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This report is a sample for information purposes only. These recommendations are closed.
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4/5/2017 9:50:14 AM Eastern Time

Nail Biting Time Is Over
By Charles Payne, CEO & Principal Analyst

 Click here to download PDF version

Yesterday, the market meandered in a very tight trading range ahead of 72 hours of big economic data that will be watched closely on Wall Street, K Street, and Main Street, beginning with tomorrow’s ADP Employment report.

All the major indices were fractionally higher while the big mover of the session was crude oil, which continues to rebound and has reestablished $50.00 support.

It’s all about hype becoming reality.

In the surveys, there is no arguing that the surge in confidence in households and in all areas of large and small businesses has turned the wheels of commerce.  On Main Street, the potential home-buyer foot traffic has expanded positively for the first time in more than a decade after Trump's victory.

Of course, there is a difference between what Wall Street calls soft and hard data.  Surveys are one thing, but we are seeing it materialize into reality.  Meanwhile, the stock market is a harbinger of things to come as it is looking for huge moves in financials, industrials, and materials.

Manufacturing

One area is manufacturing, which has come back to life big time. In yesterday's national report on manufacturing, 17 of the 18 manufacturing industries reported growth and no one experienced contractions.

The market is making note of this as the top performing sectors owe gains to President Trump's Agenda, and to a lesser but important degree, an end to the war on business.

Financials have surged the most in the past six months, in part to the notion that the Dodd-Frank Act will be repealed or, at the very least, prepared to stop punishing consumers. Yesterday, Jamie Dimon wrote to shareholders that banks are sitting on $200 billion to meet risk and regulatory barriers placed by President Obama- they would rather lend that money.

In fact, until the beginning of the Great Recession, bank loans were greater than bank deposits.

Industrials

Industrials are the second best performing sector, led by United Rentals (URI). In my mind, it’s the best proxy for re-building America, and Caterpillar (CAT) is the best global proxy for industrial growth. Speaking of which, Caterpillar caught an upgrade to the “Conviction Buy” list at Goldman Sachs (GS) Monday morning, followed by a very positive piece in Barron’s after the close.

Materials

Materials are the third best performing sector, led by Freeport- McMoRan (FCX), number 2 percentage gainer, +24% as copper prices surge. Note: this week has seen a spike in metallurgical coal names such as Arch Coal (ARCH).

While I want to emphasize that the market will go down from time to time with occasional crashes, I think we are on the cusp of a super rally that will lift the market significantly higher in the next three to four years. Please don’t miss it.

Two weeks ago, I mentioned my special report on marriage and the economy – I finally finished it, and it’s great. Contact your representative for a free copy or download it here. Email research@wstreet.com for assistance. 

Today’s Session

The ADP Report blew the doors of consensus estimates, driven by those good-paying jobs in the goods-producing sector.

  • Mining +4,000
  • Construction +49,000
  • Manufacturing +30,000

It’s the foundation of the economy which is becoming firmer each month, not just the amount, but the quality of jobs.  Higher paying jobs that also bring a sense of pride to the nation.

Long Idea: Cigna Corporation (CI) @ $151.31
Industry: Medical/science; Healthcare Plans
Click here to view the trading alerts that followed this recommendation

Trading Parameters
Status Closed
Entry Price$151.31
Entry Limitsee comments
Stop LossN/A
Target$181.00

BACKGROUND: Cigna Corporation (Cigna), together with its subsidiaries, is a health services company. The Company offers medical, dental, disability, life and accident insurance and related products and services. The Company's segments include Global Health Care, Global Supplemental Benefits, Group Disability and Life, and Other Operations and Corporate. Its Global Health Care segment aggregates the commercial and Government operating segments. Its commercial operating segment encompasses the United States commercial and certain international healthcare businesses serving employers and their employees, other groups, and individuals. Its Global Supplemental Benefits segment offers supplemental health, life and accident insurance products in selected international markets and in the United States. Its Group Disability and Life segment provides group long-term and short-term disability insurance, group life insurance, accident and specialty insurance and related services.

SKINNY: Cigna Corporation (Cigna) breaks out at 151.95; through there we see room to $181.00 in the longer term.


Key Fundamentals
PEG  1.21
Book Value  53.42
Institutional Holdings  88.50
Price/Sales  0.98
Average Daily Volume  1.39M
Shares Outstanding  256.67M
Market Value  38.84B
Insider Activity  10 Sells
52-week High  154.83
52-week Low  115.03
Annual Earnings Estimate  9.51

Analyst Coverage
 BofA/Merrill Resumed  BUY
 Piper Jaffray Initiated  OVERWEIGHT
 Stifel Initiated  BUY



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