Stocks continue to churn as the tax bill moves closer to reality. Sector rotation into big old Dow blue chips (GE excluded) from sleek growth stocks in the NASDAQ continues. At the close the Dow gained 58 points to 24,290. Trading volume was lower and the Dow finished much lower than its opening trade of plus 200 points. Meanwhile the tech heavy NASDAQ continued to show reversal signals and finished the day down about 1% on higher trading. I could be wrong but caution at this juncture is advised. While IBD still lists stocks in rally mode it has highlighted several sell signals within the market leading tech sector.
The tax bill in Congress is now in the reconciliation phase after having passed the Senate on Saturday. Tech stocks are feeling the pain and BMO Capital Markets noted that fund managers are selling large tech growth stocks like Amazon, Google and Microsoft and using the cash to purchase financials like Bank of America and JP Morgan in a clear sign of sector rotation. With the tax bill allowing accelerated depreciation, some industrial, telecom and utility stocks are moving up since their capital investments can be depreciated faster than a cheetah. Forbes had a good article on the tax reform which we posted to our Facebook page.
It was merger Monday as CVS Pharmacy is offering to purchase Aetna for $69 billion smackers. The significance of the buyout, if it goes through, is that it will mark a shift away from standalone pharmacy-benefit managers or PBMs to a format where one company handles it all “in-house” from the doctor to the hospital to the prescriptions. It’s like having all your pills in one bottle.
The Boy Scouts are doing well with the tree sales this year and the weather has been cooperating. It is fun to hang out at the tree lot and watch the young lunkheads work in the rain. They look like little wet rats running around. I tell our tree customers that when they look at their Christmas tree as it sits majestically in the living room that they should think of a bunch of kids in the woods who are cold, wet, hungry and tired and feel the satisfaction of knowing they helped make that experience happen. Most of them seemed to like that point of view.