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Morning Commentary

Building Up Speed

By Charles Payne, CEO & Principal Analyst
10/21/2021 9:45 AM

Yesterday, growth was down, and yet, the S&P 500 still eked out a gain to close within 0.2% the all-time high.

S&P 500 Index

+0.37%

 

Communication Services XLC

+0.20%

 

Consumer Discretionary XLY

 

-0.07%

Consumer Staples XLP

+0.58%

 

Energy XLE

+0.81%

 

Financials XLF

+0.80%

 

Health Care XLV

+1.43%

 

Industrials XLI

+0.63%

 

Materials XLB

+0.80%

 

Real Estate XLRE

+1.53%

 

Technology XLK

 

-0.28%

Utilities XLU

+1.58%

 

“Looking Good, Billy Ray.”

“Feeling Good, Lewis.”

-Trading Places, circa 1983

The Fear & Greed Index is surging to the right above, up significantly in the past week, month, and above the year ago level.

Image

The CBOE Market Volatility Index (VIX), a.k.a. the fear index (VIX), is near the lowest level of the year as optimism replaces anxiety.

Great Signs

A few days ago, I featured the iShares U.S. Transportation exchange-traded Fund (ETF), which was coming to the end of a descending triangle. That’s exactly what happened, and now it’s building up speed. I feel so much more comfortable with broad market rallies when transportation stocks corroborate the move.

Union Pacific Corporation (UNP) is the largest holding at 17% and holding up, but other large components have struggled:

There is a good chance those laggards have bottomed, and rails and truckers can keep leading.

IYT

Brighter Shade of Beige Book

The Beige Book was released yesterday, and it had some interesting tidbits and words we’ve all heard too much:

Who knew the Beige Book could have made for a great drinking game?

Portfolio Approach

There are no sector weighting changes this morning.

Today’s Session

The Philly Fed report this morning came in slightly less than expected as prices continue to be an issue.

Current and Future General Activity Indexes

Current Prices Paid and Prices Received Indexes

We are seeing this play out in the five-year breakeven rate, which is at the highest level since 2005.

5 Year Breakeven

Earnings

Earnings are mostly mixed but still more top line misses underscore the difficulty in passing along higher costs.  The problem is for those companies that miss the punishment is swift and harsh.  The 4.4% decline in share price is harshest reaction to misses since 2007.

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Comments
Looking forward to Making Money today while delivering Meals on Wheels!

Lorin K on 10/21/2021 10:22:28 AM
 

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