Strangest of Rallies, Wonder Woman 1984, retail sales, Apple’s turning point

At first glance, everything looks good enough. Day two of our seven day “Santa Claus” period seems very hot.

The president involuntarily signed the bill at about $ 2.3 billion in expenditures, which included both $ 1.4 billion intended to keep the government afloat at the end of the 2021 financial year and $ 900 billion in Covid aid funds. Futures markets set the stage for a strong session overnight, well ahead of Monday’s opening clock. Certainly, by the end of the day, the Dow Industrials, S&P 500 and Nasdaq Composite will all reach record levels again. However, the longer the day lasted, the more and more the march, as well as the internal stock market, simply deteriorated.

I recently wrote to you that things can get dizzy sometimes this week. They can. Sometimes, despite your best effort to get all the ducks in a row, they simply do not stand together.

The US dollar this morning appears to be (weaker) against most of its reserve currencies (not the yen). Same as at this time on Monday morning (it’s about 4 o’clock ET as I write this). Just one thing. The dollar basically rose sharply after opening on Monday and then sold hard again. Gold and crude move against every dollar against the dollar, while bitcoin has held its ground on an interesting level. In terms of equities, I told you that our highest focus on capitalization indices was all records, but it had to be one of the least impressive performances to be honest.

Impressive composition

The headlines read well. However, breadth and composition will hurt the curious mind. One look at the sector performance charts tells investors that while it may look good at the moment, we may just have to skate with our heads down.

I do not care to see that the sectors Communication Services (led by the Internet), Consumer Discretionary and Information Technology take the lead. The technology sector was our friend again this year. However, this is misleading. In the technology sector itself, we see the Dow Jones US computer hardware index rise by 3.4%, basically because Apple (AAPL) has risen by 3.6%. In fact, the whole FAANG was strong.

The truth is that hardware transported technology on Monday. The Technology Sector Select SPDR ETF (XLK) gained 1.1% on the day, despite the fact that the Dow Jones US software and Philadelphia Semiconductor indices both contracted for the session (both rounded down to -0.2%) . Basic. information technology has risen without a large share of the technology stocks.

Look further at the sector performance tables. Numbers 9, 10 and 11 (out of 11) would have surprised investors amid a march based on expanding the deficit spending that was supposed to improve the lot of small businesses and households. These sectors at the bottom of the table were all cyclically oriented and perform best as an economy grows. The industrial, materials and energy sectors all stumbled on Monday.

To put an exclamation point on this statement, the Dow Transports (part of the industrial sector) not only closed flat on the day (because Delivery Services and Trucking counteracted power in the airlines and the railways), but the REITs , Consumer Staples, and the utilities, all defensive in nature, outperformed the three growth-oriented sectors mentioned above.

Of course, this is a funny way to agree.

There is more

The breadth, in fact, was an awful Monday for a day, where the three big-cap indices that the media likes to talk about posted all gains of or nearly 0.75%. Market watchers need to understand that traders make gains in small to mid-cap stocks. Makes sense. The Russell 2000 is currently on an eight-week winning streak. The New York Jets have not done so since 1986. To put it in perspective, Ken O’Brien was the starting quarterback of that team. It was O’Brien’s age of 26. He’s now 60.

Even more interesting, while our three major capitalization indices raised football in the end zone on Monday at 16:00 ET, the truth is that winners only barely beat the winners on the New York Stock Exchange and on the Nasdaq Market Site. Falling volume beat the rising volume on 11 Wall Street (yes, even with the indices on records), and it really wasn’t even that close. However, trading volume was very light on the NYSE. In fact, the total trading volume for S&P 500 members is 26% less than its own simple 50-day moving average. In other words, there is more slumber than selling for this more cyclical type of name.

Not so, but in Times Square. For Nasdaq-listed names, declining volume increased by more than 3 to 2, while trading volume returned to normal levels. In fact, for Nasdaq Composite Composers, the trading volume ended up 13% in total above what would be its own SMA for 50 days. These traders did not sleep, but they limited their interest, and although it was wider than just a few stocks, it was just FAANG.

Oh, remember I mentioned that the judges had a great day? There’s a story there.

Wonder Woman and Retail

Is it possible that a federal spending / stimulus bill of $ 2.3 billion has been transferred to the law – with the hope of increased helicopter money still on the table, which would probably be another $ 400 billion to $ 500 billion to the size of the package add – investor decision making on Monday? Yes, is the short answer.

You all know that ‘Wonder Woman 1984’ is considered a relative success (for the pandemic era). The release of Warner Bros. took $ 16.7 million into the coffers, which would have been awful nine months ago. AT&T (T) is the parent company of Warner Bros., and the stock sold on Monday. That said, AT&T is also the parent of streaming service HBO Max, and AT&T reported that half of all HBO Max subscribers watched this movie on Christmas Day. Well, that’s interesting. This is also very good news for the Walt Disney Company (DIS), Amazon (AMZN) Prime, Apple (AAPL) TV +, the Peacock unit of Comcast (CMCSA). Interestingly, Netflix (NFLX) fared poorly among the rest of FAANG on Monday, as well as the rest of the streaming universe, as it’s seriously jeopardizing the company’s market share in the future. All of the above can bring new content without going to the bank, or debt markets if they do not want to.

Now, a word about retail. According to data released by Mastercard (MA) SpendingPulse, overall retail sales increased 3% year-on-year for the extended holiday season, starting with Amazon Prime Day in mid-October. The overall growth in pedestrians was driven by a furious 49% increase in e-commerce, meaning brick-and-mortar stores were basically plunged into darkness. E-commerce has just become less than the 20% mark for overall holiday shopping. For reference, e-commerce accounts for less than 9% of all retail spending for the calendar year 2017. Remember, this is not only the loss of revenue for smaller retailers and retailers who do not do e-commerce well, but also e-commerce is for the retailer a much lower margin than traditional retail. It is much better for the business if buyers come to them. Amazon can compensate lower margin through advertising.

Another reason for the increase in shares of Amazon Monday. This is also why Walmart (WMT), Target (TGT) and Costco (COST) did well. They can all subsidize the last mile to stay competitive. That cute shop in Main Street? Not so. For them, the delivery of the last mile cost is prohibited, and they can not sell advertising space.

Bending point

As we said here today, it was a good day for most of FAANG. Facebook (FB) rose 3.6% to retake the stock’s 50-day SMA. Alphabet (GOOGL) added 2.3% for the day to actually center the last auction just in the middle of a two-month trading range. Amazon has risen 3.5%, and it’s getting interesting now because the stock looks like a rocket bouncing back from its 50-day line.

Now Apple is different, at least technically speaking.

We can talk about iPhone 12 upgrading of superbikes, anything we want. It may or may not develop. We can talk about possible life-saving wear. We can talk about the ecosystem and the captive audience and that it will continue to evolve into a recurring revenue model. The fact is that this is all positive and that the stock is on a slant.

Do you remember this graph? It was the rising triangle we showed you that we are expecting an impending eruption. We now see the outbreak, or at least part of it. Some people may see a saucer here that will place the pivot point to the left of the cup / saucer or at $ 138. Some may think they see a ‘flat base’, but it’s just not flat.

What if we move the top of the rising triangle (we’m still not sure it’s correct) to the $ 138 level as stocks approach that point now?

Much more impressive, if so. Know what I’m thinking? I think AAPL goes to $ 165. At least. For now, this is my target. As for a panicky point, I just am not selling AAPL anytime soon.

Must know

The House of Representatives supported President Trump’s demand to increase the individual stimulus payment in the already signed law, from $ 600 to $ 2000, by 275 to 134, with 44 of the 275 yes votes of Republicans. The ball is now rolling in the Senate with an entire nation, or more specifically the state of Georgia, watching. I do believe that Mitch McConnell will put it to the vote. Part? I do not know, but it puts the few remaining fiscal hawks in government in a terribly difficult position politically.

Separately, the House voted even more overwhelmingly to dominate the president’s veto of the National Defense Act. It will also now be handed over to the Senate. Although I see the president’s point on section 230 of the Communications Decency Act, and I do not know why anyone on either side of the aisle would oppose better regulation of social media (both sides have recently lost one presidential election ) two and has hit social media in response to this), this is not the place to do it. In addition, as someone who served the flag, I often wondered why I serve at bases or walk the streets, named after people who took up arms against the same flag. Just say ‘.

Economy (All Times Eastern)

08:55 – Redbook (weekly): Last 6.5% y / y.

08:30 – Case-Shiller HPI (Oct): Expect 6.9% y / y, last 6.6% y / y.

16:30 – API oil supply (weekly): Last + 2.7M.

The Fed (All Times Eastern)

No public performances are scheduled.

The highlights of today’s earnings (Consensus EPS expectations)

No significant quarterly earnings are available for exemption.

(Amazon, Alphabet, Apple, Facebook, Disney, Mastercard, Costco, and Walmart are shares in Jim Cramer’s Action Alerts PLUS member club. Want to know before Jim Cramer buys or sells these shares? Learn more.)