Morning Commentary
Once again, the Trump Rally is reflecting a key characteristic of the Trump campaign that’s finishing strong.
Late spurts into the close on Tuesday was very telling, suggesting smart money and allowing traders and novices to close out positions during lulls -- very few took the bait. While there is no doubt that individual names are ahead of themselves, there is serious reluctance to close them out, hinting at an underlying strength that has bought completely into the notion that the nation is on the right track.
Still, this is the first session since the election where all the major indices traded higher as NASDAQ heavyweights finally rebounded, although they’re down considerably. On the NYSE, there were almost as many stocks hitting new 52-week lows as highs, underscoring the fact this is still about picking the right stocks.
Market Breadth |
NYSE |
NASD |
Advancers |
71% |
57% |
Decliners |
27% |
35% |
New Highs |
297 |
237 |
New Lows |
271 |
57 |
The Trump Rally has hit its stride as investors await the next bit of news from the President-Elect on his cabinet and campaign promises. The Street would probably cheer the selection of Wilbur Ross as Commerce Secretary and Harold Hamm as Energy Secretary, and those appointments could be made any day now.
The real question is the rollout of the new administration’s ambitious plans. I think the first 100 days must see the following:
Thus far, Trump has made all the right moves and I think the economy has responded. With that said, I would like to see crude oil continue to rebound; while it’s a global commodity with lots of influences, the same driver of copper and zinc should help oversold bounce gain traction.
There is a demand element. The rally in zinc and copper is very important for the global economy and the stock market rally.
I am working on an oil idea that I think is a double plus if crude goes back to $55.00. Meanwhile, Chevron (CVX) looks like the safest idea in the sector and pays a hefty $4.32 dividend.
Federal Reserve…Rally Killer
At this stage of the Trump Rally, the gist is that a bad move from the Federal Reserve can derail. Last December, Yellen & Co hiked rates and 2016 stumbled out the gate into the record books for its swift sell-off. Now, conventional wisdom holds that the Fed will hike again in December. What will the market do? Is it unfair to hike now when many believe the Fed didn’t pull the trigger before to shield Obama and Clinton before the election?
This week, there is a parade of Fed talking heads, and the mission is to get investors ready:
Telegraphing the move is smart, but making the move based on economic data and trends is most important.
I think the Street would actually welcome a rate hike if these trends continue.
Today’s Session
The stock of the morning is Target (TGT). The beleaguered retail giant posted results better than expected results, but management’s moving the current quarter same store sales guidance higher is the main reason the stock is opening higher. The news dovetails with a lot of additional signs that this could be a Merrier Christmas than recent years.
But that news is being drowned out by surge in the dollar and bond yields. Maybe there will be some pullback in the aftermath of a big miss on Producer Price Index. There is no doubt the dollar is too strong at this point, and that presents serious problems for the market, and even policy, and the upcoming battle between the Trump administration and China for fairer trade (Yuan at eight-year low).
10 Year Yield
Comments |
Top line growth in income, business investment, the potential for huge job growth (just couldn't pass up the pun) all add up to a market that could just ignore the rise in rates and the dollar. Things we have been missing and crying about for years... The animal spirits of capitalism are beginning to catch fire and we are in for a renewal after 20 years plus of economic dunderheadedness. Charles is right I believe AGAIN in his call. Bully Charles! Ray Weldon on 11/16/2016 9:34:28 AM |
Low oil should be a boon for Investors, Savers and ultimately Investments, why do you want to see it go up? I'd like it to stay down long term. Craig on 11/16/2016 10:12:15 AM |
craig --- a rising tide lifts all boats--- and oil floats. John on 11/16/2016 11:46:00 AM |
If goes up 15-20%,it won't crush gas prices too high, but the energy companies that adjusted will experience tremendous growth and profits! Everyone's 401k and stocks will all go up up up!!! That's what Sir Charles is saying I'm sure right? Chris DeGhelder on 11/16/2016 1:13:01 PM |
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3/13/2024 9:51 AM | ALL SO EPIC |
3/12/2024 1:42 PM | Marching Higher |
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