From the desk of Willie Delwiche.
Key Takeaway: A healthy level of optimism ushers investors into the holiday season. But lofty expectations are neither reflected in price nor supported by breadth. Participation is struggling to expand beneath the surface and cyclical areas of the market are retesting critical levels of support. A narrow rally running on empty leaves the market vulnerable to disappointment and could challenge high spirits. The question becomes how patient will investors be, especially since consumer sentiment is in the dumps. If the fish aren’t biting, some may prefer to cut bait.
The latest data from the University of Michigan shows consumers are in a pretty bad mood. The Consumer Sentiment Index for November is at its lowest level in a decade. While the expansion in the number of stocks hitting new lows probably doesn’t help, this seems to reflect political divisions and partisan divides more than than an actual economic or market reality. Too often we let the headlines and news stories from afar sway our moods rather than being thankful for and acting on the actual opportunities that are before us on a daily basis.