Post-election rally continues led by small caps and financials, as tech slips and Bitcoin surges

The post-election rally continued to push the indexes higher….The Dow + 305 pts or 0.7%, the S&P + 6 pts or 0.1% (closing above 6000), the Nasdaq while up 12 pts or 0.06% did struggle a bit – as chip stocks were lower on the day – think NVDA – 1.6%, AMD – 0.5%, AVGO – 2.6%, INTC – 4.4%, QCOM – 1.5%, the Russell continues to enjoy the company of buyers, outperforming the other indexes– rising another 35 pts or 1.5%, the Transports added 212 pts or 1.2% while the Equal Weighted S&P gained 40 pts or 0.5%.

The equal-weighted S&P outperforming its sister index – the S&P – hinting at the ongoing broadening rally – Recall the S&P is a market capitalization index – so larger mkt cap companies have a greater influence on the index – the Equal Weight S&P removes that ‘influence’ so all stocks have an ‘equal weight’ which then gives us insight into where money is moving…. with street strategists making note of shifts in stock positioning as the year progresses, particularly money moving from tech to Financials – the XLF + 1.5%, Industrials – XLE + 0.8%, Consumer Discretionary + 2%, Retail – XRT + 1.4%, Airlines – JETS + 2.2%, Oil Exploration and Production – XOP + 1.5%, Aerospace & Defense – XAR + 1.5% etc.

We saw money move out of Tech – XLK – 0.6%, Healthcare – XLV – 0.6%, Basic Materials – XLB – 0.4%, and Real Estate – XLRE – 0.9%,

Bitcoin surged by more than $8k to trade in the $87k range – it is up 35% since the election and 106% ytd and that is causing all kinds of excitement in the sector.  Coinbase, the biggest beneficiary exploded up 86% in the last 7 days – all this a direct result of Trump’s position on crypto – which is in complete contrast to the current administration leaving Gary Gensler on the ‘unemployment line’.  Other names in that group include PYPL + 42% ytd, SQ + 62% ytd, FI + 62% ytd. 

The dollar gained another 0.5% to end the day at $105.49 and that sent the BCOM (Bloomberg Commodity Index) lower – falling 1%.  Oil lost 3.2% to end the day at $68.15, but is trying to find support this morning as it is up 0.8% at $68.60 while Gold got punched in the face – falling $68 to end the day at $2625/oz. This morning gold is down another $26 at $2599 and appears to want to test intermediate support at $2566.

The bond market was closed yesterday for the Veteran’s Day holiday but this morning the 2-yr is yielding 4.30% while the 10-yr is yielding 4.34% - both up from Friday’s level.   Analysts are expecting the 10 yr to test last week’s high of 4.47% as investors consider what the upcoming inflation data may say about underlying inflation. 

CPI is due out tomorrow – m/m figures for topline and core CPI are expected to remain stable.  Y/y reads for top line CPI is expected to tick up to 2.6% from 2.4% while Core CPI y/y is expected to remain unchanged at 3.3%.  PPI is due out on Thursday and THAT is expected to tick higher on all reads…. Top line is expected to come in at +0.2% m/m (vs last month’s 0.0%) while Core PPI m/m is expected to tick up to +0.3% from +0.2%.  Y/y figures coming in at + 2.3% up from +1.8% (so that is a bit concerning) and Core PPI of +3% up from +2.8%.  So, we ask – will this put the brakes on the rally?  We’re about to find out.

This morning futures are finally taking a breath……Dow futures -90, S&P’s -17, the Nasdaq -70 while the Russell is -18 as some analysts are concerned that investors, traders and algo’s have taken stocks to levels that are now overextended.  All of the indexes are kissing or breaching RSI’s that suggest stocks are overbot, something I have made clear and warned about on both Friday and yesterday.   ….and think about it, it does make sense…. stocks have been on a tear since last Wednesday – at some point they need time to digest the news and the movies.   

European markets are weaker as well…. - Spain down 0.7% while France is 1.25% lower.  German inflation data rose by 2.4% after rising by 1.8% in September…- not what the ECB wants to see…. Later in the week Europeans will have to digest Eurozone Industrial Production, Eurozone GDP, and UK GDP in addition to US inflation rates.  BoE Governor Baily and ECB President Christine Lagarde to speak on Thursday.

The S&P closed at 6001 – up 6 pts…. And while that is exciting, I suspect that stocks need to digest all the news. The S&P gapped up on November 6th…. leaving a hole in the chart – on the 5th – it closed at 5782 and on the 6th, it opened at 5862 – and 80 pt gap – so don’t be surprised if we ‘fill’ that gap.  Much will depend on the eco data that we are getting this week in addition to the CPI/PPI data that we discussed.  Real Avg Hourly Earnings y/y are due out tomorrow, Retail Sales due out on Friday, along with Industrial Production and Capacity Utilization.

Earnings today include HD, ADM, HTZ.

We will also hear from Fed Governor Chrissy Waller, Minneapolis’s Neely Kashkari, and Philly’s Patty Harker.  Tomorrow includes – Kansas City’s Jeffrey Schmid, Dallas’s Lorie Logan and St. Louis’s Alberto Musalem.  Thursday brings Fed Chair JJ Powell, NY’s Johnny Williams and FED Governor Adriana Kugler.

Stuffed cubanelle peppers

Another Thanksgiving vegetable to serve….and so good….

Cubanelle peppers are the long Italian peppers used for stuffing.  Pick up a dozen from the store and try this recipe.

You need:  Cubanelle Peppers, Italian seasoned breadcrumbs, olive oil,

Put the breadcrumbs in a bowl and add some olive oil - enough to wet them but not enough to soak them.... mix well.

Now - using a teaspoon - carefully stuff the pepper - push the breadcrumbs deep into the pepper with your finger if you need to.  Once stuffed - place in a baking dish - alternating 'head to toe'.

Preheat the oven to 375 degrees.

Now drizzle the peppers with a bit of olive oil - not too much - they will make their own oil....

Cover with foil and place in the oven - bake for about 30 mins.  Now remove the foil and let them brown a bit.... if there is too much oil - just take a spoon and remove some it.

Let them brown for about another 10 - 15 mins or so.  Remove and let stand while they cool.  Now - if you overstuffed them - then expect to see some of the stuffing come out of the pepper - no problem - It's all good.  Serve alongside the other veggies at your Thanksgiving table.