February 20, 2019

The Dow Industrials and S&P 500 are building on their gains after rising above their 200-day averages. The Nasdaq Composite Index is in the process of testing its 200-day average and its December high at 7486. A close above both barriers would be a positive sign for the Nasdaq and would strengthen the market's uptrend. Financials, energy, healthcare, and industrials are leading the day's advance with gains of 1% or more. Small caps are also showing more leadership. That may be due to recent strength in the dollar which usually favors smaller stocks. Banks are leading today's gains in the financial sector.

02-20-2019 SPY

  • The NAHB/Wells Fargo Housing Market Index (HMI) rose four points in February to 62, above the consensus of a one-point gain to 59.
  • The index rose for the second straight month, this is the most we have seen since December 2017, as higher consumer confidence and lower mortgage rates boosted expectations for a solid spring home buying season.
  • All HMI components advanced. Stronger builder confidence suggests a pickup in housing starting over the next few months.
  • Retail sales plunged 1.2% in December, the most since September 2009, and contrary to the consensus of +0.1%.
  • Nearly all major retail categories declined, with some displaying the largest drop in over a decade.


The steep decline in retail sales at yearend, at odds with reports of a generally strong holiday shopping season, was likely driven by the stock market selloff around Christmas and the partial government shutdown. Since the shutdown spanned most of January and tax refunds would likely be smaller than previous years, retail sales could remain weak in the first few months of 2019. Although, employment and income growth are solid, credit conditions are still favorable, and some measures of consumer attitudes are picking up, all of which bode well for the outlook for consumer spending growth this year. Indeed, the Bloomberg Consumer Comfort Index jumped 1.8 points last week, the most since February 2018, to 60.0, its highest level since early December, with all of its components advancing. 

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