While last week was a choppy week for the market, the bias remains to the upside. The last month has been positive for every sector save Utilities.
S&P 500 Index
Communication Services XLC
Consumer Discretionary XLY
Consumer Staples XLP
Health Care XLV
Real Estate XLRE
Despite the swings, which were in a narrow range, market breadth was extremely bullish last week in even key metric.
Weekly Market Breadth
New 52 Week Highs
New 52 Week Lows
Americans Are Eager to Live
Even as lockdowns and restrictions ratcheted higher, Americans where more actively engaged in the economy. This speaks to not only current data but to future possibilities in a post-Covid19 world.
The Weekly Economic Index (WEI) issued by the New York Fed continues to edge higher toward growth.
Over the weekend, travelers eschewed warnings, as airline passengers reached the highest level since March.
To see the chart, click here.
Current Consumer Trends
There was a much-needed reversal higher in credit card usage as measured by JP Morgan Chase. Wholesale clubs and supermarkets have been the biggest winners (if you are low on toilet run don’t walk now).
- Supermarkets +17.8%
- Wholesale +43.8%
- Retreatants -19.6%
- Health Care +2.9%
- Other +18.0%
- Millennial +4.7%
- Generation X -2.8%
- Boomers -9.2%
- Card User Not Present +16.8%
- Card User Present -14.3%
I note these trends and the return to normalcy in this week’s Payne’s Perspective. For a free copy contact your representative or click here.
Guide to Wall Street Gibberish
When I saw your investment approach it should be a barbell. The inference is that there should be different investments that somehow offset each other, but that leaves a lot to the imagination.
For some, it means you should own growth and value stocks, which essentially narrows down your investment options to the entire market.
For others, it refers to different asset classes like stocks and bonds or stocks and precious metals or precious metals and bonds. The combinations are not endless, but mathematically, a number that would boggle the mind and not really be helpful.
As someone that has lifted a lot of weights, I’m surprised Wall Street has gone with barbells instead of dumbbells. I get the “dumb” part might seem counterintuitive from a marketing perspective, but they are easier to control and certainly less intimidating.
Moreover, why has Wall Street used weights when there are other visuals that might make better sense. Certainly, they are a lot more fun.
This suggests larger core holdings in the middle of your portfolio. Ultimately, you are going to want to be overweight something you think will outperform. Otherwise, just get an index fund.
Love beads (with peace sign)
This approach means having a lot of smaller individual positions that give you the exposure you want, but again, with the largest piece being the focus of your portfolio and what you love the most.
This makes investing fun and exciting, bringing back those golden years when we let our inhibitions down and zoomed down the road. This is for hands on aggressive investors putting a lot of sweat equity into the effort, determined to outperform the next person with just a few core holdings all spinning fast at the same time. Think mega growth, stay at home and electric vehicle stocks.
Watch the US dollar and its impact on assets particularly oil prices.
The US dollar has begun to break down and it now trading at levels last seen in 2018. The pullback is very similar to the move that took the dollar index (DXY) from 103.0 in early December 2016 to 88.9 by late January 2018. From December 16, 2016 to January 22, 2018, the S&P 500 rallied 24.5%.
Crude oil breaks key resistance at $44.00, and from there has clear shot to $48.00, a huge upside test.
The latest vaccine news is upbeat and encouraging, but vaccine news has limited ability to move markets after those initial huge responses. The market now expects more good news on vaccines. I think the key for the week is movement on stimulus. That coupled with more vaccine news and upward bias could make this a strong week.