Yesterday, the S&P 500 was essentially unchanged, but it was a humdinger beneath the surface. Moreover, the right names were higher, and the market felt more jovial.

Market breadth saw more 52-week lows, which again reflects the fact that although the same tide lifts all ships – if you make a mistake, your stock will drown.

Market Breadth	NYSE	NASDAQ
Advancing	1,500	2,149
Declining	1,810	2,454
52 Week High	172	235
52 Week Low	56	204
Up Volume	1.53B	3.00B
Down Volume	2.33B	2.37B

Turn Those Machines Back On

The October read on Industrial production climbed 1.6% from September, well above the consensus of +0.9%:

• Factory: +1.2% (ex- auto production +0.6%)
• Utilities: +1.2%
• Mining: +4.1%

The number was impressive, albeit about half was attributed to recovery from Hurricane Ida.

There are signs the chip crisis in the auto sector may have gotten through the worst of it, although there is still a long way to get back to pre-pandemic levels.

Capacity utilization climbed 1.2 percentage points to 76.4 against the consensus of 75.8. It’s the highest level in some time but still 3.2 percentage points below the long-run (1970 to 2020) trend.

Give Me Shelter

The National Association of Home Builders (NAHB) Sentiment Index came in at 83 against the consensus of 80 as all components edged higher but remained well off year ago levels.

• Single Family Home (present) 89
• Single Family Home (six-months) 84 (highest since December read 85)
• Prospective Buyer Traffic 68 (highest since June 91 read)

The housing boom is no flash in the pan. But it’s been out of reach for many folks, as credit scrutiny is much tougher than the last housing boom, and supply constraints hurt even those with the funds.

Conclusion

It was a good day for the market and a great day for economic data. Yes, there were some hairy issues on all the releases, including the possibility folks were buying stuff to get in front of the supply chain snafus. But, overall, the report points to a nation resolved to make it – just as it has always been.

This is not the time to add more money into the mix.

It reminds me of the time my parents decided I was old enough to babysit my younger brothers so they could go on a date night.

My mom told me to make a box macaroni and cheese – “just follow the instructions, it’s simple,” were her last words.

I got to the part to drain the pot, and I was unsure what that meant – so, I skipped it. Instead, I spent a couple of hours stirring the noodles, wondering when all that water would go away.

It never did, and we had macaroni and cheese soup that night.

Right now, the nation is in a good place even though there are debts to pay. This inflation crisis could come down naturally, and businesses will keep on investing.

Adding a trillion more in spending is a mistake, and I’m sure investors do not want this economy and stock market to turn into macaroni and cheese soup.

 Fed Watch

The next Fed Chairman will be named within the next four days, according to President Biden. I know Lael Brainard is more dovish, but her nomination would roil the market for a bit – the Street likes Powell.

Portfolio Approach

We added to Consumer Discretionary yesterday in our Hotline Model Portfolio.

Today’s Session

It is going to be slow going out of the gate, but keep an eye on Technology – the XLK index is on the cusp of breaking out.

 

Comments

Always enjoy how you use humor to make a point about the market. But I just have to ask....how was that macaroni and cheese soup? Bob Cayia on 11/17/2021 11:20:03 AM

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