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Morning Commentary

Blue Chips Look to Lead

By Charles Payne, CEO & Principal Analyst
4/30/2019 9:11 AM

While major indices limped into the finish line, all closed higher on the session.  There continued to be rotation into blue chip names and would-be value sectors, like Financials, lead by Citigroup (C). Although there is a more cautious tone to the market, trading in the past few sessions indicate investors are looking for principle appreciation and are shifting out of safe havens like Utilities and Real Estate.

I have been saying there is a dumbbell approach that’s working right now.  Investors are aggressive with momentum names in Communication Services and Technology but are also position-building in underperforming sectors for value.  

S&P 500 Index

+0.11%

 

Communication Services (XLC)

+0.91%

 

Consumer Discretionary (XLY)

 

-0.35%

Consumer Staples (XLP)

+0.12%

 

Energy (XLE)

 

-0.09%

Financials (XLF)

+1.01%

 

Health Care (XLV)

 

-0.18%

Industrials (XLI)

+0.23%

 

Materials (XLB)

 

-0.19%

Real Estate (XLRE)

 

-1.03%

Technology (XLK)

+0.03%

 

Utilities (XLU)

 

-0.59%

 

Blue Chips Shine

The value piece takes center stage this morning with the Dow Jones Industrial Average poised to come out the gate fast, powered by strong earnings results.

General Electric (GE) leads the way after beating on revenue and earnings and reporting industrial free cash flow better than anticipated.  This stock is either the ultimate value investment or the ultimate value trap.

McDonalds (MCD) beat on revenue, missed on earnings but comp sales shined with global comps +5.4 and U.S. comps +4.5%; the street was expecting +3.0%.  Operating margin also climbed to 42.3 from 41.7.

Health Care

The sector has been under siege, but it should see a nice bounce this morning. 

The Health Care sector (XLV) chart is a reverse head and shoulder, which is often a bullish formation.

There is a ton of earnings to sift through today, and that will weigh on markets until the dust clears.  That disappointment with Alphabeth (GOOGL) will be an anchor for NASDAQ.


 

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