Wednesday was another up session for the market. The Federal Open Market Committee (FOMC) release was greeted with a yawn after it was preempted by a parade of talking Fed heads that will be eclipsed today. Even stocks limped into the close. There was compelling action that underscored the oversold nature of the market and shift in bias.

For the first time since the government shutdown began, I think Washington negatively impacted the stock market. It wasn’t the shutdown, but it was the level of dysfunction that goes beyond gridlock, which Wall Street normally cheers. The place was established to encourage compromise.
 

Reversals

Three names overcame the pre-opening pressure on lower company guidance, only to finish the session higher. I love these kinds of actions as a broader indicator, but also to make some money.

• Apple (AAPL) seems to have bad news or negative speculation each morning, but the stock rallied 1.7%.
• Skyworks (SWKS) is an Apple supplier and issued a warning that must have already been baked into the share price as the stock finished the session +3.8%. The stock is still deeply oversold.
• Lennar (LEN) had good numbers, but their lukewarm guidance triggered early selling. Management turned things around during the conference call, convincing enough observers that an increase in traffic was a sign the worst is over. It didn’t hurt. We learned mortgage applications surged 23% last week.  Last night, KB Home (KBH) beat the Street, and initial reactions saw shares rally more than 5.0%.

Also, after the close, Bed Bath & Beyond (BBBY) rocketed 16% higher, and Union Pacific (UNP) continues its amazing moves.

Chip Ahoy

Computer chip stocks rocked yesterday as a proxy in their burgeoning hope for resolution on the trade battle. On that note, I will say its clear chips ran out of gas before the battle was joined. However, there is no doubt recent selling has been exaggerated, leaving most oversold.

Portfolio Approach

We are sitting on limited cash as major indices approach a huge resistance test. We might close positions earlier than usual, but we are going to watch and wait. If you are not currently a subscriber to our Hotline service, now is a great time to get started.  Click here for more information.