Archive for the ‘Market Update’ Category

Citigroup Setting Up For New Highs

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The sharp rise in bond yields this week has sparked an impressive rebound in the financial stocks, especially the major banks.  Citigroup has been a top performer during this rebound phase after avoiding an ugly breakdown last week.  C is now testing its September peak as it extends the rally off key support near the $66.00 area.  This bullish action has set the stock up well for a retest of the 2017 high. 

Shortly after Citi’s powerful late June breakout the stock stalled.  In early July C began to consolidate after surging over 35% since the election.  During this phase the stock built a very solid base near the June 29 breakout gap.  This area, near $65.50, held the July, August and September lows.  The fresh rally that is beginning to gain steam this week has solid footing underneath.  C could move sharply higher once the August highs are cleared. 

Citi has nearby support in place from $68.00 to $67.00.  If shares can continue to build momentum above this zone a run up to new 52 week highs is likely.  The stock still has a few hurdles to clear, namely the August 8th spike high, but could travel quite far before entering overbought territory.  On the downside, a close back below $65.50 would clearly violate the September low indicating more consolidation is ahead before a fresh rally leg can take hold.

At the time of publication we are long C in most managed accounts.

Textron Tracking Towards a Breakout

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The stock should be considered a buy near current levels.

Textron is surging today following an upgrade from Drexel/Hamilton.  The defense/aerospace stock is up over 3% and is headed for new all time highs.  This impressive breakout type move is leaving behind a narrow consolidation pattern that has been in place since the start of the year.  A fresh rally leg appears to be on the way, one that could carry TXT sharply higher in the coming months.

Immediately after the election Textron began a major rally phase with a powerful 5% gain on November 9th.  The stock trended higher through December before running out of steam in early January after a 27% gain off the November 9th low.  TXT began to consolidate in mid January and has remained in this pattern since then.  After nearly nine months of sideways trade the stock is poised for a new rally leg after today’s breakout move.  In the near term investors should take on a much more positive view of the stock.

At mid day TXT is testing its 2017 high set back in early January.  Once this area is convincingly taken out the stock has plenty of room to run.  TXT now has a very solid support zone in place between $50.50 and $49.00.  This key area includes the July and August highs as well as this morning’s powerful breakout gap. 

At this time we do not have a position in Textron.

Buy and Hold Works

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The strategy, which has taken quite a bit of heat over the last few years, is a preferred way the wealthiest Americans build their portfolios.  Key bit from MarketWatch.com:   As much as everyone likes a good get-rich quick story, the rich typically didn’t make their wealth overnight, which should comfort investors who are concerned that buy-and-hold investing no longer works.

Support comes from the 2016 Insights on Wealth and Worth survey conducted by U.S. Trust. The study explored the common success traits of wealthy Americans across all generations, surveying close to 700 individuals with at least $3 million in investable assets. The results, says Chris Heilmann, chief fiduciary executive at U.S. Trust, show that “the American Dream is alive and well.”

Read the whole thing:  www.marketwatch.com

Dead Money

Great stuff from Michael Batnick:

Armed Stallion

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A Marine Corps crew chief fires an M2 .50-caliber machine gun from the back of a CH-53E Super Stallion helicopter near Misawa Air Base, Japan, August 21, 2017, during exercise Northern Viper 17. Marine Corps photo by Lance Cpl. Andy Martinez

Hat tip Strategypage.com

U.S. Investor Optimism Continues to Rise

Amazing stats here from Gallup, investor optimism is now at a 17-year high.  Some color:

One of the key factors in the robust third-quarter index is investors’ growing confidence in the stock market.

  • Sixty-eight percent now say they are optimistic about the stock market’s performance during the next year, matching the record high for the question from December 1999 and January 2000.
  • At least 61% have expressed optimism about the stock market in each of the three surveys this year, a percentage matched or exceeded only four other times in the 132 times the question has been asked since April 2000.
  • Twenty-five percent say they are “very optimistic,” topping the previous record high of 24% from the first quarter of this year. Only 11% were very optimistic a year ago.

 

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More:  Optimism has risen considerably more among retired investors this year than among nonretired investors. In the first-quarter survey, the index was similar among retirees (+124) and nonretirees (+127). Now retirees are considerably more optimistic than nonretirees, +158 versus +130. While nonretirees’ ratings of the personal and economic components have moved little this year, both have risen significantly for retirees.

Read the whole thing:  www.gallup.com

Only 30 More To Go

The S&P 500 Index has survived the first week of September without much of a pullback.  The streak without a drawdown of at least 3% has now stretched to 211 days, just 30 days shy of the all-time record:

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Nonetheless, we continue to believe September will be a volatile month.  The financial sector stocks are beginning to look vulnerable to further downside.  They may prove to be quite a drag over the next three weeks.

Hat tip Charlie Bilello

Risk Happens

A little wisdom from Pension Partners:  Going back to 1928 the average year has had between 3 and 4 corrections greater than 5%.  This serves as a helpful reminder that there is no reward without risk and that equity securities are inherently volatile (the current period notwithstanding). Corrections happen, even in good markets.

Hat tip Charlie Bilello

After 10 Straight

The S&P 500 Index finished August with its tenth straight monthly gain(real return basis).  Since 1950 this was only the fourth winning streak of 10 or more months(1954, 1958, 1995).  What happens next?  One year later, the index was up 26.5% on average.  Embrace the decline. 

Hat tip Ryan Detrick

September Doesn’t Disappoint

We mentioned the ‘slipperyness’ of September last week.  It’s no surprise that as the new week begins, and Wall Street returns from vacation, stocks are under pressure.  The extended period of calm may be ending at a seasonally weak time.   The S&P 500 Index is on its longest run in over 20 yrs without a 5% correction – and its longest run in a decade w/out even a correction greater than 2.5%.   A healthy pullback would be a welcome event. 

sept returns

Hat tip LPL Research

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