For the moment, it looks like the hottest stocks in the market might be ready to cool down but, at the same token, retain the heat for the next leg in this marathon run.

This week, there could be an issue with the Personal Consumption Expenditures (PCE) report because higher yields could be Heartbreak Hill.

Yesterday, a rare pullback was led by ‘safe’ sectors, as Technology (XLK), and Consumer Discretionary (XLY) joined Energy (XLE) to finish higher.

Market breadth was negative on the New York Stock Exchange (NYSE) but firm on the NASDAQ Composite.

Market Breadth	NYSE	NASDAQ
Advancers	1,136	2,331
Decliners	1,690	2,004
New Highs	195	229
New Lows	38	90
Up Volume	1.61 billion	3.36 billion
Down Volume	2.04 billion	1.97 billion

The market capitalization of the S&P 500 is at a record over equal weight, a sign for many of a lopsided stock market.

Wall Street Gets Giddy

Wall Street has fallen in love, hook, line, and sinker, with a soft landing or above-trend Gross Domestic Product (GDP) plus disinflation.

Look at the spike in the “Soft landing” story counts on the Bloomberg Terminal – yikes!

Tail Wagging the Dog

Historically, sentiment and confidence have been said to move the stock market. But I’m beginning to think it’s the exact opposite.

We all know a wealth effect influences spending decisions, but it seems that the higher the market, the more the experts return to their drawing boards and sharpen their pencils, and new models are much more encouraging and bullish.

 

The Greed & Fear Index should be called the Optimism Index.

There will be lots of economic data out  the rest of the week.

Salesforce (CRM) is the earnings report, and estimates are surging.

Portfolio Approach

We added a new position in Consumer Discretionary yesterday afternoon and are adding a new position in Technology  this morning in the Hotline Model Portfolio. If you are not a current subscriber to our Hotline premium service, contact your account representative or email Info@wstreet.com to get started today. 

Today’s Session

The S&P 500 has rallied higher in fifteen of the last seventeen weeks, which is the most impressive streak since 1989. 

(Normally I don’t get too excited about this kind of stuff, especially when someone on TV says the market is up three of the last four days – but this points to significant strength…. that should continue.) 

It also invites scrutiny and concerns that the stock market and investors have become euphoric (which on Wall Street is a four-letter word.)

Durable goods coming in weaker than expected helps the rate cut camp.

 

Comments

I'll answer your ? of the week, like this: Do you think the angle of ascent on, ley's say, NVDA is sustainable? Or, say others of the Mag7? They are not quite parabolic, but they're getting there! Charles A Haselberger on 2/27/2024 11:42:40 AM

I believe Stock market is too high, euphoric is a great analogy! Like Charles said, Americans are spending more than they have and not saving. Cindy Wade on 2/27/2024 2:21:38 PM

I think the market is very long n the tooth, but there are also opportunities William Don Hughes on 3/6/2024 2:06:34 PM

Euphoric might be a little strong. But can't deny that most stocks are at the upper limit of their Bollinger Bands. I'm nervous buying new stocks right now. Nick on 3/6/2024 2:50:26 PM

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