Mid-Day Recon

Good Afternoon,
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                          The S&P 500 is testing the 2172 level at the top of today’s chart for the third time as I type out this note. Should this level crack early this afternoon, then 2180 becomes a distinct possibility. A failure here allows a retreat as far as 2166, which is our local rally point. While the index acts well enough, leadership has changed, at least for now. That said, let’s take a look under the hood.
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1) Strong macro.  October Retail Sales hit the tape impressively, and brought with them upward revisions to September. Strength was seen in Non-Store retailers, Motor vehicles, Gasoline, and Building Materials. You expected that. Right? What you not have seen coming was the strength in the Sporting Goods, Hobbies, Book & Music Store sub-component. (Yes, that’s all one category). What does this mean, kids? This means that Jimmy, and Suzy are buying stuff they like !!!  Not just stuff they need. That’s key. On top of that wonderful bit of information, the November Empire State Manufacturing Index printed in expansion. Why? Because New Orders printed in expansion for a change !!  (celebratory balloons)
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2) Gold, (Long-dated) Treasuries and Oil all find a bid.  Especially Oil. That’s a good thing, because without the pop in WTI, we would not be seeing this move for the entire Energy sector, which just happens to be leading the way today. Gold and Treasuries have barely stabilized, but they are not being brutalized. The US Dollar was weaker this morning, but has been untamed. The animal spirits have found the greenback. Beware.
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3) Money going in. Besides Oil, Energy, Treasuries, Gold and the USD ??  Tech and Utilities. With expanding yields comes life for the dividend reliant, interest rate sensitive Utility sector. Tech is just trading with momentum as the risk gang files back in.
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4) Money going out. The recent winners are for the most part, today’s losers. There’s a nasty bout of profit taking making the rounds among the Financials, Defense stocks, the Small caps, and the Railroads.
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5) Pasta Salad for lunch.