Tuesday saw a sluggish session all day, but there were periods where buyers showed up, although there was never enough upside momentum to lure big money off the sidelines.

S&P 500 Index	-0.17%
Communication Services (XLC)	-1.24%
Consumer Discretionary (XLY)	+0.19%
Consumer Staples (XLP)	-0.13%
Energy (XLE)	-0.21%
Financials (XLF)	+0.49%
Health Care (XLV)	-0.80%
Industrials (XLI)	-0.08%
Materials (XLB)	-0.69%
Real Estate (XLRE)	-0.89%
Technology (XLK)	-0.38%
Utilities (XLU)	+0.45%

Areas of Strength

Still, there were pockets of strength, including Financials, led by regional bank names. We are still looking for consistency from the big Wall Street banks, which must lead the way to not only carry the sector but also to provide broad leadership - especially if some of the big tech names such as Facebook (FB) and Netflix (NFLX) continue to struggle.

Yesterday, the best action came in the S&P Consumer Discretionary sector. It wasn’t all about Amazon (AMZN), which grabbed headlines earlier yesterday when it eclipsed a one-trillion-dollar valuation. The action is in brick-and-mortar retail, as it underscores the growing importance of brokerage conferences when it comes to news and moving stocks.

The SPDR S&P Retail Index (XRT) enjoyed a strong session, led by several names, all presenting at the 25th Goldman Sachs Global Annual Retailing Conference over the next few days. All the big winners yesterday were big losers at some point in the past year and written off by Wall Street. Now, a lot of firms may actually have to come back after massive rallies to put buy ratings on the following names:

• (ULTA) Ulta Beauty
• (KSS) Kohl’s
• (AAP) Advanced Auto Parts
• (JWN) Nordstrom
• (TSCO) Tractor Supply Company
• (ORLY) O’Reilly Automotive

The XRT retail index is up 16% for the year, and 23% from its March 23^rd low.

Up in Smoke

The biggest winner was the medical marijuana company Tilray (TLRY), which continues its explosive move, including almost $20 per share since the company’s CEO appeared on the show last week when I said the firing of Jeff Sessions will send shares of all these stocks even higher (no pun intended).

Market Breadth

Although there were more 52-week highs than lows for the NYSE and NASDAQ, the market breadth was overwhelmingly negative for the NYSE than the NASDAQ.

Advance/Declines

• NYSE: advancers 1,052 - decliners 1,914
• NASDAQ: advancers 1,242 - decliners 1,762

Volume

• NYSE: advancing volume 970,8 million - declining volume 2.0 billion
• NASDAQ: advancing volume 1.1 billion - declining volume 1.0

Economic Data/Economy

In the end, it’s about the economy. Right now, success begets success and long-dormant feelings of optimism that need the magic elixir of mass optimism to come to fruition.

Corporate Profits

Corporate profits in the United States increased by USD 47.3 billion, or 2.4%, to an all-time high of $2.01 trillion. The problem for these companies is what they do with all that cash. Dividends only increased by 0.7%, while undisturbed profits increased more than 5.0%

ISM Manufacturing

The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index (PMI) in the U.S. jumped to 61.3 in August of 2018 - the Street was looking for 57.6. New accounts and employment were strong, and prices went down, even as participants continue to voice concern about the tariff battle.

This is the calm before the storm. As the big market players return from their mansions in the Hamptons, they will have to make major decisions. 

Right now, I think a new North American Free Trade Agreement (NAFTA) will happen, but not if it’s going to kill our economic momentum. I think some Chinese tariffs go into effect, but not all $200 billion. The biggest focus by the end of the week will be jobs. With a friendlier Fed, we can root for bigger wage gains on Main Street this Friday.

Today’s Session

It looks like a replay of yesterday morning with the market opening with some trepidation awaiting all of today’s scheduled and even unscheduled events that have become the recurring story in Washington, DC.

I love these moments, which for us, always go beyond fundamentals and assess stocks based on investor emotions and behavior as well. 

Meanwhile, the trade data out this morning is more of the same as the deficit hit $50.1 billion in July.  More on the report on the afternoon note. 

Comments

I think the market isn't going higher because people are having a hard time trusting their money to what really are petulant children. Tarriff this and that. That's the only thing that matters, but it isn't. It's all the "market" cares about. Wall St is the swamp. Tim on 9/5/2018 11:39:32 AM

Tim I'm glad you brought this yup...please don't confuse the market with market commentators. Three of the four biggest hits to the stock market in 2018 happened in response to fears of Fed policies with the largest tariff-related down down on March 22 resulting in the market opening at the low of the year on March 23. Since then the market has been in a very strong stealth rally up five straight months. Dow +10.3% S&P +11.4% NASDAQ +14.3% Russell +13.9% Please don't let commentators even those that are genuine in their critic of any government policy and actions to dictate your investments and financial future. CP Charles Payne on 9/5/2018 11:56:07 AM

Tim I'm glad you brought this yup...please don't confuse the market with market commentators. Three of the four biggest hits to the stock market in 2018 happened in response to fears of Fed policies with the largest tariff-related down down on March 22 resulting in the market opening at the low of the year on March 23. Since then the market has been in a very strong stealth rally up five straight months. Dow +10.3% S&P +11.4% NASDAQ +14.3% Russell +13.9% Please don't let commentators even those that are genuine in their critic of any government policy and actions to dictate your investments and financial future. CP Charles Payne on 9/5/2018 11:56:15 AM

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