the region saw 296 deaths, down from 402 the previous day, and the lowest tally since March 19th.
We pray for our brothers and sisters around the world, and we gain hope when we see cases and deaths begin to turn. The goal is to reach an apex in America, so we can focus on a return to normal life, which of course, will never be normal again.