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Morning Commentary

Pros Hate Rally (why you should love it)?

By Charles Payne, CEO & Principal Analyst
2/13/2019 9:21 AM
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If yesterday was the last day of the year, most investors would be satisfied as the market has just about made a complete 180-degree turn from 2018. With this kind of success, Wall Street will soon have to sharpen its pencils and ratchet the full year’s target higher or hope the rally stalls and the market moves sideways for a few months. The problem with that is this market hasn’t moved sideways in a long time. 

It’s been feast or famine for a long time, mostly the former. 

Not only do the experts have to reconsider their 2019 assumptions, but they also are going to have to reconsider leadership. I asked subscribers to overweight their portfolios in Industrials and Materials coming into the year, and while the latter has stalled, the former is on fire. I think the sector will remain hot, and Materials, which rallied more than 2.0% yesterday, could be on the cusp of making a charge.

I like that the underlying fundamentals are improving, and I love that the rally is still unloved, especially by the experts that think every market rally is like the Fyre Festival scam.

S&P 500 Index

+9.5%

Communication Services (XLC)

+10.9%

Consumer Discretionary (XLY)

+10.1%

Consumer Staples (XLP)

+7.0%

Energy (XLE)

11.7%

Financials (XLF)

+9.7%

Health Care (XLV)

+5.3%

Industrials (XLI)

+15.8%

Materials (XLB)

+6.8%

Real Estate (XLRE)

+11.1%

Technology (XLK)

+11.1%

Utilities (XLU)

+5.4%

The Power of 200

The major indices closed above their 200-day moving averages. Perhaps there will be some meandering or backing and filing as the technicians call it. However, this could be looked back as the moment the next leg higher was triggered.

Interestingly, those old momentum darlings are struggling to reach or to stay above their own individual 200-day moving averages. Clearly, Apple (AAPL) and Amazon (AMZN) are still a fair distance from the 200-day moving average, while Facebook (FB) and Google (GOOGL) are trying to hold above only as Microsoft (MSFT) has begun to lift off those pivotal support points.  If all these names get going, and at some point, they will - only because so many professional money managers have already missed the rally - this might be the only way they can catch up.

Meanwhile, I also like that the Dow has not broken the string of lower highs since October, which presents a significant channel breakout that should lift the index back to its all-time high point.

Dow Jones Industrial Average

Today’s Session

News overnight that Chinese President Xi Jinping will meet with top U.S. delegation to further attempt to facilitate a trade deal helped equities hold up this morning carrying over another great session.

This as all parties are sounding and acting more optimistic about a deal.   President Trump suggested he might move the March 1 deadline if talks are productive, which corroborate what many investors are taking for granted.

Where’s Inflation?

The Consumer Price Index for January was out this morning, and once again, the pace of change continues to decline.  Imagine, there is 7.3 million job openings, rising wages and still no inflation. 


Comments
Love each morning reading what Charles has to say and his insight.

John Dennstaedt on 2/13/2019 9:44:37 AM
John, Thank you so much for your kind words. CP

Charles Payne on 2/13/2019 9:46:26 AM
Charles, I think a column on why the these so called Pros want to kill this market is in order. I know I sure have trouble understanding their logic.

David Howley on 2/13/2019 11:27:51 AM
David if this market was more orderly with fewer air pockets and constant fear mongering millions of Americans would take control of their own accounts. Please those meltdowns at individual investor expense create amazing values. That's why I say stay the course but I will say these masters of the universe could push the string too much and have from time to time. CP

Charles Payne on 2/13/2019 11:33:53 AM
 

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