Wednesday was a monster session, and the fact that three sectors were down actually underscored how quickly ‘investor fear’ has faded.

S&P 500 Index	+0.82%
Communication Services XLC	+0.83%
Consumer Discretionary XLY	+0.92%
Consumer Staples XLP		-0.25%
Energy XLE	+3.49%
Financials XLF	+1.72%
Health Care XLV	+0.16%
Industrials XLI	+0.96%
Materials XLB	+1.10%
Real Estate XLRE		-0.30%
Technology XLK	+0.96%
Utilities XLU		-1.10%

The Water’s Fine

Remember when I kept worrying out loud about the weak underbelly of the rally – flaccid market breadth?  Forget about it. 

• Advancers bested decliners 3.6 to 1 on the NYSE, and 3.1 on the Nasdaq
• New 52-week highs climbed above 52-week lows
• 84.7% of volume on the NYSE was up volume, making it one of the back-to-back sessions above 80% (first time since last November)

Market Breadth	NYSE	NASDAQ
Advancing	2,417	3,349
Declining	874	1,044
52 Week High	113	91
52 Week Low	18	36
Up Volume	3.22B	3.32B
Down Volume	634.75M	777.13M

Still, Work to Do

Stocks are rapidly rebounding, but the number of names below their 50-day moving average is still humongous.

Key Charts

Even as major equity indices shake off that major air pocket and rest in the shadows of all-time high levels, the CNN Fear & Greed model continues to lurch lower. Typically, these dips are harbingers of market pullbacks. So, something has to give soon.

Dow Jones Transportation Index (DJT) has traded in unison with the S&P 500 for the past five years until recently when they diverged. The Dow Theory says transportation must corroborate rallies.

Russell 2000 (RUT) bounced perfectly off a must-hold support point and is now in the mid-way point of its trading range. There must be a successful breakout soon.

Bitcoin is still down a lot from its all-time high but popped more than 7% when Elon Musk declared that at some point, Tesla (TSLA) would resume accepting cryptocurrency.

Crude Oil

Crude inventories climbed in the past week, but there has been a massive decline since last June.  Consequently, crude oil bounced, trading near $71, after being oversold on a short-term basis. I’m not as confident on crude oil as I was a few months ago, but it’s on our radar, and we think everyone should have some exposure.

Crude Price

Portfolio Approach

Yesterday we added to Consumer Discretionary in our Hotline Model Portfolio.

Today’s Session

Initial jobless claims climbed to 419,000 in the latest week reaching its highest point since mid-May and the prior week was revised higher to 368,000.

Continuing Jobless Claims edged lower to 3.236 million, but consensus was for 3.10 million.

The ten year yield declined on the data, trading down to as low as 1.27%.

The Nasdaq is currently the lone indices in the green.

Comments

On crude oil, the WTI/Brent arb has to widen to allow U.S to attract sufficient imports to make up for declining domestic production and lack of Keystone barrels. Michael Thacker on 7/22/2021 12:01:23 PM

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