Welcome Stockaholics to the trading week of December 5th! This past week saw the following moves in the S&P: Major Indices End of Week: Bird's Eye view of the Major Markets on Friday: Economic Calendar for the Week Ahead: Sector Performance WTD, MTD, YTD: What to Watch in the Week Ahead: Monday Earnings: Coupa Software 8:30 a.m. New York Fed President William Dudley speaks on economy 9:10 a.m. Chicago Fed President Charles Evans 9:45 a.m. Services PMI 10 a.m. ISM nonmanufacturing 10:30 a.m. New York Fed's Dudley on CNBC 2:05 p.m. St. Louis Fed President James Bullard Tuesday Earnings: Autozone, Michaels Cos, Dave and Buster's, Toll Brothers, Bob Evans, Oxford Industries, Bank of Montreal 8:30 a.m. International trade 8:30 a.m. Productivity and costs 10 a.m. Factory orders Wednesday Earnings: Costco, Lululemon Athletica, Brown-Forman, Vera Bradley, H and R Block 10 a.m. JOLTS 3 p.m. Consumer credit Thursday Earnings: Sears Holdings, Broadcom, Restoration Hardware, Ciena, Hovnanian 8:30 a.m. Initial claims Friday Earnings: Vail Resorts 10 a.m. Consumer sentiment 10 a.m. Wholesale trade
Tech, Small Caps Suffer Worst Week In 10 Months As Trump Hangover Hits Everyone's doing it, just follow them... An interesting week: Nasdaq's worst week since Feb 2016 Small Caps worst week since Feb 2016 Bank stocks up 4 weeks in a row to highest since Jan 2008 FANG Stocks down 4 of the last 6 weeks Treasuries down 4 weeks in a row, TLT lowest close in a year USD Index down first time in 4 weeks Oil's best week since Feb 2011 (at highest since July 2015) Gold down 4 weeks in a row to 10 month lows Stocks on the week stunned investors, with Small Caps and Nasdaq suffering their worst weeks since Feb 2016 (and Dow and Trannies clung to unch) NOTE: The Dow gained 10 points on the week - just 3 stocks - GS, UNH, and JPM added over 150 points alone. Since the election, Nasdaq is now red... But futures show the real action... Financials (and Energy) remain the biggest post-Election winners (with Utilities and Staples worst) but both banks and energy stocks faded today... (banks worst day in over 2 months) Just two charts to consider... Notably VIX flash-crashed on payrolls... but look at Dow Futures swings - desperate to keep green for the week... Post-payrolls, oil was best but bonds and bullion beat stocks FANG (Diamondback) outperformed FANG Stocks on the week... The yield curve steepened on the week (after 2 weeks of flattening), leaving 2Y yields lower on the week and the long-end underperforming... So bonds and stocks down on the week - as Risk-Parity funds suffer the 7th week of losses in the last 9 weeks... FX markets were volatile this week withthe USD index ending lower for the first time in 4 weeks led by cable strength... Crude soared on the week - best week since Feb 2011 (to July 2015 highs) and silver gained as gold and copper slipped lower Finally we leave you with this - here is your market America... h/t @Not_Jim_Cramer
Spoiler: Weekend Reading: Trumponomics Submitted by Lance Roberts via RealInvestmentAdvice.com, What a change a couple of weeks can make. As my colleague, Michael Lebowitz, wrote this past week: “Following Donald Trump’s surprise victory and the violent market reactions, many investors are left scratching their heads. As shown above, the consensus narrative warned that a Trump victory would spell doom for the markets. Days later, the narrative flipped and Trump’s economic policies, all of which were known prior to the election, are deemed beneficial for share prices.” The question which remains, however, is whether tax reform and infrastructure spending will have the impact the markets are currently betting on? As I penned in yesterday’s missive: “The problem for Trump is that we no longer reside in the 80’s where a large group of ‘baby boomers’ were entering the workforce and driving a massive wave of innovation and productivity changes. Today, we are on the wrong side of the demographic trends combined with falling productivity and labor force growth.” “In any event, the horses may already be out of the barn. Only 8.5% of payroll employment is now attributable to manufacturing, down from 10.3% 10 years ago, 14.3% 20 years ago, and 17.5% 30 years ago. Bringing factory jobs back to the US may bring them back to automated factories loaded with robots. Even Chinese factories are using more robots.” And from Harvard Business Review: “Slow productivity growth is the main cause of slow economic growth, and slow economic growth makes it all but impossible for everyone’s boat to rise. No wonder angry citizens want dramatic change. But while voters may see the problem in a political establishment that is out of touch, the populist politicians who are challenging that establishment are unlikely to fare better. In the short term, they may be able to medicate the economy with a big tax cut or a dose of deficit spending. When the effects of that treatment wear off, though, the effects of slow productivity growth will linger.” But beyond the productivity problem is simply debt. While Trumponomics has fostered a furious rally in asset prices, the impacts of rising interest rates, inflation, and a surging dollar may provide headwinds of the wrong type. In fact, the current combination of events is similar to what we saw previously – in 1999. (yellow highlights) Also, notice there have only been three sell signals since 1999 as well which have coincided with major market peaks. If you look closely there is a high degree of similarity in the markets actions between today and the “exuberance” in 1999. While I am not suggesting the market is about to “crash” in a fiery mass, I am suggesting the “ebullience” of the markets over the last 8-years has likely priced in any real net effects of fiscal policy changes at this point. In other words, changes to fiscal policy will likely only offset retractions of monetary policy. Just a thought. In the meantime, here is what I am reading this weekend. Trumponomics The Revolution That Failed by David Stockman via Daily Reckoning Sustaining The Trump Rally by Mohamed El-Erian via Project Syndicate Trumponomics Vs. Reality by Martin Feldstein via WSJ Can Trump Really Rebuild America by David Millward via The Telegraph Better Come To Terms With Growth Expectations by Eric Bush via GaveKal Trumpflation Is Coming! Really! by Kenneth Rapoza via Forbes Trumponics Gets Wall St Thumbs Up by Heather Long via CNN Money Lessons For Trump From JFK by Ray Keating via Real Clear Markets The Trouble With Trump’s Infrastructure Plan by Tyler Cowen via Bloomberg Trump May Have Trouble With Jobs Promise by Ana Swanson via WashPo Trump Can’t Fix The Economic Problem by Marc Levinson via Harvard Business Review Donald Trump & The New Economic Order by Michael Spence via Project Syndicate We’re All Populists Now by Dr. Ed Yardeni via Yardeni Research Q3 GDP Got Lots Of Temporary Help by Richard Moody via Regions The Big Infrastructure Myth by Marc Scribner via Foundation For Economic Freedom Markets The “Ideal Buy High/Sell Low” Situation by Shawn Langlois via MarketWatch Market Could Soar 400-Points & Be A Bad Thing by Business Insider Buffett Indicator Says Stocks Overvalued by John Reese via CNBC Why The Bulls Will Stay In Charge by Howard Gold via MarketWatch Trump Will Benefit Almost All Stocks by Julie Verhage via Bloomberg Are The Markets All Wrong About Trump? by James Mackintosh via WSJ 3 Tailwinds To Buoy Global Stocks by Sid Verma & Blaise Robinson via Bloomberg Don’t Believe The Great Great Bond Fake-Out by Jeff Reeves via MarketWatch Global Bond Yields At A Glance by Peter Tchir via Forbes No Long-Term Issues For Bonds…YET by Michael Kahn via Barron’s Bond Market Trumpdado by Ivan Martchev via MarketWatch Inside Markets Love Affair With Trump by Charles Gasparino via New York Post 5% Yearly Returns Wishful Thinking by John Coumarianos via MarketWatch Just How Bullish IS The Market Right Now via Avi Gilburt via MarketWatch In Defense Of Fed’s Rate Hike Campaign by Edward Harrison via Credit Writedowns Interesting Reads The Italian Connection by Danielle DiMartino-Booth via Money Strong 3-Signs Black Friday Was A Bust by Craig Wilson via Daily Reckoning The Best Credit Cards For 2016 by Brendan Harkness via Credit Card Insider Boomers & Gen-X’rs Are Worried by Rodney Brooks via WashPo Krugman On The Working Class by Tim Duy via Fed Watch Rates Will Remain Low by David Trainer via Forbes From Peak Oil To Peak Demand by Justin Fox via Bloomberg If You Build It (Infrastructure), They Won’t Come by Stephen Entin via IBD House Price Increases Less Than You Think by Keith Jurow via Advisor Perspectives Home Prices Reach New Highs, Houston Falls by Aaron Layman via AaronLayman.com Missing The Big Economic Picture by J Bradford Delong via Project Syndicate More Blowoff Than Breakout by John Hussman via Hussman Funds Are Industrial Metals Pointing To Economic Growth? by Dana Lyons via Tumblr Bonds Haven’t Priced In Trumpflation Yet by Jesse Felder via The Felder Report “I am altering the deal. Pray I don’t alter it any further.” — Darth Vadar
Santa Claus Rally Is Coming, But We Ain’t Seen Nothing Yet Here we go again. Every year I am compelled to set the record straight. When the jack-o’-lanterns burn out and the turkeys get stuffed everyone starts calling for the Santa Claus Rally. The fourth quarter or yearend rally is not the Santa Claus Rally. Many get caught up in the hype and forget what the real Santa Claus Rally is. As defined by Yale Hirsch in 1972 in the Stock Trader’s Almanac (50th Anniversary 2017 edition page 114), the Santa Claus Rally is the last 5 trading days of the year and the first 2 of the New Year. (See Wikipedia, Investopedia and elsewhere, just Google it.) The significance of the Santa Claus Rally is really when it does not occur. Over this 7-day period the S&P 500 averages a rather consistent, yet a modest 1.4% average gain since 1950. But, as the songwriter in Yale declared, “If Santa Claus should fail to call; Bears may come to Broad & Wall.” In the last 22 years the SCR has been down only five times. As you can see in the table below, flat years occurred in 1994, 2005 and 2015, while nasty bears emerged in 2000 and 2008. The S&P 500 was down -5.1% in 2016. S&P is currently up about 7% year to date. We are currently experience some typical early December softness, but expect tax-loss selling to abate toward the middle or latter part of December and the Santa Claus Rally to emerge. While 2016 looks to be averted the full year weakness typically associated with an absent SCR, a mild NDR-Defined bear market did occur in February of this year. And as long as President-Elect Trump, and soon to be President Trump, doesn’t slip up Santa should arrive on schedule and we expect the market to tack on further gains well into Q1 2017. Should he stumble, the market may tumble as this rally has been built on stronger economic readings and the promise of big positive, construction changes and policy initiatives from the Trump Administration. Early December strength frequently fades into mid-month Over the most recent 21-year time period, December has developed a pattern of opening with strength lasting until about the third day for DJIA, S&P 500 and Russell 1000 (NASDAQ and Russell 2000 tend to run a bit higher into the sixth or seventh trading day) before moving sideways and finally lower into mid-month giving back any gains and then some by the eleventh trading day. From there, the major indices generally consolidate until the fourteenth or fifteenth trading day before rallying to close out December. Early tax-loss selling is the most likely culprit from this first-half decline. In most years, buying any first-half December weakness ahead of mid-month results in solid gains by yearend. Typically Strong December Slightly Weaker in Election Years December is the number one S&P 500 month and the second best month on the Dow Jones Industrials since 1950, averaging gains of 1.6% on each index. It’s also the top Russell 2000 month and third best for Russell 1000 (1979). December is NASDAQ’s second best month. Rarely does the market fall precipitously in December. When it does it is usually a turning point in the market—near a top or bottom. If the market has experienced fantastic gains leading up to December, stocks can pullback. Conversely if the market has been through the ringer of late and December is down as well, then expect a rally to ensue shortly. In the last sixteen election years, December’s ranking slip modestly to #3 S&P 500, #5 NASDAQ, but DJIA remains #2. Small caps, measured by the Russell 2000, have had a field day in election-year Decembers. Since 1980, the Russell 2000 has lost ground just once in nine election years in December. The average small cap gain in all nine years is a solid 3.0%. The Russell 2000’s single loss was in 1980 when the Prime Rate was 21.5%. Market trading in December is holiday inspired and fueled by a buying bias throughout the month. However, the first part of the month tends to be weaker as tax-loss selling and yearend portfolio restructuring begins. Regardless, December is laden with market seasonality and important events.
Welcome To The Strongest Month Of The Year For Equities Historically The month of November is in the books. We came into the month with the longest Dow losing streak in 35 years and many concerns over the U.S. presidential election. In the end, the fears didn’t materialize and equities had a big move higher. Here is a summary of what happened last month: • November was a great month for equities, as the S&P 500 gained 3.4%—its best monthly gain since a 6.6% gain in March. It was the best return in November since a 5.7% bounce in 2009. • As good as the month was for equities, it was that bad for bonds as rates spiked. The Barclays Global Aggregate Total Return Index was down 4% for the worst month on record going back to 1990. • The S&P 500 went the entire month without a 1% drop, only the third time that has happened the past 20 years during November. • Small caps had a huge month, as the Russell 2000gained 11.0% for the largest monthly gain since a 15.0% jump in October 2011. • During the month, the Russell 2000 (RUT) gained 15 consecutive days for only the fifth time since 1979, but the record of 21 straight green closes from 1988 remains safe. • Turning to sectors*, financials gained 14.0%, for their best monthly gain since a 14.3% advance in October 2011. Industrials, energy, and materials all led as well. Utilities and real estate lagged as higher rates lowered demand for higher yielding assets. Consumer staples also lagged, as money rotated away from more defensive sectors. • All four days of Thanksgiving week were green, something that interestingly has now happened in three consecutive election years. December is known for many things, but from a financial point of view the best might be it has been a historically strong month for stocks. Per Ryan Detrick, Senior Market Strategist, “December is the feel-good time of the year and Santa tends to come for equities as well, as no month is higher more often or up more on average. Not to mention the Dow has been lower each of the past two Decembers, and since 1896, it has never been lower three years in a row.” Here are some points to remember: • December has been historically one of the strongest months for equities. Going back to 1950**, the S&P 500 has averaged a gain of 1.6% and been higher 76% of the time; both are the best out of all 12 months. • When the S&P 500 has been up for the year heading into December, the average return in the month jumped to 2%. When the year has been down heading into the month, the average return dropped to 0.8%. • The catch is the S&P 500 has been lower in December during the past two years for only the sixth time in history (going back to 1928). It has never been lower for three consecutive years. • It is rare to see a large pullback during this month as well, as since 1950, the average return when the month is negative has been only -2.1%, the smallest loss out of all 12 months. • Incredibly, since 1950, only once has the S&P 500 closed the month of December beneath the low close from the month of November. • Going back to 1950, the S&P 500 has never had its weakest month of the year during of December. In fact, it has only had the 11th and 10th worst months of the year seven times. • The last time December was the worst month of the year for the Dow was in 1916, when it dropped more than 10% during World War I.
Stockaholics come join us in our weekly market poll and vote where you think the markets will end this upcoming week ahead!- Weekly SPX Poll - Sentiment (12/5-12/9) <-- click there! In addition we have our weekly stock picking contest now up and running as well!- Stockaholics Weekly Stock Picking Contest for the Week of (12/5-12/9) <-- click there! We also now have a daily stock picking & market direction guessing challenge running here!- Stockaholics Daily Stock Pick Challenge & SPX Sentiment Poll for Monday (12/5) <-- click there! And lastly we have a Fed poll...will they hike, will they stand pat? Vote!- Fed Poll: Will the FOMC raise rates to <0.75% on Wednesday December 14th @ 2:00PM ET? <-- click there! Oh and we also have a newly created Santa Claus Rally poll! Will Santa deliver a market rally this year or not? Vote!- Santa Claus Rally in 2016? Yes or Not? Vote! <-- click there! ======================================================================================================== In addition as we're coming up to the new year 2017 we've got a handful of new market polls for you folks to vote on- SPX - 2250 or 2150? Which one comes first from here? Vote! <-- click there! Dow Poll: Will the DJIA cross 20K in 2017? Vote! <-- click there! /GC Gold Futures - $1000 or $1400 next? Vote! <-- click there! /CL Crude Oil Futures - $40 or $60 next? Vote! <-- click there! /DX US Dollar Index Futures - $105 or $95 next? Vote! <-- click there! 10-Year Treasury Note Yields - 3% or 1.75% next? Vote! <-- click there! Will the Euro hit parity against the USD in 2017? Yes or No? Vote! <-- click there! U/J - 130 or 100 next? Vote! <-- click there! It would be pretty awesome to see some of you regulars here at Stockaholics join us and participate on these sentiment polls & challenges! Have a fantastic weekend everyone!
Earnings releases for this upcoming week ahead: ($AVGO $LULU $TOL $AZO $GWPH $COST $FNSR $MIK $FRAN $CIEN $HDS $BMO $BOBE $FRED $RH $PLAY $HOV $BNED $OLLI)
Free Friday Market Wrap and Sector Watch Dec 2 -9th Little bit of a healthy pull pack in some sectors this week as we saw some sector rotation out of the former hot sectors like SMH and Tech into Oil and financials. Pullbacks are healthy as long as they aren't too extreme. Still bullish but we could see more weakness near term
ShadowTrader Video Weekly 12.4.16 - Does divergence spell opportunity soon? Video from ShadowTrader Peter Reznicek
Something about oil.. I really don't understand haw the OPEC deal is going to reduce supply for very long. Seems to me that frackers under the current administration will fire up the pumps at or near these levels. Once the President-Elect takes office I suspect there will be incentives given to U.S. producers.
Something else that occurs to me is that Saudi actually benefits from lower prices as many of their competitors cannot afford to sell at lower prices so Saudi gets a larger market share at natural supply and demand prices.
just bringing this over from last week's thread: i just wanted to quickly apologize to all for my absence this past week ... it obviously wasn't done on purpose or anything like that lol ... unfortunately my area was hammered pretty good from severe weather last week (in fact just 5 miles south of me there was a confirmed EF1 tornado touch down which caused a lot of damage...) fortunately for me though it was just several tree limbs that were down in my front/back yard, but it was enough of a headache that it had me cleaning up my yard for a good 3 days ... what a pain in the rear that was! but, i won't complain too much as many people were not only w/o power but also experienced some pretty seroious damage from the twister i should be back to a more normal schedule this week though ... so i'll try to get all the market moving events & earnings reports posted whenever i can y'know i didn't quite realize just how tedious these threads can be ... but i do need to say how much time & effort these things can take ... not only for these weekly threads but also the stock picking challenges and market polls that i run here ... as well as the morning stock movers & news, and on top of all that modding this board and cleaning up spam that we get hit on the forums here periodically ... it can be quite overwhelming for me to say the least! =/ but i honestly do try my best to do what i can with the limited time that i have on here sometimes albiet it ain't easy ... but holy cow do these things eat up a lot of my time & effort! phew! lol anyway enough of me, i hope you guys have a great trading week ahead! should be another interesting one this week!
^^^ Don't know what happened there but here is my response... Seriously? Cy these boards would not even exist without your efforts, you have zero reasons to apologize man. I have been exactly were you are before trying to promote, build a user base, create content, etc. I know how tough it is, and seriously you are the ONLY reason that these boards survived the upgrade and your efforts are super appreciated to me and I suspect all the other members here. Take all the time off any time you need to man, you have no reason to feel anything more than proud of what YOU have built imo man.
@Cy McCaffrey No worries Cy. I was just wondering if you were on vacation or something, I wasn't complaining. Really appreciate all of the work that you have done here, I know it requires a lot of efforts and time
No apologies necessary Cy. Don't know what we would do without you. And it looks like Italy isn't having much effect on the market. Looks like a smaller version of the Trump effect. Down quickly then slow grind back up.
that is quite the reversal in the eur/usd overnight ... about a 250 pip reversal off the lows ... interesting that seemed to also reverse our indices off their overnight lows as well ... we're now looking at new highs for the /ym (dow futures) and getting back up close to near old highs (about 10 handles shy) for the /es oil also reversing earlier losses as the dollar weakened from its overnight highs gold on the other hand is acting a little weird ... initially saw a pop on the italian news overnight but now back down and in fact hitting fresh lows on this move should be an interesting day and week ahead ... its good to be back in the saddle this week and thx again to all who responded in here last night ... you guys are absolutely the sole reason this site is even possible imho! keep them great posts coming fellas! we can't thank y'alls enough!
