Welcome Stockaholics to the trading week of June 22nd! 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. Chicago Fed National Activity Index 10:00 a.m. Existing home sales Tuesday 9:45 a.m. US Flash Services PMI 9:45 a.m. US Flash Manufacturing PMI 10:00 a.m. New home sales 10:00 a.m. Richmond Fed Business Activity Survey Wednesday 7:00 a.m. Mortgage applications 12:45 pm: Fed’s Charles Evan speaks on the Corridor Business Journal webinar 3:00 pm: Fed’s James Bullard speaks at Greater Louisville virtual event Thursday 8:30 a.m. Jobless claims 8:30 a.m. Third estimate GDP 8:30 a.m. Durable goods Friday 8:30 a.m. Personal income 10:00 a.m. University of Michigan Survey of Consumer
COVID Concerns, Crude Collapse, & Quad-Witch Craziness Spark Stock Swoon Well that was a week of worrisome headlines (from World War 3 to global COVID reawakenings), awe-inspiring US macro-economic beats (which lose all context in relation to the collapse) as earnings outlooks remain just "off the lows", and a stock market that refuses to go down despite bonds, the dollar, and commodities all signaling anything but strong growth ahead... Given the mean-reverting nature of the US macro surprise index (3 standard deviations above the mean), this could be as good as it gets... Source: Bloomberg Leaving the gap between macro and micro at its greatest ever... Source: Bloomberg All hell broke loose this morning as the June S&P futures contract expired... On the week, all the US majors were higher with Nasdaq leading and The Dow lagging... On the day only Nasdaq managed to close green... With the late-day panic... Nasdaq is up 6 days in a row and up 17 of the last 20 days... The Nasdaq Biotech index spiked 3.5% today to new record high... The Virus Fear Trade picked up again this week... Source: Bloomberg Banks started the weak with a panic-bid off opening weakness but that faded as the week proigressed and yields slid... Source: Bloomberg Crude prices crashed intraday, accelerating on heavy volume at 1230ET (After AZ,FL case counts) before bouncing back dramatically (as USO tumbled into red)... Treasury yields fell today to end the week unch... Source: Bloomberg The dollar ended the week higher (up 6 of the last 7 days and 2nd up-week in a row) Source: Bloomberg Bitcoin ended the week lower but apart from Monday's dump and pump, traded in a narrow range... Source: Bloomberg Gold surged today, back above $1750... And finally, don't forget, The Fed's balance sheet shrank the most since 2009 this week... Source: Bloomberg Either TSY yields are dramatically too low or Dr.Copper is way over his recovery skis relative to gold... Source: Bloomberg Is volatility about the be resurrected? And here's a little context... Source: Bloomberg
Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2020- S&P sectors for the past week-
100 Days Fri, Jun 19, 2020 100 days ago today on March 11th, the WHO made it official and declared the COVID-19 outbreak a pandemic. Markets were already under a lot of pressure before the WHO declared the pandemic, but the 100 days since will probably go down as some of the craziest 100 days we'll ever experience, not only in the market but in general society as well. More than enough ink and pixels have been spent discussing the societal impact at large, so we'll spare you and just focus on the markets. While much of the declines were already in the rearview mirror by the time the WHO made its announcement, equities still had a steep decline in the immediate aftermath. The large-cap Russell 1000, for example, fell another 19% to its March 23rd closing low, but after the rebound, the net change since the pandemic was officially declared has been a gain of 14.3%. As impressive as the Russell 1000's gain has been in the face of the global pandemic, many stocks have done a lot better than that. The table below lists the 25 stocks in the index that have seen the biggest gains so far during this pandemic. Topping the list is Wayfair (W) which has rallied more than 350%. If there is one thing Americans must have realized while they were stuck at home under lockdown it was that they needed some new furniture! Behind Wayfair, two other stocks have more than tripled and both were beaten down stocks from the Energy sector that were trading at less than $2 per share on March 11th. A number of familiar names standout including Moderna (MRNA), Twilio (TWLO), DocuSign (DOCU), Beyond Meat (BYND), and Etsy (ETSY), but looking through the list, there's really a diverse group of names ranging from bombed-out stocks from the Energy sector (8 stocks), Consumer names (7 stocks), and the ever-popular software stocks from the Technology sector (6 stocks). It's definitely been a rocky road for the markets over the last 100 days, but for anyone who had these names in their portfolio, they aren't complaining. Click here to view Bespoke's premium membership options for access to our weekly Bespoke Report which includes an update to our Stocks for the COVID economy portfolio that was released on March 11th. S&P 500 Industry Group Breadth Remains Positive Fri, Jun 19, 2020 Equity markets have become a bit wobbly in the last week or so, but breadth, in terms of large-cap industry groups, still remains pretty robust. Relative to their 50-DMAs, all 24 S&P 500 industry groups still have rising 50-DMAs. When you consider the fact that the 50-day window spans the period going back to early April, a period encompassing most of what was one of the strongest 50-day rallies on record, the fact that every industry group has a rising 50-DMA isn't all that surprising. Even though all their 50-DMAs are rising, not every industry group is currently trading above its 50-DMA. While the reading briefly reached 100% in late May and early June, two industry groups have since pulled back below their 50-DMAs, putting the percentage at a still impressive 91.7%. The table below summarizes industry group performance showing YTD performance, where each one is trading relative to its 50-DMA, as well as where the group is trading relative to its 52-week high. As mentioned above, all but two groups (Drugs & Biotech and Food & Staples Retail) remain above their 50-DMAs, and another four are less than 2% above their 50-DMA. If Friday's sell-off deepens into next week, the percentage of industry groups above their 50-DMAs has the potential to quickly sink as low as 75%. Of the 22 industry groups that are above their 50-DMAs, Autos and Tech Hardware are the only two greater than 10% above. On a YTD basis, the S&P 500 is down less than 4%, but for the vast majority of industry groups, performance has been worse than that. Of the 24 groups shown, 16 are down more than 4% YTD, including eleven that are down over 10%. The worst performers of these losers include Energy, Banks, and Autos. While Energy gets most of the attention for being so weak, Banks are essentially down just as much! On the upside, just two industry groups are up over 10% (Retailers, which is basically Amazon, and Software & Services). Retailing is also the one industry group that is within 1% of a 52-week high and one of seven that is within 4% of a 52-week high. Credit Market Reversals Thu, Jun 18, 2020 We've noted in detail the massive reversals seen in global equities over the last three months, but outside of equities, we've also seen some other massive moves. One example is credit spreads between the yields of corporate and high yield bonds relative to Treasuries. The top chart below shows the spread in yields between the B of A Corporate Index relative to Treasuries going back to 1997, and below that, we show the 50-day rate of change in the spread. Heading into the COVID-crash, spreads on corporate bonds were less than 100 basis points (bps), meaning the corporate bond index was yielding only 1 percentage point more than comparable Treasury yields. In the span of less than two months, though, spreads surged by more than 300 bps to over 400 bps. Not since the depths of the credit crisis in 2009 had we seen spreads widen out more than they did in March. Just as notable as the level is the fact that the speed with which spreads widened during the COVID-crash was similar to the pace during the credit crisis. While spreads were quick to spike during both crises, they narrowed nearly as fast both times. Going back to 1997, the most corporate spreads have ever narrowed over a 50-day period was in June 2009. Coming in at a close second place, though, the 50-day period ending in early June was nearly as extreme. Similar to spreads on corporate bonds, the movement in spreads on high yield (junk) credit has been nearly as extreme. While spreads on the B of A High Yield Master Index widened out by only half as much during the COVID-crash as they did during the Financial Crisis, the 50-day move ending in late March was easily more extreme than any other period outside of the credit crisis. A shown in both charts above, the only time both corporate and high yield spreads narrowed by an amount anywhere close to the amount they narrowed from late March through early June was back in early June of 2009. The chart below of the S&P 500 shows that point from the perspective of the S&P 500. That period in June 2009 was right in the early stages of what turned out to be a multi-year bull market. Given the similar tightening in the credit market now versus back then, should we assume a similar move for equities going forward? After the last five months, we'll be the first to say that anything is possible. However, while there are plenty of similarities between the moves in credit markets over the last three months versus the first half of 2009, there are also important distinctions. The most important of these has to do with where the S&P 500 is trading right now. The second chart below shows the historical levels the S&P 500 has traded at relative to its all-time high. Even after the initial narrowing of credit spreads from March through early June 2009, the S&P 500 was still more than 40% off its all-time highs, and therefore still had a lot of climbing to do to get out of the hole. Back in June 2009, to get back to its all-time high from October 2007, the S&P 500 still had to rally another 75%. Today, it's a much different picture as the S&P 500 is already within 10% of its February 2020 all-time high. Could we be in the earlier stages of what turns out to be another long-term bull market? Sure. Will the magnitude of the gains be anything like the gains early on in the bull market that began in 2009? It's unlikely. The Dash for Trash Thu, Jun 18, 2020 We’ve seen a number of claims recently that the huge surge in the share prices of formerly “trash” companies is a sign that markets are getting carried away. In reality, this is very normal behavior coming out of an extreme market movement like the February-March selloff. Across the 26 Russell 3,000 companies that had CDS spreads greater than 1000 bps (the traditional indication of “distressed” credit territory) at the equity market lows on March 23rd, the average spread was over 57%. As shown below, in 2009, there were three times as many distressed companies, but they traded at a lower average spread (26%). Average performance afterwards, though, looks almost identical in the two cases. As shown below, in the 60 trading days that started the last bull market in 2009, these distressed companies rallied 209.8% on average. In the current situation, the average gains have been 208.2%. Given the fact that equity is a call on the value of assets (retaining whatever is left after liabilities), large shifts like major bear market lows by definition should lead to huge gains for the most distressed companies. In other words, the theory (first put forward by Robert C. Merton in 1974, link) is perfectly consistent with what we see in practice both now and historically. The most stressed companies by definition should rally the most, by virtue of their distress in the first place; this “dash for trash” phenomenon is a function of the capital structure of distressed firms, not any sort of sentimental excess in the behavior of investors. This analysis was included in last night's Closer report -- Bespoke's post-market macro note that goes out to clients at 6 PM ET each weekday. The Very Slow Recovery In Economic Activity Is Continuing Wed, Jun 17, 2020 As economies around the country slowly recover from COVID-19 and reopenings proceed, economic activity is slowly recovering. For the hardest-hit sectors, though, the recovery is only inching forward. Security checkpoint volumes at US airports are still down 80% YoY, and the trend of improvement is only set to return travel activity to 50% of 2019 levels in September. For restaurants, OpenTable data shows covers down by two-thirds from last year, though some of that is because many restaurants remain closed. Among reopened establishments, the number of seated customers are still down almost 40% YoY. About half of restaurants remain closed per the OpenTable data. We discussed this chart and other retail enthusiasm indicators in last night's Closer report, which is available to Bespoke Institutional members. Leading Indicators Turn Positive Yesterday, The Conference Board released last month’s reading for its Leading Economic Index (LEI), a composite of leading data series, which showed a month-over-month increase of 2.8%. As seen in the LPL Chart of the Day, the return to positive territory follows three straight months of negative monthly growth. ”We noted that the pace of the LEI’s deterioration slowed in the April report, potentially suggesting a bottom forming in the US economy,” said LPL Financial Senior Market Strategist Ryan Detrick. “Yesterday’s print was one of several positive economic data surprises we’ve observed recently, bolstering our optimistic view for economic growth in the second half of the year.” While the economy still has a ways to go in order to recover from the damage of the prior three months, the composition of May’s LEI advance encourages us. We noted a disconnect in April’s readout in which the financial market indicators tended to be net positive contributors while the “real economy” indicators detracted. May’s release saw a reversal of that trend whereby the economic subindexes played catch-up. Seven of the 10 components were positive contributors led by an improvement in average weekly initial unemployment claims, average weekly manufacturing hours, and building permits. The three negative contributors were the Institute for Supply Management (ISM) New Orders Index, average consumer expectations for business conditions, and the Leading Credit Index. The most recent LEI release reinforces our view that an economic bottom is likely behind us. Workers starting to return to jobs that they were unable to do remotely had material effects on May’s readout, and if that trend continues, a stock market trading at stretched valuations would have a stronger foundation under it. 3 Charts That Have Our Attention Stocks have shaken off the 5.9% S&P 500 Index drop last Thursday by gaining three days in a row before yesterday’s modest weakness. While researching and reading this week, three charts stood out that tell us quite a good deal about how investors have reacted during this volatile market and what could be next. “Incredibly, we saw nearly a third of all investors over 65 years old sell their full equity holdings,” explained LPL Financial Senior Market Strategist Ryan Detrick. “With stocks now back near highs, this is yet another reason to have a plan in place before trouble comes, as making decisions when under duress can lead to the exact wrong decision.” As shown in the LPL Chart of the Day, according to data from Fidelity Investments, nearly 18% of all investors sold their full equity holdings between February and May, while a much higher percentage that were closer to retirement (or in retirement) sold. Some might have bought back in, but odds are that many are feeling quite upset with the record bounce back in stocks here. Along these same lines, investors have recently moved to cash at a record pace. In fact, there is now nearly $5 trillion in money market funds, almost twice the levels we saw this time only five years ago. Also, the past three months saw the largest three-month change ever, as investors ran to the safety of cash. If you were looking for a reason stocks could continue to go higher over the longer term, there really is a lot of cash on the sidelines right now. Last, we noted last week that the extreme overbought nature of stocks here is actually consistent with the start of a new bull run, not a bear market bounce, or the end of a bull market. Adding to this, the spread between the number of stocks above their 50-day moving average and 200-day moving average was near the highest level ever. Think about it; with the 45% bounce in the S&P 500, many stocks were above their 50-day moving average, but not nearly as many were above their 200-day moving average. So from a longer-term perspective, there could still be gains to be had. Sure enough, looking at other times that had wide spreads, they took place near the start of major bull markets. Near-term the potential is there for a well-deserved pullback, but going out 6 to 12 months, stocks have consistently outperformed. Election Year July Performance Tepid July historically is the best performing month of the third quarter however, the mostly negative results in August and September tend to make the comparison easy. Two “hot” Julys in 2009 and 2010 where DJIA and S&P 500 both gained greater than 6% and a strong performance in 2013 and 2018 have boosted July’s average gains since 1950 to 1.2% and 1.1% respectively. Such strength inevitability stirs talk of a “summer rally”, but beware the hype, as it has historically been the weakest rally of all seasons (page 74, Stock Trader’s Almanac 2020). July begins NASDAQ’s worst four months and is the third weakest performing NASDAQ month since 1971, posting a 0.5% average gain. Dynamic trading often accompanies the first full month of summer as the beginning of the second half of the year brings an inflow of new capital. This creates a bullish beginning, a soft week after options expiration and some strength towards the end. Election year Julys rank in the bottom half of all election year months. DJIA: 0.5%, 6th worst; S&P 0.4% 6th worst; NASDAQ (since 1972): -0.7% 3rd worst; Russell 2000 (since 1980): -0.2% 3rd worst.
Here are the current major indices pullback/correction levels from ATHs as of week ending 6.19.20- 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 6.19.20-
Stock Market Analysis Video for June 19th, 2020 Video from AlphaTrends Brian Shannon ShadowTrader Video Weekly 6.21.20 Video from ShadowTrader Peter Reznicek
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 (6/22) <-- click there to cast your daily market vote and stock pick! Stockaholics Weekly Stock Picking Contest & SPX Sentiment Poll (6/22-6/26) <-- 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!
Here is a look at this upcoming week's Global Economic & Policy Calendar- (GLOBAL ECONOMIC AND POLICY CALENDAR NOT YET POSTED!)
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 6.22.20 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! NONE. Monday 6.22.20 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! Tuesday 6.23.20 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 6.23.20 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 6.24.20 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 6.24.20 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 6.25.20 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 6.25.20 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 6.26.20 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! Friday 6.26.20 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- ($NKE $RAD $DRI $WGO $MKC $WTI $INFO $ACN $KBH $SOHO $FDS $BB $AVAV $LZB $XAIR $CAAS $MCF $BWAY $SNX $GMS $WOR $QMCO $AFMD $EPAC $WUBA $USAT $NG $PDCO $APOG $PRGS $FUL $AEMD $AIH $YRD $STAF $UFAB $CAMP) If you guys want to view the full earnings post please see this thread here- Most Anticipated Earnings Releases for the week beginning June 22nd, 2020 <-- click there to view!
Might get back into some gold mining stocks on a pullback, probably not today GDX is still way off its recent highs from last month
Ignoring after-hours Friday and pre-market this morning, SPX has not moved out of the range from 6 days ago, June 16, in regular hours. It feels like the market can't go up anymore, but momentum stocks still got momentum so we aren't going down.
Ethiopian maids dumped outside their embassy in Beirut Maids have been dumped outside a Beirut embassy, amid an ongoing economic crisis in Lebanon, heightened by the coronavirus pandemic. Lebanon’s economy is collapsing with the country’s currency losing 70% of its value in the past six months. Now many of the country’s middle class claim they can no longer afford to pay their domestic maids. Sucks to not have a V-shaped economic recovery. Maybe here in America we can dump schoolteachers. We're going to do classes by Zoom, all the coronavirus did was speed up this tech evolution in the US. C'mon folks, just focus on the bright side.
sure does feel like the summer doldrums has now fully set into the market couple that with what the fed is doing, pretty much putting a backstop to any significant decline in the market and you have a recipe for a pretty uninteresting, boring market seems like nothing can phase this market right now. covid this, protests that, shitty economic news, global instability, etc. you name it the list goes on. could be a pretty long summer, absent ... well i would usually say "black swan event" here, but i guess the fed has the markets back so any black swan will just be met with more fed bazooka's lol really not sure what changes this, i've literally run out of things that could possibly derail this. this market has had everything but the kitchen sink thrown at it, and its shrugged it all off with new ATHs (at least in the case of the nazzy )
