Test Of The Mightiest Stocks

Posted: Sep 30, 2021 1:30 PM
Test Of The Mightiest Stocks

Source: AP Photo/Richard Drew, File

It’s never how the market opens; it’s how it closes. And for the second consecutive session yesterday, the inability to lure buyers off the sidelines saw the rally attempts fizzle. There were more new lows and down volume for the NYSE and the NASDAQ Composite.

There was a flight to traditional safety, which powered the defense sectors to the front of the pack. Interestingly, Materials joined growth sectors (Communication Services and Tech), perhaps reflecting doubt about the infrastructure bill squeaking through. However, I think it’s clear it has to pass before that gargantuan “social welfare” spending bill.

Market Breadth









52 Week High



52 Week Low



Up Volume



Down Volume




S&P 500 Index



Communication Services XLC



Consumer Discretionary XLY



Consumer Staples XLP



Energy XLE



Financials XLF



Health Care XLV



Industrials XLI



Materials XLB



Real Estate XLRE



Technology XLK



Utilities XLU



Fed Talking Head Parade

Washington, D.C. Follies have not confided in Congress because Federal Reserve members are all over the place trying to soothe nerves and, perhaps some are auditioning for the top job (now or in the future).

Powell Highlights


  • The current inflation spike will not lead to a new inflation regime.
  • Inflation will run well above the target for the coming months.
  • Transitory inflation means that inflation spike won’t lead to ongoing higher inflation.

Balance Sheets

  • Household and business balance sheets in the United States are quite strong.
  • Households have never been this liquid
  • Businesses have never been this rich…

Corporate Assets 






Cash & Cash Equivalents


















San Francisco Fed President Mary Daly


  • At the end of the year, the tapering bar should be fulfilled.


  • On the jobs front, there has been a lot of development and momentum.
  • With almost six million Americans out of work, it’s appropriate to wait and see.


  • I don’t believe we’ll have fulfilled the rate raise criterion next year, but it’ll be a tremendous victory for the economy if we do.
  • We’re still a long way from raising interest rates.

Social Justice

  • The Federal Reserve examines inequality to close gaps and promote growth.
  • The Fed lacks the tools and authority to address inequity and climate change.


  • It’s positive that inflation has started to moderate; however, there are still inflation threats.


Daly’s comments that inflation could be moderating is interesting. Sherwin-Williams (SHW) was poised to be the biggest decliner on the session on supply chain woes. But it climbed off the lows to close higher. So, perhaps the Street is seeing beyond supply chain and inflation issues.

Who Will Challenge Zodiac Capital Limited (ZOD:AU)?

The mighty NASDAQ-100 is under more pressure than it’s accustomed to, and the internals are breaking down as only 24% of its components are trading above their 50-day moving average.

The NASDAQ Composite failed to hold onto two separate rallies closing near the trendline.

Portfolio Approach

There are no weighting changes this morning in our Hotline Model Portfolio.

Today’s Session

The government will stay open until December 3, but there probably will not be a vote on infrastructure.  Meanwhile, the parade of Fed speakers continues, and at any time, their words could nudge the market.

John Williams Speaks

10:00 AM

Raphael Bostic Speaks

11:00 AM

Patrick Harker Speaks

11:30 AM

Charles Evans Speaks

12:30 PM

James Bullard Speaks

1:05 PM

Mary Daly Speaks

2:30 PM

How To Get Economy in Gear & Live with Covid?

Initial Jobless Claims are up for the third straight week missing consensus in each of those weeks and now at the highest level since the first week of August.   Something is wrong.  I think this gets back to actions being taken to combat Covid19 and whether there is a better balance between safety, economic progress and common sense.

Consider this story out of NYC that saw vaccine passports and mandates backfire anyway as the cast of the play Aladdin saw breakthrough cases.

Covid cancels 'Aladdin' one day after Broadway reopening

Producers of the musical, which closed along with the rest of Broadway in March 2020, said breakthrough cases were detected in the company.


New York City requires proof of vaccination to attend many indoor venues, including theaters, and staff members must also be vaccinated. The Broadway League trade group has also said all 41 theaters are requiring audiences, crew members and performers to be vaccinated.

Breakthrough cases refer to people who contract Covid-19 after having been vaccinated. Health experts say that such cases are expected but that the risk of getting severely ill or dying is much lower among those who are vaccinated.

Good start this morning, but lots of bombs, including CarMax (KMX), which blew away revenue but missed big on earnings.  The stock is in the model portfolio, as we anticipate demand to remain strong even as consumers are forced to pause for a variety of reasons.  This is the tough calculus.