Morning Market Thoughts

by DAN Good morning. Congressional hearings continue today, and I suspect that trading will continue sideways for another day as the market waits to hear from the high profile banking stocks tomorrow. Over the past 7 days of trading, the S&P has closed higher than the open 5 times, lower than the open just 1 time, and one day was a draw. Trading volume on the “higher close” days was noticeably higher than trading volume on 2 weak days. So there is still an underlying bid to the market.

Several drugmakers were down yesterday in reaction to a statement made by President-elect Trump in yesterday’s entertaining press show. Fun to watch if you have the time. Irrespective of where you sit in the political spectrum, it’s always fun to watch a bar fight as long as you know everybody will walk away from it with only bruises. The one moment in the show that was the most meaningful to stocks was when PEOTUS said, “Drugmakers are getting away with murder.” It was interesting to see his comments about buzzkill and CNN, but those weren’t market moving comments. But when he made his comment about drugmakers, Mylan (MYL) (maker of EpiPen, which has recently been in the news for shamelessly gouging customers), Valeant Pharmaceuticals (VRX) and Teva Pharmaceutiocals (TEVA) dropped 4.3%, 6.5% and 2.6% respectively. In just 20 minutes, Pfizer (PFE) dropped 2.8% — a pretty big selloff for a megacap stock like Pfizer.

Today, they’re snapping back just a bit (I don’t think there is a trade here — I’m just pointing it out).

One thing about railroads — I looked at them last night in our online webinar session and noted the breakout in Csx (CSX). CSX is the largest coal transporter, and that is likely a key reason why the railroad is outperforming its peers.

And speaking about coal, look at Consol Energy (CNX), Suncoke Energy (SXC), Westmoreland Coal (WLB) and Natural Resource Partners (NRP). These coal companies have all been trading sideways after first staging impressive post-election rallies. There has been little written about coal lately, but I suspect that breakouts in these stocks will be noticed. And once the media and large traders see the strength (which is not yet evident…but is anticipated), these stocks could be quite impressive. I’ll cover them in tonight’s Strategy Session and give you price levels that I think are important.

There were several questions last night that I did not have a chance to get to. I apologize for that, but I will dedicate some time to answer them, and will deliver a video when it is done. Thanks to everyone who attended. I plan on doing these more often.

See you in the forum.

–Dan

Market Update