Leaping out the Chute
Its sessions like yesterday that makes it easy to understand why investors call it a “bull” market or as they did back in 1714 when the phrase “bull baiting” was coined. As the antithesis of “bear baiting,” there is a certain ferocious determination when the market wants to move higher. This market has wanted to go higher for a couple of weeks, but instead it has only been able to consolidate the impressive rebound from March lows.
Still, market breadth continues to be impressive and the rally continues to broaden out. One thing is clear, the market cannot rally if Technology stocks are lower, but it can rally without Technology stocks leading the way. That distinction is important, as investors should be focused on the broadness of these rally attempts.
Meanwhile, the clock is ticking as big equity indices either see major breakout or have to retreat a to regroup.
Market Breadth | NYSE | NASDAQ |
Advancing | 2,145 | 2,255 |
Declining | 771 | 958 |
Unchanged | 81 | 85 |
Total | 2,997 | 3,298 |
52 Week High | 27 | 66 |
52 Week Low | 15 | 14 |
Up Volume | 3.73B | 2.64B |
Down Volume | 1.34B | 1.10B |
Unchanged | 127.86M | 23.11M |
Total | 5.20B | 3.76B |
Sector Watch
Energy was the best performing sector as crude continues to move higher, even shaking off mid-session weakness. The Index is now only 2.65% of the S&P, only beating out Materials at 2.43%, which also enjoyed a solid session. The wildcard could be Financials which are 10.93% of the index. It’s important for these names to participate in the next leg higher because they serve as proxies to overall economic growth.
Rotation out of safer havens like Consumer Staples continues.
Communication Services is the newest sector. These names reflect a future society run on the Internet and remote communications, which are naturally well-positioned, as the future has been pulled forward during the global shutdown.
S&P 500 Index | +1.15% | |
Communication Services XLC | +1.88% | |
Consumer Discretionary XLY | +1.57% | |
Consumer Staples XLP | -0.28% | |
Energy XLE | +2.60% | |
Financials XLF | +2.35% | |
Health Care XLV | -0.01% | |
Industrials XLI | +1.17% | |
Materials XLB | +2.05% | |
Real Estate XLRE | +0.89% | |
Technology XLK | +1.50% | |
Utilities XLU | +0.40% |
Re-Opening Milestones
Tesla (TSLA) is opening its Fremont manufacturing plant with limitations to account for Covid-19.
Disney (DIS) needed minutes to sellout tickets for its Shanghai park, which opens on Monday at one third typical capacity.
Michigan’s Governor will allow that state’s auto plants to resume operations with restrictions.
Portfolio Approach
Yesterday, we added an idea to Real Estate and Technology in our model portfolio. This morning we are adding a Technology position. Contact your account representative or Click here to get started on the Hotline today.
Today’s Session
Jobs losses for April rolled up to 20.5 million with 7.7 million in leisure & hospitality (5.5million restaurants and bars). Its one for the record books and one that should spark a sense of urgency to re-open the economy. There is no way this kind of devastation can continue.
To see the chart, click here.
We will go further in-depth with the jobs report on the afternoon note.
An early driver of market optimism comes from reports the US and China trade negotiators have calmed the waters, saying Phase One of the trade deal is still full speed ahead. Stability in a very unstable global economy is important, especially as the risks could possibly shift from economic to military aggression.
Happy VE Day to our United Kingdom cousins, as today marks the 75th anniversary of the defeat of Nazi aggression. Victory for Europe was victory for all of humanity. This is something we can take solace in, as the world fights a different, but determined, evil foe in the form of the coronavirus, which has been unleashed upon the planet.
Key Technical Points
S&P 500
- 2,901 is the initial test
- 2,923 breakout point, which could force buyers off sidelines
Dow Jones
- 24,094 is initial test
- 24,199 was pre-opening high
- 24,633 is major breakout point