New Highs Are Back Baby

Equities start the day higher as we finally, FINALLY have something to talk about.  Remember when the market went sideways for 29 trading days?  I do, it was the lamest thing since Crystal Pepsi.   I would spend hours and hours trying to come up with a funny way to talk about “sideways” before giving up and deleting the miserable recap I wrote.   New highs are back baby, we have some farm fresh price action to talk about.  Yesterday’s breakout put to bed the notion that we might be at a top so now you’re wondering “should I be excited about this move higher or no?”  Yes, the answer is most definitely yes.  What are some of the things we like to see at new highs?  Breadth is one and it’s most definitely on our side.  65% of NYSE stocks are above their 200 day MAVG, the S&P500 cumulative A/D line just made a new high, the MSCI All Country ex US just made a new high, and the NYSE composite index (all common stocks listed in NYSE) also made a new high.  This isn’t just the FANG stocks taking the market higher.  What about volume?  The perma bears always say “there’s no volume, this is all fake news”.  Well, overall volume traded continues to be right down the middle of the fairway, 6.3-6.5B shares a day.  Sectors?  The top performing ones are all of the “risk on” type, fan favorite such as Materials, Tech, and Cons Disc are leading the pack.   Earnings what about those?  Aren’t those supposed to be important?  Yep, and they are growing for the 2nd straight quarter since Q1 2015.  With 105 companies in the S&P on the tape top line is up 2.3% and bottom line is up 5.2%.   There’s a little something for everyone here people so don’t overthink this.   Don’t waste your time looking for negativity when the trend seems SO in place.  You can waste your time fighting the market or you can call up your good friends at Baird and let us give you a few good ideas.   Dow 20k?   Sure, why not, this is a great country with a vibrant economy and endless innovation.   Don’t sleep on the future laid out before you.

After the open we got 20k plus more!  Plenty of new all-time highs from names such as CMCSA, BA, CSX, DE,  ITW, GOOG, ADBE, and MA.   Look at that cross section we have Media, Tech, Industrials, Software, Finance, just anything and everything.   Rising tide --à boats.   Hey, remember when I talked about markets correcting via time instead of price?  It’s now clear that the past month reset the bar and yesterday’s breakout is likely just the start of the next leg higher.  Fight it all you want but I’ve talked to plenty of people who’ve said “I have the wrong portfolio right now, I never expected this post-election bounce to continue”.   Speaking of never expected when’s the last time you looked at IBM? (street has 8 buys 18 holds  3 sells on it)   Do people even talk about IBM anymore?  In the realm of “things you never hear” I bet you could put “IBM is my top idea” next to “boy I wish I used more soy sauce.”  Heck my dad worked there for 30+ years and even he doesn’t mention the place.   Yet it grinds and grinds and grinds (just breaking a 4 year downtrend) because it’s a great American company and those don’t go quietly into that good night.  Losers were few and far between but the biggest one’s were TXT, CA, FCX, STT, and APH.   By lunch the S&P was just shy of 2,300 which also happens to be the year end price target for about 6 strategists.   Crazy.

The rest of the day was up and to the right and when that big old bell rang nearly every major index was trading at a new all-time high.  I swear…if there was a theme for late 2016 / early 2017 it would have to be “would you look at that, never thought that would happen” because you could use it on about 100 things right now  (stocks, markets, politics, sports, deep fried chicken chalupas at T Bell).  So look, when a brand new President starts calling in the CEO’s of major corporations and telling them “we are going to help you as much as we can” I mean…. that’s the kind of environment that’s good for stocks right?  Talk about “don’t fight City Hall”?  Does that just seem way too obvious?  Could I possibly have used more question marks in today’s recap?  Final Score:  Dow +78bps, S&P500 +80bps, Nasdaq +99bps, Rus2k +97bps.      

Volume was good.  Our desk was better to buy.  Buying in Industrials and REITs.  Selling in Tech and Software.  Shorting in Consumer.  News Highlights:

We haven’t ended on a skiing video yet so let’s do that today!   Pro tip:  When you ski out of bounds you might die.   I’ll take the groomers and a beer at Garfinkles thanks.

Have a good night