Small business optimism remains strong according to the NFIB June report.  The index posted the sixth highest reading in its history at 107.2.  The 45-year average is 98, and the all-time highest reading was recorded in 1983 at 108. 

Highlights from the report:

• Plans to increase inventories were strong, increasing 2%
• Job openings are tied for the record high posted
• Plans to create new jobs posted solid gains

Companies reported that strong sales have depleted their inventories, which produced an increase in the number of owners planning to restock inventories levels.  Owners viewed their inventories as being “too low,” which confirmed that the drawdown from strong sales was the reason for low inventory levels and not from owners being unsure of the future.  NFIB President and CEO, Juanita Duggan, commented that “Small business owners continue to report astounding optimism as they celebrate strong sales, the creation of jobs, and more profits.”

The one red flag in the report was that 87% of respondents who are currently hiring reported few qualified applicants for their open positions.  The lower quality of labor has helped keep a lid on wage gains.  Plans to increase compensation rose 1 point to 21%, but it remained off its high of 24% recorded back in January.  

The Dow Jones Industrials Average is working on a four day rally, being lead by one of our favorite high fliers, Boeing (BA).  BA reported 2Q2018 total deliveries of 194 vs 183 in the same quarter a year ago.  The Dow is nearing a major test of the 25,322 area and may be running low on steam.  Banks opened strong, but quickly faded, and the Russell 2000 is trading to the downside.  Fundamental underpinnings continue to augur for a higher market, but we are still worried about the banks, which rallied 2.3% yesterday.

Markets are thin and feel vulnerable.  Breadth is currently slightly to the downside.

• NYSE advances are 1,379 vs declines of 1,555; New highs are 118 to new lows of 12
• Nasdaq advances are 1,174 to declines of 1,731; new highs are 103 to new lows of 25