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Wall Street Strategies has been providing independent stock market research since 1991 to individual, retail and institutional clients through a balanced approach to investing and trading. Charles Payne, our founder and chief analyst, is routinely sought after for his stock market, political,... More
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  • Plane Taking Off - By Charles Payne

    After a string of sessions marked by the market holding key support for three straight sessions before the remarkable reversal last Friday, and continuing yesterday, the spurt may run out of steam. So, the question now is can new support levels hold to build a base for another leg higher. Of course it's one thing to rebound from the kind of drubbing stocks took in September, and another to rally back to the old highs. On that note, the market will need leadership based on fundamentals.

    PepsiCo (NYSE:PEP) posted a strong earnings release this morning, beating estimates on both the top and bottom lines. Earnings per Share (NYSEARCA:EPS) of $1.35 were $0.09 better than the consensus estimate. The stock is indicating to open higher.

    We just received the latest read from the government on the August goods and services trade deficit of $48.3 billion. This was the highest deficit since March of this year. A strong dollar continues to weight on exports, which were at the lowest level since 2012. A reduction in overseas sales of U.S. produced petroleum and industrial supplies attributed to the bulk of the decline. Overall, year to date, the trade deficit increased $17.6 billion, or 5.2%. August exports were $185.1 billion, $3.7 billion less than July. Imports were $233.4 billion, $2.8 billion more than July imports. Imports have seen an increase largely from the shipment of the latest iPhones and consumer electronics, which were up a whopping 30% to $9.01 billion. This report didn't move the market much as the estimates called for goods and services deficit of $48.5.

    Key parameters from here on the DOW:

    • Resistance 16900
    • Support 16400

    In some ways, I'd like to see support tested before resistance. Either way, let's see if there's consolidation this morning.

    Oct 06 11:26 AM | Link | Comment!
  • The New Norm? By Charles Payne

    There is still much confusion over the jobs report, and the reaction on Friday. Those that boil the market down to its most simplistic aspects are rejoicing as they see the Fed holding pat. But that wouldn't explain the initial 258 point drubbing, or why the Dow is still down 2,000 points from the high, and global markets are at multi-year lows. On the other hand, when a firm like JP Morgan says we should expect 75,000 jobs a month as a new and okay norm, it blows my mind. I'm not sure what birth-death model they're using, but it flies in the face of conventional wisdom and common sense.

    I get that birth rate is low, and lifespans are longer, but the notion we should welcome lower job creation data is nuts.

    This economy never got on track the way it could or should have because of suicidal fiscal policies. If we had the same animosity toward tyranny in the world that the administration has against individual and business success in America, there would be no ISIS; they would be decimated like the coal industry. But there is the intuitive nature of Americans to succeed even as there are fewer incentives and lots of penalties along the way.

    For the moment, there are still a lot of unanswered questions from corporate profits to consumer spending. Maybe, I should have flipped those since the latter has to influence the former, except for the last couple of years, when it's been about fewer shares rather than top line growth. I like when companies buy back its shares, but I love when companies have confidence to build factories and hire people. By the way, government can't make this happen, but must facilitate a backdrop that encourages this to happen.

    For now, the markets around the world are higher, mostly consolidating new bottoms, which is positive, but not the same as launching.

    I'll excited about the opportunities but let's stay cool and calm. This is a period where we have to chase a little, which means we won't get the absolute bottom, but will feel very confident after clearing key technology and fundamental hurdles.

    Oct 05 4:06 PM | Link | Comment!
  • Three Months Of Hell In The Books By Charles Payne

    Please watch 'Making Money With Charles Payne' on Fox Business - tonight, my special guest is GOP presidential front-runner Donald Trump.

    Tough Quarter- Tough Crowd

    It's become a life-and-death struggle for the market that has been the scorn of bears and shorts, and any number of assorted curmudgeons. It may be a bit of hyperbole to say that this is a life and death situation, but those that want to see this market lower are salivating and ready to pounce while there are a few defenders on the other side. Markets are cyclical and were due for a pullback. In fact, it is long overdue after 1,400 days without a correction.

    So, here we are. It's not the end of the world, but the chorus of doom is loud, making each down session feel that much worse and hopeless.

    This was the third down quarter for the Dow; the S&P 500 was off 6.9%.

    Over the past three months (the only sector in the green) investors flocked to utilities as a flight to safety.

    However, a look at the actual performance of individual sectors clearly underscores a headline-driven quarter. The global economy took a bigger bite out of U.S. stocks, marked with domestic uncertainty. For the quarter, energy and materials took it on the chin from the oil war and China's woes. Then, there's healthcare, which was hammered from high valuations that made it a sitting duck when Hillary attacked it with criticism and a call for price caps.

    • Utilities +4.4
    • Consumer staples -0.8
    • Consumer discretionary -2.9
    • Information technology -4.1
    • Financials -7.2
    • Industrial -7.4
    • Telecom -8.0
    • Healthcare -11/7
    • Materials -17.4
    • Energy -18.1

    So, what's the deal from here?

    Testing the recent lows is still in play, but the last two days has seen the kind of resolve needed to turn this ship around. However, there has to be a spark as well. In the meantime, in addition to global economic concerns and our own uneven recovery, there's a debate over the valuation of domestic stocks. I think this is very much overblown. Price-to-earnings (P/E ratios), down from a year ago, is nowhere near levels normally associated with massive stock market bubbles.

    Valuation Debate

    YTD Return


    PE Year Ago

    PE Trailing 12m

    PE Forward 12m


    Dow Jones





    S&P 500





    NASD 100





    Dow Transpos










    Russell 2000




    I prefer to use forward price-to-earnings ratios when modeling for future value propositions. Even if you're a purist, who believes in using trailing earnings, the Dow Jones is reasonable; the S&P could come in more, although dividend yields are attractive enough to lure buyers on further weakness. That said, I am most concerned about transportation, which has long been a key for the market to sustain a rally. Using forward price-earnings ratios, transportation looks very much oversold.

    There's no doubt blue chips could come in because of widespread panic selling, but not because of wildly exuberant valuations. Then, there's yield, which is actually more attractive or equal to 10-year Treasury yields.

    Dividend Yield

    Year Ago


    Dow Jones



    S&P 500



    NASD 100



    Dow Transpos






    Russell 2000



    Technical View

    Key Support Points:

    • S&P 1,867
    • Dow 15,666
    • NASDAQ 4,500 then 4,214

    Of course, using a five-year chart, the Dow Jones Transportation (DJT) is still up 72%, which points to another issue for the market. The rally has been long and powerful and a correction was overdue (I think only two bull markets have lasted longer before a ten-percent pullback).

    Dow Jones Transportation


    The market is vulnerable and everyone is calling for more pain, but it doesn't have to be that way because it's the current conventional wisdom. We'll know more in the next 24-hours. The key is that we need much better economic data.

    Today's Session

    Equity futures were up huge in the wee hours of the morning, but have been drifting as opening-bell jitters are settling in just twenty four hours from that jobs report that looms as large as ever. Unlike previous jobs, reports during the bull market run, there is no debate over what the street wants to see. A strong jobs report- period!

    Meanwhile, data out of China and Japan had vague signs of improvement but you have to look under the hood.

    • China PMI 49.8 is still in contraction, but output was 52.3 from 51.7 and new orders 50.2 from 49.7.
    • In Japan, improvements in cap ex and non-manufacturing data is seen as a plus.

    Grasping for straws but this is a grasping for anything environment.

    Layoffs Mount

    This morning the Challenger Gray and Christmas job layoffs announcements for September were 93% higher than a year ago. The tally was the third highest of the year and the quarter was the highest since 3Q09.

    Not surprising, energy has been decimated, but government and retail have popped as well. It would seem retail should be higher based on job growth and cheap gas or maybe it's the shift to less brick and mortar shopping.

    CGC Jobs Cuts

    Year to Date















    Industrial Goods



    There's a cautionary tale on income inequality and high taxes. Big job losses in the most liberal states with forced higher minimum wages and the highest taxes in the nation have endured the largest job cut announcements. It's not a coincidence.

    CGC Jobs Cuts









    New York




    Oct 01 9:55 AM | Link | Comment!
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