Yesterday turned out to be a ho-hum session, which isn’t surprising. What is interesting is the shift in buying conviction for beaten-down sectors and stocks. The S&P 600 SmallCap Index followed up that monster 5.4% gain on Tuesday with another strong showing that tested the 200-day moving average.

Lots of retail names are leading the charge.

Magnificent Seven Looking for a Booster Shot

The “Magnificent Seven” stocks struggled a bit, mainly because of profit-taking. This is a significant test of resistance that must be cleared fast.

 

Watching NVDA

NVIDIA (NVDA) reports next week, but the stock is in focus, as it formed a double top, which is usually bearish. Moreover, the stock tickled $500 on its last earnings report and then collapsed.

Advancers, Decliners, & Heat Map

Consumer Staples (XLP) popped even as other traditional safe haven sectors stumbled. Technology (XLK) was under pressure but was offset by a solid move in Communication Services (XLC).

This profit-taking theme will spread over parts of the market like those miracle-weight drug makers.

The bigger head-scratcher is the drift in Energy (XLE). Perhaps it’s the most fantastic signal of a recession out there, because the script has been flipped from early October when West Texas Intermediate (WTI) was above $90, and it was a slam dunk.

Fear & Greed

There is no way sentiment is moving into ‘greed’ – not just yet. However,  I suspect when the S&P 500 closes above 4,600, there will be another wave of panic-buying.

Approach

There are some great trading ideas in the ‘ash heap’ of the last two years, but I'm not convinced about going all in on the also-rans at the expense of names that have been executing.

Personal Note

Thank you so much for all the Happy Birthday wishes. I will try to reply to them personally in the coming days.

It means a lot.

Today’s Session

Walmart (WMT) posted results that beat expectations on the top and bottom line but issued a wary guidance for the current year. Shares of WMT are down 6% this morning as the CFO said October trends made the company “pause and rethink the health of the consumer.” More specifically, there was a sharp falloff in sales during the last 2 weeks of October.

• Rev $160.8B vs. $159.1B est
• Comp sales ex gas +4.7% vs. +3.4% est
• EPS $1.53 vs. $1.52 est

FY Guide

• Net sales +5-5.5% vs. +4-4.5% prior
• EPS $6.40-6.48 vs. $6.36-6.46 prior

Cooling Job Market

Looks like the Fed plan is taking hold as the labor market is showing signs of softening.  Initial and continuing jobless claims both came in above consensus. Initial claims were up 13k to 231kvs. consensus 220k, to a 3-month high.

Continuing claims at 1.865M vs. consensus 1.845M, up 18k, which was the highest read in almost 2 years.

We also go the latest Import Prices, which fell the most since March 0.6% against consensus of -0.3%, primarily led by a drop in fuel import prices.

The Philly Fed increased but remained negative at -5.9 vs consensus -8.0. Firms indicated mostly steady employment, but the current price indexes continued to suggest increases in prices.

Meanwhile, futures are well off lows ahead of the open and bond yields are edging lower.  The 10-year U.S. Treasury is down to 4.45%, a two-month low.

Comments

A belated Happy Birthday, Charles! I hope you found the time to celebrate your special day! I was extremely honored to meet you and be a guest on the July 27th Town Hall. You are a true inspiration to so many. All that you do and say genuinely comes from your heart and desire to help others. Thanks for being you! Also, I want to say your new book is as phenomenal as “Unstoppable Prosperity”was. As a student of Payne’s Education, I want to thank you for providing such a fantastic learning experience. From the program design, course content and resources, to the exceptional quality of the instructors, the program is invaluable to anyone wishing a hands-on approach to learning how to invest and trade. You, Charles, make the world a better place. Keep up the good work! Alice Kenny on 11/16/2023 8:31:03 AM

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