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.