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Morning Commentary

Historic Session

By Charles Payne, CEO & Principal Analyst
8/31/2020 9:33 AM

This is a historic day for the stock market, and it will begin with the kind of trepidation that normally greets these kinds of session.  So much buying has gone into the market ahead of the day, it could feel anticlimactic.  But make no mistake, there are several narratives that will inform investing for some time to come.

Splits

The experts yawned, but investors pounced when Tesla (TSLA) and Apple (AAPL) announced their respective stock splits.  Shares of both names moved into higher gears with the former climbing more than 60% since the announcement.

I suspect more stocks will split as an acknowledgement of more individual investors in the market.  CEOs must decide if they want more investors in their names or to simply trade as the whim and pressure from large institutions.

Index Changes

Its influence has always been ignored, but no more as UnitedHealth (UNH) is the most influential name in the index.  But it should have more Communication Services and Technology to be relevant in today’s world.

UnitedHealth Group

Home Depot Inc.

Salesforce.com

Amgen Inc.

Microsoft Inc.

Visa Inc.

McDonald’s Corp.

Goldman Sachs

Boeing Co.

Honeywell International

 

3M Co.

Johnson & Johnson

Caterpillar Inc.

Walmart Inc.

Procter & Gamble Co.

Walt Disney Co.

IBM

Apple Inc.

Travelers Cos.

Nike Inc.

 

JPMorgan Chase & Co.

American Express

Merck & Co.

Chevron Corp.

Verizon Communications

Intel Corp.

Coca-Cola Co.

Dow Inc.

Cisco Systems

Walgreens Boots Alliance

 

True Breakouts

When stock indices or individual stocks take months or longer to recover, there is normally further upside as new highs beget new highs driven by fresh money.   Then at some point, the instrument pulls back and often will test the old high as key support.  Once that holds, the next leg higher can be monumental, and for sure it is not one you want to miss.

This is not an exact science, which means for those that have missed this gigantic move, be careful of being too cute. 

The number of folks that have missed this rally trying to pinpoint the bottom is heartbreaking, but there have also been a ton of folks that missed each step higher looking for the perfect entry. 

If you want to be in this market, and own the best names at reasonable prices, do not be too cute.

Portfolio Approach

On Friday, we added a stock in Consumer Discretionary in our Hotline Model Portfolio.

Today’s Session

The markets are relatively flat. Apple is indicating up and Tesla down after their splits.  Several Fed officials are set to speak today, kicking off with Vice Chair Richard Clarida at 9 AM ET. Atlanta Fed president Raphael Bostic is also due to speak at 10:30 AM ET. The Dallas Fed’s monthly business survey will be out at 10:30 AM ET. 


Comments
"If you want to be in this market, and own the best names at reasonable prices, do not be too cute"

..........simple..... right-on advice... that we never hear.

https://twitter.com/tedwheeler/status/1299433988600156160/photo/1

........ no mention of climate change?.... he figured it out?... if we kill each other why does climate change matter?

prettydirect on 8/31/2020 9:53:29 AM
The Portland Mayor is a very sick pup!!

Mike Hilburn on 8/31/2020 10:15:37 AM
 

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