Things you need to know:
- And the market marches on…readying to kiss another century – 3900!
- GME falls another 43% to end the day at $55.30…Hello?
- Today’s data is all about the Non-Farm Payroll Report
- Oil pierces $57 overnight – and we are off!
- Try the Cuban Sandwich….
And the Bull just refuses to quit……stocks advanced again yesterday as investors continue to digest the improving macro data points that suggest that the labor market is gradually improving and the better than expected earnings reports that we have seen that continue impress us….At its current pace – this season is showing 85% of reports are beating the estimates on both the top and bottom lines….85% -that is well above the longer term average of 70% and above last quarters avg of 75%…..and this driving the latest round of buying…..Tech XLK + 2.13%, Consumer Discretionary XLY + 1.8%, Industrials XLI +0.95% and financials XLF + 0.67% all leading the way up….. Basic Materials and Retailers failing to keep up with the Jones’s…both – XLB & XRT falling 0.26%. The rest of the sectors were up, but all less than 0.5%…. which suggests (to me) that it is feeling a bit toppy and tired. By the end of the day – the Dow added 332 pts or 1.08%, the S&P’s up 42 pts or 1.09%, the Nasdaq up 168 pts or 1.23% and the Russell up 42 pts or 1.44%.
But remember – the market can continue to push higher while everyone expects it to go lower – which is exactly why it goes higher……because when it does not come in – then some investors throw in the towel and start buying….and you know what happens then…when that buying gets exhausted – who is left to support those prices? A lot less people which then causes a bit of a vacuum leaving a void in prices allowing stocks to go lower – sometimes swiftly…. I am just sayin – do not be surprised….
And the perfect example of this is what we are witnessing in GME…. did you see what happened to it yesterday? It lost 42% over the course of the day – closing at $53.50 – taking it almost right back to what is now the 50 dma at $48.27 – a level I do not expect it to find any support. But what do I know???? (That is rhetorical question…no need to answer it!)
Today brings us a bevy of eco data points all released within the NFP (Non-Farm Payroll) report -due out at 8:30 am…. This is one of a slew of monthly data points that investors/traders watch and as we emerge from this global crisis it takes on even more importance in terms of the health of the economy……Now this follows Wednesday’s ADP employment report – which showed a gain of 174k new jobs – or 148% greater than the expectation of 70k so what will we see today? Estimates call for the report to show a gain of 107k new jobs….and if we mimic the ADP report then we could see a jobs report that exceeds 260k jobs….so sit tight and strap in…. Unemployment is expected to remain at 6.7%, but if we get a huge gain, that number would have to come down, Avg Hourly Earnings of +0.3%, and labor force participation rate of 61.5%. The underemployment rate is set to remain in the double digits somewhere in the 11% range…. Underemployment is defined as ‘not having enough work or not doing the work that makes full use of your skills; not full capacity’ (Investopedia)
This morning US futures are UP, UP, UP (and away….) Dow futures are +135 pts, the S&P’s are up 16 pts, the Nasdaq is up 45 pts and the Russell is up 22 pts as investors/traders await today’s data. The moves up this week can continue to be attributed to the same issues we have been discussing…. improving data points, ‘dramatically’ strong earnings, more relief (expected to be ~ $1 tril) a JNJ vaccine that is expected to be approved for emergency use authorization to assist the Moderna, PFE and AstraZeneca vaccines that are making significant progress against the virus. All issues that we have been discussing and the market has been pricing in……which is why I continue to say – remain just a bit cautious….no need to chase. (See comments above).
European stocks are also higher…on this final trading day of the week following the strong performance out of Asia overnight. Corporate earnings and vaccine news continue to be the driver of late…. No eco data to report. In Italy – the Italians continue to push for Uncle Mario (Draghi) to solve the latest crisis and form a new gov’t after current PM Giuseppe Conte goes down in flames……. At 6:15 am – the FTSE +0.14%, CAC 40 + 0.98%, DAX + 0.17%, EUROSTOXX + 0.55%, SPAIN +0.98% and ITALY +1.27%.
And OIL keeps going higher as well……as OPEC makes it clear that they are sticking to their production cuts even as the world emerges from this crisis and demand is expected to soar….Chinese demand is up, European demand is expected to be up and US demand is healthy…and going UP……US stockpiles are at their lowest levels seen in months and anyone that had been predicting doom and gloom are suddenly jumping on board raising estimates….(All you had to do is pay attn to me – I’ve been screaming about this when oil was trading in the high 30’s) This morning it is trading at $56.79 but did pierce $57 overnight…..and so boys and girls – It is off to the races……
Gold sold off yesterday breaking below $1,800/oz…. testing the November lows of $1,795 ish….it has broken all trendline supports, tried to find support at $1830 and failed and now has tested support at $1,795 ish…. a failure here would take us back to the $1,700/$1,750 range….
Bitcoin is flat at $37,700……
The S&P closed at 3871 – a new closing high while also making a new intraday high of 3872…. And this morning it looks like it wants to kiss another new century – 3900! And while I continue to be cautious – it is what it is….and if you are invested then you are enjoying the gains…and I would say – sit tight and stick to the plan, making investments regularly, but not chasing stocks on any one day….
We are in an upward channel bound by 3715 and 3900 – anywhere within that range would be considered normal….so do not stress……My sense is that a breakout above is not in the cards right now…. I still believe that we will see more backing and filling and that is ok…in fact, that would be welcomed.
Call me to discuss your portfolio.
Text INVEST to 21000 to get my digital business card – give me a call if you want to discuss what Slatestone can do for you.
Take good care.
Consultant, Market Strategist
The Cuban Sandwich
A perfect Superbowl option and very apropos for my twitter interaction this past week with none other than the illustrious Mark Cuban!
This is a classic sandwich that comes directly from Cuba and is easy to make – once you have the key ingredient – the roasted pork shoulder – that if done correctly – will fall apart and melt in your mouth when eating it. Seasoned and cooked perfectly – it is like heaven when you eat it and when you turn it into this classic sandwich – MMMMMMM! It is perfect for super bowl weekend. Now, I happen to be lucky – my wife is a Latina (Puerto Rican to be exact) and she makes a mean roast pork…. If you are not that lucky – then find a local Cuban restaurant and go, get yourself some! Make sure you get some of the juice as well.
In addition, you will need: A long Cuban bread roll (if you cannot get that – then a French baguette will work as well), Dijon Mustard, Swiss Cheese, bread and butter pickles, thin sliced ham, olive oil. (Warm up the pork….in the oven – but do not dry it out!)
Now slice the bread – but not all the way thru – open it and spread it out on the cutting board. Now – carefully layer the bread – in this order – drizzle some of the juice on the bread – then mustard, cheese, pickles, ham, – season with s&p – pork – then cheese again. (Do not over drizzle the bread with the juice – you do not want a mushy sandwich). Some people also use mayo along with the mustard…. that is fine – no one is going to ding you for eating it the way you like it.
Now – heat up a heavy bottom skillet or a grill pan – lightly coated with olive oil…. Place the sandwich in the pan and then place a cooking weight or a large can of ‘Italian Style Crushed Tomatoes’ on top of the sandwich – This holds the sandwich firmly in place – cook for 4 – 6 mins…. flip and repeat – when done, the sandwich should be compressed, the cheese should be all melty and the bread nice and crispy. MMMMMMM! Cut at an angle and present on a platter with white rice and black beans, or yellow rice and pink beans or whatever else you want. You can also use this as a complement to the hot dogs, burgers, wings, and chili that you are also sure to make for Sunday’s big game.
Buen Provecho! (Spanish for Buon Appetito)