Stock Market Today: June 15th - 19th, 2020

Stockaholic · Jun 12, 2020

Welcome Stockaholics to the trading week of June 15th!

After big sell-off, stock market will be wary of virus and Fed testimony in week ahead

Fed Chairman Jerome Powell’s two days of Congressional testimony is a highlight in the week ahead, and markets will watch him with a wary eye after the Fed’s sober assessment of the economy spooked investors.

Retail sales is the most important data point, in addition to jobless claims, that economists will be watching and it may show very slight improvement over April, as states reopened.

The bottom line for markets is the status of the virus and whether there are continued outbreaks that threaten economic progress.

Stocks could be caught in a tug-of-war in the week ahead, as investors weigh the potential positives of a reopening economy against worry that the coronavirus continues to spread.

In the past week, the S&P 500′s sharp gains briefly drove the index into positive territory for the year, before a bruising sell-off at the end of the week. Stocks were more than 47% above the March 23 low before investors got spooked by signs the coronavirus is picking up in some areas.

The Fed also dampened sentiment when it released economic forecasts Wednesday that showed a slow recovery and interest rates at zero through the end of 2022. Investors will hear more of the same when Fed Chairman Jerome Powell speaks before Congress this Tuesday and Wednesday in his semi-annual economic testimony. He may provide more clarity on the Fed’s bond buying and other policy moves.

Retail sales for May are released Tuesday, and that will be an important look at consumer spending activity. It is the most important data in the coming week, other than the weekly jobless claims report on Thursday.

Stocks rose on Friday with the S&P 500 up more than 1% after Thursday’s sharp sell-off that sent the index down nearly 6%. Treasury yields, which move opposite price, also moved sharply lower as investors moved to the safety of bonds. The 10-year yield was back below 70%, well off the high of 0.95% in the week earlier.

“We’ve been overbought for awhile and digesting gains would be natural,” said Sam Stovall, chief investment strategist at CFRA.

Stovall said the fact that 97% of the S&P 500 companies’ stocks were above their 50-day moving average this past week was a warning. The 50-day moving average is a momentum indicator, and if a stock or index rises above it, it is usually a positive, but if they all do, it’s a contrarian warning.

“Historically that’s just too high ... and also the P/E on the S&P was 25.1 of forward 12-months earnings, which is a 52% premium to the P/E average since 2000,” he said. The P/E, or the price-to-earnings ratio, is an important tool to value stocks, and it averages around 16.5 times.

In the sell-off, stocks that would benefit from the economy’s reopening were the hardest hit. Investors had been jumping into those names, driving them higher at a dizzying pace. They were also the sectors that were last to join the rally, like banks, casinos, airlines and hotels.

“Once the pullback runs its course I think investors will move back again into the sectors and subsectors that were most beaten up in the bear market,” said Stovall.

Scott Redler, partner with T3Live.com, said he lightened up his holdings earlier in the week. “There were some clues early in the week that the market was vulnerable, like when the S&P closed below 3,191 on Tuesday. You had some feverish trading in some of the very speculative names,” he said.

Stovall said other headwinds hang over the market, and one big one is the upcoming presidential election, which could become a bigger influence on the market. RealClearPolitics has President Donald Trump trailing former Vice President Joseph Biden by 8.1 points in the latest average of polls.

“Trump’s numbers are just looking so bad, and if the Fed needs to keep interest rates at zero and we have the potential for a resurgence in Covid cases, then Trump is not going to benefit from an economic recovery, and as a result, that gives Biden a better chance of being elected,” said Stovall. “It’s not necessarily that the market dislikes Biden, but they dislike uncertainty. And a decline in equity prices would be representative of that uncertainty.”

Consumer barometer
Retail sales are typically a barometer for consumer spending, and when Americans were shut in their homes they did much less shopping than usual. April data showed a 16.7% drop in sales, but consumers did spend online.

Economists are watching Tuesday’s report on May sales closely, particularly after the May jobs report had a large upside surprise. There were 2.5 million jobs added in May, instead of an expected loss of 8.3 million.

Mark Zandi, chief economist at Moody’s Analytics, said business-to-business spending data for May implies that retail sales were flat to fractionally higher, up about 0.7% over April’s depressed level.

Zandi used data from Cortera, which collects information on about $1.5 trillion in business-to-business spending. In an analysis of spending by retailers in May, it found there were gains from April in some categories, including home building and gardening supplies, furniture, auto sales and parts, gasoline stations and restaurants.

But Zandi said weakness in apparel and sporting goods washed out the gains.

Fed ahead
Strategists said Powell did not surprise the market with his comments this past week, but his sober approach reminded investors that the Fed policy will have to be in place for a very long time to pull the economy out of its deep rut. That will keep markets on high alert during his two days of testimony.

“I think the cat’s out of the bag. I don’t think he can sugarcoat it. The thing he’s got to worry about is he needs help. He needs Congress and the administration to come up with another fiscal rescue package. He can’t do it on his own,” said Zandi. “He has to keep the pressure on them and get a piece of legislation before they go on August recess. ... He’s speaking as much to the American people as he is to the policy makers.”

Zandi said the Fed has acted aggressively and swiftly to unfreeze credit markets when they locked up in March, but the economy needs more stimulus ahead of a wave of potential business defaults and with a high level of unemployment. The Fed’s balance sheet has ballooned to $7.2 trillion, and on Wednesday the central bank committed to monthly purchases of $80 billion in Treasury securities and $40 billion in mortgage securities.

“I think he continues to lay the foundation for policy changes to come,” said Zandi. “He’s strongly suggesting there’s going to be more monetary support, and that would come in the form of a few things - it would be performance dependent forward guidance. ... He’s going to make it clear until the economy is at full employment and inflation is at least at target, if not above.”

Zandi said Powell may discuss yield curve controls, which would mean the Fed would set targets for interest rate levels in the Treasury market, and make purchases to influence rates. Some economists believe the Fed will adopt that tool before the end of the year.

“I think he’s going to more clearly define the amount of QE they’re doing going forward. He’ll try to preserve some optionality, but he’ll try to make it known, they’re buying a lot of bonds for a long time to come,” Zandi said.

But the hearings could be more politicized, and Powell may be criticized by Congress for helping financial markets more than Main Street, said John Briggs, head of strategy at NatWest Markets. “I’d be surprised if there’s a lot new, given it comes on the heels of the FOMC meeting,” Briggs said.
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

8:30 a.m. Empire State survey

4:00 p.m. Treasury TIC data

Tuesday

Fed Chairman Jerome Powell before Senate banking

8:30 a.m. Retail sales

8:30 a.m. Business leaders survey

9:15 a.m. Industrial production

10:00 a.m. Business inventories

10:00 a.m. NAHB survey

Wednesday

Fed Chairman before House Financial Services Committee

8:30 a.m. Housing starts

Thursday

8:30 a.m. Initial jobless claims

8:30 a.m. Philadelphia Fed

Friday

8:30 a.m. Q1 current account

10:15 a.m. Boston Fed President Eric Rosengren

Stockaholic · Jun 12, 2020

Rollercoaster Session Fails To Dent Retail Euphoria
In the end, that "gamma neutral" level in the S&P at 3,046 which we highlighted earlier, proved too much for the bulls...

... with stocks failing to rise above it after a curiously diagonal overnight levitation faded in early trading, followed by a subsequent bounce that got just shy of the neutral line before drifting lower for the rest of the day.

Besides gamma, what else drove Friday's market? Although it’s unclear exactly what’s led to today's rollercoaster moves that saw the Dow surge more than 800 points before sliding in the red and recovering some of the gains, several headlines weighed on the markets in early trading:

WHO Director-General Tedros said the pandemic is escalating globally and the virus will wreak more havoc.

The CDC said that if cases go up again dramatically, mitigation efforts as seen in March may be needed again.

Florida Covid cases rise 2.8% vs pervious 7-day average of 2.0%

The Fed said in its semi-annual report to Congress that the economic damage from the recession may be "persistent" as a collapse in consumer demand could bankrupt many businesses, and there’s uncertainty about future demand and productivity as firms shift production processes, which could lead to lower wages

In any case, there was no coherent market catalyst in either direction, which is probably why the VIX gyrated just as wildly, rising as high as 44 from a session low of 35 before trying to find a resting place somewhere inbetween.

The volatility led to some amusing intraday incidents such as this tweet from Reuters: "We are deleting a video saying Wall Street had bounced back on Friday, which went out after stocks had turned negative."

And speaking of early surges, the divergence between the day and night session has exploded, and is now the widest it has been since the start of May as a result of Thursday's daytime rout even as overnight sessions remain largely upward bound.

While some have suggested that Thursday's market rout was reminiscent to the start of the March puke, one place where it differs is the apparent lack of a funding shortage: FX basis swaps trade at levels suggesting that dollar-funding pressures are missing for the time being, which is largely thanks to the expanded swap lines announced in March between the Fed and most central banks. As Bloomberg's Ye Xie writes, the lack of funding stress has "cut off the vicious feedback loop between stock declines and funding stress" which is good news for now, assuming the dollar doesn't spike in the coming days.

While stocks gyrated wildly in the past three days, rates have been a sea of tranquility by comparison, and after the 10Y hit 0.95% last week, it has drifter lower along with much of the curve, closing around 0.70% on Friday in a dramatic flattening of the yield curve, which incidentally comes just as most sellside desks start pushing for steepeners as the 10Y approached 1%.

Other assets were relatively tame with oil inching fractionally higher, the Bloomberg Dollar Index up just 0.1% after some earlier volatility and gold rose 0.2%. Not even Bitcoin dared to move much.

Finally, while the broader market gyrated in a rollercoaster of illiquidity, one place where there was never any doubt was in Robinhood where the 20 biggest intraday moves were all additions... appropriately enough with bankrupt Hertz at the very top.

Stockaholic · Jun 12, 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 12, 2020

Is This The Start Of A New Bear Market?

“Stocks take an escalator up, but an elevator down.” — Old investment axiom

The saying above sure happened yesterday. In the end, the S&P 500 Index fell 5.9% for the worst day since March 16 and the first three-day losing streak in more than three months. What does it mean? We’ve been on record that we expect some type of well-deserved pullback or at least consolidation after the 45% bounce off of the March 23 lows and the best 50-day rally ever. Then add in the fact that June has been the worst month of the year for stocks since 2000 and some type of weakness is perfectly logical here and now.

“In many ways, this is one of the most overbought stock markets we’ve ever seen. Now the catch to this is previous times we’ve seen major levels similar to now have been closer to the beginning of bull markets than the end of bull markets,” explained LPL Financial Senior Market Strategist Ryan Detrick.

This is now one of the greatest surges off a major low ever. It is perfectly normal to see a drawdown of double digits after the initial surge weakens. This could be happening now.

We’ve shown that huge up months like April tend to eventually resolve higher, but some near-term weakness is possible.

Also, when more than 90% of the stocks in the S&P 500 are above their 50-day moving average, this shows solid longer-term results. Again, suggesting that very overbought isn’t always a bad thing.

There was a huge spike in stocks marking new monthly highs, again historically an overbought signal. This opens the door for some near-term weakness, but is a very positive sign longer-term.

Last, in the LPL Chart of the Day, the S&P 500 was recently more than 13% above the 50-day moving average, one of the highest levels ever. The good news is one-year later stocks were higher every single time. Yet another clue that historically overbought isn’t always a bad thing for the bulls.

A record run, over-the-top excitement from small traders, the Nasdaq at 10,000, historically high multiples, and seasonality all could be a factor in why a pullback here could be perfectly normal. In fact, if you are bullish, after a 45% rally, one of the best things would be for prices to reset some here over the coming months. We would be a buyer of weakness and use it as an opportunity for longer-term price appreciation.

Persistent Volatility Runs Into Resistance & Exuberant Sentiment

We have all been gobsmacked by velocity and strength of this V-shaped rally off the March 23 bear market low. For the record this rally became an official Ned Davis Research defined bull market on May 26 when DJIA was up 30% from the low when it made a new recovery high after 50 calendar days (see NDR definitions below). And this was on the back of the shortest bear market on record, which lasted only 40 days. Today’s market comeuppance is an important reminder that we need to be patient with this market and heed our cautious analysis and stance.

This is still the “Worst Six Months” and as we warned in the May Outlook when the market is down during the “Best Six Months” (November-April) as they were in 2020, the “Worst Six Months” (May-October) were down or flat 86% of the time with a median S&P decline of -6.7% since 1950.

Other seasonal indicators are also flashing the caution sign. This year’s negative January Barometer and breached December DJIA low, point to possible retests of the lows and choppy, volatile trading over the next several months. See the updated composite graph of the seasonal pattern for these 22 years since 1950 in the June Outlook.

It appears that quite a fair amount of hope was built into the rally. Lots of hope that everything is just going back to the way it was real soon. But COVID cases are on the climb again and folks are concerned that a pause and/or reverse of reopening could delay the economic recovery and derail the bull. Up until the past few days it felt like mid-February again with the market ignoring economic and corporate data as momentum pushed everything higher.

The jobs report was a bit unbelievable and then Fed Chairman Powell’s candor and reserved outlook at yesterday’s press conference put the fear right back into the market today. Meanwhile the Atlanta Fed’s GDPNow model currently estimates that 2020 Q2 GDP growth will be down -48.5%.

Sentiment had also become rather exuberant as the Weekly CBOE Equity Only Put/Call ratio we track in the “Pulse of the Market” hit 0.43 last week – its lowest level since the week ending 4/10/2010 about three weeks before the infamous flash crash. Investor’s Intelligence Advisors Sentiment survey Bullish advisors are now up to 56.9%. Correction advisors are down to 22.5% while Bearish advisors have slipped further to 20.6%, putting us at caution levels.

Technically, things deteriorated rapidly today. After blasting through several levels of resistance we have been tracking as shown in the chart here S&P 500 stalled at 3210 and plunged 5.9% today through 3115 support/resistance and closed just below 3010 support/resistance which sits at the 2019 summer highs. The next major support level below here is 2725 right near where the 50-day moving average turned up in mid-May, which would be a 15.7% correction from the recent recovery high reached this past Monday, June 8.

Hope springs eternal, but caution remains the prudent course of action.

Ned Davis Research bull and bear market definitions:

A cyclical bull market requires a 30% rise in the DJIA after 50 calendar days or a 13% rise after 155 calendar days. Reversals of 30% in the Value Line Geometric Index since 1965 also qualify. A cyclical bear market requires a 30% drop in the DJIA after 50 calendar days or a 13% decline after 145 calendar days. Reversals in the Value Line Geometric Index also qualify. Bull and bear markets are measured at peak and trough dates, so both the time and price criteria must be met as of the peak and trough dates.

More Volatility Likely During June Options Expiration Week and Beyond

The second Triple Witching Week (Quadruple Witching if you prefer) of the year brings on some volatile trading with losses frequently exceeding gains. NASDAQ has the weakest record on the first trading day of the week. Triple-Witching Friday is usually better, DJIA has been up ten of the last seventeen years.

Full-week performance is choppy as well, littered with greater than 1% moves in both directions. The week after Triple-Witching Day is horrendous. This week has experienced DJIA losses in 26 of the last 30 years with an average decline of 1.07%. S&P 500 and NASDAQ have fared slightly better during the week after over the same 30-year span, declining 0.72% and 0.23% respectively on average.

Stockaholic · Jun 12, 2020

Here are the current major indices pullback/correction levels from ATHs as of week ending 6.12.20-

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 6.12.20-

Stockaholic · Jun 12, 2020

Here are the upcoming IPO's for this week-

Stockaholic · Jun 12, 2020

Stock Market Analysis Video for June 12th, 2020
Video from AlphaTrends Brian Shannon

ShadowTrader Video Weekly 6.14.20
Video from ShadowTrader Peter Reznicek

Stockaholic · Jun 12, 2020

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 (6/15) <-- click there to cast your daily market vote and stock pick!

Stockaholics Weekly Stock Picking Contest & SPX Sentiment Poll (6/15-6/19) <-- 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 12, 2020

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

(GLOBAL ECONOMIC AND POLICY CALENDAR NOT YET POSTED!)

Stockaholic · Jun 12, 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 6.15.20 Before Market Open:

Monday 6.15.20 After Market Close:

NONE.

Tuesday 6.16.20 Before Market Open:

Tuesday 6.16.20 After Market Close:

Wednesday 6.17.20 Before Market Open:

NONE.

Wednesday 6.17.20 After Market Close:

Thursday 6.18.20 Before Market Open:

Thursday 6.18.20 After Market Close:

Friday 6.19.20 Before Market Open:

Friday 6.19.20 After Market Close:

NONE.

Stockaholic · Jun 12, 2020

And finally here is the most anticipated earnings calendar for this upcoming trading week ahead-
($KR $MFA $GRPN $JKS $ORCL $LEN $KMX $TSQ $HRB $MPAA $SWBI $CMC $RGS $TTM $HOME $JBL $DBI $AMSWA $ABM $BNGO $CNTG $LMB $LIVX $ALYA $GAN $INWK $VOLT $UROV $VNCE)

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

Most Anticipated Earnings Releases for the week beginning June 15th, 2020 <-- click there to view!

Vdubman · Jun 15, 2020

Bulls better hope that printing press doesn’t have a jam Monday!

Bears better hope the second wave is real and not a hoax like the first one

Stockaholic · Jun 15, 2020

Frankenstein · Jun 15, 2020

Ok. There's the SPX 3050. I'm all out. Focusing on risk management. And then, hopefully, another collapse to enter, starting from scratch.

stock1234 · Jun 15, 2020

What a comeback for this market

Steven_Burt · Jun 15, 2020

If the bears want to stop the momentum, now is the time

Steven_Burt · Jun 15, 2020

Steven_Burt said: ↑

If the bears want to stop the momentum, now is the time
Click to expand...

Well that was soundly rejected

Vdubman · Jun 15, 2020

Money printer jam repaired today! Brrrrrrrrrrrrrrrrrrrrr

stock1234 · Jun 15, 2020

The Fed says it is going to start buying individual corporate bonds

https://www.cnbc.com/2020/06/15/the...-start-buying-individual-corporate-bonds.html

All major indexes now deep in the green

anotherdevilsadvocate · Jun 15, 2020

Chinese internet stocks looking good this month.
Even managing to carry GSX, which is largely considered a fraud. (Then again, it has also been a good month for bankrupt stocks so far, no?).

Stock Market Today: June 15th - 19th, 2020

Stockaholic Content Manager

Stockaholic Content Manager

Stockaholic Content Manager

Stockaholic Content Manager

Stockaholic Content Manager

Stockaholic Content Manager

Stockaholic Content Manager

Stockaholic Content Manager

Stockaholic Content Manager

Stockaholic Content Manager

Stockaholic Content Manager

Vdubman Well-Known Member

Stockaholic Content Manager

Frankenstein Well-Known Member

stock1234 2017 Stockaholics Contest Winner

Steven_Burt 2019 Stockaholics Contest Winner

Steven_Burt 2019 Stockaholics Contest Winner

Vdubman Well-Known Member

stock1234 2017 Stockaholics Contest Winner

anotherdevilsadvocate Well-Known Member

Share This Page

Useful Searches

Stock Market Today: June 15th - 19th, 2020

Stockaholic Content Manager

Stockaholic Content Manager

Stockaholic Content Manager

Stockaholic Content Manager

Stockaholic Content Manager

Stockaholic Content Manager

Stockaholic Content Manager

Stockaholic Content Manager

Stockaholic Content Manager

Stockaholic Content Manager

Stockaholic Content Manager

Vdubman Well-Known Member

Stockaholic Content Manager

Frankenstein Well-Known Member

stock1234 2017 Stockaholics Contest Winner

Steven_Burt 2019 Stockaholics Contest Winner

Steven_Burt 2019 Stockaholics Contest Winner

Vdubman Well-Known Member

stock1234 2017 Stockaholics Contest Winner

anotherdevilsadvocate Well-Known Member

Share This Page