Welcome Stockaholics to the trading week of August 22nd! This past week saw the following moves in the S&P: Bird's Eye view of the Markets on Friday: Economic Calendar for the Week Ahead: Sector Performance WTD, MTD, YTD: What to Watch in the Week Ahead: Monday Earnings: Nordson, Premier Tuesday Earnings: Bank of Montreal, Best Buy, Toll Brothers, J.M. Smucker, Intuit, Trina Solar 10 a.m. New home sales 1 p.m. $26 billion 2-year note auction Wednesday Earnings: HP, Royal Bank of Canada, Guess, Express, WPP Group, Heico, Williams-Sonoma, Workday 9 a.m. FHFA home prices 9:45 a.m. Manufacturing PMI 10 a.m. Existing home sales 1 p.m. $34 billion 5-year note auction Thursday Earnings: Toronto-Dominion Bank, Canadian Imperial Bank, Tiffany, Movado, Burlington Stores, Dollar General, Dollar Tree, Michaels Cos, Autodesk, GameStop, Pure Storage, Splunk 8:30 a.m. Initial claims, durable goods 1 p.m. $28 billion 7-year note auction Friday Earnings: Big Lots Fed Chair Janet Yellen speaks at Jackson Hole, Wyoming 8:30 a.m. Real GDP Q2 (second); international trade 9:45 a.m. Services PMI 10 a.m. Consumer sentiment
VIXtermination Saves Nasdaq's Longest Winning Streak In 6 Years Don't celebrate too early... the year's a long way from over... The Rick Astley Market Rolls On for the week... NASDAQ battled with 5233 all day - desperately trying to keep the winning streak alive... Trannies managed to outperform on the day...but everything else ended red - with a big trend change at the EU close... On the week, Trannies also outperformed and The Dow lagged and while the NASDAQ managed to eke out a gain, S&P failed by 0.01% Notably FANG stocks had their worst week since June... All of which happened as US Macro data suffered its worse 4-week streak in 6 months... And earnings expectations for 2015 plumb news lows... And this definitely doesn't matter... Treasury yields rose on the week - thanks mainly to a surge in yields today as the USD gained (though we note they did rally into the close)... But we note that the 10Y yield remains incredibly range-bound... The USD Index fell for the 3rd week of the last 4 (but bounced back today off the week's lows)... The USD Index bounce seemed to coincide with the Brexit/Jo-Cole-Dead lows... While crude soared ridonculously (best week in a year)... Gold managed a small gain and silver losses... In fact this was the biggest Gold outperformance of Silver in 6 months... But of course, oil was all that mattered... Charts: Bloomberg
Spoiler: Weekend Reading: Valuationally Challenged Submitted by Lance Roberts via RealInvestmentAdvice.com, As another week comes to a close, we continue to wrestle with a market that remains detached from underlying economic data and clings to recent levels of over overbought, overextended and low reward/risk outcomes. Of course, in the final stages of a bull market, this is what has historically been the case. As I stated last week: “The problem for individual investors is the ‘trap’ that is currently being laid between the appearance of strong market dynamics against the backdrop of weak economic and market fundamentals. Ignoring the last two to chase the former has historically not worked out well.” There was an excellent article by John Authers for the Financial Times on Friday to this very point: “Markets are extravagantly confident that brokers are too bearish, and that their profit forecasts for US companies are too low. The multiple of 18 times next year’s projected earnings at which the S&P 500 currently trades, according to Bloomberg data, allows little other interpretation. It is at its highest since 2002, outstripping any level it reached during the credit bubble, or when the Federal Reserve was pumping up asset prices with QE bond purchases. Add to this that US retail sales data suggest a sluggish economy, meaning that there is little reason to expect a big rise in revenues; that margins will be hard to expand; and that core inflation and earnings data suggest at least a whiff of inflation and a risk of higher rates from the Fed. Put all these together, and the highest prospective earnings multiples since the dotcom boom look like irrational exuberance.” There is currently a strong belief that the financial markets are not in a bubble. The arguments supporting those beliefs are all based on comparisons to past market bubbles. The inherent problem with much of the mainstream analysis is that it assumes everything remains status quo. However, the question becomes what can go wrong for the market? In a word, “much.” Economic growth remains very elusive, corporate profits have peaked, and there is an overwhelming complacency with regards to risk. Those ingredients combined with an extraction of liquidity by the Federal Reserve leaves the markets more vulnerable to an exogenous event than currently believed. It is likely that in a world where there is virtually “no fear” of a market correction, an overwhelming sense of “urgency”to be invested and a continual drone of “bullish chatter;” markets are poised for the unexpected, unanticipated and inevitable reversion. Take a step back from the media, and Wall Street commentary, for a moment and make an honest assessment of the financial markets today. If our job is to “bet” when the “odds” of winning are in our favor, then exactly how “strong” is the fundamental hand you are currently betting on? This “time IS different” only from the standpoint that the variables are not exactly the same as they have been previously. Of course, they never are, and the result will be “…the same as it ever was.” Here is what I will be reading this weekend. Fed / Economy In A Fed Minute by Danielle DiMartino-Booth via Money Strong Policy, Not Robots The Barrier To Jobs by Robert Samuelson via RCM The New VooDoo by Scott Sumner via EconoLib Nudging The Fed by Cato Institute via RCM Untold Story Of Shadow Banking by Daniela Gabor via New Economic Thinking Central Banks Could Be Next Pets.com by James Mackintosh via WSJ Economic Stimulus Perplex by Ronald Bailey via Reason Businesses Worried About Election by Ylan Q. Mui via Washington Post Stimulus Wears Off. Now What? by Robert Samuelson via Real Clear Markets Wages & The Business Cycle by Yves Smith via Naked Capitalism Yields Rise After Hawkish Fed by Anora Mahmudova via MarketWatch FOMC Worried About Valuations by Tyler Durden via Zero Hedge Subprime Auto Is Back! Markets The Market Is Hugely Overvalued by Mark Hulbert via MarketWatch Irrational Exuberance Surfaces by John Authers via Financial Times A Stock Market Crash Is Coming by Ken Goldberg via The Street Safest Place For Money At Record Highs by Michael Sincere via MarketWatch This Is The Top! No Wait! by Shawn Langlois via MarketWatch Legends Of Finance Go Short by Julia La Roche via Yahoo! Chance Of A Stock Market Hangover by Mark DeCambre via MarketWatch Laggards Become Leaders by Oliver Renick via Bloomberg Why Investors Are Ignoring Market Warnings by Adam Shell via USA Today Rob Arnott: Smart Beta Being Abused by Anora Mahmudova via MarketWatch What’s Driving The Market by David Nelson via David Nelson, CFA Always Good To Read Central Banks Threatening The Economy by Bill Gross via Financial Times Cash, NIRP & Bonds by David Kotock via Cumberland Advisors Dividend Cuts Back Into Recession by IronMan via Political Calculations Broad Alarm & Business Cycles? by Jeffrey Snider via Alhambra Partners ObamaCare On Verge Of Collapse by Sally Pipes via CNBC Stupid Is What Stupid Does – US vs Japan by Eugene Von Bawek via Bawerk.net Eurphoria Is Already Upon Us by Eric Parnell, CFA via Seeking Alpha NYT’s Dire Warning About Polling by Michael Krieger via Liberty Blitzkrieg How The GOP Got Trumped by David Stockman via Contra Corner Gold At Extreme Correlations by Eric Bush via GaveKal Gold At Key Levels by Dana Lyons via Tumblr Gold Is Standing At The Crossraods by Jesse Felder via The Felder Report “If you have the cool nerves of a great gambler, the sixth sense of a clairvoyant, and the courage of a lion, you have a ghost of a chance of making money in the stock market.” ? Bernard Baruch
Fed fighting five-year inflation downtrend Two pieces of economic data are currently suggesting the Fed will not be raising rates anytime soon. In the following two charts the 6-Month Exponential Moving Average (EMA) of the 1-Year Change in the Consumer Price Index (CPI) and the Producer Price Index (PPI) have been graphed. Both CPI and PPI are not seasonally adjusted. This combination of unadjusted data, smoothed with a simple EMA produces solid trend lines. Looking at the long-term history of CPI and PPI there is a clear trend toward price stability. Prior to 1950, there were wide swings in both that ranged from nearly 40% to negative 30% in less than 5 years. Since then the range has narrowed substantially. Zooming in on the time from 1982 to present the current trend of CPI and PPI is visible. PPI’s leadership of CPI is also visible. It is also clear that PPI and CPI peaked in 2011 and have been trending lower since. Last year’s sharp drop in crude oil and other commodity prices sent PPI spiking below negative 5%. CPI also dipped near zero. Although there has been a modest recovery to both in 2016, the overall trend is still lower. Given the Fed’s data dependent nature, it could be years before there is a stable trend toward someplace around 2% (solid black line). Rally showing signs of fizzling With a little help from the release of the Fed’s minutes from its last meeting yesterday, the market was able to mount a rally that spilled over into today, producing modest gains on both days. The wishy-washy nature of the Fed has once again convinced enough people that any rate hike is most likely to be later, not sooner. Low rates for longer also put downward pressure on the U.S. dollar which in turn has given a boost to crude oil. Even with the ongoing support of the Fed, the market’s current rally appears to be losing some steam. A bit higher in August is still likely, but afterwards a modest pullback in September-October is not out of the question. In the above three charts of DJIA, S&P 500 and NASDAQ signs of a slowing rally are growing. DJIA is sitting at about the same place it was a month ago in mid-July. S&P 500 is a handful of points higher and only NASDAQ has made any substantial move higher over the past four weeks. Stochastic and relative strength indicators are bouncing around just under overbought. MACD has been negative on DJIA and S&P 500 charts since the end of July while NASDAQ MACD has visibly turned negative over the past three days. All of this does not preclude additional gains, but it does suggest any gain is likely to be unimpressive. Don’t Sell Stocks on Monday Monitoring market performance on the individual days of the week has been revealing over the years. The insights were so inspiring that our iconoclastic founder and resident consigliere, Yale Hirsch, entitled his 1986 book Don’t Sell Stocks on Monday. In the following charts we have lined up the performance on each day of the week from pages 141 and 142 of the Stock Trader’s Almanac with annual average daily volume deviations for each day. Not surprising, Monday, or the first trading day of the week shows substantially reduced trading volume on both the NYSE and NASDAQ of 9% below the average. Friday is also below average for NASDAQ. This underscores the recent trend of market gains being concentrated midweek and weakness at the beginning and end of weeks. Apparently, traders and investors prefer long weekends; or at least not being exposed going into the weekend and being more tentative about taking new positions upon their return. Picking up stocks on Monday weakness and unloading during midweek strength on higher volume would appear to be a prudent strategy for the most part. It also pays to be keen to price and volume action on Fridays and the following Monday for indications of future market direction. Strong volume and price advances tend to be bullish, while back-to-back weakness on normal or elevated volume is frequently bearish. Market on track for further gains this August At roughly the half-way point of August, the eleventh trading day of the month and yesterday’s close, DJIA was up 1.11%, S&P 500 0.76%, NASDAQ 1.94% and Russell 2000 1.80%. Some of these month-to-date gains were surrendered today, but the market is tracking August’s historical pattern in election years quite closely. As you can see in the following two charts, election-year Augusts follow a different pattern than all Augusts. Election-year Augusts tend to start strong and remain in positive territory for the duration of the month while all Augusts over the most recent 21-year period have opened weak, bounced mid-month and finish in the red. In election years, around mid-month, NASDAQ and Russell 2000 tend to pull away from DJIA and S&P 500 to finish with an average gain of around 3%. According to Investor Intelligence Advisors Sentiment survey, bullish sentiment has been on the rise with the markets and is nearing lofty levels, but it is still not as frothy as it was, for as long as it was at the market’s top in May 2015. Bullish advisors were reported at 54.3% most recently compared to 59.5% in early 2015. Bears have retreated to just 20.9% and the correction camp is down to 24.8%. Bullish sentiment is elevated, but it has not reached truly worrisome levels yet which leaves plenty of room for the market to resume its advance in August.
ShadowTrader Video Weekly 8.21.16 - Poor highs, Importance of $TICK, BABA long term calendar Video from ShadowTrader Peter Reznicek
Stockaholics come join us in our weekly market poll and vote where you think the markets end this week! Weekly SPX Poll - Sentiment (8/22-8/26) <-- click there! in addition we have our weekly stock picks challenge here- Stockaholics Weekly Big Board Contest for the Week of (8/22-8/26) <-- click there! it would be great to see all of you regulars here at stockaholics participate!
yo @Ken34 do you remember back during the height of the 2015 correction (right about 1 year ago from now) we were looking at the charts comparing the 2015 correction with that of the 2011 correction ... and we were trying to figure out if there were any similarities between the 2 charts and were wondering if the recovery back to new highs was going to materialize once again, just as it did following the 2011 correction? well let's check up on those charts again shall we lol the top chart is that of 2015 to our YTD with the bottom chart being that of 2011 - 2012 ... while obviously these are not exactly the perfect patterns to a tee by any stretch of the imagination ... since the initial recovery off the correction bottom in 2015 turned out to be much more dramatic and powerful than the one in 2011 (the #3 highlight in gray) ... as well as the fact that we did make a new low on the move (the #4 highlight in yellow) in this correction as the one in 2011 did not ... and even the recovery to new highs (last highlight in #5) is a bit off with the 2012 recovery ... but still given all of that we can kind of see some similarities between the 2 there no? now let's really zoom out on those 2 charts ... my question here is do we repeat the next couple of years as we did in 2013, 2014, etc...? man oh man would that be one helluva epic bull rally!! lol here i've done a projection (above chart) of our current and obviously the bottom chart being what we saw in the years after the big 2011 correction ... hmm ... not saying it's gonna happen again ... but just putting this out there for some discussions haha ... whatcha think?
earnings winding down here ... these are the most notable names reporting this week: $ULTA $BBY $DLTR $DG $TOL $SJM $ZOES $GME $KIRK $DY $NDSN $LCI $INTU $TIF
This week's market wrap and Sector watch Still looking good nice consolidation no reason to think bulls can't stay in control
ah yes, i remember this. i agree, even though the charts are not 1 to 1 match, the whole thing still played out very similar. man if 2017 turns out to be a 2013, that would be nuts. i could see it happening though, considering biotech has been a dog for most of this year, it can very well come back booming like it did in 2013.
just in case anyone missed my thread earlier today ... this coming wednesday will be marking the 1-year anniversary of the infamous chinese yuan devaluation fiasco, and we all remember what happened that morning http://www.stockaholics.net/threads...argest-intraday-point-decline-on-record.1849/ ^^ i posted up vids and audio clips in that link for anyone interested to take a trip down memory lane lol
i agree ... and with the way that we keep putting in poor highs after poor highs on the profile there's no telling just how far this bull continues to run lol
Just wanted to say sorry I haven't been around guys. Had to move all of my money out of my trading account to fix up and get a house sold in California. It's sold now, and the money should be back in my account by the end of September, beginning of October. At which point, if the market hasn't tanked yet, I'll be going short.
Early movers: MDVN, PFE, CST, ISIL, SYT, FB, VIAB, VLKAY, JPM, MAT & more Medivation — Pfizer announced a $14 billion deal to acquire the biotech firm in an all-cash transaction. The deal is worth $81.50 per share and Pfizer expects it to add 5 cents per share to earnings in the first year. CST Brands — The gas station and convenience store operator is being bought by Canada's Couche-Tard in a $4.4 billion deal worth $48.53 per share. Intersil — Intersil is close to being bought by Japan's Renesas Electronics in a $3 billion deal, according to Reuters. A deal for the U.S. based chipmaker could be reached as early as this month. Syngenta — Syngenta's deal to be bought by ChemChina for $43 billion has been cleared by a U.S. national security panel. The pesticides maker said it still expects the deal to be finalized by the end of 2016. Facebook — Facebook shares could rise by more than 20 percent over the next year, according to Barron's. The paper said the boost would come on the strength of growing advertising revenue across Facebook's various platforms. Viacom — Chief Executive Officer Philippe Dauman has resigned, with Chief Operating Officer Thomas Dooley taking over as interim CEO. Dauman will remain as non-executive chairman through September 13. Volkswagen — Volkswagen will resume contract talks with suppliers today, trying to resolve a dispute that has halted auto production at some of its plants. JPMorgan Chase — The bank will receive $645 million from the estate of Washington Mutual, after settling a dispute with the FDIC arising from its purchase of WaMu during the 2008 financial crisis. JPMorgan will drop more than $1 billion in claims as a result of the settlement. Valeant Pharmaceuticals — Valeant announced the hiring of Paul Herendeen as chief financial officer, luring him away from animal health company Zoetis. Mattel — Mattel got a favorable mention in this weekend's Barron's, which said the toymaker could return an additional 20 percent to investors, including dividends, as its recent overhaul continues to provide a boost to operations. Rovi — The entertainment-focused data analytics company signed a 10-year patent licensing renewal deal with Dish Network. Discover Financial Services — The credit card issuer announced plans to repurchase an additional $100 million of its common shares between now and June 30, 2017. L Brands — Goldman Sachs upgraded the Victoria's Secret parent to "buy" from "neutral," saying a slump in productivity and profit margins has likely bottomed. Marathon Oil — Chief Financial Officer J.R. Sult is leaving the company for personal reasons, which the energy producer said is unrelated to any disagreement with the company over business matters. Vice President Pat Wagner has been appointed interim CFO while the search for a permanent replacement is conducted. Office Depot — The office supplies retailer announced that CEO Roland Smith plans to retire, but will stay on until a successor is found. The company expects that to occur by the end of the first quarter of 2017 and that Smith will remain as chairman.
Frontrunning: August 22 Dollar Rises on Fed Outlook as Emerging Stocks, Commodities Fall (BBG) Oil falls as China fuel exports jump, U.S. rigs rise (Reuters) Dollar gains, U.S. yields rise as investors await Fed hike signal (Reuters) Fischer Signals 2016 Rate Hike With Economy Nearing Fed Goals (BBG) Show of European unity: Merkel, Hollande, Renzi meet to discuss gameplan (Reuters) Rainy Rio wraps up challenging Games on upbeat tropical note (Reuters) Japan's Abe Plays Super Mario in Rio to Promote 2020 Tokyo Games (BBG) Donald Trump the Mortgage Broker Was in Trouble From Moment One (BBG) Japan Inc unenthused over Abe's stimulus, BOJ easing (Reuters) Donald Trump Bets Big on Online Advertising (BBG) Trump campaign signals possible shift on immigration stance (Reuters) Sweden Warns U.K. Against Aggressive Tax Cuts Amid Brexit Talks (BBG) Companies Build Bonds for European Central Bank to Buy (WSJ) Italy to hold elections in 2018 whatever referendum outcome: Renzi (Reuters) Focus on VIX futures shorts hides the real story (Reuters) The Justice Department Used Shaky Statistics to Drop Private Prisons (BBG) Kurdish militia launches assault to evict Syrian army from key city of Hasaka (Reuters) U.S. banks want to cut branches, but customers keep coming (Reuters) In Scramble for Yield, Pension Funds Will Try Almost Anything (WSJ) Former China boom town learns hard lessons about service economy (Reuters) Valeant names former Zoetis executive Paul Herendeen as CFO (Reuters) Iran says Russian use of air base for Syria strikes over 'for now' (Reuters)
#ES_F $ES_F #SPY levels to watch 2186 / / 2174.50 / / 2162.75 #CL_F $CL_F #Crudeoil levels to watch 48.19 / / 47.30 / / 46.47
