Stocks: The Good, The Bad and The Ugly

Vulnerable mega-caps, leaders within energy and a quick word on CPI

Good morning advisors!

Quick update on October CPI which just came across the wire:

• Core CPI MoM: +0.3%, less than +0.5% expected

• Core CPI YoY: +6.3%, less than +6.5% expected

• Headline CPI MoM: +0.4% less than +0.6% expected

• Headline CPI YoY: +7.7% less than +8.0% expected

Indexes soared on the news in the pre-market (S&P futures +2.8%; Dow +2.1%, Naz +3.7%) while bond yields and the dollar tanked. The initial reaction always seems to be wrong (remember last month’s report), but this seems like generally good news. Nobody reading this is a day trader, but here are the key levels to watch on the S&P 500 over the next few days:

• 3807. This has been a key pivot point over recent months. Futures indicates we should open above this level.

• 3859. Flirting with this level pre-market, bulls at least want to see us take out what has been the high-water mark for the week.

• 3911. Most significant of all, a breakout above this level would mean we have a higher high and a higher low. Would set up the 200-dma as next resistance.

That said, let’s get into today’s edition of Stocks: The Good, The Bad and The Ugly. In today’s report we will look at:

• The leading stocks within energy

• Vulnerable stocks within the super mega-caps

• Stocks to avoid within healthcare

• Soaring broker-dealers

• Opportunities in materials

• The worst industrial stocks

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Leaders within energy

HES: Hess

Energy stocks were slammed on Wednesday, and the sector was the worst performer down 4.9%. However, energy is still leadership and the stocks we’re looking at here are the best of the best. $131 looks like a place to start nibbling at HES which is in a solid uptrend vs. the broad sector (vs. XLE in bottom panel).

MPC: Marathon Petroleum

MPC was the second-best stock in the energy sector yesterday, with only a 2.7% decline. A significant amount of support can be found in the range from $106-$113 and relative performance vs. XLE is turning up right where you would expect it to.

SLB: Schlumberger

Schlumberger was also a relative outperformer on Wednesday falling less than 3%. That shouldn’t be a surprise looking at the bottom panel. First support at $50 followed by $46.

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The super mega-caps

TSLA: Tesla