S&P 500 Falls for 4th Straight Session

Picks of the Day December 6, 2017.

S&P 500 Falls for 4^th Straight Session

Though on the face of it, indexes didn’t move much yesterday, there were tectonic moves under foot. The first thing that stands out is that the indexes ended mixed, the tech-leaning NASDAQ recovering, though the S&P 500 experiencing its fourth consecutive day of losses. Energy sector weakness counteracted the tech sector recovery, the S&P 500 suffering its longest losing streak since March. Add to that concerns about the ultimate fate of the Republican-led tax bill, and the quiet that stands out from the minor changes on the major indexes gives little insight into what’s really on the market’s mind.

As noted, energy stocks were some of the biggest losers on the day, crude tumbling 2.9% and the energy sector shedding 1.3% in turn. Tech stocks, though, bounced back, edging up 0.8%. So far, though, the sector is trading off 1.8% on the month. Facebook (FB) rose 1.87%, Alphabet (GOOGL) tacking on 1.3%. Amazon (AMZN) gained 0.9%. We saw a rarity yesterday in the market, a public spiff between Amazon and Google, the former refusing to sell some Google products on its site, the latter retaliating by blocking YouTube on some Amazon products. Pitted against each other, Google has long moved beyond searching capacity, and Amazon, is very far from being strictly a retail company. We’ll have to wait and see how this dramatic faceoff unfolds!

Why have tech stocks struggled of late?! The most common answer now given is something called AMT. AMT is an abbreviation for Alternative Minimum Tax and what’s on everyone’s minds, now, is whether the bill stamped out between the two houses of Congress will include it or not. The House version repealed it; in a last minute amendment before its bill Saturday morning, the Senate decided to keep it in. The Oxford definition is “a federal tax introduced in 1969 and intended to prevent wealthy individuals or companies from avoiding the payment of income tax through deductions and credits.” And truth be told, that’s where the money’s at! If the bill doesn’t included the AMT, it could be an even bigger boon for companies. We’ll recall, the thinking behind the market’s huge run is lower corporate taxes = higher dividends & more stock buybacks = more cash coming investors’ way!

Aviance Capital Management chief investment officer, Chris Bertelsen, noted, “People are becoming a little more risk averse with the march up in technology. While these are great companies, a stock like Amazon AMZN, +0.94% isn’t cheap. They’ve had a huge run, and they’ll need a pause to refresh a bit, which could be 10-15%, or even 25% in some names.” If that happens, it could be a bloodbath for the sector. With so many concerns up in the air – the federal government even possibly shutting down come the weekend – the conventional wisdom would seem to make sense, i.e. to preserve this year’s hard-earned gains.

On the bitcoin front, its meteoric rise hasn’t halted, Bitcoin representing half of net cryptocurrencies. The coin moved above $13,000 on Wednesday hitting an all-time high. Like we’ve noted before, trade at your own risk. “What goes up, most come down,” especially seeing that nearly half of respondents in a recent survey think that it’s just another bubble; the worth of a bitcoin, more than anything else, is a function of the worth people attribute to it, something that could change instantaneously. Reuters reported today that NiceHash, a cryptocurrency marketplace, reported that its wallet had been breached, with one executive saying that nearly $64 million worth had been lost. A heist like that could never happen with your stock or bond holdings, or cash, smug and safe in your bank account.

American Eagle (AEO) rose 2.4%, Brown-Forman (BF.B) rising 6.5%. United Parcel Service (UPS) fell 1.7% after warning of delivery delays.

Today’s Economic Calendar: Jobless claims will be coming out at 8:30, N.Y. Fed Chief, William Dudley speaking at 8:30. The EIA Natural Gas Report will be released at 10:30, the Fed Balance Sheet and the Money Supply coming out at 4:30.

Hot Stocks: AVGO, LULU, OKTA, OLLI

Have a great trading day!

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Today’s Picks – Swing “New-York Strategy”

No.1 –   SPLK