S&P 500 BREAKOUT, HCM-BUYLINE® REMAINS STRONG - LOOK TO BUY BEATEN DOWN STOCKS

August 26, 2020

It is a breakout on the S&P 500; the HCM-BuyLine® is strong, and any pullback should be seen as a buying opportunity. Tech looks strong and we see no reason that trend will slow down. A lot of companies that have been beaten down are looking like good buys; a lot of hospitality stocks, airlines stocks, even stocks like Carnival Cruise Lines look to be worthy risk-reward investments. 

S&P 500

Very positive news on capital goods orders:

  • Core capital goods orders increase by 1.9% in July
  • Core capital goods shipments rise 2.4%
  • Durable goods orders jump 11.2%

New orders for key U.S.-made capital goods increased in July, though the pace slowed from June's robust gain, suggesting the rebound in business investment would be gradual amid uncertainty about the course of the COVID-19 pandemic.

Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, increased 1.9% last month, the Commerce Department said on Wednesday. These so-called core capital goods orders jumped 4.3% in June.

Core capital goods orders are slightly below their pre-pandemic level. They fell 1.9% on a year-on-year basis in July. Last month's increase in orders was in line with economists' expectations.

Though new coronavirus cases have subsided after a broad resurgence following the reopening of businesses in May, the path of the pandemic remains unclear, with many hot spots remaining.

Core capital goods orders last month were supported by demand for machinery, fabricated metals products, computers and electronic products and electrical equipment, appliances, and components.

COVID-19 UPDATE: 

Decline in COVID-19 Cases

Cases are dropping and dropping fast. If the trend continues, which we think it will, we could see a drop in the first week of September that confirms most, if not all states need to reopen. The cure is now more deadly than the disease. After a disturbing conversation this weekend with a trained/degreed psychologist who works with individuals contemplating suicide and other mental health issues, in a candid discussion, her update was shocking. Suicide attempts, domestic violence, child abuse, drug use and overdoses are going through the roof. The firm she works for cannot even keep up; she estimates their call volume is up 7-fold.  

Germany Seated Diners - YOY

UK Seated Diners - YOY

Germany and the United Kingdom have for the most part completely opened back up. You can see the chart from Open Table for both countries that their citizens are back to eating out --- a lot. I have also enclosed the same chart for the U.S. below, sad as it is. Bottom line, it is time to reopen the economy.

U.S. Seated Diners - YOY

 

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