The market vaulted out of the gate, but it has since begun a slow and steady drift lower, which is not unlike the action seen in the last two weeks of trading in 2017. Some of this is a holiday hangover, in fact many big market players are still away, and while some is a result of investors still looking for certain signals.
Today, retail continues to sparkle. After surprising the experts in December, the S&P Consumer Discretionary sector is the best performer today. Some of the action is directly tied to enthusiasm over the December sales momentum, particularly at the brick and mortar retailers. (I shopped at an Amazon bookstore and felt like I was walking on the tomb of Borders Books, and others. But it was a much more pleasant experience than at those dinosaurs and the essence of creative destruction.)
With jobs data later this week, it will be interesting to see if we get outsized wage increases, which have been a component of the recovery that has lagged, although some see improvements in employment as late-stage parts of an overall recovery.
Merger mania is also driving the Consumer Discretionary names today with potential targets:
I suspect there will be a couple of blockbuster deals in this space that will also serve as price/value discovery, which should help all names, even those that enjoyed strong bounces off 2017 low points.
I like the action in technology today as well, but I am more focused on US Steel(X) and other names trying to breakout, as proxies for the part of the economy that better represent Main Street USA.
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