Weekend Notes

By Gary Kaltbaum January 28,2017

Couldn’t help but start this missive with what is happening politically. We are not saying all this divisiveness will cause problems for the market. We are just saying it is something to watch. The markets have put a lot of trust in Trump and what he will do going forward. Trust by the market can be quite fleeting. Whether you are on one side or the other, we have not seen it this bad in ages…and doubt it gets better any time soon.

The big story was the move above range this past week. The “duh” statement is: as long as the move holds, market is in good stead. The fact is it is most important breakouts of range stick…so pay attention. As we wrote last week, most everything held support and then 20,000 was taken out while the S&P moved out. There is a lot more earnings to come out which will tell the tale…but what we have seen over the weekend looks like it is already coming into play.

We did want to make note of several things.

Continue to avoid retail…which is now, for lack of a better word, cracking! Many famous names are into new yearly low ground while major indices are at new yearly highs. We cannot tell you how bad that is for this group. We also needed to add that Sears Holdings is now acting like its on last legs. We do not see how this stays as an entity as things go from bad to worse. When you have a chance, check out these names
…Macys, Gap, Bed Bath Beyond, Kohls, Nordstroms, L Brands, Target. A big wow!

Continue to avoid interest-rate sensitive stuff as the bond market is still not cooperating.

Continue to avoid a slew of consumer staple areas and names as defensive issues just aren’t happening. This has been going on for quite a while.

Watch gold and silver. We have been bearish on them for many months. We will need to see some more cards come out of the deck but we are watching the set up for a possible another leg up.

Other than that, not much to complain about YET but as always, pay attention. We are way overdue for some bad behavior. Earnings have not been very good but so far, market is quite forgiving. In fact, some poor earnings have been bought up.