Yesterday was another see-saw battle that saw the market turn higher into the close. The gain was no great shakes, but the effort is noteworthy.

Once again, the worst-performing sector and the only one to finish in the red was Utilities (XLU). Historically, it is the most incredible place to ride out weakness and trepidation.

I get everyone is on edge, but that’s one of the biggest reasons to remain calm, relaxed, and collected.  The next step from taking deep breaths is to find deep discounts. On that note, shifting through the bottom of the firepit is wrong, but big-time opportunities are evolving.

Most Impressive: Semiconductors

AGCO Corp (AGCO) acquired Trimble Ag Assets and Technologies (TRMB), which is evolving into an Ag-Tech play. Still, I was most impressed with the semiconductor names, which rallied even after Micron Technology (MU) stunk up the joint.

The VanEck Vectors Semiconductors ETF (SMH) is on the cusp of a significant breakout that could see it retest the 50-day moving average.

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Least Impressive: Utilities

AES Corp (AES) and Nextera (NEE) were the second and third worst-performing sectors. Something is wrong here, but I’m not sure what.

XLU volume erupted to a multi-year high on massive selling.

Heat Map

Overall, the Heat Map was very impressive.

Market internals were much better, although the volume was very light.

Market Breadth	NYSE	NASDAQ
Advancers	1,996	2,656
Decliners	900	1,680
New Highs	42	38
New Lows	223	310
Up Volume	2.77 billion	2.80 billion
Down Volume	1.04 billion	1.78 billion

There is too much pessimism out there, and I think it’s almost time to pounce.

Portfolio Approach

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Today’s Session

Jay Powell’s favorite inflation gauge is out, and it is okay news – which these days is sign–of–relief news.  This Fed seems hell-bent on more rate hikes, but this kind of data holds them at bay.  I’m hopeful enough data will come out before the December meeting to keep the Fed on ice into 2024, where political pressure will make them think twice about going too far.

Core PCE is under 4.0% for the first time since July 2021. High by historical standards but moving lower.

I’m sure some will point to spending increasing, even as income growth slows, as a sign of a strong consumer. 

Americans love to spend, which is why this is a ‘trickle up’ economy, but I say don’t conflate spending on higher gasoline as some kind of positive for the consumer.

Stock of the Day

Nike (NKE) is the stock of the day after posting financial results after the close yesterday.  This will be presented as a sign of a strong US consumer. That’s not the case.

IPO Cautionary Tale of the day

Blue Apron (APRN) is being taken over for $13.00 a share, which means the stock will be up 134% this morning.  But remember, adjusted for two splits, the high on the stock was $1,687 a share.

Wall Street made a bundle selling this overhyped name to Main Street.  The experts call Main Street investors “dumb money” and trick them into these kinds of deals.

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