Welcome Stockaholics to the trading week of July 18th! This past week saw the following moves in the S&P: Bird's Eye view of the Markets on Friday: Economic Calendar for the Week Ahead: Sector Performance WTD, MTD, YTD: What to Watch in the Week Ahead: Monday Earnings: IBM, EMC, Netflix, Yahoo, VMWare 10 a.m. NAHB survey 4 p.m. TIC data Tuesday Earnings: Goldman Sachs, Johnson and Johnson, United Health, TD Ameritrade, Microsoft, Lockheed Martin, United Continental, Discover Financial, Kansas City Southern 8:30 a.m. Housing starts Wednesday Earnings: American Express, Morgan Stanley, Halliburton, Abbott Labs, Illinois Tool Works, Northern Trust, St. Jude Medical, eBay, Las Vegas Sands, Qualcomm, Intel, Newmont Mining, Motorola Solutions, Mattel Thursday Earnings: AT&T, Visa, Capital One, Chipotle, General Motors, Travelers, Union Pacific, Bank of NY Mellon, Biogen, Blackstone, DR Horton, Hershey, Johnson Controls, Sherwin Williams, Royal Caribbean, PulteGroup, Domino's Pizza, Nucor, Quest Diagnostics , Pandora 8:30 a.m. Initial claims; Philadelphia Fed survey 9 a.m. FHFA HPI 10 a.m. Existing home sales Friday Earnings: General Electric, Honeywell, American Airlines, VF Corp, Whirlpool, Synchrony Financial, SunTrust, Stanley Black and Decker, Newell Brands, Moody's 9:45 a.m. Manufacturing PMI
Small Stock Slide Ruins First "Perfect Week" This Century Does anyone else feel like this is going on behind the scenes? Quite a week: S&P up 3rd week in a row to record high - best 3-week run in over 4 months Trannies up 3rd week in a row (+4% this week) - biggest week in over 4 months Italian Bank Stocks up 13% this week - best week in 5 years 10Y Yields rose 23bps this week - that's a 17% rise in yields (yeah we know!) which is the 3rd biggest weekly spike ever. USDJPY spiked over 5% this week - the biggest JPY weeklu Yen weakening since 1998! Cable rose 2% this week - biggest week in over 4 months Copper rose 5.3% this week - the best week in over 4 months Gold fell 2.7% - first down-week in the last 7 weeks Silver dropped 1% - first down week in the last 7 weeks The "Perfect Week" ended in failure...NOTE - today was rates rising and stocks falling - first time during this ramp As @RyanDetrick pointed out, the last time S&P saw a "perfect week" - up all five days during the week and all five days were new all-time highs - was March '98. This has only happened 11 times since 1950. The only volume seen all week was the post-open selloff in Thursday "Extreme Greed" Bitches... Off The February "we must save the world" lows. S&P, Dow are up almosty 20%, Small Caps up 27%... But since BREXIT, Bonds and Bullion still hold the lead... Since payrolls, stocks remain the lone winners with crude flat and gold and bonds lower... On the week, Trannies were best, Nasdaq worst (but still up 1.3%) Financials strengthened notably on the week... but faded off yesterday's open... VIX fell for the 3rd week in a row, closing at 12.5 - its lowest weekly close in a year... (lowest intrday 12.14 this week is lowest since Aug 2015). They crushed VIX into the close to try for a green close but it failed dismally... Treasury yields were ugly. Despite a brief pause on Wednesday, it was a one-way street higher with 10Y up 23bps on the week... This is the 3rd biggest percentage surge in 10Y yields (yes we know percentages on yields suck) ever... The yield curve steepened dramatically - 2s30s +11bps (the biggest absolute spread jump since June 2015, or biggest percentage surge in the curve since Jan 2013 The USD Index ended the week practically unchanged (+0.25% and up today) BUT massive vol in Cable and JPY were the big news... JPY's biggest weekly devaluation in 18 years!! Commodities were all over the place this week, Copper shot higher in early week stimulus hope (then died), crude dipped and ripped, while PMs drifted lower... Charts: Bloomberg Bonus Chart: Fundamentals... Industrial Production is so "old economy"
Spoiler: Weekend Reading: If I Was Janet Yellen Submitted by Lance Roberts via RealInvestmentAdvice.com, Janet Yellen, in my opinion, is about to make a critical mistake. She is not going to raise rates in July. Why is this a mistake? Simple. No matter when you think there will be an economic recession, there will eventually be one.As I have repeatedly stated, the biggest problem for the Federal Reserve has been getting caught at the “zero bound” of interest rates during the onset of a recessionary contraction. Such a combination of events would leave the Fed without a very valuable monetary policy tool. Come July, Janet Yellen and the FOMC are going to once again “punt” hiking interest rates in favor of waiting for “global instability” due to the “Brexit” to subside. However, as stated this is a mistake for a couple of reasons. First, with the markets making new all-time highs, there is a “price” cushion available for the markets to absorb a rate hike without breaking important downside support as shown below. Secondly, with Central Banks globally flooding the markets with liquidity, as discussed yesterday, a further “shock absorber” is currently engaged in softening the impact of a rate hike. “But, for now, a rash of global Central Banks continue to support asset prices by increasing accommodative policies either through additional reductions in interest rates or direct injections of liquidity. As Matt King from Citi recently noted: ‘It has been a surge in net global central bank asset purchases to their highest level since 2013.’” Lastly, the economy is likely going to show a bit of “strength” in upcoming reports, with slightly stronger inflationary pressures. This pickup in economic strength will be another inventory restocking cycle following several months of weakness. As has been in the past, it will be transient and that strength will evaporate as quickly as it came. If I was Janet Yellen, I would hike interest rates by .50 bps immediately in a surprise announcement and use the price and Central Bank liquidity cushions to soften the blow. This would move the Fed towards its goal of reloading its primary policy tool while there is some ability to temporarily control the outcome of the rate hike. But that is just me. She won’t do it. Instead, she will pass on hiking rates at the upcoming meeting with promises of rate hikes to come before the end of the year. Unfortunately, for her, this is the “trap.” The liquidity will dry up, the inventory restocking cycle will end, and the next “crisis” will be on the horizon with Ms. Yellen remaining stuck near the “zero bound.” The past opportunities to “normalize” interest rate policy have come and gone. This opportunity will likely pass also and, as always, the Fed will realize far too late they are trapped. But by then, it won’t matter much to investors, or what’s left of them, anyway. For now, here is your reading list for the weekend. “The stock market is like a wife. When you come home you never know if you will be greeted with a kiss, or hit with a frying pan.” – C. Vern Myers Fed & Economy Fed Mouthpiece: Helicopter Money Next by Lee Adler via Wall Street Examiner Fed Needs To Stop Being A Wuss by Tim Mullaney via MarketWatch Crisis Is Us by David Stockman via Contra Corner Economic Data Is Confusing by Joe Calhoun via Alhambra Partners Jobs Report Confirms Slowing Economy by Louis Woodhill via Real Clear Markets Anemic Growth = New Normal by George Will via IBD The Deep Causes Of Today’s Struggling Economy by Ryan Murphy via NCPA Markets Art Cashin: The Rallies “Conspiracy Theory” by Bob Bryan via Business Insider Bull Market Blues by Paul Krugman via NY Times Everything Is Horrible, Stocks Love It by Matt Phillips via Quartz Don’t Sell Dull Market Short by Mark Hulbert via USA Today Why Earnings Estimates Are A Joke by Jeff Reeves via MarketWatch Welcome Our New Algo Overlords by Ronald Baily via Reason It’s Only A Matter Of Time Before Global Melt Up by Avi Gilburt via MarketWatch Stocks Hit New Highs, Different This Time? by Matt Krantz via USA Today Ignore The Bond Market Alarm Bells? by Neil Irwin via NYT This Stock Market Rally Isn’t Like The Others by Akin Oyedele via BI S&P At New Highs, Don’t Party Just Yet by Michael Kahn via Barron’s What Will Cause The Next Crash by Chris Vermeulen via The Street What Is Dow Theory Saying Now? by Mark Hulbert via MarketWatch My Faves & Raves Commercial R/E Checks Into Heartbreak Hotel by Danielle DiMartino-Booth Why 2016 Is The Top For Housing Prices by Mark Hanson via MHanson.com 3 Red Flags Of The Housing Market by Tyler Durden via Zero Hedge Slow Suffocation by Buttonwood via The Economist Death Of The Risk Free Rate by Chris Brightman via Research Affiliates Race To The Bottom by John Hussman via Hussman Funds 10 Stupid Retirement Tricks by Judy McNary via Investopedia Here Be Dragons by Ted Rivelle via TCW The Case For Absolute Return by Axel Merk via Merk Investments The Hope Trade Has Returned by Jeffrey Snider via Alhambra Partners The Biggest Fed Power Grab Yet by David Stockman via Contra Corner July Not Likely A Top. Watch September? by Dana Lyons via Tumblr The Great Dichotomy by Jesse Felder via The Felder Report “Half the plowing is in the planning.” – Arthur Cutten
Stimulus assurances fuel hot July Contrary to past election-year July’s, this year is well above average even with more than half a month’s trading remaining. As of today’s close, DJIA is up 3.2%, S&P 500 3.1%, NASDAQ 4.0% and Russell 2000 has gained 4.4% thus far. If we include the gains from the last three days of June, the results more than double across the board; 8% for DJIA, 8.2% S&P 500, 9.6% NASDAQ and 10.4% for the Russell 2000. DJIA and S&P 500 are trading at new all-time highs while NASDAQ and Russell 2000 are not. New all-time highs by NASDAQ and Russell 2000 would provide further evidence that this rally is for real and would likely put DJIA 18000 and S&P 500 firmly in the rearview mirror. The explosive move higher off of June’s Brexit low on June 27 is clear in the above charts. All four indices plunged below their respective 50- and 200-day moving averages when the vote tally was announced, but quickly rebounded as the reality of the Brexit process became clearer and central banks around the globe became even more dovish. The surge higher has pushed all but NASDAQ through projected monthly resistance (red dashed lines) and sent Stochastic, relative strength and MACD indicators towards overbought. Summer rally nears historical average gains early Most years, especially when the market sells off during the first half or is flat, prospects for the perennial summer rally become the buzz on the street. Parameters for this “rally” were defined by the late Ralph Rotnem as the lowest close in the Dow Jones Industrials in May or June to the highest close in July, August, or September. Such a big deal is made of the “summer rally” that one might get the impression the market puts on its best performance in the summertime. Nothing could be further from the truth! Not only does the market “rally” in every season of the year, but it does so with more gusto in the winter, spring, and fall than in the summer. From its June 27, closing low of 17140.24, DJIA has rallied 7% as of today’s close which was also a new all-time DJIA closing high. Winters in 53 years averaged a 12.7% gain as measured from the low in November or December to the first quarter closing high. Spring rose 11.4% followed by fall with 11.0%. Last and least was the average 9.0% “summer rally.” Even 2009’s impressive 19.7% “summer rally” was outmatched by spring. So beware the summer rally hype as it is usually the smallest rally of the year and can fade just as quickly as it began. S&P 500 and DJIA have managed to break out to new highs, but NASDAQ and Russell 2000 continue to lag. Without tech and small-cap support, large-cap stocks could soon run out of momentum.
ShadowTrader Video Weekly 7.17.16 - No sign of sellers yet, Market Profile, AMZN, earnings Video from ShadowTrader Peter Reznicek
Resistance for DOW was 18500 on Friday it closed at 18516.55 so yes we are going higher I have to agree with you Gil.
Naw we going up and here is the reasoning the overall analysis is bearish because yesterday/today we reached the top and this is why the market continues to go higher you can say I'm a buffoon. What a few of my colleagues and I have learnt from our mentor is that analysis only concern themselves with domestic earnings and fed watching which is old school thinking. Here is food for thought everyone preaches it's a global economy but are traders/investors really trading/investing with a global mentality in mind I don't know the answer but I have my opinion about it.
@Cy McCaffrey Seriously, your weekly kickoffs are the best on the web! Thanks for all you do man! Mucho Kuddo's to you sir.
you rock @Steven_Burt for posting this man ... seriously totally made my w/e here i know you have always been so appreciative of these weekly threads for the longest time that i can remember dating back to our time on HSM ... and for that i am ever so appreciative right back atcha for sticking around with this community through the changes etc ... for its members like you and posts like these that keep that fire going! keep up the great work around here steve and thank you once again for that awesome post! if only i could give you 100 likes .. you da man!
just my own personal opinion here but i'm thinking no meaningful pull until small caps and naz indices come up to test their old highs ... we're not quite there yet ... we'll see transports prob won't get close to sniffing out new highs ... but if that ever made a run to test its old highs that would be crazy bullish imho vix in the 12's is interesting ... but that doesn't suggest anything
here is just a quick visual of those old highs for the other respective majors ... did not realize the trannies were 16+% out from the old high ... dayum
Historically, new all-time S&P 500 high doesn’t guarantee further gains After 417 calendar days, S&P 500 made a new all-time high this Monday and DJIA followed on Tuesday. Previous research into similar periods of time without a new all-time S&P 500 had shown a high probability for a 20% or worse bear market developing. That was not the case this time. However, looking at those previous 13 all-time high dry spells we see that S&P 500 did not always continue higher over the next 1-, 3-, 6-, 9- and 12-month time periods. Most recently was the S&P 500 new all-time high on May 30, 2007. S&P 500 did trade to an ultimate high on October 9, 2007, but that was also the end of the bull market. The following table is an expansion of a table we have posted on a few occasions. Please click the link to view full size in a new window. To the right of the old table we have included S&P 500 returns over the next 1-, 3-, 6-, 9- and 12-months. Years shaded grey are when S&P 500 avoided a 20% bear during its all-time high hiatus. Because 1994 was less than 417 calendar days, the argument could be made that it should no longer appear in the table can be made. Absent 1994, average gains do shrink modestly. This table does suggest further gains are likely, but it does not guarantee them. Considering the magnitude of the declines that preceded, the bulk of the advance (off the Final Low) has already taken place.