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Afternoon Note

Stealth Rally Finds Buyers

By Charles Payne, CEO & Principal Analyst
8/6/2018 1:39 PM

The subtle reversal in the Dow Jones Industrial Average is the biggest news of the session.  While the experts continue to fill the airwaves with doom and gloom and surrender over the tariff battle, the stock market keeps edging higher because the underlying economy continues to surge.

Closing above 25,528 would be another major buy signal.

Dow Jones Industrial Average

I also like that the decidedly un-sexy stuff like chemical and packaging names are higher while consumer spending is helping both discretionary and staples.   This stealth rally is picking up more buyers, which means it will attract even more buyers until its not so stealthy anymore. 

Monday Merger News

Merger and acquisition activity are helping propelling stocks higher.  This morning packaging products manufacturer Bemis (BMS) agreed to be acquired by Australian packaging company Amcor in an all-stock deal valuing BMS at approximately $5.25 billion.  

In other merger news, telecom stocks are strong after the NY Post reported that Sprint (S) and T Mobile (TMUS) merger approval chances are improving.  S is higher by 8.35% and TMUS is higher by 4.40%. 

Dish Network (DISH) is trading higher by 5.40% following Friday’s strong performance, +14.5%, after reporting earnings that beat on both the top and bottom lines.  The Telecom ETF, IYZ, has been in a downtrend going back to the beginning of 2017.  A close above 27.93 would put the ETF above its 200-day exponential moving average. 

This week, the equity markets will be shooting for their sixth straight week of gains.  Since the week ending June 29 through Friday’s close, the S&P 500 is up close to 4.5%.  According to Almanac Trader, Jeff Hirsch, over the past 21 years (1997-2017), the average return for the S&P 500 in August is - 0.65%.  Let’s see if the market can turn in a positive month and make a run at new highs. 

Currently, the S&P 500 is higher by 0.35%; the Dow is higher by 0.25%; the Nasdaq is up 0.43% and the Russell 2000 is higher by 0.43%. 

Breadth: Positive

On the Nasdaq, advancing volume is more than 2:1 over declining.    


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