I think it was a great way to begin the year with the early back and forth, giving shaky folks the chance to bail. On the flip side, the ‘buy on dips’ crowds - not as aggressive as they once were - warmed up with an hour left in trading on Monday, lifting most equity indices near the highest points of the session.

Interestingly, the two biggest winning sectors thus far this year were the only decliners yesterday, as investors are still more interested in booking gains than falling in love with the story.  As the session moved along, buyers moved away from traditional safe havens and found Consumer Discretionary names, which enjoyed monster gains.

There have been lot of second and third-tier retail names like Kirkland’s (KIRK) that enjoyed amazing sessions with big gains on better than average volume.

However, the names in the spotlight, including airlines, dominated the session and headlines. It’s hard for me to chance them here, even as underlying fundamentals improve. I think buy and hold investors should cast their gaze elsewhere.

S&P 500 Index	+0.65%
Communication Services XLC	+0.71%
Consumer Discretionary XLY	+1.34%
Consumer Staples XLP	+0.44%
Energy XLE		-1.14%
Financials XLF		-0.58%
Health Care XLV	+0.69%
Industrials XLI	+0.84%
Materials XLB	+0.11%
Real Estate XLRE	+1.13%
Technology XLK	+1.07%
Utilities XLU	+1.28%

Transportation names are garnering the most attention via Google searches, probably paced by the uptick in airline traffic. It would only make sense for folks to connect those dots, but as usual, it should have been done weeks ago. 

Interestingly, the increased curiosity in Real Estate has captured our attention. It’s a big sector, but the core has a direct correlation with reopening and sending people back to the office. 

Market Breadth

Market breadth was impressive yesterday, although the overall volume was light. 

Market Breadth	NYSE	NASDAQ
Advancing	2,053	2,372
Declining	1,242	1,747
52 Week High	462	395
52 Week Low	15	41
Up Volume	3.05B	4.54B
Down Volume	1.68B	1.26B

Fear Abetting

What if I told you after four weeks of wild gyrations, including several huge down days, the Volatility Index (VIX), often referred to as the fear index, was at its second-lowest level since the start of the pandemic?

It’s true. The VIX is slightly above its lowest read of 19.97, hit on February 12, 2021. It is amazing, considering the end of the world narrative that’s dominated headlines and storylines.

Portfolio Approach

We added to Consumer Discretionary and Industrials in our Hotline Model Portfolio yesterday.

Today’s Session

Retail Sales & The American Consumer

Shout out to Bank of America, which called Retail Sales big time. With that in mind, the big number to focus on with today’s report on February Retail Sales is January revisions.  The headline number was initially 5.3%, but it has been revised to 7.6%.  January Retail Sales, ex-autos, revised to +8.3% from +5.9%, and ex-auto and ex-gas, revised to +8.5% from +6.1%.

This is critical because these numbers were influenced by $600 stimulus checks.

The current round of checks is $1,400.  So, while this report may give some folks pause, I suspect we are setting up for major spikes in the next couple of months.

Bank of America Retail Sales Estimates Posted Yesterday

Year to year trends were very strong, particularly for building materials, sporting goods and the Internet.

I do not think this report will factor into the Fed’s thinking other than give them confidence that when checks stop coming, consumers will become more cautious.

February Monthly Sales Retail & Food Services	M/M	Y/Y
Headline	-3.0	+6.3
Motor Vehicle & Parts	-4.2	+9.2
Furniture	-3.8	+8.9
Electronics	-1.9	-3.1
Building Materials	-3.0	+14.2
Food & Beverage (at home)	+0.0	+11.7
Health & Personal Care	-1.3	+5.4
Gas Stations	+3.6	+1.4
Clothing	-2.8	-11.3
Sporting Goods	-7.5	+15.4
General Merchandise	-5.4	+4.2
Internet	-5.4	+25.9
Food & Beverage (away from home)	-2.5	-17.0

 

Comments

Get it back into the economy! Vacations, dinners out, Large ticket purchases. Don't overlook charitable donations and pay down your debt also. Adam on 3/16/2021 9:48:00 AM

Pay down debt with stimulus. Todd Vaccaro on 3/16/2021 9:49:36 AM

Pay down BILLS Brian Coughlin on 3/16/2021 10:03:38 AM

It depends where your at financially. pay current bills, pay down dept, save or invest for the future,etc. lee garrison on 3/16/2021 10:05:03 AM

Put it in your gas tank. John Cowger on 3/16/2021 10:05:57 AM

Much depends on their needs. If needed to keep up with expenses, that's how the money should be used. If folks are ahead of the game, they should spend in their communities, especially in support of local small businesses that may have been pushed to the brink by closures. Harvey Wheat on 3/16/2021 10:07:14 AM

Pay bills. Joe on 3/16/2021 10:08:32 AM

If you are a senior and have grandkids...invest the money "for them"...literally invest in their future...they are going to need it after our Democrat payback and giveaway by seniors that should have been retired themselves. L Hill on 3/16/2021 10:11:27 AM

Thankfully, my small business survived. So, I put the extra 1400 cash into my SEP-IRA. (The extra contribution dropped my taxes by 500 -- So, it's like a 1900 add). Also, I ordered take-out and left the driver a big tip... Lance on 3/16/2021 10:15:02 AM

A free AR-15 and ammo. Thanks socialists Charlie Francisco on 3/16/2021 10:16:57 AM

Open an account with C.V Payne @ WSTREET.COM. DAVID L. BRUNDAGE on 3/16/2021 10:17:49 AM

Support your local businesses! Andy Anderson on 3/16/2021 10:21:19 AM

Buy American made products! Donate to a deserving charity. Ernie Moyer on 3/16/2021 10:33:41 AM

This big pork bill is hard to imagine the consequences short term, but scary to the debt long term! Lorin K on 3/16/2021 10:44:32 AM

Pay down credit card David on 3/16/2021 11:09:44 AM

Bills if have them otherwise save 50% invest the rest. Rixh on 3/16/2021 11:45:54 AM

pay federal income tax David Maliff on 3/16/2021 11:56:54 AM

I follow you and your ideas daily. Your knowledge and your actions are very impressive. Soon after the company LOTZ went public, I invested a small (but fair) percentage of my account as a medium term length investment as I was intrigued by the Company’s marketing strategy relative to Carvana, Vroom, etc. Since my investment, the Company has reported favorable news culminated yesterday with record sales and revenue with significant growth expected. Although I plan to hold the stock for a fair term, I am becoming increasingly concerned with the stock price compared to its financial news. I’m wondering if I am missing something significant and need to implement an exit strategy even at a loss. Be yourself CP, you’re the best by far. Steve M on 3/16/2021 12:30:25 PM

Pay down debt Bill on 3/16/2021 12:37:19 PM

It depends on your situation. Spend it on a splurge or invest it or pay off bills. Whatever works for your situation Ryan Shadel on 3/16/2021 12:39:45 PM

If I had no debt in the rears I would invest it. A no brainer! Dennis & Judie Reitman on 3/16/2021 12:48:28 PM

If they don't NEED it they should give it to someone who really does. Lezlie A Greene on 3/16/2021 1:36:24 PM

I'm punting it in the stock market Peter Lazidis on 3/16/2021 2:00:35 PM

I don't know, Charles. Some are predicting a "melt up" and some a "melt down" in the market shortly. I wonder which it is? For me, I think I will stay cautious and only lightly in the market until this fragmentated government starts responding to the people. William s Brown on 3/16/2021 2:34:47 PM

Hey Charles, unlike some who will buy weed and tattoos, I am going to pay down my credit card debt. Martin Lombardi on 3/16/2021 5:30:15 PM

That's called being responsible - good news is there are more folks out there doing the same.  CP Charles Payne on 3/16/2021 6:05:29 PM

Spend it on something very useful, or hang on to it in case you need it for an emergency. We're in a volatile time right now. Patricia Flynn on 3/16/2021 10:16:57 PM

Sensible - not really in vogue in 2021 but never really goes out of fashion.  CP Charles Payne on 3/17/2021 6:12:38 AM

put into savings or stocks after paying off high interest debt bill rollins on 3/17/2021 9:23:38 AM

Pay on or off credit card, buy sm cap stock donate some to charity or church options I have Al on 3/18/2021 3:59:08 PM

I'll be paying those lovely school And county taxes. Stimulating the teacher and county unions. Jen L on 3/19/2021 3:20:29 PM

Save it as cash. Our cost of living will increase so it may be needed as this Administration continues to fumble, lie, mismanage, and ruin a good thing. George DesBrisay on 3/24/2021 4:50:24 PM

Open a Hotline account with CP immediately. Scott Thomas Ellis on 3/24/2021 5:38:05 PM

Invest in the stock market and try to double it :-) Richard Arndt on 3/25/2021 5:55:26 PM

Pay down high interest debt and transfer the former payment into your investment account. Rick Payne on 3/31/2021 1:47:13 PM

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