Man, that was a long session. Thursday felt like Trench warfare. The volleys went back and forth, as lower spikes were met with higher spikes, which quickly fizzled into sharp declines. The trading range was tight, which also lent to a sense of breakout or breakdown all session long.

Headlines played a role:

Mnuchin Says He and Pelosi Have Agreed to Restart Stimulus Talks

The market was drifting higher when this headline made the wires before noon.

France Daily Coronavirus Cases Jump to Record 16,096

This headline tripped up the rally, and for a moment, it looked as if the only thing that would stop the selling would be the closing bell.

In the end, major indices posted gains for the session. There were more decliners than advancers, although the up volume was decidedly stronger than the down volume. By the close, the stock market was a perfect reflection of a society, where the government, the presidential race, and our relationship with COVID-19, can all be described as stalemates.

Stock Picker’s Market

The great 2020 Stock Market Bounce, including the magnificent run for the NASDAQ Composite, has always been a limited affair. 

Only 189 stocks in the S&P 500 are up for the year, which is the lowest amount going back to July 28^th, and the 392 NASDAQ winners (against 619 losers) are the lowest since July 24^th - 52-week milestones have also turned very bearish:

NYSE

• 7 new highs
• 71 new lows

NASDAQ

• 12 new highs
• 129 new lows

This year has truly proven that simply buying funds and being weighed down by losers is often a big mistake.

Portfolio Insurance

Don’t look now. Campbell Soup (CPB), Kellogg’s (K), Hersey Co. (HSY), and the rest of your kitchen cabinet are getting hot. Consumer Staples (XLP) rocked at the onset of COVID-19, as consumers loaded up to hunker down. The sectors stalled as investors moved away from safety. I like the space more than other ‘would-be’ safe havens, should the coronavirus case make a big return.

Hotline Model Portfolio Approach

Yesterday, we put one cash position to work, and we are down to 10% cash in the model portfolio.

Today's Session

Durable goods data slowed, missing consensus, rising 0.4% vs. 1.5% expected. However, business investments rose 1.8%, better than 1% expected. 

Comments

love your book and daily updates Joseph L Metzger on 9/25/2020 12:36:23 PM

Thank you very much Joseph.  CP Charles Payne on 9/25/2020 12:41:05 PM

Thanks again, Charles! I’m sitting here with 2/3 cash, having taken profits from my equities on August 27th. So, I’ve been in decent shape with this recent downturn. Now, I’m thinking a re-entry point will come when we get through this (likely chaotic) election. Any thoughts on investing a pile of cash in the present environment? William Sheaffer on 9/25/2020 1:25:09 PM

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