2020 Performance

Nasdaq Composite +22.7%

S&P 500 +4.6%

Dow Jones Industrial Average -2.0%

Russell 2000 -5.1%

Dang, so close, and yet so far away.  The S&P 500 trying to achieve a fresh all-time high has become an exercise in frustration. 

This is par for the course for major indices or well-known stocks on the cusp of making a new high, especially after six months.  Right now, the S&P is at a technical double top, which is typically a bearish formation.  That adds pressure for the breakout to happen soon.

S&P 500

Of course, making this move even more special was the swoon to the fastest bear market in history where an idyllic economy and stock market gave way to a dark world of doom and certainty of worst things to come.  The experts were sure it would take years before major equity indices got back to all-time high territory.

I am an optimist and knew the market was way oversold, but I did not think the stock market would forge ahead to this degree.  While the index stopped within inches of a new high, the components of the S&P and NASDAQ are faring the best they have all year long.

Expanding Winners Circle

The number of winners is at the highest level of the year, while there are still far too many losing stocks this year.  The good news is the average lose is improving and each update will see larger swathes of names move into the plus column.

S&P 500 Winners:

• 223 average gain: +19.87%  
• Top twenty average gain: +64.46%          

S&P 500 Losers

• 283 average loss: -22.33%
• Bottom twenty losers average decline: -57.03%

Nasdaq Winners

• 450 average gain: +52.42%
• Top twenty average gain: +462.25%          

Nasdaq Losers

• 543 average loss: -26.48%
• Bottom twenty losers average decline: -69.33%

 

Market Breadth	NYSE	NASDAQ
Advancing	1,865	1,920
Declining	1,118	1,432
52 Week High	88	111
52 Week Low	1	25
Advancing	1.93B	1.91B
Declining	1.70B	1.72B

Weak Greenback = Strong Multinationals

Dollar weakness has helped shares of multinational companies gain traction providing an underpinning for the move that is capturing the attention of investors. 

Dollar weakness has helped S&P 500 stocks with greater overseas revenue exposure rally 57% from the March 23^rd low.

S&P 500 Focused Foreign Revenue Exposure Index Weights

• Information Technology 44.3%
• Health Care 13.3%
• Communication Services 11.6%
• Consumer Staples 7.8%
• Industrials 6.1%
• Financials 4.4%
• Consumer Discretionary 4.3%
• Materials 4.2%
• Energy 2.9%
• Real Estate 1%
• Utilities 0.1%

There are 241 names in the index.  Shares of companies with the largest exposure to overseas markets like Lam Research (LRCX), Nvidia (NVDA) and Las Vegas Sands (LVS) have been sizzling.

I know there is a school out that that thinks the US Dollar could never be too strong. Recently, dollar hawks have warned the greenback will lose its place as the world’s reserve currency – in a decade.  I think there are limits to dollar weakness, but it was too strong, especially in March when the world could not get enough during the more frightening and opaque periods of the pandemic.

Portfolio Approach

Yesterday, we took profits in Industrials and added to Technology and Materials. This morning, we are taking profits on a Consumer Discretionary Position in our Hotline Model Portfolio.

Today’s Session

Earnings season has winded down, and all the big monthly economic data is out, so look for the market to turn its attention to stimulus talks on Capitol Hill. It feels like both parties have passed around fiddles, as they allow the clock to continue to tick past midnight.

Here's the current dilemma. I think the economy needs a booster shot, and I think the rally will stumble if conventional wisdom shifts that there will not be a deal.  Yes, the market is up during the negotiation impasse, but in part to an assumption that a deal is going to happen and that there will be much better economic data.

That economic data, however, was aided greatly by swift fiscal and monetary actions.  Politicians that point to economic improvements as if they would have happened without help, and will be sustained at current levels, are not being honest with themselves (and more than likely aren't up for reelection anytime soon).

Meanwhile Breaking News

• Initial Jobless Claims 963,000 -228,000
• Continuing Jobless Claims 15,486,000 -604,000
• Pandemic Assistance 488,622 -167,377
• Total receiving benefits 28,257,995 -3,065,616

Experts expected more dire numbers.

There are people out that that hate improving news, including many in financial media, but too damn bad. 

Initial Jobless Claims

 

Continuing claims

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