The Most Critical Day In Market History Is Upon Us

Equities start the day higher as the most critical day in market history is upon us!! Wait, is that really true?  Not really but I needed a hook to keep you reading, sorry. We are at the top of this “triangle” that everyone’s been talking about for a month so if you believe stocks penetrating an imaginary line on a chart is important you’ve come to the right place!! But what’s the narrative around this breakout? Has anything meaningfully changed with all those headwinds I’ve been prattling on about? Not really, they are all still with us, but right now they’ve taken a back seat because that’s just how markets work. Things matter until they don’t. There isn’t a person on the planet that knows exactly why we are breaking out of this sideways malaise and that’s ok (@ryandetrick even labeled it the “Charlie Brown shirt bottom”.  If you’re always on the hunt for clarity you’re going to be sadly disappointed because frustration and angst is the price we pay to invest in stocks. The notion that earnings were “as good as it gets” was a popular theme for about a week, now no one mentions it anymore. What’s the new theme going to be?  Stick around and we’ll create one ourselves. When I write this blog I do it for “edutainment”. I want you to come here and learn a thing or two about markets all while laughing at my final link and awful grammar. Josh Brown says you are what you read:  “A delicate balance is required – pay some attention but not too much. Read the news but don’t get carried away in thinking that a reaction to the news is necessary”. That’s right, I 100% agree. Come here, read a bit about the market but don’t feel like you need to rush out and make a trade. Most of the time we are just swinging around like a kid on a playground blissfully enjoying our lives so don’t make this more complicated than it is. Understanding this game is a lifelong pursuit and hopefully you spend 3 to 4 minutes of your day with me so we can do it together.

After the open Maverick chased Jester above the hard deck as the S&P went ballistic.  Up 1% to 2,723 in pretty much a straight line. What about other indices though? We talk about the S&P way too much so let’s look at the NASDAQ and the RUSSELL2000. Both back near all-time highs but the move in Small Caps is particularly juicy.  To have them lead the way higher would be fantastic from an overall breadth / momentum point of view because we won’t have to hear the bears say “it’s only AAPL and AMZN”  Ok, let’s switch gears here for a second and talk about TWTR.  The President of the United States announced the location of his NK summit on Twitter. TWITTER. A potentially world changing historic event between two nations and it wasn’t announced at a press conference or on a major news website. TWITTER. Like if we find a way to lasting peace with NK are they going to have to print out that Tweet and put it into the Smithsonian? Imagine if FDR announced the Pearl Harbor attack on Snapchat (actually ignore that, only millennials would’ve found out). What an amazing time to be alive, if you truly want to sit front row to breaking news you gotta be on TWTR and you have to follow @bullandbaird (so so shameless). Winners CTL, EVHC, DISCA, CAH, and Emrging Mkts (EEM). Losers FTI, M, COTY, BKNG, and LB. Have you looked at LB lately? Did Victoria Secret start selling dot matrix printers instead of bras? The fall from grace (down 68% from its high) has been absolutely breathtaking (Baird rates outperform). 

We saw a small profit taking move late in the afternoon but eventually bounced back to close near the highs, 2,722, up 0.9%. The VIX has been crushed back to 13 and the question now is “has the correction run its course?” Sentiment has been reigned in, valuations have dipped, and the euphoric move on January seems a lifetime ago. What I’d really like to see is a return to the boring grind of 2017, an air of normalcy where FB isn’t shooting itself in the foot, Trump isn’t slamming one of our greatest companies, and the CFO of CAT isn’t being misunderstood.  If that happens then yea, I think the correction is over and we can start to push back towards the high in a “non-spikey” way (January was ridiculous). Today is Baird’s Annual Meeting so I’m going to leave this here desk and head over to a giant arena where I’ll spend a few hours talking with the best people on the planet.   I’ll tell you what, working for a small financial services firm that has a laser focus on clients and a management team committed to REAL VALUES is refreshing in this day and age. I hope they don’t lay me off because of MIFID, I have such big plans for this place.  

Final Score:  Dow +80bps, S&P500 +94bps, Nasdaq +89bps, Rus2k +48bps

News Highlights:

Gotta jet so watch people hurt themselves.   We’ll switch back to inspirational videos next week.

https://www.youtube.com/watch?v=4IyUHND6c_s

Have a good night