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Morning Commentary

AUTUMNíS OPTIMISM

By Charles Payne, CEO & Principal Analyst
9/23/2019 9:13 AM

Friday was a sloppy close to a pensive week. The market has regained its footing; however, the problem is how to get the kind of momentum needed to get through key resistance that also happens to be all-time highs. Over the past month, investors moved into Financials and Energy looking for value rather than growth-driven Technology stocks.  

Investors rotating among various sectors underscore the fact stocks are generally more attractive than other investment options, but defensive investing isn’t usually the catalyst to get major indices higher.

Right now, the workhorses that powered the market higher are facing their own battles. I don’t think Facebook (FB), Google (GOOGL), Amazon (AMZN), or Apple (AAPL) will be broken up, but they could come under different legal restrictions and oversight, which means more investigations and lots of fines. 

A whole lot of fines. 

Of course, if these companies can show great performance during this period and not be sidetracked like International Business Machines (IBM) was when it fought government overtures toward a breakup, then these names will probably move back into the driver’s seat in time for a year-end rally.

S&P 500 Index

+3.16%

Communication Services (XLC)

+3.09%

Consumer Discretionary (XLY)

+2.56%

Consumer Staples (XLP)

+0.28%

Energy (XLE)

+6.04%

Financials (XLF)

+6.04%

Health Care (XLV)

+1.50%

Industrials (XLI)

+4.36%

Materials (XLB)

+3.44%

Real Estate (XLRE)

+1.03%

Technology (XLK)

+1.50%

Utilities (XLU)

+3.57%

Constructive

When we hear talks were “constructive,” it allows everyone to take a sigh of relief, especially when it’s associated with trade talks between the United States and China and the comments from their state news agency Xinhua.

Portfolio Approach

Last week, we didn’t do a lot of fresh names, but we have reiterated several open positions. I think current entry points are very attractive, so make sure to contact your rep or research@wstreet.com.

Communication Services

Consumer Discretionary

Consumer Staples

1

2

1

Energy

Financials

Healthcare

1

1

2

Industrial

Materials

Real Estate

3

2

1

Technology

Utilities

Cash

3

0

3

Autumnal Equinox

All the leaves are brown (all the leaves are brown)

And the sky is grey (and the sky is grey)

I've been for a walk (I've been for a walk)

On a winter's day (on a winter's day)

-The Mamas & The PapasI’m a fan of fall, but I get the blues because I know it means winter is right around the corner and will probably stick around for six months. For now, enjoy the season and its crisper air, leaves changing, and a natural uptick in optimism as we head into the holiday season.

It’s often a great time for the market once we get through the wild gyrations of October, which Goldman Sachs (GS) promises will be crazier than ever – we’ll see.

Another Gimmick?

I’ve never been a fan of “pumpkin spice” even though I enjoy an occasional slice of pumpkin pie. I was surprised to learn it’s a blend of spices and contains no pumpkin.

Today’s Session

Technical View

The Dow Jones Industrial Average is at a double top formation and must find a way to breakout soon or could be vulnerable to a big pullback.  The last time the index failed to breakout through a double top was October 3, 2018, (see arrow) although that failure comes with an asterisk: it’s when Jay Powell gave an off the cuff remark that suggested a pipeline of Fed rate hikes well into 2019.

=

So, it turns out China didn’t bolt from a purposed visit to American farms because of President Trump’s firm line on wanting a complete deal, but at the request of the United States.   When hatred drives the news or reaction to news, we all lose.

Certainly, algorithms are programed to sell first and ask questions later, but maybe humans should count a few beats and get facts before acting.


 

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