Well, yesterday, could have been a lot worse. But it was a tough session even with late buying that added specks of green to the screen.

Meanwhile, market internals continue to deteriorate, resulting in more new lows than highs for the New York Stock Exchange (NYSE) and the NASDAQ Composite. 

Market Breadth	NYSE	NASDAQ
Advancing	893	1,261
Declining	2,446	3,209
52 Week High	86	62
52 Week Low	99	340
Up Volume	934.40M	1.55B
Down Volume	2.54B	2.44B

New Delta Safe Haven Portfolio

Health Care was the big winner as new Centers for Disease Control and Prevention (CDC) COVID-19 guidelines are now calling for a booster shot for everyone just eight months after the initial jab(s). In addition, supermarket Kroger Co (KR) and Spam-maker Hormel (HRL) enjoyed strong sessions. Domino’s Pizza (DPZ) and Etsy (ETSY) were two of the biggest lockdown winners that turned higher early in the session.

Moderna, Inc. (MRNA)	XLV	373.86	+28.00	+7.49%
The Kroger Co. (KR)	XLP	43.45	+1.99	+4.58%
Vertex Pharmaceuticals, Inc. (VRTX)	XLV	190.97	+7.47	+3.91%
Pfizer Inc. (PFE)	XLV	48.91	+1.51	+3.09%
Organon & Co. (OGN)	XLV	34.33	+1.05	+3.06%
Regeneron Pharmaceuticals, Inc. (REGN)	XLV	628.60	+18.84	+3.00%
Domino's Pizza, Inc. (DPZ)	XLY	513.19	+14.56	+2.84%
Edwards Lifesciences Corp. (EW)	XLV	114.36	+2.90	+2.54%
Incyte Corp. (INCY)	XLV	73.99	+1.67	+2.26%
Centene Corp. (CNC)	XLV	64.06	+1.35	+2.11%
SBA Communications Corp. (SBAC)	XLRE	352.45	+7.25	+2.06%
Etsy, Inc. (ETSY)	XLY	190.42	+3.88	+2.04%
Take-Two Interactive Software, Inc. (TTWO)	XLC	160.35	+3.12	+1.95%
Gilead Sciences, Inc. (GILD)	XLV	71.71	+1.32	+1.84%
Biogen, Inc. (BIIB)	XLV	343.50	+6.29	+1.83%
Hormel Foods Corp. (HRL)	XLP	46.31	+0.83	+1.79%

Note: big money hiding out in Real Estate and Health Care will be very uncomfortable with the high price-to-earnings (P/E) ratio, so look for them to also move into Financials and basic Materials. 

Sector	Market Cap	P/E	Forward P/E
Financial	10168.35B	12.77	15.01
Basic Materials	2337.15B	15.37	11.76
Consumer Cyclical	7769.11B	20.07	23.41
Energy	2670.36B	20.10	9.15
Utilities	1366.90B	23.88	20.26
Consumer Defensive	3753.74B	25.62	20.02
Industrials	5068.48B	29.73	20.32
Communication Services	8747.11B	30.36	23.97
Technology	14345.99B	31.71	27.10
Healthcare	8232.99B	34.43	19.77
Real Estate	1775.44B	38.15	38.83

More Worrisome Than Inflation?

A survey from Deutsche Bank sees the rise of the Delta variant climbing to the top concern while inflation dropped dramatically from the top spot. Stronger economic growth failing to materialize also saw a big jump surpassing worries of a central bank policy mistake.

Watching

Copper is right at the trendline support. “Doctor Copper” is often a proxy for China, which is flashing serious warning signs of weaker growth, perhaps. 

Copper

I do not think its panic time, but you will hear a lot about how many days have passed without a 5% pullback and talk that such a move is “overdue.”  But that’s not necessarily the case. The most important thing right now is that the Delta variant shows signs of peaking at some point, and the Fed clarifies it’s not going to stop the party.

Portfolio Approach

There were no weighting changes in our Hotline Model Portfolio.

Today’s Session

Mixed reactions to earnings, with most earnings beats being met with selling, with the exception being Lowes (LOW).

Mortgage applications were a disappointment

Mortgage Applications	Week to week	Year over year
Purchase	-1.1%	-19.0%
Refinance	-5.0%	-8.0%

 

Housing data is mixed, but really disappointing, reflecting supply constraints, and also the spike in home prices.  Still, homes on the market are being snapped up with lightning speed.

Housing Starts

-7.0% consensus -3.2%

Housing Permits

Annual rate 1.635m consensus 1.610m

NAHB

The decline to 75 from 80 takes the number to lowest level since July 2020.   Perspective buyers led the move, decreasing to 60 from 65 – anything above 50 is growth.

We are itching to make some moves, as there are a lot of great looking opportunities – it’s macro issues that has use holding onto cash.

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