New Highs

Not only in the S&P 500 Index: 

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Don’t tell Krugman!

Hat tip Charlie Bilello

The S&P 500 Index Closes at New All Time Highs

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In addition, the S&P 500 Index extended its streak of monthly gains to five straight at the end of August.  An impressive run to say the least: 

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What happens next?  Well, its very good news for the bulls.  Since 1950, one year later the index is up 23 out of 24 times.  A pullback, even an extremely shallow one, has been too much to ask for and may continue to be. 

Hat tip Ryan Detrick

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.

JPM

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Streak Update

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The S&P 500 Index has now gone 52 weeks without a 2% weekly lower close.  That’s the longest streak of this kind since 1995(61 weeks).  We live in interesting times. 

Hat tip Ryan Detrick

PFE

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Tesla Breaks Out

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Tesla, very quietly, lead the Nasdaq 100 on Monday with a 5.9% gain with the help of a nice jump in volume.  This breakout type move drove shares past a key overhead trendline that links the June and August highs.  The six week consolidation pattern that followed the stock’s last earnings report set the stage for a fresh rally leg.  The post earnings consolidation has ended today with an upside resolution. The new rally phase that follows could drive TSLA back up to its all time highs.

Back on August 3rd TSLA surged over 6.5% immediately following its second quarter earnings report.  This powerful move, its second best gain of the year, had very limited follow-through. TSLA began to consolidate after falling short of the July high and has been trading in a narrow range since.  Following today’s breakout the stock is well above this pattern leaving layers of support in place in the process. 

We believe Tesla is now set up for a return to its all time highs set back in late June.  The stock should be considered a buy on weakness.  A key support zone begins near $359.00, the stock’s high from last week.  An important hurdle will be the $370.00 area.  Once past the August high TSLA will have plenty of room to run.  On the downside, a close back below $340.00 would violate the September low sending a clear warning sign of trouble ahead. 

At the time of publishing we are long Tesla in some 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.

INTC

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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

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