Yesterday was a quiet session but one of the more impressive outings of the last two weeks. An early pre-opening rally faded, as investors faded an algorithm-generated pop on Pfizer’s Omicron headlines.
It could have been all downhill thereafter. But the market treaded water, and at about the same time sell programs had been kicking in, we got a buy program instead (usually in the 2 PM hour when my show is airing live on Fox Business – I just call it the “CP Effect” when it’s a rally and ignore when it’s a sell program).
It was all about reopening ideas on the three-dose and you’re good bounce. However, it has been all about cyclical sectors (Energy, Industrials, and Materials) and using caution in others (Staples, Real Estate and Utilities) for the month.
Growth names have limped along so far in December as the Wall Street trade is to sell them because all the other stuff is “due” to outperform.
To see the chart, click here.
Technical View
The S&P 1500 is in the shadow of its all-time high, having bounced perfectly off the trendline and without leadership from growth. It is very encouraging. Remember, double tops are bearish formations, so it will be critical that the index blows through 1080 and not look back.
Meanwhile, don’t write off those biggest, most impressive names in history outside of Ford (F) and Standard Oil and others that created industries from scratch. Apple (AAPL) popped again, and Google (GOOG) looks intriguing as well. The market has withstood a major test with investors aggressively rotating among sectors and styles, but not bailing out.
To see the heatmap, click here.
Portfolio Approach
This morning, we took profits in Financials and are adding a new position to Consumer Discretionary in our Hotline Model Portfolio.
Today’s Session
Initial Jobless Claims
Initial jobless claims declined by 43,000 to only 184,000 in the past week, which is the lowest level since early September…1969.
Continuing claims did edge higher.
These claims for unemployment insurance do not include the millions of Americans that are quitting their jobs. In October, the number was 4.3 million.
At the top of the list were accommodation and food services workers at 893,000 which was down from 1.6 million in September.
It stands to reason, many workers are looking for better pay, as this is the lowest paying industry according to the Bureau of Labor Statistics. But here’s the rub – last month food workers saw a 12.3% hourly wage increase from a year earlier – by far the highest of any industry.
To see the chart, click here.
This is why the market is on edge- everyone is anxious about tomorrow’s CPI report where consensus is +6.7% from year ago and +0.7% month to month. Many see it coming in much higher. Note: it’s a dilemma, but not long term, and if it hits the board market, it will mean great stocks are on sale.