Welcome Stockaholics to the trading week of May 6th! This past week saw the following moves in the S&P: Major Indices End of Week: Major Futures Markets on Friday: Economic Calendar for the Week Ahead: Sector Performance WTD, MTD, YTD: What to Watch in the Week Ahead: Monday Earnings: Occidental Petroleum, Sysco, Tyson Foods, Bausch Health, AIG, Pioneer Natural Resources, Hertz Global, Liberty Global, KLA-Tencor, Bloom Energy, Assurant, Everest Re, Iamgold 6:00 a.m. Chicago Fed President Charles Evans 9:30 a.m. Philadelphia Fed Patrick Harker 2:00 p.m. Senior loan officer survey Tuesday Earnings: A-B Inbev, Electronic Arts, TripAdvisor, Petrobras, Diamondback Energy, Mylan, SeaWorld, Allergan, Lyft, Ambev, Emerson, Regeneron, Cinemark, Plains All American, Papa John’s, Sempra Energy, Match Group, Wingstop 10:00 a.m. JOLTs 3:00 p.m. Consumer credit Wednesday Earnings: Disney, Fox Corp, Madison Square Garden, Wendy’s, Hostess Brands, Marathon Petroleum, Royal Ahold, Barrick Gold, Bunge, Acushnet, McKesson, Switch, IAC/Interactive, Honda Motor, Toyota Motors, Siemens Thursday Earnings: News Corp, Booking Holdings, Keurig Dr. Pepper, Tapestry, Norwegian Crusie Line, Becton Dickinson, Duke Energy, CenterPoint, Canadian Natural Resources, Cardinal Health, ArcelorMittal, Azul, Hain Celestial, AMC Enertainment, TrueCar, Axa Equitable, Vale, Equifax, Zillow,Yelp 8:30 a.m. International trade 8:30 a.m. Jobless claims 8:30 a.m. PPI 10:00 a.m. Wholesale trade 10:45 a.m. Atlanta Fed President Raphael Bostic 1:15 a.m. Chicago Fed’s Evans Friday Earnings: Viacom, Marriott, Tribune Media, Telefonica, Buckeye Partners, JD.com 8:30 a.m. CPI 9:00 a.m. Atlanta Fed’s Bostic 10:00 a.m. New York Fed President John Williams 2:00 p.m. Federal budget
Dow Suffers Longest Weekly Losing Streak Of Year As Fed Loses Control Of Short-End The Fed's tweak to the funding markets failed to take back control... As The Fed's IOER cut left EFF still 6bps rich... The key message was obvious: European stocks were very mixed with Germany's DAX leading and UK and Spain lagging... An epic short-squeeze ramped US equities back into (or near) the green for the week... With Small Caps and Trannies leading... Nasdaq and S&P were levitated almost perfectly into the green for the week... Nasdaq up 6 week sin a row and 16 of the 18 weeks in 2019. Nasdaq soared today on the back of Berkshire buying some Amazon shares... (FANG stocks managed to get back to breakeven on the week only though after the GOOGL drop) For The Dow, this is the same panic-bid we saw last Friday... Dow down for 2nd week in a row - first time since Dec 2018 VIX has now risen for 3 straight weeks (albeit marginally) - the longest streak since Oct 2018 Treasuries were bid today, shifting the long-end yields back to unchanged on the week, while the short-end remain notably higher in yield... The yield curve flattened dramatically on the week (after a brief spike initially on the Fed statement)...This was the biggest weekly flattening in 5 months Roller-coaster week for the dollar surging back to unchanged on the week after The Fed, then tumbling today after payrolls... Yuan ended the week unchanged (after a big bounce back today) even with China closed... The peso surged today ahead of Cinco de Mayo... Big week for Cryptos with Bitcoin and Bitcoin Cash leading... As Bitcoin tests $5800... Strong bounce back day for commodities today was unable to get them green on the week but gold outperformed as copper lagged... Gold bounced off its 200DMA once again... WTI fell for the 2nd week in a row - the biggest 2-week drop since 2018...hugging the 200DMA... Finally, as BofA notes, ISM's collapse (which everyone seemed to ignore this week) is a major warning signal for US EPS growth... Which is already lagging the market's enthusiasm for free money... Global money supply better start picking up again soon...
Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2019- S&P sectors for the past week-
Strong Starts Hog Gains for the Year Big gains the first four months of 2019 have some Wall Street pundits and analysts concerned. While strong starts for the market for the first four months of the year don’t leave much for the rest of the year, it is by no means a negative implication or bearish indication. S&P 500 leads the pack with its 17.5% gain coming in at #3 since 1950. NASDAQ’s 22.0% gain is the 5th best first four month since 1971. DJIA’s 14.0% rise is number 9. In the tables below we have displayed the top 20 first four month gains for the three major U.S. market indices with the subsequent changes for May, Rest of the Year, “Worst Six Months” May-October, 2nd half July-December and full year performance. While most of the full year gains are clearly logged in these big first-four-month gains, there still upside to be had in the latter part of the year. As you might expect May is weakest for DJIA and S&P and the Worst Six Months are hit hardest mostly after the strongest starts. The major blemish is course in 1987, with other critical givebacks in 1971and 2011. Other significant issues arose in 1975, 1983, 1986 and1998. Basically, if you take 1987 out of the equation the rest of the year after strong starts aint so bad. Average gains are about equal to historical average annual gains. Rest of the year gains sans 1987: DJIA 7.3%, S&P 500 8.7%, NASDAQ 12.6%. Typical May Trading: Just a Couple of Positive Areas Once again it is that time of the year where we increasingly see and hear “Sell in May.” But when exactly in May is the “best” time to sell? Based upon the last 21 years of data, the best time could be early in May. The month has opened well, on average, recently with strength on the first trading day and on the second for the most part. Afterwards, DJIA, S&P 500, NASDAQ, Russell 1000 and Russell 2000 all tend to drift sideways to lower until around May’s eighteenth trading day or so. It is on this day the NASDAQ and Russell 2000 begin to rally to finish the month. Beware though, this late-May rally typically fizzles before it can exceed the highs reached earlier in the month. The Power of Productivity The U.S. labor market may be kicking the economic expansion into another gear. Consistent productivity growth has been largely absent from the expansion, even as payrolls and wages have grown at a healthy clip. However, strong labor market trends and last year’s pickup in capital expenditures growth could be sparking a resurgence in productivity, which we think could be key to future economic growth. As shown in the LPL Chart of the Day, productivity in the first quarter rose at the fastest year-over-year pace since 2010. Increased business spending is the primary catalyst for higher productivity, as better equipment and training boosts output per worker, although a tightening labor market has also helped. Labor shortages and accelerating wage growth normally incentivize companies to invest in boosting output with current labor. In turn, workers may get paid more as output increases, which could flow through to higher consumer spending. Growing productivity also helps offset rising labor expenses, as companies get more output per dollar spent, which can help mitigate inflationary pressures and support healthy profit margins for U.S. companies. First quarter unit labor costs rose only 0.1% year over year, the slowest pace of growth since the fourth quarter of 2013. “Labor market strength has been a pillar of the expansion,” said LPL Research Chief Investment Strategist John Lynch. “Job creation and wage growth remain healthy, and increased productivity points to stronger output without significantly higher costs.” The April jobs report, released May 3, showed U.S. hiring hasn’t wavered amid global uncertainty and trade tensions. Nonfarm payrolls rose 263K, higher than estimates for a 190K gain. Average hourly earnings grew 3.2% year over year, around the fastest pace of the cycle, and at a level that should continue to bolster consumer confidence and support consumer spending. The unemployment rate fell to 3.6%, a cycle low. More (Im)patience The Federal Reserve (Fed) has promised patience, but financial markets now want more. On Wednesday, Fed members unanimously voted to keep rates unchanged, and Fed Chair Jerome Powell repeated several times in his May 1 post-meeting press conference that further patience is appropriate. That patience, which soothed stocks earlier this year, spurred nearly a 1% intraday selloff in the S&P 500 Index. Investors have pointed to slowing consumer inflation as a case for lower rates, and bond markets have increasingly positioned for a rate cut. As shown in the LPL Chart of the Day, growth in core personal consumption expenditures (PCE), the Fed’s preferred inflation gauge, has slowed in the first three months of this year, falling as the global economy has struggled with trade uncertainty. While the pace of core PCE growth isn’t alarmingly slow, the downward trend over the past three months runs counter to the Fed’s intentions. Still, Powell attributed lower inflation to transitory factors. He also correctly noted that core PCE growth stayed close to 2% for much of 2018, so fundamentals before the first quarter volatility supported the Fed’s inflation target. Producer prices and wages have steadily risen over the past few months, and we expect businesses to eventually adjust their prices accordingly as demand picks up. “We think the trend of slowing consumer price growth is temporary and that inflation could pop higher as pricing pressures build,” said LPL Research Chief Investment Strategist John Lynch. “If consumer price growth picks up, we think there is a better chance of a rate hike later this year, rather than a cut.” Other parts of the U.S. economy are rebounding, so we don’t see a strong argument for a rate cut right now. At the very least, Powell made it clear that the Fed doesn’t have enough clarity to move policy in either direction, which is prudent given the persistent mixed signals in some data series. For now, the Fed remains in wait-and-see mode as trends settle and growth stabilizes. Time to Sell in May? Part Deux As we noted earlier this week, these next six months historically have been the worst for stocks. That is why there’s a well-known investment axiom to “Sell in May and Go Away.” However, that popular principle hasn’t rung true for most of this bull market. “Stocks have actually risen over this dreaded six-month stretch in six of the past seven years, while the S&P 500 Index has gained in May six consecutive years,” explained Senior Market Strategist Ryan Detrick. “Blindly going to cash and waiting until after Halloween to re-invest hasn’t been the most profitable strategy lately.” The S&P 500 has bucked the seasonal trend recently, but we think a decisive midyear rally could be more difficult to come by this year. With the S&P 500 higher each of the first four months of 2019 and up more than 17.5% for the year (as of April 30), we think a consolidation or pullback could be warranted. As our LPL Chart of the Day shows, over the past 20 years stocks have spent the next several months in a sideways grind. The average peak-to-trough correction during these worst six months is 11.1%. With conditions quite stretched near term, stocks could be vulnerable to a potential pullback over the coming months. The Bespoke Report - Cut it Out! Fri, May 3, 2019 In the market’s ceaseless determination to make a mountain out of every molehill, equities sold off sharply from record highs on Wednesday afternoon after Fed Chair Powell suggested that the FOMC had no plans to cut interest rates as futures markets were implying. Didn’t he have some nerve? In the last month, Jobless Claims hit a 50-year low, Q1 GDP surprised to the upside and came in at 3.2%, the stock market was at record highs, and on Friday, Non-Farm Payrolls surprised to the upside with a reading of 263K. Are there some blemishes on the landscape? Do things always look brightest at the peak? Sure, but to say the Fed must cut rates in this environment was a bit much. By the end of the week, cooler heads prevailed, and the S&P 500 finished the week less than 20 cents off its record closing high and less than ten points below its intraday record high. Even more encouraging was the rally in the small-cap Russell 2000, which finally broke above resistance to close at its highest level since October. Traders often look to small caps for confirmation of a rally, and while we think they are often given more importance than they deserve, their outperformance this week doesn’t hurt. Churchill Downs (CHDN) Off To The Races? Fri, May 3, 2019 The “Fastest Two Minutes in Sports” is on Saturday at Churchill Downs in Kentucky. Since the founding of the race and racetrack (in which the company draws its name) in 1875, Churchill Downs Incorporated (CHDN) has branched out to a number of other lines of business including ownership of other race tracks and casinos around the US in addition to online gambling sites. CHDN has been like Secretariat over the last decade, posting a "10-bagger" by rising more than 10x in value since its low in 2009. So how does the stock perform around "Derby Day" specifically? In the past 20 years, the period leading up to the Kentucky Derby has typically been pretty shaky for the stock with declines in the month and week leading up to the race. Historically, in the month before the derby, CHDN has only risen 28.57% of the time with an average decline of 2.26%. The week before has been slightly better, but still declines over half the time. This year bucked the trend, though, with the stock rising 12.11% over the past month and 6.91% in the past week; similar to 2016. Looking forward, returns have typically been positive in trading the Monday after the Kentucky Derby with a gain averaging 0.52%. Both one week and three months after, outperformance is similar rising 0.41% and 0.44%, respectively, on average. Both have also been positive only a little more than half the time. One month out has been a little stronger as CHDN has been more consistently positive, rising 61.9% of the time, and averaging a 1.4% gain. Fortunately, recent history points to a bit more of an optimistic outlook. Many of the declines occurred in the 90’s and pre-crisis era. In the current bull run, the stock has only been lower one month out three times and only twice 3 months out. One final note, the company has typically reported their Q1 earnings around this time (sometimes even the trading day before or after the derby) . In other words, performance at this time of year is not purely a factor of the race as earnings also can have a significant impact. Start a two-week free trial to Bespoke Institutionalto access our interactive Earnings Database, Seasonality Tools, and much more. Mutual Fund Flows: A Tale of Two Asset Classes Fri, May 3, 2019 Earlier this week the Investment Company Institute (ICI) reported mutual fund flows for the week ending April 24. The results were grim for the equity mutual fund industry, as they have been for a very long time. In the chart below we show dollar flows by mutual fund type across a variety of time periods. Notably, equity funds are extremely weak across almost all fund types, with emerging markets equity funds the only exception. The complete opposite is true of bond mutual funds. While equity funds saw outflows of $13.9bn over the course of the week, bond funds saw inflows of more than $10bn, driven by investment grade bonds. Start a two-week free trial to Bespoke Premium to access our interactive economic indicators monitor and much more. Arbitrary large dollar numbers can be a bit hard to get a grasp of, so we also like to look at fund flows on a percentile basis, comparing their size to historical ranges. Higher numbers indicate larger fund inflows, or smaller outflows, while lower numbers indicate larger fund outflows or smaller fund inflows. This table ultimately tells the same story as the table above: very large outflows relative to history for equities, very large inflows relative to history for bonds. As with EM equities, there are exceptions to the bond inflow story: high yield has been relatively weak persistently of late. But generally speaking, fund inflows to bonds have been very large for a while now. In the chart below we show cumulative fund flows for all US mutual funds, all equity mutual funds, and all bond funds. As shown, while equity fund flows haven't been universally negative since 2007 (2013-2015 saw notable inflows), the general trend has been the same for the past decade and counting: redemptions from equity funds, buying of bond funds. US Equity Guidance: A Proxy For Global Growth Fri, May 3, 2019 It shouldn't be a big surprise, but our data shows US corporate management teams are sensitive to global growth. In the chart below, we compare the US equity market's guidance spread to Markit's Global Manufacturing PMI. The guidance spread measures the percentage of companies raising guidance each month to the percentage of companies lowering guidance each month. Higher readings indicate more guidance raises relative to lowers, and therefore optimism from management teams about the outlook. We've taken the raw monthly percentage, seasonally adjusted it, and taken a 3 month average to compare to ISM. As shown, big upswings or downswings in guidance tend to coincide with similar swings in global manufacturing activity as measured by Markit's PMI. Currently, we're in the midst of a swing lower for both, but things are still actually more positive than numerous periods from 2012-2016. Bullish Sentiment On The Rise Fri, May 3, 2019 As the S&P 500 has been making all-time highs in the past week, bullish sentiment as reported by the AAII Investor Sentiment Survey has risen back up to its highest levels since the start of April. The percentage of investors reporting an optimistic outlook rose to 39.02% from 33.52% last week. This is still only slightly above the historical average; so it is not at an alarming level. Alongside the solid increase in AAII's reading, Investors Intelligence sentiment readings are echoing the optimistic shift as the percentage reporting as bulls rose to its highest level since early October of last year. Bearish sentiment also rose 1.2% to 21.3% this week. In the grand scheme of things, though, even with this increase bearish sentiment still remains at very low levels. As with bullish sentiment, the Investors Intelligence survey results are similar to the AAII survey as bearish sentiment also fell to multi-month lows. Neutral sentiment, on the other hand, saw a sharp decline this week falling to 39.63% from 46.31% last week. That is the largest decline since the final week of 2018 when the market bottomed and a very large portion of investors reported outright bearish sentiment. This time around, the decline in neutral sentiment predominantly went towards the bulls.
Here are the current major indices pullback/correction levels from ATHs as of week ending 5.3.19- Here is also the pullback/correction levels from current prices- ...and here are the rally levels from current prices-
Stockaholics come join us on our stock market competitions for this upcoming trading week ahead!- ======================================================================================================== Stockaholics Daily Stock Pick Challenge & SPX Sentiment Poll for Monday (5/6) <-- click there to cast your daily market vote and stock pick! Stockaholics Weekly Stock Picking Contest & SPX Sentiment Poll (5/6-5/10) <-- click there to cast your weekly market vote and stock picks! Stockaholics Weekly T/A Charting Challenge (5/6-5/10) <-- click there to participate! ======================================================================================================== It would be pretty sweet to see some of you join us and participate on these! I hope you all have a fantastic weekend ahead!
Stock Market Analysis Video for May 3rd, 2019 Video from AlphaTrends Brian Shannon ShadowTrader Video Weekly 5.5.19 Video from ShadowTrader Peter Reznicek
Here are the most anticipated Earnings Releases for this upcoming trading week ahead. ***Check mark next to the stock symbols denotes confirmed earnings release date & time*** Monday 5.6.19 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! Monday 5.6.19 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! Tuesday 5.7.19 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 5.7.19 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 5.8.19 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 5.8.19 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 5.9.19 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 5.9.19 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 5.10.19 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! Friday 5.10.19 After Market Close: Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES! NONE.
And as promised here is the most anticipated earnings calendar for this upcoming trading week ahead- ($DIS $ROKU $CHK $EA $JD $TTD $CRON $BHC $SYY $ETSY $TSN $KOS $MPC $DBX $REGN $TEUM $OXY $GLUU $GWPH $DNR $BUD $CTL $STMP $WFT $HEAR $AMG $ACRX $DSK $PLX $LYFT $CROX $HIIQ $CAMT $TWIN $BKNG $PLUG $AGN $OSTK $MTCH $DK $LITE $AIG) If you guys want to view the full earnings post please see this thread here- Most Anticipated Earnings Releases for the week beginning May 6th, 2019 <-- click there to view!
(SOURCE) Trump says tariffs on $200 billion of Chinese goods will increase to 25%, blames slow progress in trade talks In addition, Trump threatened to impose 25% tariffs on an additional $325 billion of Chinese goods “shortly.” The president said that trade talks with China are continuing, but are moving too slowly as Beijing tries to re-negotiate.
Will be interesting to see how the futures open tonight, it looks like we will open sharply lower based on this news
Dow futures drop 400 points after Trump’s tariff threat catches traders expecting a deal off guard https://www.cnbc.com/2019/05/05/traders-brace-for-sharp-sell-off-on-trumps-tariff-threat.html
Good Monday morning to all. Here is this morning's pre-market news thread for those of you wanting to get a quick read before today's open- <-- click there to read! Hope everyone has a great trading day and week ahead.
Morning Lineup - Here We Go Again! Mon, May 6, 2019 Just when you thought the days of markets opening down sharply in reaction to an overnight headline concerning trade negotiations with China were over, we get this morning. There isn't a whole lot of earnings data to contend with and the economic calendar is blank for today, so it looks like just three days after Kudlow decided to spike the ball in reaction to Friday's NFP report, the President is shaking things up a bit with his tweet-storm last night. US futures are set to open down over 1%, but the gains don't look to be anywhere near as severe as what happened in China where the decline was more like 5%. Also, ever since the initial gap down, things have been extremely steady. Today's decline is set to be the 9th gap down of 1% or more for the S&P 500 since the start of 2017, and in today's Chart of the Day we looked at how the index performed following prior occurrences as well as what the catalyst for each decline was, so if you haven't already seen it, check it out. Last night's sell-off in Chinese equities put a big dent into this year's gains for the Shanghai Composite. With a drop of more than 5.5%, it was the largest one day decline for Chinese stocks since February 2016. Year to date, the Shanghai Composite is now up 16.54% on the year and has nearly cut this year's gains in half. More noteworthy is the fact that with the S&P 500 up 17.5% YTD heading into today, the US is now outperforming Chinese stocks YTD. Obviously, with futures down over 1%, the US lead may not last for long, so we'll have to see how things shake out over the course of the trading day.
