Welcome Stockaholics to the trading week of May 27th! 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 Memorial Day holiday Tuesday Earnings: Workday, Booz Allen Hamilton, Momo, Heico, Bank of Nova Scotia 9:00 a.m. S&P/Case-Shiller home prices 9:00 a.m. FHFA home prices 10:00 a.m. Consumer confidence Wednesday Earnings: Abercrombie and Fitch, Capri Holdings, Dick’s Sporting Goods, PVH, Palo Alto Networks, Bank of Montreal Thursday Earnings: Costco, Dollar General, Dollar Tree, Dell, Ulta Beauty, VMWare, Okta, Gap, Marvell Tech, Red Robin Gourmet Burgers, Burlington Stores,Express, Sanderson Farms 8:30 a.m. Jobless claims 8:30 a.m. Real GDP Q1 8:30 a.m. Advanced economic indicators 10:00 a.m. Pending home sales 12:00 p.m. Fed Vice Chair Richard Clarida Friday Earnings: Yintech Investment 8:30 a.m. Personal income and spending 8:30 a.m. PCE inflation 9:45 a.m. Chicago PMI 10:00 a.m. Consumer sentiment
Stocks Suffer Worst Streak In 8 Years As Trade Tempest Sparks Rates Rout Well that was a week... China remains best YTD followed by Europe and US the slight laggard... US stocks were also down on the week as trade tensions escalated and morphed into growth scares... The Dow was least worst while Trannies and Nasdaq suffered most... The Dow is down 5 weeks in a row - the longest losing streak since June 2011 "Most Shorted" Stocks had their 3rd weekly loss in a row - the biggest 3-week drop of the year - as Tuesaday's short-squeeze couldn't last... Hope of a Chinese trade deal has collapsed... But the algos remain ever alert to a bounce on optimistic headlines (h/t @jsmauro13) Semis suffered their worst week of the year (down 3 weeks in a row - tumbling over 16% in that time - the worst 3-week loss since Oct 2008) Technology stocks overall were whacked... Energy stocks are down 7 weeks in a row... Musk had a bad week... Banks outperformed the market this week, but don't hold your breath... Credit markets blew wider this week even as VIX ended the week almost unchanged... Treasury yields took a breather today (and a half day ahead of Memorial Day) after a breathless plunge midweek... Slamming yields to multi-year lows... 10Y Yields are down 5 of the last 6 weeks to 2.32% - the lowest weekly close since Oct 2017... The yield curve crashed back into inversion this week... The Dollar Index slumped this week after a brief surge early yesterday to a new cycle high... Cable had a volatile week of May/Brexit headlines but ended the week practically unchanged... Litecoin soared over 15% today but Bitcoin and Bitcoin Cash also surged again on the week... With Bitcoin back above $8000... And ugly week for WTI crude (and copper) with PMs managing gains... WTI broke below its 50- and 200-DMA, but bounced at the 100DMA for now... Silver had its best week in 4 months... Copper was clubbed like a baby seal... Finally, The Fed has a problem - how's it going to be able to support the market when investors are already pricing in 45bps of rate cuts for 2019... It appears the market thinks the recession has already started... David Rosenberg@EconguyRosie Has the recession already started? Real retail sales peaked in Nov/2018; real PDI peaked in Dec/2018; IP peaked in Dec/2018; and HH employment peaked in Feb/2019. The 4 cornerstones of the economic cycle. 309 1:11 PM - May 15, 2019 Twitter Ads info and privacy 146 people are talking about this Global Economic Policy Uncertainty is back near record highs... But there is a silver lining...It’s going to cost you less to refill the propane tank for your gas grill this Memorial Day weekend. Propane prices have plunged this month, reaching their lowest level in more than 2 1/2 years...
Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2019- S&P sectors for the past week-
S&P 500 Down Four Straight Day After Memorial Day Our office will be closed for observance of Memorial Day on Monday, May 27. U.S stock and bond markets will also be closed. As you spend some quality time off with family and friends please take time to commemorate those who have paid the ultimate price while serving in the U.S. military. For decades the Stock Trader’s Almanac has been tracking and monitoring the market’s performance around holidays. The trading day after Memorial Day has a mixed record going back to 1971. Both S&P 500 and NASDAQ have declined more often than risen on the day, but average performance is still positive. Since 1986, the frequency of gains has improved, and average performance has also risen however, over the last four years S&P 500 has declined. The second trading day after Memorial Day has since more advances than declines, but average performance is negative for NASDAQ. The third day after appears to have the best long- and short-term record combined with solid average performance. The Bespoke Report - It's All Relative Fri, May 24, 2019 Hut, Hut, Cut! With weaker economic data to contend with this week on both a domestic and international basis, plus escalating tensions between the US and China, investors are increasingly pricing in a higher likelihood of rate cuts from the FOMC before the year is out. Through mid-day Friday, the Fed Fund futures market was pricing in over an 85% chance of a rate cut between now and the January 2020 meeting. Those are the kind of odds that would make James Holzhauer say "All in." This week's Bespoke Report newsletter is now available for members. In this week's report, we cover all the bases including the massive declines in semis, one of the shallowest five-week losing streaks for the DJIA on record, the shift to defensives, the disconnect between the market and the Fed, the widening gap between Internationals and Domestics, summer seasonality, sentiment updates, what the S&P 500's flat 200-DMA means for equities, big gaps down on a daily basis, and more. Technology vs. Utilities Fri, May 24, 2019 Below are relative strength charts (vs. the S&P 500) for the Technology and Utilities sectors. In the chart, when the line is rising, the sector is outperforming the S&P 500, and vice versa for a falling line. In each chart we provide dots for days that the FOMC made a rate decision. Blue dots are days when the Fed left rates unchanged, while red dots are days when the Fed hiked rates. While the Fed kept rates unchanged at its most recent meeting, it marked a key turning point for the cyclical Tech sector and the defensive Utilities sector. Since the last FOMC meeting, Tech has seen its relative strength plummet as investors have shifted quite dramatically into defensives like Utilities. The rally for Utilities and decline for Technology have done a number on valuations for the two sectors, to the point where their trailing 12-month P/E ratios are nearly the same. Tech's P/E currently stands at 20.52, well below the reading near 24 it had in late 2018. Utilities has seen its P/E balloon above 20 up to 20.10 as of this morning, which is nearly 5 points higher than it was at the end of 2018. When a no-growth sector like Utilities has a P/E that's similar to a growth-oriented sector like Tech, it doesn't say much about the confidence of investors. Fed Members Side With “Transitory” Inflation Posted by lplresearch Investors just got more details on Federal Reserve (Fed) policymakers’ views of inflation. Minutes of the Fed’s most recent meeting, which ended May 1, showed that “many participants” considered slowing consumer inflation as “transitory,” and agreed that the Fed’s current patient approach should help stoke economic growth and inflation. Policymakers’ optimistic view on inflation runs counter to a growing opinion in financial markets that slowing growth in core personal consumption expenditures (PCE) could warrant lower rates. Markets think the grace period for a “transitory” excuse has passed, but data show it’s too soon to tell. Another measure of inflation, the Fed Bank of Dallas’s “trimmed mean” PCE measure, points to higher pricing pressures ahead. As shown in the LPL Chart of the Day, the trimmed mean PCE, which has proven to be a less volatile version of core PCE, has hit 2% year-over-year growth for the past several months. “It’s tough to make a case for lower rates with over 3% gross domestic product growth, healthy wage growth, and a labor market close to full employment,” said LPL Research Chief Investment Strategist John Lynch. “If consumer inflation picks up, the U.S. economy will be near full employment with healthy inflation across the board, fulfilling the Fed’s dual mandate.” Of course, much has happened on the global front since the Fed’s last meeting. Trade tensions have flared up again, with the United States raising tariff rates on $200 billion of Chinese imports and threatening to increase rates on the remaining swath of goods. Logically, tariffs should be a catalyst for higher consumer inflation, as higher costs should boost price growth. However, the opposite has happened over the past few months, and there are several factors to consider when thinking about future inflation. Overall, we don’t see a strong argument for a rate cut right now, and we side with the Fed in thinking consumer inflation could pick up as wage growth accelerates and growth stabilizes. At the very least, it’s becoming more obvious the Fed doesn’t have enough clarity to move policy in either direction. Another Reason For Bulls To Smile Posted by lplresearch The S&P 500 Index has officially gained each of the first four months of the year for the first time since 2013. This comes on the heels of the best first quarter since 1998. Six straight months in green has been the best monthly win streak to start a year, and that last happened in 1996. Starting a year with strength like this historically has been a good sign, even though stocks in May saw a nearly 5% correction. “Although we wouldn’t be surprised to see continued volatility over the coming months, the good news is a great start to a year has had a funny way of eventually resolving higher,” explained LPL Senior Market Strategist Ryan Detrick. “In fact, the rest of the year has been higher an incredible 14 out of 15 times after the first four months were in the green!” As our LPL Chart of the Day shows, the S&P 500 returns the rest of the year (final 8 months) have been more than twice as strong as the average year returns—10% versus 4.7%—following four straight monthly gains to kick off a new year. There’s always a catch though, and in this case we’ve seen an average pullback of more than 8% the rest of the year. Earnings Season Takeaways Posted by lplresearch We consider earnings season a success based on the amount of upside to prior estimates generated by S&P 500 Index companies despite several headwinds. Companies handily beat expectations to get first quarter earnings up to flat, as shown in the LPL Chart of the Day. When earnings season began in mid-April, consensus estimates called for a 4–5% drop in S&P 500 earnings, according to FactSet data. Beating results by this much is impressive considering persistent trade uncertainty and the drag on overseas profits from a strong U.S. dollar. Also consider that the median stock in the S&P 500 has grown earnings several percentage points faster because a few large companies are dragging down the market-cap-weighted calculation. Resilient estimates are also encouraging. Since April 15, the 2019 consensus estimate for S&P 500 earnings per share has risen slightly to $168 (a 4% year-over-year increase). We consider that a win given that estimates typically fall during earnings season. “Escalating trade uncertainty and the threat of more tariffs are huge wild cards for corporate profits,” said LPL Chief Investment Strategist John Lynch. “We are hopeful that significant progress can be made on the trade front next month, when President Trump and China’s President Xi are expected to meet at the G20 summit. A prolonged impasse that lasts through the summer would make mid-single-digit earnings growth difficult to achieve in 2019.” Our base case remains that we will get a trade deal with China early this summer and consensus expectations for 3–4% earnings growth may prove to be conservative. Earnings are hardly booming, but with a continued economic expansion, low inflation, and low interest rates, we see enough earnings growth ahead to push stocks up to our year-end S&P 500 fair value target of 3,000—though it probably won’t get there in a straight line. Pre-election Year June: Tech and Small-caps Best June has shone brighter on NASDAQ stocks over the last 48 years as a rule ranking eighth with a 0.6% average gain, up 26 of 48 years. This contributes to NASDAQ’s “Best Eight Months” which ends in June. June ranks near the bottom on the Dow Jones Industrials just above September since 1950 with an average loss of 0.3%. S&P 500 performs similarly poorly, ranking tenth, but essentially flat (–0.02% average). Small caps also tend to fare well in June. Russell 2000 has averaged 0.6% in the month since 1979. In pre-election years since 1950, June ranks no better than mid-pack. June is the #8 DJIA month in pre-election years averaging a 0.8% gain with a record of nine advances in seventeen years. For S&P 500, June is #5 with an average gain of 1.2% (10-7 record). Pre-election year June ranks #6 for NASDAQ and #7 for Russell 2000 with average gains of 1.9% and 1.1% respectively. Recent pre-election year Junes in 2015, 2011 and 2007 were troublesome for the market as DJIA, S&P 500 and NASDAQ all declined (Russell 2000 eked out a modest gain in 2015).
Here are the current major indices pullback/correction levels from ATHs as of week ending 5.24.19- 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 Tuesday (5/28) <-- click there to cast your daily market vote and stock pick! Stockaholics Weekly Stock Picking Contest & SPX Sentiment Poll (5/27-5/31) <-- click there to cast your weekly market vote and stock picks! Stockaholics Weekly T/A Charting Challenge (5/27-5/31) <-- 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 3-day weekend ahead!
Stock Market Analysis Video for May 24th, 2019 Video from AlphaTrends Brian Shannon ShadowTrader Video Weekly 5.26.19 Video from ShadowTrader Peter Reznicek
Here is a look at this upcoming week's Global Economic & Policy Calendar- Next Week's Economic Indicators - 5/24/19 Fri, May 24, 2019 Despite a light data slate, there were not too many bright spots this week as only four of the fourteen releases showed improvements from the prior period or beat estimates; the rest came in weaker or missed forecasts. The Chicago Fed's National Activity Index was the only release on Monday coming in weaker than both March's reading and consensus estimates. Similarly, April Existing Home Sales was the only release Tuesday, and results were once again weaker than expected. While Initial Jobless Claims on Thursday were better than expected, Continuing Claims missed by 10K. Flash PMIs were very weak for both manufacturing and the services sectors. Friday morning, advanced manufacturing orders, sales, and inventories all disappointed (we covered in an earlier post). Activity picks back up next week with 27 releases on the docket. Due to Memorial Day holiday, markets will be closed, and no data is to be released on Monday. But on Tuesday things pick back up with multiple home price indices. The quarterly House Price Purchase Index for Q1 will come out in addition to the FHFA House Price Index and S&P CoreLogic Case-Shiller Index for March. More housing data will be out on Thursday with Pending Home Sales. The Conference Board's Consumer Confidence for May and the Dallas Fed's Manufacturing Activity Index will also be released Tuesday, and both are expected to show an increase. The Richmond Fed will follow that up with their own manufacturing index on Wednesday, similarly expected to increase relative to April. In addition to the typical weekly data on Thursday, the second release of Q1 GDP will be out. While consumption and inflation are expected to be unchanged from the initial release, GDP is expected to be 0.1% weaker. Personal Income and Spending for April is due out in what will be a busy Friday. While income is expecting an uptick, spending data is forecasted to be considerably weaker. The Fed's favored inflation gauge, PCE, along with the Chicago PMI and University of Michigan Sentiment will round out the week on Friday.
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 5.27.19 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! NONE. (U.S. MARKETS CLOSED IN OBSERVANCE OF MEMORIAL DAY!) Monday 5.27.19 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! NONE. (U.S. MARKETS CLOSED IN OBSERVANCE OF MEMORIAL DAY!) Tuesday 5.28.19 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 5.28.19 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 5.29.19 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 5.29.19 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 5.30.19 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 5.30.19 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 5.31.19 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! Friday 5.31.19 After Market Close: Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES! NONE.
And finally here is the most anticipated earnings calendar for this upcoming trading week ahead- ($NIO $MOMO $GOOS $COST $PANW $ZS $OKTA $WDAY $NTNX $ULTA $DKS $VEEV $ANF $BZUN $DG $DLTR $BNS $YY $MRVL $ASND $CSIQ $CPRI $BAH $BURL $VMW $AMWD $KEYS $ZUO $BMO $PLAN $JT $HEI $GPS $NXGN $PVH $QTNT $NM $EXPR $SAFM $BITA $CMCO) If you guys want to view the full earnings post please see this thread here- Most Anticipated Earnings Releases for the week beginning May 27th, 2019 <-- click there to view!
And finally, just a very quick reminder to everyone in here. The markets here stateside will closed this coming Monday (5/27) for Memorial Day. Enjoy your 3-day weekend everyone! Here is the Globex (futures) holiday schedule for Monday.
Memorial Day Week and Summer Stocks Since 1971 when Memorial Day was officially designated as the last Monday of May, the S&P 500 has experienced an average gain of 0.53% during the 4-day Memorial Day week. On a median basis, the gains are slightly stronger at +0.59%. And in years when the S&P 500 is up 10%+ year-to-date heading into Memorial Day week (as it is this year), the median gain has been 0.63% during the week. In the chart below, we show the S&P's change during Memorial Day week each year since 1971. Blue bars are years in which the S&P was up 10%+ YTD through Memorial Day. Now that "summer" has unofficially begun, we used our Stock Seasonality tool to find the S&P 500 stocks that perform the "hottest" during the summer months. Below are the ten stocks with the strongest median gains from Memorial Day through Labor Day over the last 10 years. Somewhat surprisingly, Apple (AAPL) ranks first with a median gain of 13% over the last ten years with gains 80% of the time. AAPL has gained at least 7% in each of the last 3 summers, and the stock's only decline of any significance came in 2015 when it dropped 14.5%. Cooper (COO) ranks second with a median gain of 12.1%, followed by Alexion Pharma (ALXN), NVIDIA (NVDA), Align Tech (ALGN), and ABIOMED (ABMD). Amazon.com (AMZN) also makes the cut with a median gain of 8.9% during the summer, ranking it 10th in the S&P 500. For AMZN, its median gain isn't quite as strong as stocks like Apple or NVIDIA, but it hasn't fallen once from Memorial Day to Labor Day over the last 10 years!
Not Bad for a Five Week Losing Streak The DJIA is entering this last full week of May riding a streak of five straight weeks of declines in what is the longest weekly losing streak for the index in just under eight years. While the current streak is the longest in years, it is also notable due to just how mild of a losing streak it has been. Over the five weeks in which the DJIA has been down, its total decline has been a mere 3.67%. To put that in perspective, the average decline for the DJIA during its 64 prior five-week losing streaks since 1900 has been a drop over 10%, and the last time the DJIA saw a smaller decline during a five-week losing streak was over 40 years ago in 1976! While there have been 64 prior five-week losing streaks for the DJIA, there have only been eight prior streaks where the DJIA's losses during the first five weeks of declines were less than 5% (table below), and there have only been three where the decline was less than the 3.67% we saw over the last five weeks. As shown in the table, of the eight prior mildest streaks, the DJIA went on to see a sixth straight week of declines more than half of the time for an average decline of 0.65% (median: -0.45%). For all five-week losing streaks, however, the DJIA saw an average gain of 0.35% during week six with gains just over half of the time (51%).
Market turned weak today, but some stocks were up nicely like AMD, SHOP. And even BYND continues to defy stock gravity. SOLY been on a roller coaster the past week. Possibly a better IPO than BYND, if volatility doesn't turn you off.
