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Morning Commentary

EXCITING & NEW…COME ABOARD

By Charles Payne, CEO & Principal Analyst
4/7/2021 7:17 AM

Tuesday’s session began with a whimper, got a bolt of energy from the better-than-expected jobs opening report, then faded into the close like a wet noodle.

The market is in that lull period after the big jobs report and waiting on the next round of earnings. There is an old saying, never short a dull market, but even dull markets need sparks. The market got the opposite when the 2021 Investor Meeting at Applied Materials (AMAT) laid an egg.

Semiconductor stocks were leading the parade higher and then turned on a dime. The semis were pacing Technology (XLK), which started the session higher. It turns out the chips were the first dominoes to fall, along with XLK and all the major indices by the closing bell.

Technology was staging a strong rebound from a rocky month of March. Coincidentaly (or not), XLK hit a perfect double top, which is a bearish chart formation. 

By the same token, one could argue the chart is also on a reverse head-and-shoulders formation.  This is  one of my favorite technical buy signals.

Message of Broad Market

It’s never cool when Utilities and Consumer Staples are the top two performing sectors in any given session. Investors that didn’t seek the comfort of the sidelines decided to camp out in those havens.

The fact is there wasn’t anything dramatic, but the market is more vulnerable now to sharp moves lower than it’s been in a while.

S&P 500 Index

 

-0.10%

Communication Services XLC

+0.25%

 

Consumer Discretionary XLY

+0.43%

 

Consumer Staples XLP

+0.42%

 

Energy XLE

 

-0.26%

Financials XLF

 

-0.20%

Health Care XLV

 

-0.38%

Industrials XLI

 

-0.24%

Materials XLB

+0.22%

 

Real Estate XLRE

+0.25%

 

Technology XLK

 

-0.43%

Utilities XLU

+0.53%

 

Market Breadth

Market internals were nothing to write home about. Shares fared better in the New York Stock Exchange (NYSE), especially new highs to new lows ratio; overall, it was a light volume on the day.

Market Breadth

NYSE

NASDAQ

Advancing

2002

2035

Declining

1312

2115

52 Week High

285

196

52 Week Low

7

21

Up Volume

2.54B

2.14B

Down Volume

1.46B

1.83B

The best news is the breadth of winners for the year continues to expand:

Love Boat

Love, exciting and new

Come aboard. we're expecting you.

Love, life's sweetest reward.

Let it flow, it floats back to you.

The love boat soon will be making another run

The love boat promises something for everyone

Set a course for adventure,

Your mind on a new romance

-Jack Jones

After the close, the Centers for Disease Control and Prevention (CDC) announced cruises could begin cruising again in the middle part of the summer with restrictions. It’s intriguing because there were reports cruise companies would be allowed to operate without mandated vaccines. More than likely, companies will make those decisions based partly on destinations.

I have to say, however, there are many people  ready for adventure - and for everyone else, it’s a step in the right direction. I suspect the last form of entertainment to come back might be Broadway plays, as those theaters do not have great ventilation, and the seats are too small to begin with.

Cruise line stocks popped in after-hours trading.

Also, after the close, President Biden moved up the nationwide vaccine eligibility date for adults to April 19, which at this point, I think, moves the needle for two states, as the nation is galloping ahead of schedule.

Portfolio Approach

We took profits in one of our positions in Technology yesterday in the Hotline Model Portfolio.


Today’s Session

Today, we get a look at the Federal Open Market Committee (FOMC) Minutes, which should be eventful after seven Fed members indicated they see tightening before 2024, up from four in December. There was speculation it would be a majority; hinting Powell had lost control of his team and vision.


 

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