Stocks lumbered along on Friday and finished flat for the session, but the major indices still managed to overcome a sharp selloff on Monday and end the week with slight gains. And the market accomplished this turnaround in the second half of September, which is known as the toughest time of the year for stocks.
The headline is downright dull today with the S&P rising 0.15% to 4455.48 and the Dow up 0.10% (or about 33 points) to 34,798, giving these indices weekly gains of 0.5% and 0.6%, respectively.
Even the NASDAQ finished around the flatline (after a late session surge) by dipping only 0.03% (or less than 5 points) to 15,047.70, putting it up by less than four points over the five days.
However, these performances become much more impressive when you consider how this week started, namely with a sharp selloff of 1.7% or more on Monday for each of the indices. So the S&P and NASDAQ ended a two-week skid today, while the Dow is back in the green after a three-week slump.
Not a bad turn of events for September.
Obviously, the Fed played the right tune on Wednesday by keeping the stimulus measures in place for now, but warning that conditions are good enough to start thinking about scaling back the asset purchases. Many people think the Committee will start the ball rolling before the end of the year… and investors seem to be OK with it.
The Evergrande situation continues to be perilous with China’s largest property developer still in danger of defaulting without help from that country’s government. However, the market, which fears contagion from such a big failure, calmed down after the company resolved a $36 million interest payment on Wednesday. Of course, this issue remains unresolved so don’t be surprised if we hear more about it in the days ahead.
Speaking of unresolved, we’re still waiting around to see if the government is going to shutdown next week. Congress needs to pass some funding by September 30 or the doors are going to close in October. It’s just another thing that investors will have to worry about.
The good news is that September will be over next Thursday. Despite the past three days, the major indices are still down approximately 1.5% each so far this month. Let’s see if we can get back some of those losses next week.
Today’s Portfolio Highlights:
Counterstrike: Shares of food and drug store giant Kroger (KR) have collapsed 16% from recent highs due to supply chain issues. However, Jeremy agrees with analysts that this is likely a temporary problem. But the real head-scratcher with KR is that the market overlooked a strong report, which included a positive earnings surprise and even a raised fiscal year 2021 outlook. The stock has pulled back into a technical buy zone and now Jeremy sees profit in the aisles. He added KR on Friday with a 4% allocation. The plan is to add more on any further unnecessary pullbacks, while enjoying a 2% dividend along the way. Check out the complete commentary for more on this new pick.
Stocks Under $10: “This should have been the chance for the quick traders to take profits and sellers should have been able to force this market down a little more here. Instead we see a mostly flat day and that is about as positive of an event as we could have.
“This is making me more and more aggressive in my stance and I believe that we are going to be making new highs in early October.
“Everything I am seeing, and I mean everything, is telling to get and stay aggressive. This week I will be fine tuning all the portfolios and making sure we are positioned for success.” — Brian Bolan.
By the way, this portfolio had the best performer among all ZU names on Friday with RCM Technologies (RCMT, +4.8%).
Value Investor: “Add onto all of that that there is uncertainty in Washington DC, with the Federal government possibly facing a shutdown next week and the raising of the debt ceiling deadline looming by mid-October.
“I’m not a fan of what is going on in DC. We’ve seen this movie before, specifically in 2011, and it didn’t end well then. In July 2011, the Dow fell for nearly 2 weeks and quickly corrected on worries about a US debt downgrade before an agreement on the debt ceiling and budget was reached.
“In 2011, the sell-off was a big buying opportunity, and I’m expecting it to be the same in 2021 if it happens this year too.
“But first, we’ll have to deal with the pain of the sell-off.” — Tracey Ryniec
Have a Great Weekend!
Jim Giaquinto
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