New highs on every index sans SOX though SOX was no slouch on the upside. Looks as if new money is entering as volume was higher and breadth expanded. Good for the upside to see stronger internals on new highs as it shows more buying into the move at a key juncture.
SP500 13.22, 0.54%
NASDAQ 40.73, 0.64%
DJ30 66.02, 0.31%
SP400 0.99%
RUTX 0.99%
SOX 0.89%
NASDAQ 100 0.61%
VOLUME: NYSE +3.5%, NASDAQ +6%. NYSE volume moved higher but is still well below average. NASDAQ trade actually crept closer to average but was still below average on the move. Low trade yes, but that has not stopped the move at all. Doesn't matter until it does matter, right? When would that be? If the sellers mass and attack all at once. Perhaps some bad event, perhaps it just starts. Thing is, even when a sharp selloff session shows up, the selling stalls and the upside reasserts itself. Whether the Fed or the Plunge Protection Team, the sellers just die out. Right now they are not even present.
A/D: NYSE 2.9:1, NASDAQ 2:1. With SP400, RUTX leading, of course breadth improved. NASDAQ was 2:1, better, but still not commensurate with the move higher.
Note the even gains for RUTX, SP400, SOX. Even NASDAQ and NASDAQ 100 were much closer with overall NASDAQ rising more; the move spread out a bit beyond the big FAANG names.
It would appear that there was no rotation, just a move higher by the various sectors and indices, some rallying harder than others, of course.
The cause? Is there a need for a cause? Everyone likes to pin the tail on the reason for the rally. This one is nothing specific for the day, just the continued notion the Fed is behind the market regardless the issues as well as a sense the powers that be simply cannot allow the financial markets to fade. If that happens, the entire house of cards falls.
Healthcare? Yea, right. Healthcare reform going nowhere though McConnell says he will bring the topic of a repeal vote to the floor -- what guts to actually DISCUSS healthcare repeal. For a moment I thought he was going to do something interesting, i.e. force a vote to hold those who voted to repeal when Obama was President (and knowing it would be vetoed) accountable if they voted 'nay' on repeal now that Trump is President. Of course McConnell is one of those lacking a spine and any semblance of character, so . . . they are just going to talk about it. And there will be bluster about those dying, those without healthcare, etc. without considering the insurance we are forced to buy is crap and unaffordable, effectively rendering millions uninsured even with policies in hand! All the while, the REAL issue, good, affordable healthcare, will be lost in the name calling and out and out lying, all in an effort to save one of the worst healthcare plans in the history of the world. What an incredible bunch of moronic imbeciles with more than a sprinkling of cowardice.
I feel better now. At least until I read the next headline on the news.
Economic data? Housing Starts and Permits in June topped expectations at 8.3% and 7.4%, respectively, bouncing back from a quarter of losses.
Earnings? Oh yes, the quarterly works of fiction are being released right now, a swarm of non-GAAP, no rules, no holds barred stretching of the truth. And all will be applauded, the CEO's, CFO's, etc. will appear on afterhours shows and will blow smoke up the skirts of anchors and experts all too eager to buy everything they are peddling, and of course issue 'buy, buy, buy!' recommendations. Lest you forget, the most recent GDP report showed corporate profits falling. Of course that could be due to a system that allows companies to effectively launder profits while the smaller businesses and individuals pay the taxes that support the policies that allow the large companies to avoid taxes.
Bitter you ask? Nay, not me. The stock market provides impressive returns in this made up world of make believe markets. It is just absurd to see so many small businesses and individuals struggling just to get by when you are told every day on the financial stations that the economy is booming, jobs are plentiful and great, wages are wonderful, yet many are just not seeing it, wondering if there is something wrong with them. Ever wonder why a socialist such as Sanders became so popular? Because the young don't see opportunity, and if there is no opportunity, someone offering to take from those getting all the benefits of the skewed policies and give to them is appealing. Beats working. Beats changing the system to where it used to be with level playing fields for anyone with an idea to work hard and succeed. No, not bitter, just worried for the future, for the kids. PO'ed would be more like it.
Suffice it to say that there is nothing in particular driving this market other than made up numbers that, even if believed to be untrue, are backed up by the full faith and credit of . . . the Fed. And the men in black suits that appear and buy every time the market is rolling over.
On the day we took some gain on the IBM puts taken Tuesday as that stock sold off on results, but held the same support through the afternoon. We also banked some strong gain on NVAX as it surged for a second session before reversing the day's move. We picked up some very good positions on CF, SPN, SPPI, VMW -- quite the varied group, indicating the move in the market was rather broad.
New highs, better internals, happy days are here again, right? Certainly the upside is in groove. It will test the move of course, as NASDAQ and SOX are up over 2 weeks straight and NYSE indices up 1.5 weeks. For now, however, the bids are stronger at a breakout move, and as noted earlier, that is a good indication the buyers are strengthening their hand.
Have a great evening!
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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