It was a somber day across the nation as we put things in their proper place including life, family and dreams.

But, so many of our dreams revolve around the economy in general, and for millions, the stock market in particular.   On that note, we were reminded of the resolve and greatness of America.  All the major stock indices closed at new record highs. 

Materials continue to outperform, and were the best performing sector of the session, but the most compelling sector of the session was financials.  Just a couple weeks after Jamie Dimon dissed Bitcoin saying, “it will end badly,” reports say Goldman is consider a trading desk specifically geared to crypto –currencies as Bitcoin has come roaring back.

Financials have been drastic underperformers after leading the Trump rally immediately following the election.   This group is now a value investment.

General Motors broke out last month after more than a year of taking market share. It has gone from a value stock to a momentum stock. 

This kind of describes the broad market, where breadth is overwhelmingly bullish.  It is hard to find value, but you must ride the wave.   On that note, just because share price moves higher doesn’t mean a stock is overvalued or overbought if the underlying fundamentals are improving even more rapidly.

Ironically, stocks that are not working are being abandoned as investors, mostly professional money managers, chase performance.  Yet, in this pile of laggards are the names that will breakout in six months to a year, and then become the darlings.

Therein lies the challenge of investing. 

Many feel the need to catch up immediately and assuage that feeling of missing the rally while being smart enough to position for the future.   It’s a lot harder than it looks.

Today’s Session

I love getting updates on the economy from businesses.  These comments from the CEO of Lennar, which posted strong financial results, speaks to how the surge in enthusiasm becomes economic reality.

Stuart Miller, Chief Executive Officer of Lennar Corporation, said, "We are pleased to announce our second quarter results as we achieved net earnings of $213.6 million, or $0.91 per diluted share. These strong results were supported by an improved macroeconomic environment, renewed optimism, wage and job growth, and increased consumer confidence. We are now seeing, contrary to recent reports on housing starts and building permits, more of a reversion to normal in the housing market than the slow and steady recovery pace of the last several years.

Of course, it’s easy to be this giddy when your company just recorded 8,898 orders, the highest in a decade, and backlog grew by 19%.  Margins improved sequentially as sales incentives per home sold decreased to 5.5%, the lowest since 2006.

On that note, this is a big week for economic data culminating with the employment data on Friday, so I expect anxiety to creep into the picture at some point.

We are working on new list of potential buys, and might be taking profits on some older positions, so stay tuned.