The market was lower in light holiday trading on Thursday. Still, 141 stocks hit new highs on the New York Stock Exchange versus only 13 new lows.

We were reminded the market can actually move lower after the three major indices closed in the red, which means the Dow Jones Industrial Average, with a run of nine sessions, and seven record closes, has come to an end. However, no one is panicking. 

With that being said, there is anxiety about the next catalyst for the market.  What sector pulls the train out of the station?

Perhaps, it will be financials, which set the pace in the first quarter. Well, the sector has been on a stealthy tear; yesterday, Financials (XLF) closed at the high point of the year. It’s building steam with big names such as Goldman Sachs (GS) as it gains traction. 

XLF

I also continue to be impressed and bullish on the industrial sector. I think it’s much more representative of America’s heartland.  It must be the foundation for prosperity, which is widely shared rather than enjoyed largely by the elites when its banks and technology stocks are only things rocking.

Industrials closed at an all-time high even as its biggest weight, General Electric (GE), remained a laggard.

XLI

Industrial names are also good proxies for the global economy, which continues to improve.  Yesterday morning, Caterpillar (CAT) released its machine orders for August, which reflects amazing growth in Asia-Pacific, momentum in Europe and the Middle East, and a steady improvement in Latin America. 

Caterpillar Total Machines (August 2017 vs July 2017) Asia Pacific +44% versus +45% EAME: +8% vs +5% Latin America: +11% vs +10% North America: +1% vs +4% World: +11% vs +12%

Trust

The element of trust is crucial for the market and is becoming a greater question mark these days. 

Wells Fargo’s shenanigans are well known, and the company’s CEO will have to testify before Congress on Octo
ber 3^rd.

Equifax also has made a series of mistakes, the greatest of which might be hiding hacks from customers, will have a chance to explain to Congress on October 4^th.

However, the big news is who’s watching the watchdog. The Securities and Exchange Commission (SEC) admitted its EDGAR system was hacked back in 2016. The SEC detached something and didn’t realize there was a breach for months. Moreover, the SEC buried news of the hack in the middle of a 4,000- page document released to Congress on Thursday night at 8 PM.

I’m sure SEC Chairman Jay Clayton will make a few visits to Capitol Hill as well.

Despite all of that, I’m excited about what’s bubbling beneath the surface, as well as the execution at the White House, which has lifted President Trump’s approval rating. 

Everything is coming together.

Today’s Session

The Ravings of a Madmen

North Korea

Kim Jong Un continues to raise the ante with a string of insults and threats of detonating a hydrogen bomb above the Pacific Ocean.

Quotes:

“I am now thinking hard about what response he could have expected when he allowed such eccentric words to trip off his tongue. Whatever Trump might have expected, he will face results beyond his expectation,” Kim said, saying that he would “tame” Trump “with fire.”

“Mentally deranged U.S. dotard”

Iran

Iranian President Hassan Rouhani announced plans to enhance its missile capabilities after presiding over a military parade where his military showed off a new ballistic missile with range of 1,200 miles, and capable of carrying several warheads.

The good news is the market isn’t freaking out over all these developments.  Remember when this kind of saber-rattling in the Middle East would have sent crude oil soaring?  Or the notion of a rogue nation blowing up nuclear bombs would have sunk the market several percentage points.   That said, there is heighten anxiety about these geopolitical events, and there is a measure of pressure to be felt at the open.

I think the greater issue is what is the next catalyst for the market and making sure rotation keeps money in the market and not seeking the shelter of the sidelines.

 

 

Tweet

 

Home | Products & Services | Education | In The Media | Help | About Us | Disclaimer | Privacy Policy | Terms of Use | All Rights Reserved.