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Afternoon Note

Wild Swings

By Charles Payne, CEO & Principal Analyst
12/28/2018 1:43 PM
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The market continues to exhibit resolve seen in the last two sessions where the Dow was able to climb out of the red and rally higher into the close.

Yesterday was about value names like Proctor & Gamble attracting buyers.  So far today, it’s a mix with winners like Chipotle, up 46% for the year, leading consumer discretionary and Berkshire Hathaway pacing financials higher.

Wells Fargo (WFC) is the second-best performer in financials after the company cut a deal with Attorney Generals in all 50 states covering an assortment of company business practices.  This is the latest settlement for the bank, which paid out $65 million separately to NY state and $1.0 billion to the federal government over its handling of mortgages and auto loans.

Curiously, Goldman Sachs shares are lower today and down 36% for the year.   The other issue is whether the market can rally without the leadership of momentum names.

Key Word: Resolve

The bottom line is while these sessions are skewed because so many traders are away, it’s hard to ignore the resolve of the market.  Buyers emerging on dips had gone away.  

S&P 500 Index

+0.35%

Communication Services (XLC)

+0.10%

Consumer Discretionary (XLY)

+0.40%

Consumer Staples (XLP)

+0.34%

Energy (XLE)

-0.26%

Financials (XLF)

+0.68%

Health Care (XLV)

+0.52%

Industrials (XLI)

+0.50%

Materials (XLB)

-0.02%

Real Estate (XLRE)

0.00%

Technology (XLK)

+0.22%

Utilities (XLU)

+0.38%

 

Technical View

The Dow Jones Industrial Average has rallied back to 23,200, which was the December 21 high point and looks like a serious short-term resistance point.  Closing through this level could actually trigger buying pressure and lure money off the sidelines even faster.

https://www.tradingview.com/x/cb9JOjpd/

It is still touch and go, but the test and the resolve, we must say is a necessary part of finding a bottom and has gone great since Christmas.

We never know when we’ve hit intermediate term bottoms until long after they’ve been established.  That’s something to remember. 

Also remember, the idea is to buy low, especially when stocks are low for non-fundamental reasons. 

Have a great weekend. 


 

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