Welcome Stockaholics to the trading week of December 12th! This past week saw the following moves in the S&P: Major Indices End of Week: Bird's Eye view of the Major Markets on Friday: Economic Calendar for the Week Ahead: Sector Performance WTD, MTD, YTD: What to Watch in the Week Ahead: Monday 3-year and 10-year note auctions 2:00 p.m. Federal budget Tuesday Federal Open Market Committee meeting begins 30-year bond auction 8:30 a.m. International trade 8:30 a.m. Productivity Wednesday 6:00 a.m. NFIB survey 8:30 a.m. Import prices 2:00 p.m. FOMC decision 2:30 p.m. Fed Chair Janet Yellen press briefing Thursday 8:30 a.m. Initial claims 8:30 a.m. CPI 8:30 a.m. Empire state survey 8:30 a.m. Philadelphia Fed survey 8:30 a.m. Current account 9:45 a.m. Manufacturing PMI 10:00 a.m. NAHB survey 4:00 p.m. TIC data Friday 8:30 a.m. Housing starts
Another Day, Another Melt-Up In Stocks As Gold Hits 10-Month Lows Why does this... Keep making us think of this... Quite a Week: The Dow, S&P, and Nasdaq closed higher every day this week for the first time in 5 years Small Caps soared over 5% this week to record highs - 2nd biggest week since Jan 2013 Treasuries dropped for 5th week in a row to July 2015 lows Gold down 5 weeks in a row to 10 month lows (longest losing streak since Nov 2015) Oil closed lower for the first week in the last 4 USD Index up 4th of the last 5 weeks (highest weekly close since 2003) And stocks were panic-bid again this afternoon... Remember the Italy Referendum? Well inflows into European banks after that have NEVER been bigger... It seems the VIX down, Stocks up relationship normalized today... Small Caps are the biggest winners post Trump... Financials and Energy continue to drive it all... Look at the 'random' walk higher in financials... (and biotechs chaos) "Most Shorted" stocks soared this week, though we note Friday saw the first down day in over a week... Stocks are now the handy leaders on the year with the long-bond back to unch... The USD Index soared post-ECB back to recent cycle highs... The Loonie strengthened against the USD this week but Yen and Euro weakness were the main drivers of USD strength... Treasury yields jumped across the curve with a notable steepening... With the curve back near cycle steeps... Crude ended the week unchanged... Silver outperformed Gold this week Gold is now down $190 from Trump-night highs to 10-month lows... And finally... Friday Humor...
Spoiler: Weekend Reading: The Trump Train Continues To Roll Submitted by Lance Roberts via RealInvestment Advice.com, The market rally on Wednesday was quite a stunner given the already full extension of the market advance following the election. However, as Art Cashin noted in his latest note to his clients (courtesy of Zerohedge) “Around 11:45, a series of electronic buy programs helped lift the Dow and S&P out of the morning’s narrow range. I noted that in an email to some friends around noon: What many of us did not realize at the moment was the probability that the buy programs may have been triggered by events in another sector. Just before the buy programs kicked in, the rally in the Dow Transports was shifting up a gear as the index was on the verge of punching through to a new record high. If the Transports made a new record high, it would confirm the record high in the Industrials, thus giving a Dow Theory buy signal. As that realization spread, the algorithms kicked in with buy program after buy program and the race was on.” The problem with the breakout and advance on Wednesday is the exacerbation of the market’s deviation from its longer term mean. As I noted on Tuesday: “The importance of understanding the nature of reversions is critical for investors. Markets rarely move in one direction for very long, notwithstanding overall trends, without a correction process along the way. While the chart below shows this clearly for the overall market, it applies to individual sectors of the market as well.” “Importantly, notice the bottom two part of the chart above. When there is a simultaneous culmination of overbought conditions combined with a more extreme deviation, corrections usually occur back to the underlying trend. This can also be seen in the next chart as well. While the “Trump Rally” has pushed asset prices higher and triggered a corresponding “buy signal,” that signal has been triggered at very high levels combined with a very overbought condition. Historically, rallies following such a combination have not been extremely fruitful.” While the “exuberance” of the Trump rally has certainly awakened the “animal spirits,” the sustainability of the advance from such egregiously overbought conditions is questionable. David Rosenberg weighed in on this point via The Globe & Mail: “Okay, so the president-elect is now at 3 percent, again skewed by two or three sectors. Big deal. Ronald Reagan, who was the original ‘Make America Great Again’ advocate (as opposed to a copycat), saw the equity market soar 6 percent in his first month in office. Guess what? The market peaked less than four weeks into his term and for the next two years, we had an economic downturn and a 25-percent slide in the stock market. The combination of rising bond yields, Fed tightening, and a stronger dollar took care of that honeymoon. After all, we all know what happens when the honeymoon is over. The hard work begins. That slump we just saw in October export volumes and widening in the trade deficit is surely just an early sign of what is to come. Before The Donald does anything on his first hundred days, something tells me the lagged impact of the tightening in financial conditions associated with the recent bounce in interest rates and appreciation of the U.S. dollar is going to come back and bite the economy in the tush, as was the case heading into 2016.” And then there is the “hope this time is different” philosophy as well. While you decide, here is what I am reading this weekend. Trump, Economy & More Trump Don’t Trust Unemployment Rate by Doug Short via Financial Sense Sustaining The Trump Rally by Mohamed El-Erian via Project Syndicate 2 Reasons Trumponomics Will Not Deliver by Greg Silberman CFA via Harvest (HVST.com) No Recovery In U.S. Economy by Jim Clifton via Gallup Trump Will Send U.S. Into Recession by Avi Tiomkin via Forbes Taxes: Trump Should Copy Reagan by Larry Summers via Washington Post Economic Stupidity Of Carrier Handout by Kevin Williamson via National Review Forget The Trade Deficit by Greg Mankiw via NYT Why Trump Boom Is A Real Possibility by Ken Rogoff via Project Syndicate The Trouble With Trump’s Infrastructure Plan by Michelle Chen via The Nation Trump Doesn’t Herald New Paradigm Of Growth by Joachim Fels via PIMCO Trump Inherits Best Economy In A Generation by Chris Matthews via Fortune Donald Trump & The New Economic Order by Michael Spence via Project Syndicate Political Spin In Full Spin On Obama Economy by Ray Keating via Real Clear Markets To Save 800 Jobs, Trump Potentially Costs More by John Tamny via RCM What Trump Didn’t Learn From The Financial Crisis by Noah Smith via Bloomberg Markets Wall Street Leading Sheep To Slaughter by David Stockman via Daily Reckoning Scariest Chart I’ve Seen In A Long Time by Bob Bryan via Business Insider Why Won’t The Fed Raise Rates? by Norman Mogil via SoberLook Rosenberg Throws Up ON “Trump Rally” by David Rosenberg via ZeroHedge Has Trump Unleashed The Dollar Bull by Alan Kohler via The Australian Bond Sell-Off Could Boost Stocks by Lee Jackson via 24/7 WallStreet Time To Take Profits From Oil Trade by Thomas Kee via MarketWatch Time To Party by Crystal Kim via Barron’s Market’s Love Trump Agenda by Charles Calomiris via E21.com 5 Reasons Stocks Are In Melt-Up Mode by Adam Shell via USA Today An Old Indicator Flashes A Red Light by Brett Arends via MarketWatch Where To Find Yield Now by Michael Kahn via Barron’s Trump Unleashes Market’s Animal Spirits by Marc DeCambre via MarketWatch Is Trump Rally Turning Into A Bubble by Sue Chang via MarketWatch Don’t Get Used To The Trump Rally by Bill Gross via Janus Capital Now Is The Time For More Credit Risk by John Coumarianos vis WSJ Euphoric Market Rally Could Be Derailed, Unless… by Paul La Monica via CNN Money Goldman Sachs’ Covert Scheme To Raise Oil Prices by Michael Covel via Daily Reckoning Interesting Reads Best Investing Books Of All Time by R.J. Weiss, CFP via The Ways To Wealth CRE: Towers Of Gold To Pillars Of Salt by Danielle DiMartino-Booth via Money Strong Behavioral Insights On Financial Advice by Shreenivas Kunte, CFA via Enterprising Investor Just How Overvalued Is The Market? by Tyler Durden via ZeroHedge A Better Theory To Explain Manias by Noah Smith via Bloomberg Don’t Confuse Italy with Brexit by Therese Raphael via Bloomberg Passive Investors’ Pain Is About To Begin by Conor Sen via Bloomberg Obama Recovery Has Been A Myth by Terry Jones via IBD Repeating All The Mistakes Of The Great Depression by Scott Sumner via EconLog American Dream May Be Hard To Revive by Bob Davis via WSJ Dividends – The Good & Bad by Ironman via Political Calculations Corporate Taxes In A Trump World by Ed Yardeni via Dr. Ed’s Blog Amazon Unveils Major Job Killer by Golding, Massarella & Covert via NY Post It’s The “Fat Left Tail” That Gets You by John Hussman via Hussman Funds Stocks & Volatility Both Jump – Who’s Right? by Dana Lyons via Tumblr Corporate Valuations Back To Dot.Com Bubble Peak by Jesse Felder via The Felder Report “Lesson number one: Don’t underestimate the other guy’s greed.” — Scarface
December option expiration week generally bullish December’s option expiration has a bullish history. In fact, the week of options expiration and the week after have the most bullish record of all Triple Witching expirations (page 78, Stock Trader’s Almanac 2017). However, the record is not pristine. In 2011, Europe’s debt crisis derailed the market. In 2012, the threat of going over the fiscal cliff triggered a nearly 2% loss the week after. Last year, Fed rate jitters resulted in a mild decline for the week, but losses were quickly recovered in the week after. When new all-time DJIA closing highs dwindle, then it is time to worry Prior to Dow Jones Industrial Average’s November 10th close it had been just 87 calendar days without a new all-time DJIA high. DJIA’s previous record high close was on August 15, 2016. Historically, this is a relatively brief period of time as DJIA went 3,583 days from January 11, 1973 until November 3, 1982 without a new all-time high. Even that dry spell palls in comparison to the 9,212 day stretch (25+ years) following DJIA’s peak on September 3, 1929. Historically, new all-time highs have been bullish and generally result in additional new highs. When new DJIA record highs begin to arrive less frequently, then it may be time for caution and/or concern. Generally, the longer DJIA goes without a new record high close, the worse its performance has been historically. For the chart above, we thinned out the 951 previous all-time highs to include just those that came at the end of a streak of new highs based upon the number of calendar days before DJIA reached the next new all-time high close. Three groups were created, 30-, 60- and greater than 90-days till the next new all-time high. In this case the longer DJIA went without a new all-time high, the greater the average loss was. Dow Theory Confirms Best Six Months Buy Signal & Bullish Call Well it looks like the Dow Transports just issued a Dow Theory Buy signal by breaking out to a new high on today’s close. The Dow Theory Sell Signal we discussed on January 6 of this year was followed by a further decline of -7.4% on the Dow Jones Industrials. The current post-election bullish rally looks like it’s got more legs and that further confirms our Best Six Months Seasonal MACD Buy Signal from October 24 and our recent call last week for further gains, based on our bullish scenario for Trump and his new team of policy makers to deliver stimulus, tax cuts, slow rising rates and healthy inflation. But be nimble and use any usual mid-December weakness due to tax-loss selling or a profit taking January break, before jumping in. Most of our recent positions are up solidly, but we did miss a few that ran away and took a few losses on those that failed to break out with this rally. Election-Year Pattern Indicates Yearend Rally Following some Early- December Weakness Over the past year we have been closely tracking DJIA, S&P 500 and NASDAQ performance in 2016 compared to past election years and 8Th Years of Presidential terms. Losses in January put the market on the losing 8th-Year track and that track suggested a February or early March rebound. The market did bottom in February and rebound to an April high before weakening once again. Following the Brexit vote, the market responded positively and clearly broke free of the potentially disastrous 8th-Year pattern. However, in doing so we then began to anticipate market weakness sometime in September or October timeframe. DJIA and S&P 500 did decline in both of those months while NASDAQ did not falter until October. Using the Election-Year pattern once again as a source, not the sole source, the pattern does suggest DJIA and S&P 500 will rally to close out the second half of December after some modest weakness in the first half of the month.
Is This 100-year Old Indicator Suggesting Market Strength? Posted by lplresearchbos The Dow Jones Industrial Average (Dow) gained for the sixth consecutive day yesterday and closed at a new all-time high for the third straight day. The Dow Jones Transports (Transports), meanwhile, had another big day yesterday and has been one of the top performers since the election. The Dow and Transports will forever be linked, as they are the two components to Dow Theory. Charles Dow created the Dow Theory in the late 1800s, and it revolves around needing confirmation from both industrials and transports before establishing market direction. Think about it—if both the industrials and transports are strong, this likely suggests an improving economy. The flipside is if both are going lower, the economy is weakening. Another way to look at the relationship between the two indexes is to compare them on a relative strength chart. When the ratio of the Transportation Index to the Dow increases, this means that transports are outperforming. We have found that when this ratio on a weekly chart moves above its 40-week simple moving average for more than three weeks, stocks tend to move higher over the next year. This signal triggered recently; the last time it happened was in late 2012, right before a huge equity rally in 2013. Looking at historical data going back to 1979, this signal triggered 20 times. Take note, we removed the two largest recessions over the past 20 years, as we don’t see any signs of a coming recession. The S&P 500 gained more than 9% on average six months later and was higher 80% of the time. Going out a full year, the S&P 500 has been up more than 16% on average and higher all 20 times. Could this newfound strength from the transports be telling us the economy could be set for strong improvement as we head into 2017? It very well could be, and this could be another reason to expect the equity bull market could possibly continue as well. S&P 500 Seasonal Patterns Suggest Continued Industrial Sector Strength in December Posted by lplresearch Over the last 20 years, December (much like November) has, on average, been a good month for the S&P 500. In addition to this broad seasonal pattern, some sectors have exhibited a seasonal tendency to outperform the S&P 500 in December, notably industrials. LPL Research highlighted the strength of the industrials sector based on its November seasonal pattern in a recent blog. Reviewing the actual relative performance of the sector compared with the S&P 500 Index in November, the bullish November seasonal pattern held true: the industrials sector outperformed the broad-based index by 4.9% during the month. Since 1996, the S&P 500’s average price change for December has been 1.3%, with a best return of 6.5% and a worst return of -6.0%. One way to attempt to capture the bullish December seasonal effects for stocks, should they persist, would be to invest in the overall equities market. Potential seasonal opportunities could also be considered, such as investing in sectors or industry groups within the S&P 500 that have historically outperformed the index in December. Comparing the price performance of an underlying sector or industry group to the broad-based index over a specific period can help identify the strongest seasonal performers compared with the overall market. However, performance is often driven by factors other than seasonality. The sectors and industry groups that have outperformed the S&P 500 in December, on average, since 1996 are highlighted in green in the table below, and those that underperformed the index are highlighted in red. Since 1996, the S&P 500 sector that outperformed the S&P 500 Index most consistently in December has been industrials, outperforming by an average of 0.5%, with a high of 4.1% and a low of -2.0% since 1996. Going a little deeper, we note three indicators of the industrial sector’s relative strength in December. The S&P 500 Building Products Industry Index has outperformed the S&P 500 Index, on average, by 4.3% in December, with a high of 29.4% and a low of -8.4%. The S&P 500 Professional Services Industry Index has outperformed the S&P 500, on average, by 3.2% in December, with a high of 10.4% and a low of -3.4%. The S&P 500 Construction and Engineering Industry Index has outperformed the S&P 500 Index, on average, by 2.7% in December, with a high of 34.7% and a low of -10.5%. Importantly, out of the top five industry groups listed in the above table, the industrials sector represents three, suggesting further confirmation for relative strength during December. (We saw similar industrial sector breadth in November.) December seasonal patterns and data over the past 20 years suggest that stocks may continue their climb higher with continued strength in the industrials sector. Understanding the seasonal metrics can be useful as an indication of underlying stock market strength, which may provide a timely opportunity to buy into the market on any potential dips. When Will Santa Come For Equities? Posted by lplresearch December is the feel-good time of the year, and this also goes for equities, as December has been a strong month for the S&P 500 historically. As we showed in Welcome To The Strongest Month Of The Year For Equities Historically, since 1950[1], no month has had a better average return for the S&P 500 than December’s 1.6% gain. Here’s the catch; nearly all of the gains tended to happen later in the month. According to Ryan Detrick, Senior Market Strategist, “We all know December has been a good time for equities, but don’t stop believing in Santa if the first half of the month is weak. In fact, this would be perfectly normal, as nearly all of the gains in December tended to happen the second half of the month.” Looking at the average S&P 500 performance during December, since 1950 it has been flat as of the 15th, before a big end-of-month rally. This pattern holds true the past 20 years as well, as it has been down 0.4% as of midmonth before Santa comes. For more on what stocks could do this month, be sure to read our latest Weekly Market Commentary due out later today. [1] Please note: The modern design of the S&P 500 stock index was first launched in 1957. Performance back to 1950 incorporates the performance of predecessor index, the S&P 90.
Stockaholics come join us in our weekly market poll and vote where you think the markets will end this upcoming week ahead!- Weekly SPX Poll - Sentiment (12/12-12/16) <-- click there! In addition we have our weekly stock picking contest now up and running as well!- Stockaholics Weekly Stock Picking Contest for the Week of (12/12-12/16) <-- click there! We also now have a daily stock picking & market direction guessing challenge running here!- Stockaholics Daily Stock Pick Challenge & SPX Sentiment Poll for Monday (12/12) <-- click there! And lastly we have a Fed poll...will they hike, will they stand pat? Vote!- Fed Poll: Will the FOMC raise rates to <0.75% on Wednesday December 14th @ 2:00PM ET? <-- click there! Oh and we also have a newly created Santa Claus Rally poll! Will Santa deliver a market rally this year or not? Vote!- Santa Claus Rally in 2016? Yes or Not? Vote! <-- click there! ======================================================================================================== In addition as we're coming up to the new year 2017 we've got a handful of new market polls for you folks to vote on- /GC Gold Futures - $1000 or $1400 next? Vote! <-- click there! /CL Crude Oil Futures - $40 or $60 next? Vote! <-- click there! /DX US Dollar Index Futures - $105 or $95 next? Vote! <-- click there! 10-Year Treasury Note Yields - 3% or 1.75% next? Vote! <-- click there! Will the Euro hit parity against the USD in 2017? Yes or No? Vote! <-- click there! U/J - 130 or 100 next? Vote! <-- click there! It would be pretty awesome to see you all join us and participate on these sentiment polls & challenges! Have a fantastic weekend everyone!
Dec 9th Free Friday Market Wrap and Sector Watch 2016 Markets were on fire bulls in full control heading into next week's Fed announcement. We could see some choppy action leading into the announcement. That would be healthy we need to absorb the recent move
whaaa sup oldie!!! long time man! well this was certainly a pleasant surprise to see your name pop in here! how is everything? hope everything has been going great for ya buddy! i've been noticing some old timers returning back here as of late which is awesome to see... recently saw posts from @Venom08 & @DoveJohns very cool!
Earnings releases for this upcoming week ahead: ($ADBE $PAY $ORCL $PPHM $SAFM $NDSN $JOY $APOG $AXTA $HEI $GMS $PIR $BLBD $ABM $JBL $LITB $BPMX $ASPU $IEC)
Hi All, new here but want to start contributing instead of lurking. I'm a newbie to trading equities so take what I say with a grain of salt. I think this week we'll see markets relatively flat. Fed meeting will be very interesting Wednesday but ultimately I don't see if having a big impact since a raise in interest rates is already factored in. After this week, I see a quiet sell off in the markets during the last two weeks during the holiday season. Feel like we'll see a long selloff like we did leading up to the election.
This week's Sunday Stocks to Watch on Ticker TV http://ticker.tv/vegastrader66/584d8279f722613979bc7193
ShadowTrader Video Weekly 12.11.16 - A quick peek ahead of the rate hike Video from ShadowTrader Peter Reznicek
thank you for archiving your sunday morning stocks to watch show Tim! i missed your live show again this morning (d'oh!), but going to check it out later tonight! much appreciated as always! you da man @Vegastrader66
glad to see that you decided to come out of lurking mode and join us in the discussions here, @marchballer! thx for the input and a big time welcome to you to Stockaholics! good to have you
Good to have you aboard @marchballer. Interesting handle, does that have anything to do with March Madness? Just curious as that is one of my favorite times of the year.
