Welcome Stockaholics to the trading week of March 20th! This past week saw the following moves in the S&P: Major Indices End of Week: Bird's Eye view of the Major Futures Markets on Friday: Economic Calendar for the Week Ahead: Sector Performance WTD, MTD, YTD: What to Watch in the Week Ahead: Monday Earnings: Movado 10 a.m. QFR 1:10 p.m. Chicago Fed President Charles Evans Tuesday Earnings: FedEx, Nike, Petrobras, General Mills, Lennar, Lands' End 8:30 a.m. Current account 8:30 a.m. Philadelphia Fed manufacturing 12:00 p.m Kansas City Fed President Esther George 6:00 p.m. Cleveland Fed President Loretta Mester Wednesday Earnings: Tencent, Winnebago, Five Below, Acushnet 9::00 a.m. FHFA home prices 10:00 a.m. Existing home sales Thursday Earnings: Conagra, Scholastic, KB Home, Accenture, GameStop, Shoe Carnival, Micron 8:30 a.m. Initial claims 8:45 a.m. Fed chair Janet Yellen makes opening remarks at Strong Foundations Conference 10:00 a.m. New home sales 12:30 p.m. Minnepolis Fed President Neel Kashkari at Strong Foundations Conference 7:00 p.m. Dallas Fed President Rob Kaplan Friday Earnings: Finish Line 8:30 a.m. Durable goods 8:45 a.m. Chicago Fed's Evans 9:05 a.m. St. Louis Fed President James Bullard 9:45 a.m. Manufacturing PMI 10:00 a.m. New York Fed President William Dudley
Stocks Sink On 'Quad Witch' As Dollar Suffers Worst Week In 8 Months One. Big. Squeeze... It was quite a week for 'uncertainty' as Europe's VIX crashed to record lows, and FX and Rate vols plunged after the Fed move and Dutch elections... Small Caps were the week's biggest winners (and Trannies the losers)... The Dow clung to the week's gains Financials had the 2nd worst week of the year - erasing the Trump Congress speech ramp Heading into the quad witch close VIX was well bid (after the panic selling around the open), busting the plan to break The Dow back above 21,000... Post-Fed, Gold is the biggest winner... Notably, after the worst week in 13 months last week, HYG managed the best week in 3 months, boucing off the 200DMA again... Today's record low inflation expectations sent bond yields and the dollar tumbling to post-Fed lows... Some context for these moves... The Dollar is back near post-election lows and the 30Y yield stumbled once again at 3.20% On the week 2s10s notably flattened... This was the Dollar's worst week in 8 months...And AUD, JPY, and Cable strength dragged on The Dollar Index... The USD is down over 3% in Q1 and is unchanged since March 2015... The Mexican Peso surged this week, erasing the entire post-Trump decline... With the debt ceiling deadline now passed, we note that USA sovereign risk has not moved yet, but Russia (which is junk rated but saw a positive outlook upgrade today) is now trading tighter (less risky) than investment grade Italy... This was gold's best week in the last six weeks... (silver also bounced after 2 down weeks)... Gold and Silver closed above key technical levels... Finally, this... And here's why Nasdaq hit a new record high...
Here's how the major indices have fared WTD, MTD, QTD & YTD thus far in 2017- Here are where the major indices stand since the Nov. 8th Presidential Election and Inauguration Day as of market close 3.17.17- S&P sectors for the week-
Spoiler: Weekend Reading: Just Buy Everything Authored by Lance Roberts via RealInvestmentAdvice.com, On Wednesday, as I discussed yesterday, the Fed hiked rates and despite the fact that hiking interest rates further tightens monetary policy, thereby reducing liquidity to the markets, the markets rallied anyway. With the hopes of accelerated earnings recovery being muted by falling oil prices, higher borrowing costs, and a strong dollar, investors seem willing to forgo the basic fundamentals of investing to chase an already extended and aging bull market cycle. This was noted yesterday in a note from Goldman’s Jan Hatzius, the chief economist warns that the market is over-interpreting the Fed’s statement, and Yellen’s presser, and cautions that it was not meant to be the “dovish surprise” the market took it to be. “Surprisingly, financial markets took the meeting as a large dovish surprise—the third-largest at an FOMC meeting since 2000 outside the financial crisis, based on the co-movement of different asset prices. The committee may have worried that a rate hike—especially a rate hike that was not priced in the markets or predicted by most forecasters as recently as three weeks ago—might lead to a large adverse reaction on the day, and wanted to avoid such an outcome by erring slightly on the dovish side. But we feel quite confident that they were not aiming for a large easing in financial conditions. After all, the primary point of hiking rates is to tighten financial conditions, perhaps not suddenly but at least gradually over time. And even before today’s meeting, at least our own FCI was already fairly close to the easiest levels of the past two years and this was likely one reason why the committee decided to go for another hike just three months after the last one.” He’s right. The Fed, which is now tightening financial conditions (which should/will push asset prices lower), got the exact opposite result as everything rose Wednesday from stocks, to bonds, to gold. In other words, market participates took the rate hike as another reason to “just buy everything.” Of course, with bullish trends still very much in place, it has been, and remains, very challenging to dispute that point. Just realize, eventually the mantra of “just buy everything” from overly complacent bullish investors, will change to “just sell everything.” Of course, just understanding that particular point is just winning the battle. Recognizing, and acting, on the change is what “Wins the war.” Just some things I am thinking about this weekend as I catch up on my reading. Trump/Fed/Economy Countdown To Crisis by David Stockman via Daily Reckoning Fed Is Way Behind The Curve by Wolf Richter via Wolf Street Border Tax Would Be Disaster For Texas by Richard Parker via Dallas Morning News Fed’s Era Of Easy Money Is Over by Neil Irwin via NYT How A Rate Hike Affects Borrowers & Savers by Jeff Cox via CNBC Markets Response To Fed Will Be Telling by Joe Calhoun via Alhambra Partners Fed’s Challenge May Be Existential by Eduardo Porter via NY Times Bubbly Market Lit Fire Under Fedby Caroline Baum via MarketWatch Fed: Garbage In, Garbage Out by Doug French via FEE The Growing Threat From Federal Debt by Chris Edwards via Town Hall Federal Reserve’s Rate Hike Is Bad News? by Lucinda Shen via Fortune Recession Risk by James Picerno via Capital Spectator Rate Hikes + Low Growth = Recession by Mark DeCambre via MarketWatch Market’s Response To Rate Hike by Frank Chaparro via BI Markets Corporate Bond Market: The Start Of The Matter by Danielle DiMartino-Booth via Money Strong Crash Guru Warns Of Drop To 14800 On Dow by Barbara Kollmeyer via MarketWatch Have The Markets Finally Woken Up by James Rickards via Daily Reckoning Credit Suisse/UBS Tell Clients To Buy Stocks by Jan-Henrik Foerster via Bloomberg Market Hasn’t Done This Since 1995 by Matt Egan via CNN Money The Most Overvalued Stock Market In History by Brett Arends via MarketWatch 10-Warning Signs Of This Bull Marketby Akin Oyedele via BI Wall Street’s Next Big Short by Rachel Evans & Matt Scully via Bloomberg Oil Market Is About To Get “U-G-L-Y” by John Kilduff via CNBC Why You Shouldn’t Try And Time The Market by Anora Mahmudova via MarketWatch Market Calm? Not Really! by Myles Udland via Yahoo Finance We Learned It In 1987, The Unexpected Moved Markets by Doug Kass via Real Clear Markets Is OPEC Headed For A Showdown With U.S. Shale? by Ivana Kottasova via CNN Money Sam Eisenstadt Has Bad News by Mark Hulbert via MarketWatch Stock Market Has That Sinking Feeling by Michael Sincere via MarketWatch Financial Planning/Retirement Understanding the Funded Ratio by Bob French via Retirement Researcher How To Buy Individual Bonds by Wade Pfau via Retirement Researcher How Have 401k Plans Affected Retirement Income by Munnell, Hou, Webb & Li via CRRBC The One Medicare Advantage Chart You Must See by Sean Williams via MotleyFool Research / Interesting Reads Why Shiller Is Worried About The Trump Rally by Adam Haigh & Jason Clenfield via Bloomberg Shiller: Stock Market Is WAY Overvalued by Wolf Richter via Wolf Street Let Me Convince You To Save More Money by Morgan Housel via Collaborative Fund Amazon Will Kill More Jobs Than It Saves by Rex Nutting via MarketWatch 16-Reasons Not To Live In California by Michael Snyder via Zerohedge Can We Scrap Daylight Savings Time Now? by Andrew Heaton via Reason Why You Probably Won’t Survive The Next Bear by Lawrence Hamtil via Fortune Financial Hoping For An Inheritance? by Suzanne Woolley via Bloomberg 10-Breakthrough Technologies, 2017 by Staff via MIT How Much Should You Save For Retirement? by John Divine via US News US Credit Growth Is Decelerating by Edward Harrison via Credit Writedowns Untested Robo-Advisors Are The Next Big Market Risk by Jason Schenker via Bloomberg Not The Outcome The Fed Wanted by Tyler Durden via ZeroHedge Worry When There Is Nothing But Blue Skies by John Hussman via Hussman Funds Has Stock Rally Reached Its Speed Limit? by Dana Lyons via Tumblr 3-Charts Of Unprecedented Valuations? by Jesse Felder via The Felder Report “It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” – Henry Ford
Positive January Trifecta Pattern Indicates Next Leg Higher Begins in Early April In the following chart S&P 500 historical average performance has been plotted comparing “All Post-Election Years,” “January Trifecta Positive,” “January Trifecta Positive - Post-Election Year” and 2017 as of today’s close. Thus far, S&P 500 has been tracking “January Trifecta Positive - Post-Election Year” (purple line) rather closely. Even March’s mild downtrend is mirroring the historical pattern. Should S&P 500 continue to track this pattern, then it is likely to begin its next leg higher in early April just as earnings season gets underway in earnest. Small-Caps Vs. Volatility: Who Blinks? Though the Russell 2000 is off its highs, its volatility expectations are hitting 52-week lows; which is correct? A couple times in recent months (here and here), we have written posts pointing out odd behavior between the S&P 500 and the S&P 500 Volatility Index, a.k.a., the VIX. Since stocks and their related volatility indices typically move in opposite directions, it was odd to see the 2 moving in concert, even if it was just in the very short-term. Each time, we asked the question, “who will blink, the S&P 500 or the VIX?” As it turns out, arguably it was the VIX that blinked both times, eventually reversing course to a more conventional path given the direction of the S&P 500. Today, we ask a similar question regarding the Russell 2000 Small-Cap Index (RUT), and the Russell 2000 Volatility Index (RVX). The impetus behind the question is the unusual set of circumstances currently present in the two data series. Specifically, The RVX recently closed at a 52-week low while the Russell 2000 was more than 2% off of its recent high. That may not seem all that extraordinary. However, since the inception of the RVX in 2006, it is just the 6th unique time that the RVX has hit a 52-week low while the RUT was at least 1% below its 52-week high. So what is the message being sent here? Judging by the prior events, there appears to be a clear favorite for who is most likely to blink.
Years Like 2017: March Edition Mar 16, 2017 It’s hard to believe that we’re already fifty trading days into the year, meaning that 2017 is already just about 20% in the books. The best way to characterize 2017? We’d say “so far, so good.” With a gain of 6.5%, 2017 ranks as the third best start to a year in the last ten years, behind both 2012 and 2013, and in both of those years, the index finished the year higher than it was on 3/15. Today, we wanted to take this one step further and look at past years that started off looking the most similar to 2017. To that end, as we do throughout the year, we analyzed years where the S&P 500’s closing prices had the greatest correlation to the closing prices so far in 2017. Then, for each year, we provided a summary including the correlation coefficient between closing prices for that year to the S&P 500 YTD through 3/15, how the S&P 500 performed YTD in each year through 3/15, and then how the index performed over the remainder of the year, including maximum gains and losses from the 3/15 closing level. Global Equities Back to Overbought Mar 15, 2017 US equities posted nice gains following the Fed’s rate hike this afternoon. The same was true for country ETFs outside of the US. Both the Russian stock market (RSX) and the Mexican stock market (EWW) posted gains of 3%+ today. Below is an updated look at our trading range screen for the 30 largest country ETFs traded on US exchanges. For each country, the dot represents where it’s currently trading, while the tail end represents where it was trading one week ago. The black, vertical “N” line represents each country’s 50-day moving average, and moves into the red or green zones are considered “overbought” or “oversold.” A week ago, only 7 of 30 country ETFs in our screen were trading in overbought territory, but after today’s move, that number is back up to 23 of 30. Pretty much all regions of the world are extended well above their 50-day moving averages again. South Africa (EZA), Spain (EWP), France (EWQ), and South Korea (EWY) are four of the most extended. Just 5 country ETFs are currently below their 50-days — Canada (EWC), Colombia (GXG), Russia (RSX), Thailand (THD), and Vietnam (VNM) — and just 2 of those 5 are oversold (Colombia and Russia). And even though Russia is still oversold, it has seen a huge jump higher within its range over the last week, just like pretty much every other country. What Happens To Bond Prices When The Fed Hikes Rates? Posted by lplresearch The sharp move lower in the 10-year Treasury yield yesterday after the Federal Reserve’s (Fed) rate decision and policy announcement caught many off guard. Most folks think that when the Fed hikes short-term rates, bond prices should fall (and yields rise) as inflation eats away at bond holders’ principal. While this may be the case over time, does this hold true during months immediately after a rate hike? What better time to research this than now, fresh off yesterday’s 0.25% (25 basis points) rate hike, the second hike in the past four months and the third time since 2015. To explore this, we analyze the price movement for the Bloomberg Barclays Aggregate Bond Index, the most widely used high-quality bond benchmark, two months after the 2015 and 2016 rate hikes. We see in the chart below that the Bloomberg Barclays Aggregate Bond Index price rose 1.86% after the 2015 hike (12/16/15 to 2/16/16). The same pattern held for the December 2016 hike, as the index gained 0.9% (12/14/16 to 2/14/17). One possible explanation for the higher prices (lower yield) could be that when interest rates rise, the consumer has less money to spend, therefore dragging inflation lower. It could also mean that markets are simply pricing in slower economic growth and inflation moving forward because of higher short-term interest rates. The 10-year Treasury yield fell 9 basis points yesterday to close at 2.51%, as markets broadly interpreted the Fed’s post-hike messaging as more dovish than expected, suggesting a more gradual pace of future rate hikes than markets had anticipated. So while the immediate reaction was for lower intermediate- and long-term yields (higher prices), it remains to be seen if the pattern of higher bond prices persists with this latest hike. Is A Lack Of Volatility A Sign Of Complacency? Posted by lplresearch The S&P 500 Index has now gone 104 days in a row without a 1% close lower. Should it avoid a 1% drop today, this will tie the longest streak without a 1% close lower since late 1995. Although this is no doubt a long streak, it puts in perspective the 78 years that Northwestern fans had to wait to make the NCAA tournament! Does this mean the crowd is complacent? Many have claimed recently that the lack of volatility is a sign of extreme complacency. Use yesterday for example—the S&P 500 traded in a range of only 0.25%, the smallest daily range so far this year and in the bottom 0.2% of all daily ranges since 1970. In fact, the S&P 500 hasn’t moved in a daily range of more than 1% for an incredible 59 days in a row, the longest such streak going back 50 years and trouncing the previous record of 34 from 1995. Of course, 1995 wasn’t the worst time to be long equities for the next several years. So, is this a sign of complacency? There are many ways to measure market sentiment, but it is worth noting that the number of bears in the recent American Association of Individual Investors (AAII) Sentiment Survey was the highest in more than a year, and active managers, as measured by the National Association of Active Investment Mangers (NAAIM) Exposure Index, had their lowest equity exposure of the year. Those are only two examples, but it sure doesn’t look like much complacency. Per Ryan Detrick, “The lack of volatility is historic in its own right, but is it bearish? History would say we can expect more volatility eventually, but this doesn’t mean to be on the lookout for a major correction either. In fact, after a streak of 100 or more days without a 1% drop has ended, the S&P 500 has been up a very impressive median return of 14.4% a year later and higher 75% of the time. In other words, a lack of big down days or a lack of volatility by itself isn’t a warning sign.” For more on our thoughts on if this bull market can make it to its ninth birthday next year, be sure to read How Much Is Left In The Tank?
Stock Market Analysis for Week Ending 3.17.17 Video from AlphaTrends Brian Shannon ShadowTrader Video Weekly 3.17.17 - Balance, Sector Analysis, $CFG, $NTES Video from ShadowTrader Peter Reznicek
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 (3/20-3/24) <-- click there to cast your weekly vote for this upcoming week! In addition we have our weekly stock picking challenge now up and running as well!- Stockaholics Weekly Stock Picking Contest for the Week of (3/20-3/24) <-- click there to post your weekly picks for this week! We also now have a daily stock picking & market direction guessing challenge running here!- Stockaholics Daily Stock Pick Challenge & SPX Sentiment Poll for Monday (3/20) <-- click there to cast your daily vote & stock pick for Monday! ======================================================================================================== And lastly here are our upcoming monthly and quarterly stock market polls & stock picking challenges- First the polls- Monthly SPX Poll - April 2017 Sentiment <-- click there to cast your monthly vote for April! Quarterly SPX Poll - Q2 Sentiment (April - June) 2017 <-- click there to cast your quarterly vote for Q2! And here are our stock picking challenge threads- Stockaholics April 2017 Stock Picking Contest <-- click there to post your monthly picks for April! Stockaholics Q2 2017 Quarterly Stock Picking Contest <-- click there to post your quarterly picks for Q2! ======================================================================================================== It would be pretty awesome to see some of you regulars join us and participate on these. I hope you all have a fantastic weekend ahead!
Here are the most anticipated ERs for this upcoming week ahead (I'll also have the earnings chart posted in here as well once it's ready) ***Check mark next to the stock symbols denotes confirmed earnings release date & time*** Monday 3.20.17 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! Monday 3.20.17 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! NONE. Tuesday 3.21.17 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 3.21.17 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 3.22.17 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 3.22.17 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 3.23.17 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 3.23.17 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 3.24.17 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! Friday 3.24.17 After Market Close: Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES! NONE.
And finally I leave you all with an updated look of the major indices pullback/correction levels as of this week ending- Have a nice weekend everyone!
Nothing really much doing here on the ERs front ... but here are the few that are still due to report this week- ($MU $NKE $HQY $FDX $GME $CSIQ $ASUR $FRAN $PBR $CCE $SLW $LEN $GIS $WGO $MOV $DXLG $NVCN $JMBA $NEOG $KBH)
I've got KBH reporting on Thursday, and so will also be watching LEN on Tuesday morning. There's quite a few interesting names reporting this week (FIVE may be helped by DG reporting last week, CTAS is looking strong). Watching to see if oil has bottomed. Technically it's in a precarious position, on the 200 sma and not looking like it's going to hold. But I'm hearing it won't go any lower.
I may play some earnings this week. Haven't played any (Maybe one, don't remember) since my home was burglarized. Maybe I'll find one or two this week that I like.
I know CBs are always providing liquidity but this week just feels like a down week. Of course you know what they say about feelings in trading.
Several biotech names gapping up hard today! I posted their news in the threads. A few postive releases from the FDA on them.
DB going down more on pretty strong volume. That announcement about the really discounted shares to pay off a cash call was surprising. I wonder if QE will try to fight what's unfolding at DB or if it can if things go south really quickly.
There's a gap down to 16.65, right around where the 200 sma will be given some time (currently 18.37).
