Yesterday was a great start to the week, although there was a sense of the rally looking for the next booster shot by the closing bell.

The good news is market breadth swung back to something akin to the good old days (March 2021). 

Market Breadth	NYSE	NASDAQ
Advancing	2,281	3,309
Declining	1,062	1,161
52 Week High	117	143
52 Week Low	75	97
Up Volume	2.82B	3.36B
Down Volume	758.01M	504.93M

Reopening Names Shine

The Pfizer full FDA vaccine approval is sending buyers flocking to reopen names. These names are beaten down from highs, making them even more attractive for hot money traders. 

The most compelling name was Amazon (AMZN), which has been an also-ran for more than a year.  

S&P Top Performers	% S&P	Move	Change
Las Vegas Sands (LVS)	0.32%	+2.18	+5.81%
Wynn Resorts Ltd (WYNN)	0.24%	+4.63	+5.24%
Norwegian Cruise Line Holdings Ltd (NLCH)	0.23%	+1.01	+4.27%
Tapestry, Inc (TPR)	0.30%	+1.73	+4.26%
Caesars Entertainment, Inc. (CZR)	0.47%	+3.64	+4.25%
Carnival Corp (CCL)	0.46%	+0.87	+3.96%
Tesla, Inc (TSLA)	13.62%	+26.04	+3.83%
Penn National Gaming Inc (PENN)	0.26%	+2.58	+3.81%
Expedia Group, Inc. (EXPE)	0.51%	+5.05	+3.67%
Booking Holdings Inc (BKNG)	2.24%	+62.58	+3.02%
MGM Resorts International (MGM)	0.41%	+1.12	+2.92%
Royal Caribbean Group (RCL)	0.45%	+2.04	+2.61%
PVH Corp (PVH)	0.20%	+2.57	+2.46%
Marriott Intl A (MAR)	0.92%	+3.00	+2.29%
Darden Restaurants Inc (DRI)	0.48%	+2.96	+2.12%
Amazon.com Inc (AMZN)	21.46%	+65.92	+2.06%
Bath & Body Works Inc (BBWI)	0.46%	+1.33	+2.01%
Under Armour Inc-C (UA)	0.10%	+0.34	+1.72%
Ralph Lauren Corp A (RL)	0.15%	+1.99	+1.71%
Hanesbrands Inc (HBI)	0.17%	+0.28	+1.48%

Existing Home Sales – Middle-Class Getting Shut Out

Existing home sales beat the Street, but the spike in median prices and the wide divergence in-demand price points caught my eye. Median home prices climbed to $359,900 +17.8% from one year earlier, marking the 113th straight month in year-over-year gains.

Existing Home Prices

• Homes $100 to $250k, up 28%
• Homes priced at one million plus, up 59%

Some of this is about supply, but many ask if the middle-class is getting priced out of the housing boom.

• First-time buyers: 30% from 31% in June and 34%, one year ago
• All cash 23% from 16%, one year earlier

Regional Sales Price	$100K to $250K	$1.0 million +
NE	-22.6%	+57.2%
MW	-18.0%	+46.5%
SO	-31.2%	+54.7%
WE	-61.3%	+62.7%
US	-28.0%	+59.1%

Technical View

Once again, the S&P 500 bounced off the bottom of the trading channel and its 50-day moving average.  But it needs to find a way to break out above the resistance point of the channel.

Other large equity indices also need to clear key resistance points to spark a clean leg higher. Again, I’m not sure it can happen before Labor Day, but I remain impressed with resolve at the key points where the market must make a stand.

Portfolio Approach

 

We took profits in Consumer Discretionary this morning in our Hotline Model Portfolio.

 

Today’s Session

The stock of the day is Best Buy (BBY), which crushed Wall Street consensus and offered more robust guidance than expected.  The company continues to confound the experts and is a great example that so-called smart money doesn’t know everything. 

Remember when everyone said the company was only a showroom doomed to go out of business?

Check out this article from Reuters on Jan 20, 2014

Insight: Shorts set to pounce as stocks seen pricey, Fed pulls back

Jim Chanos, president and founder of Kynikos Associates and one of the most prominent short sellers, said the market is primed for people like him, adding:

"Now I think is not a bad time to be raising capital for what we do...when critics viewed me as like the village idiot and not an evil genius."

The article went on the mention Best Buy hinting it was a good short target.

Electronics retailer Best Buy Co shares suffered their worst day in 11 years on Thursday, falling almost 30 percent after disappointing sales undermined the bullish thesis that helped the stock triple in 2013. It fell further on Friday.

Since then, the stock has tripled the performance of the overall stock market.

Investor Revolution

This past January, the world learned of the power and growing sophistication of the new breed of individual investors using resources that were only available to the industry to educate themselves, communicate ideas and even flip the script on what had been low-hanging fruit for hedge funds and others – beaten abandoned stocks to smithereens.

I was riding shotgun and didn’t even know of the power and smarts evolving on Reddit and other platforms.  I just happened to have been involved in short squeezes on and off for 30-years.  And it was clear the shorts were being hit by a new force.  I had a number of high-risk positions in my own portfolio that I could not even feature for subscribers. 

But I was able to share other ideas and thoughts with them of many stocks that went parabolic.

Here’s the deal, short squeezes go back as far as the notion of shorting.  One of the most famous was the 1923 Piggly Wiggly, which serves as a cautionary tale on how the system has always taken the side of institutions.

The founder of Piggly Wiggly, Clearance Saunders, took his company public, and when the shorts attacked, he fought back enlisting famed trader Jesse Livermore.  The share price erupted, but Livermore moved on and the NYSE changed the rules to save the shorts.

Yep, some things never change.

Lately, overall short positions are lower (although not sure how much dark pool and failure to deliver is factored into this FactSet and Goldman report) even for retail investor favorites.

This is one reason many of these stocks have traded sideways, but that could be about to change.  Short interest for certain names has begun to edge higher and there are some very compelling names among the most shorted.

Start Watching the Most Shorted Names Again.

This service is mostly buy and hold for at least three months, but traders should put up the list of most shorted names again as they are acting intriguing.

Big Five Sporting Goods (BGFV) and Blink (BLNK) the EV battery play is most intriguing to me.

The lesson from Best Buy is companies have the ability to adapt and stay alive and even thrive.  None are guaranteed to do that and there is higher risk.  By the same token, so-called smart money is not always be right, either.

With that, I remain inspired by the investing apes and others looking to change their lives.  Find your way, chart a path, break unfair rules, and live and learn – but never give up on the stock market.

Fed Watch

Goldman is now calling for the Fed to begin tapering sooner rather than later.

• November 45% chance from prior assumption 25%
• December 35% chance from 55% prior

The headline took a little off the market.

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