Good Breadth Or Bad Breadth

Equities start the day lower for what is one of the weakest, lamest excuses ever: “too far too fast”. When we can’t find a reason for a selloff the default is either “too far too fast” or “more sellers than buyers.” Both are equally pedantic and both can be roughly translated as “I have no idea but I need to say something because OMG WE’RE LOWER.” I mean sure, the bounce has been impressive but you know what’s equally as impressive? Breadth. My friend @hmeisler writes on it all the time (check her latest here) but my other friend @williedelwiche writes on it too and what he found on Friday could bode well for the future. What he and other are starting to see is a cumulative effect of “breadth thrusts” that have a really good forward track record (zoom the table on his tweet upper left corner). For those of you playing at home a “breadth thrust” is just a large number of stocks rising at the same time and hitting certain thresholds (just go with it...Wall St loves random terms like this). Willie pointed out of that we got one on Friday and that we should sit up and take notice. Now all of this doesn’t mean we won’t retest the lows or that the market won’t do something completely insane making us all look like idiots but if we use these measures of broad price movement to guide our thinking it definitely tips into the “if this happens then things usually get better from here” category (check this tweet from @wgeisdorf too). Hey…we’ll take it right? 

After the open we put “too far too fast” into our rear view mirror because, again, it’s a dumb reason to sell overnight. The low of the session was one minute after the open as we rallied on a couple things. First, WMT reported 4th Q earnings and blew them away. To be honest if you wanted a more meaningful look at consumer spending late last year this is probably preferable to that insane outlier Retail Sales number. Hey…wanna know what one of WMTs bright spots is right now? Online sales, which reached $10B for the first 9 months of their fiscal year. Not bad, I mean AMZN is still larger but companies like WMT aren’t afraid of Bezos and his crew. Second, we rallied off a better than expected housing number (NAHB). You guys know how much I love housing as an indicator so it’s good to see sentiment perking up there. Ok what else…winners were FCX, NBL, NEM, CTL, and WMT. Losers EA, ALLE, IFF, CAG, and HUM. You know who went ex-div today? Karl Lagerfeld, the fashion juggernaut. Now look, I don’t know much about fashion, I still wear khakis and Mickey Mouse polos but I do know that 1) one of my guilty pleasures is a fashion movie The Devil Wears Prada. When Miranda dresses down people I revel in it, I mean who doesn’t love that scornful look she has and 2) This quote by Karl drove a dagger thru my heart: “Sweatpants are a sign of defeat. You lost control of your life so you bought some sweatpants.” Uhhh…ummm…***sulks home to put on his sweatpants and eat doritos while crying***

The rest of the day saw fresh highs but a last minute selloff landed us closer to unchanged, 2,780 +0.16%. There’s a phrase that says “if the US sneezes the World gets a cold,” and I truly believe that’s the case. The US consumer carries the world on its shoulders from time to time as it buys and consumes and drives the World’s largest single economy. So are we sick or close to being sick? Let’s let Brett Biggs, the CFO of WMT, answer that from their conference call today: "This is Brett. I'll start off. The consumer, I think, still feels pretty good to us. You see all the numbers that we see. Wages are still pretty good; unemployment rates low; gas prices are down year-on-year. So, there's a number of things, I think, are still working in favor of the consumer. Like you mentioned, we're watching it, as we always do we're monitoring it in making sure that we're in the right place with the customer”. Does the most important retailer (and largest private employer) in the biggest most powerful economy in the World sound nervous to you? They don’t to me. I know that can change but ???  

Final Score Dow +4bps, S&P500 +15bps, Nasdaq +19bps, Rus2k +33bps.

News Highlights:

I have a bit of inspiration for you tonight. Put on a pair of headphones or listen to this video in a silent room because you will feel voices coursing through your soul. Imagine listening to this live, I bet it was incredible, the music just keeps soaring higher and higher.

Have a good night