Stock Market Today: June 8th - 12th, 2020

Stockaholic · Jun 5, 2020

Welcome Stockaholics to the trading week of June 8th!

Look for the S&P 500 to turn positive for the year with a boost from the Fed in the week ahead

The Fed’s two-day meeting is the big event for markets in the coming week, and traders are hoping for more details on stimulus and a possible new program.

The S&P 500 was very close to being back in the green for the year, adding 4.9% for the week.

Strategists expect the market’s reopening trade to continue driving investors into cyclicals, like financials and industrials, and other stocks that will be do well in an economic recovery.

The bond market joined in the reopening trade for the first time in the past week, and rates jumped as investors sold safety plays and moved into riskier assets.

Federal Reserve Chairman Jerome Powell is expected to reassure markets next week the central bank will do whatever it takes to help the economy heal. That should be enough to keep investors moving into stocks that benefit from an economic rebound and push the S&P 500 into the green for 2020.

The Fed’s two-day meeting is the big event for markets in the coming week. There are a few economic reports, including inflation data, the consumer price index Wednesday and producer prices Thursday. Weekly jobless claims will be important Thursday to see if there’s a drop in continuing clams, after May’s employment report showed a surprising record gain of 2.5 million jobs.

The reopening trade was in full swing in the past week, especially Friday when stocks surged on the jobs report, which was expected to show a loss of 8.3 million jobs. The Nasdaq broke above its record high set on Feb. 19, and the S&P 500 was just 1.1% away from turning positive for 2020.

Even before the jobs report, investors were loading up on financials, industrials, transports and small caps, which were up more than 8% for the week and 18.4% in the past month. S&P financials were 12.1% higher on the week, S&P industrials were up 10.5, and the NYSE airline index jumped more than 35.4.%.

“I think next week is dominated by the reopening and it will be for another month,” said James Paulsen, chief investment strategist at Leuthold Group. “With cyclicals outperforming, small [caps] outperforming, credit spreads coming in and then the bond yields going up, everybody — all facets of the financial markets — are sort of suggesting the same outcome.”

The S&P 500 ended the week at 3,193, a gain of 4.9%, and now traders are watching to see if it can scale the psychological 3,200 level. The Dow closed Friday at 27,110, up 6.8% for the week, and the Nasdaq Composite was up 3.4%, at 9,814 after reaching an intraday record high of 9,845 Friday.

Analysts say the market will likely look past the protests that broke out in cities across the U.S. after the death of George Floyd in Minneapolis. Four policemen were charged with murder in his death. Looters joined the protests, some of which turned violent, but they quieted down towards the end of the week.

Stocks were higher for a third week in a row, but a change this past week has been the abrupt lurch higher in Treasury yields. The 10-year rose to a high of 0.95% Friday, a quarter-point move in just three sessions. The move was already underway but got a lift Wednesday when ADP jobs data was not nearly as bad as expected. Yields ripped even higher after the May employment report showed the unemployment rate actually fell to 13.3%, instead of climbing to 20%, as expected by economists.

Bond strategists said the Treasury market was now acknowledging the potential for a recovery, but not in the exuberant way the stock market has been. Since March 23, the S&P 500 has risen more than 45%, but it took the 10-year Treasury until this week to get back the yield level it was at when stocks bottomed.

Paulsen said he believes a new bull market has been launched, but there could be pullbacks and some headwinds for the market coming up.

“When GDP is minus 30%, other issues don’t matter. There’s just one issue. But as the economy reopens again, the trade battles will matter again, presidential politics will matter again,” said Paulsen, adding the budget deficit could also matter. “I think we’ll get removed from a sole focus. That isn’t quite there but I think it’s coming.”

Fed ahead
The Fed begins its two-day meeting Tuesday, and will release its statement Wednesday afternoon, followed by a video briefing by Powell.

“Whey would the Fed want to disrupt this with anything?” Paulsen said. “They’re still going to support the economy. They’re going to stay away from negative rates or yield curve management. They’re not going to do anything to scare the markets. They might certainly reassure people that they are still ready to provide support.”

Ethan Harris, head of global economics at Bank of America, said the Fed may clarify where it stands on some of the extraordinary moves it has taken since it cut rates to zero. The Fed has been supporting the markets with asset purchases and multiple programs for commercial paper, corporate bonds, and municipal bonds, for example.

“We think right now they’re just trying to get this Main Street lending program to work. The question is are they going to do more things around what they do in terms of forward guidance and next steps of macro easing,” Harris said.

There has been speculation that the Fed would do some type of so-called yield curve control, a program to keep interest rates capped at certain levels. “I think it’s too early for that,” said Harris. He said the Fed would be guaranteeing low rates for a long period of time if it does yield curve control.

“Yield curve control is basically open-ended quantitative easing,” he said. The Fed is currently buying Treasurys but if it wanted to stop yields from rising too much as the economy improves, it could make targeted purchases.

Barclays chief U.S. economist Michael Gapen said it’s possible the Fed could announce the yield curve control. “We’ve said they could implement yield curve control out to three years,” he said. “In my mind that matches the length of the horizon of the economic projections.”

Powell has said the economy needs more fiscal help, and he could reiterate those comments Wednesday. President Donald Trump on Friday said he backs more stimulus. So far, the Democrats have put out a marker with their wish list for further spending, but there have been no negotiations.

There was concern the strong jobs report could make it harder to get buy in for another big spending package. But some economists say the recovery needs a boost and states need funding to fill the holes in their budgets from coronavirus-related spending and a lack of tax receipts.
Click to expand...

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:

What to Watch in the Week Ahead:

Monday

10:00 a.m. Quarterly Financial Report (Census Bureau)

Tuesday

FOMC two-day meeting begins

6:00 a.m. NFIB small business survey

10:00 a.m. JOLTS report

10:00 a.m. Wholesale trade

Wednesday

8:30 a.m. CPI

2:00 p.m. Federal budget

2:00 p.m FOMC statement

2:30 p.m. Fed Chairman Jerome Powell briefing

Thursday

8:30 a.m. Initial jobless claims

8:30 a.m. PPI

Friday

8:30 a.m. Import prices

10:00 a.m. Consumer sentiment

Stockaholic · Jun 5, 2020

Stocks Soar To Record Highs Amid Bond Bloodbath, Momentum Massacre
This was a big week for markets.

Trannies were up over 10% on the week, Nasdaq lagged by "only" gaining 3%...

AAPL record high today.

Best 50-day rally in stocks in 90 years...

Source: Bloomberg

Nasdaq 100 and Composite hit record highs, S&P is less than 1% away from green YTD...

Source: Bloomberg

Banks stocks exploded higher (second best week since Nov 2016, Trump election)

Source: Bloomberg

Biggest weekly gain for Airline stocks... ever...

Source: Bloomberg

Biggest weekly spike in 30Y yields since Nov 2016 (Trump Election)

Source: Bloomberg

The yield curve has steepened for 5 days straight, second biggest weekly steepening sine Nov 2016 (Trump election)...

Source: Bloomberg

Biggest weekly short-squeeze in two months (second biggest since March 2009)

Source: Bloomberg

#ShortSellersLivesMatter

— Stalingrad & Poorski (@Stalingrad_Poor) June 5, 2020
Dollar is down 10 days in a row, biggest weekly drop since March and biggest 3-week drop since Oct 2011...

Source: Bloomberg

Source: Bloomberg

Commodities were mixed with Crude and copper soaring as PMs tumbled (despite the weak dollar)...

Source: Bloomberg

And finally, "SURPRISE!" - The Citi US Macro Surprise Index exploded in its v-shaped manner today after the stunning (birth/death adjustment-enabled) jobs beat...

Source: Bloomberg

And while May was the month of overnight gains, June has seen the market rise during the night... and day...

Stockaholic · Jun 5, 2020

Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2020-

S&P sectors for the past week-

Stockaholic · Jun 5, 2020

S&P 500 Stocks Outpacing Analyst Price Targets
Fri, Jun 5, 2020

This morning's jobs report shocked the financial world -- most notably the economists whose job it is to provide estimates. The consensus estimate among economists for May nonfarm payrolls was projecting a loss of more than 7 million jobs. The actual number that was reported did not just show a smaller than expected job loss, but it actually showed a gain in jobs of more than 2.5 million.

We're seeing a similar situation play out in the equity analyst community. With the S&P 500 now up 40%+ since its low less than three months ago, the average stock in the index is now trading above its consensus analyst price target that looks 12 months out. Analysts have simply not been able to catch up to the rapid rise we've seen for equity prices.

It's extremely rare to see share prices move above consensus analyst price targets. We don't have the historical daily data on this, but anecdotally we can't remember a time when the spread has been this wide. As shown below, at the end of 2019 when the S&P finished a massive rally, equity prices were 5.5% below the consensus price target. That was seen as a very tight spread prior to what we're seeing now. At the lows in March, the average share price had dropped all the way to $92.50 compared to an average consensus price target of $143.20. That projected a gain of 54.9% at the time!

Since March 23rd, the average share price has risen from $92.50 up to $138.40, while the average analyst price target has fallen from $143.20 to $136. Current price targets no longer project a gain for the average S&P 500 stock, but rather a 1.7% drop.

Nasdaq's Historical Run
Thu, Jun 4, 2020

At its highs earlier this morning, the Nasdaq Composite was within 2% of its record high from earlier in the year. Besides the steep V-shape of the Nasdaq's pattern over the last four months, the other aspect of the chart that stands out is just how steep the 50-day moving average is trending lately.

To illustrate just how steep the Nasdaq's 50-DMA has become, the chart below shows the daily percentage change of the 50-day going back to 1971. Currently, the Nasdaq 50-DMA is rising at an average of over 0.5% per day. That's an incredible slope and a level that has been exceeded only a handful of times in the Nasdaq's 50-year history.

Big Gains From Smaller Tech
Wed, Jun 3, 2020

It's still difficult to fathom the moves in the US equity market over the last four months. The fact that the Nasdaq and more specifically the Technology sector aren't far from record highs is definitely something no one was expecting two months ago. There's an old market saying that equities take the stairs up and the elevator down, but in the latest market cycle, the elevator up was almost as fast as the way down!

If you've been following the markets, all you've likely heard up until recently is that large-cap tech, and more specifically, Microsoft (MSFT), Apple (AAPL), Amazon (AMZN), Alphabet (GOOGL), and Facebook (FB), are single-handedly driving the market higher. The reality is not nearly as clear-cut. Given their market caps, the "Big 5" (as they're often referred to) have done a lot of heavy lifting, but in terms of performance, they're hardly the only game in town.

The table below lists Technology sector stocks in the Russell 3000 with market caps of more than $1 billion that are outperforming all of the 'big 5' tech stocks on a YTD basis. Actually, since Amazon is doing so well relative to the rest of the "big 5" these are all stocks that are outperforming Amazon. If we looked for stocks that were doing better than the average return of the "big 5" the list would be a lot, lot longer (+16.4%).

Looking through the list of names below, the two top-performing names are Zscaler (ZS) and Twilio (TWLO), which have both more than doubled. Behind these two, DocuSign (DOCU) and Sprout Social (SPT) are both knocking on the door of triple-digits. All 28 of the names listed have market caps of $1 billion, but the average market cap is just over $21 billion, while Nvidia (NVDA) is the largest company on the list with a market cap of $216 billion. For the most part, these aren't names that have been driving the indices, but anyone holding these stocks in their portfolio probably doesn't care!

Best 50-Day Rally Ever

In many ways, what we’ve seen so far in 2020 has been both record-breaking and devastating. From the S&P 500 Index peak on February 19 to the bear market lows March 23, stocks lost 33.9%. Now, 50 trading days later, stocks have gained 39.6%, for the largest 50-day rally since the S&P 500 moved to 500 stocks in 1957.

“There are no rollercoasters that can replicate what stocks have done so far in 2020,” exclaimed LPL Financial Senior Market Strategist Ryan Detrick. “Here’s the catch though: Big 50-day rallies in the past have taken place near the start of new bull markets, and the returns going out a year were quite bullish.”

As shown in the LPL Chart of the Day, the 39.6% gain in 50 days was the greatest 50-day rally ever, besting the previous best in October 1982. What’s important to note here is that many of these rallies took place coming off major market lows, and delivered quite strong returns going out 6 to 12 months.

Although we have near-term worries given this historic run, as some sentiment indicators such as put/call ratios are showing some froth, from a bigger picture perspective, this strong 50-day rally offers a reason to think stock prices may be even higher this time next year.

2020 In Charts

2020 is only five months old, but in many ways it is one of the most historic years we’ve ever seen. “2020 went from moving along nicely, to seeing the worst recession in a generation and the fastest bear market ever,” explained LPL Financial Senior Market Strategist Ryan Detrick. “Now stocks are in the midst of one of the best bull runs ever, even though the economy remains extremely weak, thanks to record stimulus and hopes over a vaccine.”

To best sum it all up, here are 10 charts that tell the picture of 2020 so far.

1.) The 2010s were the first decade in history to go all 10 years without a recession, which of course ended just months into the new decade, as the economy stopped. Stocks gained 13.5% on an annual basis last decade, surprisingly, only the third-best decade over the past four.

2.) This is an election year, and the S&P 500 Index hasn’t been lower when a President is up for reelection since FDR in 1940. Although this seemed nearly impossible at the March lows, it is looking like this incredible streak could have a chance in 2020.

3.) One of the first signs something could go wrong in 2020 was stocks fell in January. Historically, this has meant potential trouble for the final 11 months.

4.) As fears over COVID-19 gripped the world, the Dow Jones Industrial Average had its fastest bear market ever, in only 19 days. To put this in perspective, this was the fastest bear market in the 124-year history of the Dow.

5.) Mark Twain said “History doesn’t repeat itself, but it often rhymes”. Looking at history, every 50 years there has been a terrible pandemic and stocks fell more than 30%. We don’t know if the ultimate lows are in this time, but so far, history is rhyming.

6.) More than 20 million people in the US lost their jobs in April, while the unemployment rate soared to near 15%, the highest since the Great Depression. Record drops in manufacturing, industrial production, retail sales, and consumer spending have all taken place in the past two months as well.

7.) A recession is here, ending the streak of 128 months in a row without one. What is unique about the previous expansion was nominal gross domestic product (GDP) grew only 50%, about the average growth seen during the previous expansions, but this expansion was nearly twice as long as the average expansion (10 years versus 5 years).

8.) The bounce off of the March 23 S&P 500 lows has been historic in many ways. In fact, it was one of the best 20-day rallies ever, with previous best rallies seeing strong returns 6 and 12 months later.

9.) As scary as it was on the way down, stocks have come roaring back, gaining more than 35% from the March 23 lows. This would classify as the greatest bear market bounce ever, which opens the question: is this more than a bear market bounce and instead the start of a new bull market?

10.) The number of COVID-19 tests in the US nearly doubled in May versus what was seen in April. Additionally, fewer and fewer tests are coming back positive. Testing is one of the key ways we will beat this and this is a step in the right direction. We’ve also seen new monthly lows in people on ventilators, in the ICU, and in hospitals.

Hard to believe, but there are still 7 months left in 2020. It hasn’t been easy for any of us, and we continue to keep everyone impacted by this pandemic in mind, but we continue to see the glass as half full. The dual benefit of record monetary and fiscal policy should help create a bridge to help those most impacted, while the economy can slowly come back online later this year.

Stockaholic · Jun 5, 2020

Here are the current major indices pullback/correction levels from ATHs as of week ending 6.5.20-

Here is also the pullback/correction levels from current prices-

Here are the current major indices rally levels from correction low as of week ending 6.5.20-

Stockaholic · Jun 5, 2020

Here are the upcoming IPO's for this week-

Stockaholic · Jun 5, 2020

Stock Market Analysis Video for June 5th, 2020
Video from AlphaTrends Brian Shannon

ShadowTrader Video Weekly 6.7.20
Video from ShadowTrader Peter Reznicek
(VIDEO NOT YET POSTED!)

Stockaholic · Jun 5, 2020

Stockaholics come join us on our stock market competitions for this upcoming trading week ahead!-

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Stockaholics Daily Stock Pick Challenge & SPX Sentiment Poll for Monday (6/8) <-- click there to cast your daily market vote and stock pick!

Stockaholics Weekly Stock Picking Contest & SPX Sentiment Poll (6/8-6/12) <-- click there to cast your weekly market vote and stock picks!

========================================================================================================

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!

Stockaholic · Jun 5, 2020

Here is a look at this upcoming week's Global Economic & Policy Calendar-

(GLOBAL ECONOMIC AND POLICY CALENDAR NOT YET POSTED!)

Stockaholic · Jun 5, 2020

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 6.8.20 Before Market Open:

Monday 6.8.20 After Market Close:

Tuesday 6.9.20 Before Market Open:

Tuesday 6.9.20 After Market Close:

Wednesday 6.10.20 Before Market Open:

Wednesday 6.10.20 After Market Close:

Thursday 6.11.20 Before Market Open:

Thursday 6.11.20 After Market Close:

Friday 6.12.20 Before Market Open:

NONE.

Friday 6.12.20 After Market Close:

NONE.

Stockaholic · Jun 5, 2020

And finally here is the most anticipated earnings calendar for this upcoming trading week ahead-
($ADBE $UNFI $CHWY $TIF $LULU $COUP $SFIX $LOVE $NEPT $GHM $REVG $GME $HDS $FIVE $SIG $CASY $CVGW $AMC $FCEL $QTNT $PLCE $CHS $THO $GCO $BF.B $LMNR $WSG $PRTY $GES $BBCP $CONN $HEXO $PHR $PVH $RRGB $PLAY $TNP $JW.A $SB $GSM $SRT)

If you guys want to view the full earnings post please see this thread here-

Most Anticipated Earnings Releases for the week beginning June 8th, 2020 <-- click there to view!

stock1234 · Jun 5, 2020

bigbear0083 said: ↑

haha, agreed 100%

on the flip side however, do we get another 500+ handle bump in the dj30 if the # is much better than expected like adp turned out to be today?
Click to expand...

A very good call by you Cy @bigbear0083 although the market did even better than 500+ handle by going up 800+

Vdubman · Jun 6, 2020

Well looks like the BLS “oops’d” the April and May actual jobs reports. https://www.cnbc.com/2020/06/05/heres-why-the-real-unemployment-rate-may-be-higher-than-reported.html

oh well what can you do

Stockaholic · Jun 8, 2020

T0rm3nted · Jun 8, 2020

Vdubman said: ↑

Well looks like the BLS “oops’d” the April and May actual jobs reports. https://www.cnbc.com/2020/06/05/her...loyment-rate-may-be-higher-than-reported.html

oh well what can you do
Click to expand...

Ya I saw that. Regardless of what either side said (left said they're cooked, right said they're lower), seems to have been an honest mistake due to an overwhelming amount of data.

anotherdevilsadvocate · Jun 8, 2020

HTZ up another +67%.
Congrats to whoever has it, you got stronger hands than Carl Icahn baby. A billionaire doing all that research for what?

T-Coonazz · Jun 8, 2020

Looks like the market is stalled out here. Big money people ran it up and now looking for a way to get buyers to sell to. Maybe the media and others will figure out how to do that.

T-Coonazz · Jun 8, 2020

SPY and IWM now threatening a blow off top, that would be a good buy signal.

stock1234 · Jun 8, 2020

Pretty much some continuation from last week, energy, airlines, casinos, BA, and the banks, etc continue to lead this market. Healthcare and tech somewhat underperforming compare to those

Stockaholic · Jun 8, 2020

whelp, don't look now folks but we're not too far off from the five-figure handle on the nazzy

might need to get these ready soon

never thought we'd be talking about this during the midst of the covid crash.

but i guess anything is possible when we have QE-infinity

i'm so fucking tempted to key up the brrrrrrrrrrr meme right about now ... but i'll refrain myself for now

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