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Message of Market

6/16/2017
By Charles Payne, CEO and Principal Analyst

It might look dull and uneventful on the surface, but this was an exciting session that speaks to the economy and the Trump agenda.

I love the action in industrial names, leading today by companies in the trucking industry. 

  • CH Robinson (CHRW)
  • Expeditors (EXPD)

Also looking great, companies that make moving-earth equipment and building things such as roads and factories. 

  • Caterpillar (CAT)
  • Illinois Tool Works (ITW)

All the major indices closed in the red, but here’s the real story. The Dow, S&P and NASDAQ all finished higher than the opening trade for the session and that’s a major sign a bottom is developing.

 

Major Equity Indices

Opening Quote

Closing Quote

Dow Jones Industrial Average

21,291

21,359

S&P 500

2,397

2,432

NASDAQ

6,127

6,165

 

Market Breakout

Pulling the trigger after dips, whether individual stocks and sectors or the broader market, starts with understanding the fundamentals and why selling has been overdone.   Then you have to look to buy up from key support points. In other words, not trying to get the exact bottom, but instead buying with a greater sense that near term risk has diminished. 

This is where many individual investors get it all wrong. 

Usually individual investors feel like that they “missed it,” and decide not to buy that stock in the company they love simple because they didn’t get the lowest entry point.  Applying this to broad markets today, the buy signal isn’t an early rebound but a combination of things including yesterday rally off opening prints.

Dow Jones Industrial Average is up 8.1% for 2017, and the 30 components are already flashing buy signals, although my focus is on industrial and material names.

The S&P 500 breaks out on closing basis above 2,445.

The NASDAQ Composite reverse from recent weakness with close above 6,325 and the usual suspects probably led the way.

Note: There will continue to be rotation into beaten down names and sectors, something to keep in mind depending on your risk tolerance and comfort holding period.

Charles Payne
Wall Street Strategies


 

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