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10/18/2022 9:57:11 AM Eastern Time

Traction, Finally
By Charles Payne, CEO & Principal Analyst

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Yesterday’s session was solid. It was paced by the biggest declining sectors in prior weeks as well as mega cap stocks.

Eclectic mix of winners on the session.

Some spec names pop every time the market bounces and still seem to be at all-time lows a few days later (looking at you CZR).

Improving Breadth

Market breadth is getting better – watching for shift in new highs to lows.

Banks Step Up

Even as the street is still in doubt (see provisions for loan losses), it’s the first time in a while I can say the big banks stepped up to lead the charge.  This morning Goldman Sachs (GS) set the tone.

USD

DXY coming down is a huge relief for the world (with all due respect to President Biden, it’s a global problem for many of our trading partners, and their damage washes up on our shores and markets), and multinational US Corporations.  The inflation offset just hasn’t been doing the trick.

10-year yield

Need to see it come down to 3.50%

Portfolio Approach

We have un-suspended our Buy list and are adding a new position in Industrials to our Hotline Model Portfolio.

Long Idea: EMCOR Group, Inc. (EME) @ $130.00
Industry: Industrial; Construction & Engineering
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BACKGROUND: EMCOR Group, Inc. provides electrical and mechanical construction, and facilities services primarily in the United States and the United Kingdom. It offers design, integration, installation, starts-up, operation, and maintenance services related to electrical power transmission, distribution, and generation systems; energy solutions; premises electrical and lighting systems; process instrumentation in the refining, chemical processing, and food processing industries; low-voltage systems, such as fire alarm, security, and process control systems; voice and data communications systems; roadway and transit lighting, signaling, and fiber optic lines; heating, ventilation, air conditioning, refrigeration, and geothermal solutions; clean-room process ventilation systems; fire protection and suppression systems; plumbing, process, and high-purity piping systems; controls and filtration systems; water and wastewater treatment systems; central plant heating and cooling systems; crane and rigging services; millwright services; and steel fabrication, erection, and welding services. The company also provides building services that cover commercial and government site-based operations and maintenance; facility management, maintenance, and services; outage services to utilities and industrial plants; military base operations support services; mobile mechanical maintenance and services; services for indoor air quality; floor care and janitorial services; landscaping, lot sweeping, and snow

SKINNY: EME is a company focused on electrical construction and facility services, mechanical construction, and facilities services, building services, industrial services and much more. Management has consistently focused on growing the enterprise and stock looks cheap. Earnings and estimates have remained solid. Our target $156.