Welcome Stockaholics to the trading week of March 27th! 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 1:15 p.m. Fed President Charles Evans 6:30 p.m. Dallas Fed President Robert Kaplan Tuesday 8:30 a.m. Adv. econ indicators 9:00 a.m. S&P Case-Shiller HPI 9:45 a.m. Services 10:00 a.m. Consumer confidence 12:45 p.m. Kansas City Fed President Esther George on the economy and policy 12:50 p.m. Fed Chair Janet Yellen speaks on workforce development challenges in low-income communities 1:00 p.m. Dallas Fed President Robert Kaplan 4:30 p.m. Federal Reserve Governor Jay Powell Wednesday 9:20 a.m. Chicago Fed's Evans 10:00 a.m. Pending home sales 11:30 a.m. Boston Fed President Eric Rosengren 1:15 p.m. San Francisco Fed President John Williams Thursday 8:30 a.m. Jobless 8:30 a.m. Q4 Real GDP 9:45 a.m. Cleveland Fed President Loretta Mester 11:00 a.m. Dallas Fed's Kaplan 11:15 a.m. San Francisco Fed's Williams 4:30 p.m. New York Fed President William Dudley Friday 8:30 a.m. Personal income 8:30 a.m. Consumer spending 8:30 a.m. Core PCE prices 9:45 a.m. Chicago PMI 10:00 a.m. Consumer sentiment 10:00 a.m. Minneapolis Fed President Neel Kashkari 10:30 a.m. St. Louis Fed President James Bullard
VIX Spikes To 2017 Highs, Stocks Suffer Worst Week In 6 Months As GOP Pulls Vote "Good Day Sir..." Another day, another headline-algo game... Dow is down over 600 points from record highs 1210 Drop - *GOP LEADERS NOT CONFIDENT THEY HAVE VOTES TO PASS HEALTH BILL 1228 Rally - REP MULLIN: "WE'RE TRENDING YES ON THE VOTE": RTRS 1235 Drop - Freedom Caucus "things are not good" 1247 Drop - Good chance vote may be postponed 1249 Drop - Ryan "we don't have the votes" 1350 Drop - Spicer sounding downbeat 1450 Drop - REP. COLE: IF HEALTH BILL FAILS, IT MAKES TAX REFORM HARDER 1515 Drop - U.S. HOUSE SPEAKER RYAN HAS TOLD TRUMP THE HEALTHCARE BILL WILL NOT PASS THE HOUSE -CNN: RTRS 1529 Rally - Vote Pulled (retarded narrative that now they can focus on tax reform!) 1545 Drop - Market suddenly wakes up to realization no health bill means smaller tax reform 1527 Rally - Just look at the panic selling in VIX as headline shit that the vote was being pulled!!! The Dow's longest losing streak since right before the election (7 days) VIX soared above 14 to 2017 highs... up 6 days in a row and above its 200DMA - then collapsed in the last few minuest to close red! Quote a swing... On the week: Small Caps worst week since Feb 2016 Trannies down 3 weeks in a row - worst week since June 2016 Dow worst week since September S&P worst week since November Nasdaq worst week since 2016 (from record high to one-month lows) Financials were a bloodbath on the week, with only Utes in the green - Financials suffered the worst week since Jan 2016 The Bloomberg Dollar Index fell again today - the 8th losing day in a row - USD Index down 2nd week in a row - biggest 2-week drop in 12 months The longest losing streak since April 2011... (the dollar has not had a longer losing streak since Dec 2006) Treasury yields tumbled on the week - this is the best 2 weeks for Bonds since July 2016 - NOTE that both times The Fed hiked rates, yields tumbled...30Y back to 3.00%, 10Y back to 2.40% Gold up for 2 weeks in a row - best 2 weeks since Brexit - back to unchanged for March Crude managed to scramble back to a $48 handle into the close but red on the week, RBOB rallied into the close back above $1.60 Gold topped $1250, Silver topped $17.50 on the week... Gold is 2017's biggest winner... Time for some mean reversion - in 'soft' data... And stocks to earnings...
Spoiler: Weekend Reading: Lack Of Perspective Authored by Lance Roberts via RealInvestmentAdvice.com, In this past weekend’s missive I wrote: “Speaking of low volatility, the market has now gone 108-trading days without a drop of 1% for both the Dow and the S&P 500. This is the longest stretch since September of 1993 for the Dow and December of 1995 for the S&P 500. The issue becomes, of course, which way the market breaks when volatility returns to the market. Over the course of the last three years, in particular, those breaks have been to the downside as shown below.” “Given the particularly extreme overbought condition that currently exists, the strongest odds suggest the next pickup in volatility will be in the form of a corrective action to reverse some of that condition.” Of course, on Tuesday afternoon that long streak of complacency came to an end as all major U.S. markets tumbled by more than 1% by the close. Discover How Modern Finance Systems Can Help Your Employees Make Better Decisions Oracle shares how the change to cloud services has empowered employees and improved operations. Ad by Oracle While such an event has been expected, it still seemed to catch investors by surprise. Of course, given such a long period of upwardly trending prices with exceptionally low volatility, investors had been lulled into very high levels of complacency. The media had also fallen into the trap, as noted by the graphic above, suggesting the one-day correction had been a major mean reverting event. It wasn’t. As shown in the chart above, updated through Thursday, all indicators remain extremely overbought. While the markets may indeed rally into Friday’s close, it is quite likely the correction that began on Tuesday is not complete as of yet. Furthermore, after such a long period of low volatility, the sharp decline in asset prices is one day FELT much worse than it actually was. This is the important, and often missed point about “passive indexing.” While a 10% decline in the market certainly does SOUND that bad, with a 2000 point loss on the Dow, or a 230 point loss on the S&P 500, FEELS entirely different. This is where investors start making emotionally bad investment decisions where “passive investing” ultimately becomes “panic selling.” It is the “lack of perspective” by investors that eventually lead them into the myriad of investment mistakes which destroys investment capital. Think about it this way. If a 1% decline causes this much angst in the market, what happens when you multiply that by 10? While it is often said it is only “time IN the market” that matters, investors must remember “time” is the one commodity we can not replace. Just some things I am thinking about this weekend as I catch up on my reading. Trump/Fed/Economy The American Dream: An Endangered Ethos by Danielle DiMartino-Booth via Money Strong Time To Kill “Obamacare Lite” by David Stockman via Daily Reckoning Fed Rosengren Is Worried About CRE by Wolf Richter via Wolf Street Economy Sounding An Alarm by Pedro Da Costa via BI Trumps Plans May Need Foreign Help by Evelyn Cheng via CNBC How A Rate Hike Affects Borrowers & Savers by Jeff Cox via CNBC What You Should Know About The Fed by William Greider via The Nation The Surge In America’s “Animal Spirits” by Mohamed El-Erian via Project Syndicate Why The Fed Paid Banks NOT To Lendby Caroline Baum via MarketWatch Yellen Ignoring TBTF Is Dangerous by Craig Wilson via The Daily Reckoning 4-Political Risks Keeping Goldman Up At Night by Tyler Durden via Zero Hedge Why Trump Thinks Passing AHCA Bill Is Sensible by Jonathan Chait via New York Magazine Rate Hikes + Low Growth = Recession by Mark DeCambre via MarketWatch 2% Growth As Good As It Gets by Jason Furman via Peterson Institute Markets Field Of Stock Market Dreams by Eric Parnell via Seeking Alpha Age Old Adages For The Bull Market by Ed Yardeni via Dr. Ed’s Blog Credit Suisse: Signs Of A Top by Akin Oyedele via BI Return Of The Risk Off Trade by James Picerno via Capital Spectator Forget The Health Bill, Damage Is Done by Tyler Durden via Zero Hedge Big Money Eyeing Stock Market Exit by Brett Arends via MarketWatch Here’s Why Oil Prices Are Crashingby Jeff Bukhari via Fortune Has OPEC Underestimated U.S. Shale by Tsvetana Paraskova via Oil Price.com Animal Spirits Not Fueling The Markets, Yet. by Jeffrey Bartash via MarketWatch A Return To The Permanent Portfolio by David Merkel via Aleph Blog Black Swan Gauge Suggests Caution by Mark DeCambre via MarketWatch Why You Should Be Short Financials by Doug Kass via Real Clear Markets Stock Market Is Too Quiet by Anthony Mirhaydari via Fiscal Times Record Number Of Investors Think Market Overvalued by Jeff Cox via CNBC U.S. Stock Market Is An Anomaly by Wesley Gray via Yahoo Finance Research / Interesting Reads Housing “Supply Shortage” Is #FakeNews by Mark Hanson via MHanson.com Ray Dalio: The Rise Of Populism by Ray Dalio via BridgeWater 7-Traits Of Successful Investors by Jim O’Shaughnessy via Tumblr The Incredible Shrinking Universe Of Stocks by Credit Suisse Robots: The 4th Industrial Revolution by David Kelnar via Medium The Man Behind The Trump Presidency by Jane Mayer via The New Yorker 4-Depressing Reasons Americans Don’t Save by Maria Lamagna via MarketWatch The Battle Of Personal Assistants On Your Phone by Hayley Tsukayama via Washington Post Why Wall Street’s Decline Won’t End by Nicole Gelinas via NY Post You Should Worry About Falling Car Prices by Edward Harrison via Credit Writedowns Does Anybody Eat Cereal For Breakfast? by Paul La Monica via CNN Money Bonds Will Outperform Stocks Over Next Decade by John Hussman via Hussman Funds Traders Aggressively Trim Their Hedges by Dana Lyons via Tumblr Bogle’s 4% Return Estimate May Be Optimistic by Jesse Felder via The Felder Report “Successful preservation of capital must overcome the handicaps of socialistic governments to supposedly help the masses.” – Gerald Loeb
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 3.24.17- S&P sectors for the week-
Health Care Bill Failure Turns Trump Rally Into Sausage “Laws are like sausages, it’s better not to see them being made,” as the oft misattributed maxim goes. While this is a blow to the Trump administration and the Republican controlled Congress, it’s probably not as bad as the 24/7 sensationalized news media wants to make it. It’s definitely a set back and it did turn the market down when it was announced that after consulting with the President, Speaker Ryan was pulling the bill as it did not have the votes to pass. Hey, law making is a messy business, deal with it. They will just have to go back to the drawing board or caucus and try again or not. And in the meantime move on to the rest of the agenda. As we stated in our 2017 Annual Forecast, “We give base case a 65% chance as he does not appear to have enough congressional support to slam through all that he campaigned on, further rationale for more compromise and less actually delivered.” Meanwhile, the end of March has a history of volatility and end-of-Q1 market weakness. This recent selloff has come a bit early and is steeper than average, but not catastrophic. As you can see in the chart below of the 21-year typical seasonal pattern 2017 was tracking quite closely until the infamous Ides of March when the health care bill ran into stiff opposition. Smartest thing Trump, Ryan and the republicans can do right now is shelve this health care business and move on to the other policy items that have a better chance of making a difference and getting more support like infrastructure spending. Get that through and implemented and then go back to the harder sells. In any event this sets up another leg up during the final month of our Best Six Months. From the March 1 high the S&P 500 is down a whopping 2.2% at today’s close. Let’s not lose our heads and start calling for a market crash. We will stick to the drill and wait for our indicators to tell us when to go on the defensive. On an encouraging note our good friend and crack market timer Dan Turov notified subscribers today that his, “Intermediate Term Model has upticked from bearish to bullish. This does not mean the bull market is without risk. It does mean that the odds favor the next 50 point move in the SPX is more likely to be up to about 2400 than down to 2300.” Dan’s Turov On Timing service is invaluable to us and we recommend you check it out. “Worst Six Months” May Halt Trump Rally From our Seasonal MACD Buy Signal on October 24, 2016 through yesterday’s close, DJIA gained 13.4%, S&P 500 climbed 9.2% while NASDAQ was up 9.6%. At their respective high closes on March 1, 2017, DJIA was up nearly 16% and S&P 500 and NASDAQ were up over 11%. Either at yesterday’s close or the highs, this performance is above long-term averages. The long-term track record of our Seasonal Switching Strategy, which is based upon the “Best Six Months”, has a solid track record of outperformance with potentially less risk compared to a buy and hold approach. Since 1950, DJIA’s average annual gain has been 8.3%. Over the same time period, DJIA has lost an average 1.1% during the “Worst Six Months,” May through October, and gained an average 9.2% during the “Best Six Months,” November through April. Detractors are quick to point out that there have been positive “bad” months and negative “good” months. This is absolutely true as there is no trading or investment strategy that works 100% of the time (even the best will report a trading loss every once and a while). In post-election years, the worst performing year of the four-year cycle (page 130, STA17), there have been some nasty selloffs. Most recently in 2001 when DJIA fell 17.3%, S&P 500 dropped 15.6% and NASDAQ plunged 31.1% during the worst months. Barring another “once-in-a-generation” bear market and financial crisis, the double-digit gains of 2009 are not highly likely this year. And with the Fed clearly in a tightening cycle, a repeat of 2013’s quantitative easing fueled gains are also unlikely.
Best Performing US Stocks So Far in 2017 Mar 24, 2017 Below is a list of the 40 best performing stocks in the Russell 3,000 year-to-date (that trade higher than $5/share). As you’ll notice, Biotech stocks dominate the list. This is the same way things looked back in 2014 and 2015, but not in 2016 when Biotech names mostly plummeted. Nine of the ten best performing stocks in the Russell 3,000 are Biotech names, with Applied Optoelectronics (AAOI) the one Technology stock in the middle. Esperion Therapeutics (ESPR) is up the most with a YTD gain of 216.7%, followed by ViewRay (VRAY) ant Global Blood Therapeutics (GBT) at 170%+. There aren’t a lot of large-cap names on the top 40 list — Chemours (CC) has the highest market cap at $6.35 billion. Below we’ve created another top 40 list with all Health Care sector stocks removed. Activision Blizzard (ATVI) is the largest stock on this list with a market cap of $37.1 billion and a YTD gain of 36.8%. Once again, though, there aren’t a lot of well-known names on the list. If you have some time, definitely browse through the company descriptions and charts of the year’s best performers to see if you find any names that are intriguing. Is This The Start Of A Bigger Correction? Posted by lplresearch Is This The Start Of A Bigger Correction? After the first 1% drop in 109 trading days on Tuesday, many are wondering if this is finally the start to a market correction. Crude continues to weaken, small and midcaps are weak, and previous leaders like financials are pulling back as well. The S&P 500 Index might be less than 2% away from the recent peak, but many other sectors are showing weakness under the surface. For starters, one of the main reasons the S&P 500 could be due for a 5% correction is it has simply been so long since we’ve seen one. In fact, the last 5% correction was right after Brexit—some nine months ago. Looking at the data, the S&P 500 hasn’t been more than 5% away from its all-time high for 185 trading days, one of the longest streaks ever. Per Ryan Detrick, Senior Market Strategist, “The S&P 500 has gone a long time being within 5% of its all-time high, but here’s the catch—these streaks can continue for much longer than most expect.” Some other things to remember: Going back 20 years, March and April have been two of the strongest months (April ranks number one and March number three), decreasing the odds that a major correction could start now. Over the past 11 years, the return during March and April has been positive 10 times, with the only loss being less than 1%, in 2015. When the S&P 500 has made a new high at some point during the month of March (like it did this year), the entire month of March has closed lower only once going back 60 years (higher 15 out of 16 times with the only loss coming in 2015). March is down 0.6% currently this year, so this will be close with about a week to go. Since 1928*, when new highs have been made in March, the month of April has been higher 75% of the time (15 out of 20), with the worst monthly return down only 3.1% in 2000. Be sure to read Getting Technical With “Green-Tinted” Signals for more on why we think any pullback could be relatively modest and would be a buying opportunity. Insider Sentiment Posted by lplresearch There are so many different measures of stock market sentiment that it can make your head spin. Some are surveys such as the American Association of Individual Investors (AAII) Bull-Bear survey, which tells us how individual investors feel about stocks, and the National Association of Active Investment Managers (NAAIM) survey, which tells us how money managers are moving actual dollars. Flows data, the derivatives markets, and the VIX measure of implied (future) S&P 500 market volatility can help gauge fear levels in the markets. Valuation metrics like price-to-earnings ratios are also sentiment measures, showing how optimistic (or pessimistic) market participants are about an investment. Still others look at market value relative to economic indicators, corporate balance sheets, or even relative to the amount of margin debt investors hold (which we will tackle in a future blog). There are many other sentiment measures, but the one we want to focus on today is insider sentiment: that is, what corporate executives are doing with their own company’s stock. Thanks to our friends at Ned Davis Research (NDR), we have access to a measure of what these insiders are doing that can be used as a sentiment gauge. The theory is that the people who know their companies best are smarter buyers and sellers. Figure 1 shows the NDR insider score* is quite negative now, implying that more insiders are selling than buying. Is this cause for concern? Perhaps, but the numbers in Figure 2, which show S&P 500 performance when NDR’s insider score is in their bullish (buying) zone, the bearish (selling) zone or neutral, should help ease concerns. As you can see, stocks fare better when the reading is positive. However, the weakness following negative readings has historically been minimal. This indicator does suggest stocks need a pause. But when we look at sentiment measures broadly, we do not see excessive optimism that can lead to big near-term corrections. Remember, negative sentiment, which is not difficult to find across the universe of sentiment indicators we watch, can be a positive contrarian signal. As LPL Research Chief Investment Officer Burt White and Market Strategist Jeffrey Buchbinder noted in this week’s Weekly Market Commentary: “Our analysis of investor sentiment reveals signs of increasing worry. From a contrarian perspective, this could be a positive sign.” So while insider sentiment does suggest some nervousness, and we may get a pickup in volatility after an unusually calm period, we would not be alarmed by this one indicator. Look for more from us on sentiment here in the coming weeks. New Highs For One Of Our Favorite Indicators Posted by lplresearch One of our favorite indicators to gauge the strength of the economy is the Conference Board’s Leading Economic Index (LEI). This has historically provided early warnings of recession and the start of equity bear markets. As we discussed in our Weekly Market Commentary: How Much Is Left In The Tank?, the LEI remains comfortably above 0% year over year, and when has turned negative, a recession has typically followed within the next 14 months. Fortunately, that isn’t close to happening. On Friday, March 17, the February results from this economic indicator, which looks at 10 diverse economic indicators, were released. The year-over-year change was 3.1%, the highest since November 2015. Additionally, the month-over-month gain has been 0.6% for three consecutive months, and it hasn’t made it to four straight months since mid-2009. Oh, and the actual index made a fresh new all-time high in the process, topping the previous peak from March 2006. Per Ryan Detrick, Senior Market Strategist, “If you are looking for signs the economy is improving, look no further than the LEI. A new all-time high is a new all-time high. Should this keep expanding, we see little risk of a recession over the next 12 months.” Last, sometimes we hear “new all-time high” and immediately get a fear of heights. It is important to remember that the LEI should continually improve over time and make new highs as the economy also expands. To put this in perspective, over the past 10 years, the LEI has gone nowhere. In fact, the average rolling 10-year return going back nearly 40 years is 22. Against this backdrop, there could be substantial room for the LEI to continue to run higher even though the index is making new highs.
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 3.27.17 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! Monday 3.27.17 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! Tuesday 3.28.17 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 3.28.17 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 3.29.17 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 3.29.17 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 3.30.17 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 3.30.17 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 3.31.17 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! Friday 3.31.17 After Market Close: Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES!
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 (3/27-3/31) <-- 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 (3/27-3/31) <-- 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 (3/27) <-- 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!
And finally I leave you all with an updated look of the major indices pullback/correction levels as of this week ending- (Dow Transports about -2% away from entering correction territory) Have a pleasant weekend everyone!
ShadowTrader Video Weekly 3.26.17 - Is there such a thing as a quintuple bottom? Video from ShadowTrader Peter Reznicek
And as promised here are some of EW's most anticipated ERs due out for this upcoming week ahead: ($PLAY $LULU $RHT $BBRY $DRI $CCL $ZYNE $GIII $GEVO $CALM $HOME $WPRT $SCON $WLB $MKC $SNX $MBII $PAYX $FDS)
Thanks for these historical reminders. Man health care has been amazing, specifically these clinical-stage biotechs. The thing is they make 100% moves in a day so you don't really have a chance to get on these +200% stocks. Except NLNK is one that moved relatively gradually. And AVXL is on the list too I see (can't believe it's ahead of AVXS, I guess it had a bad week). FIZZ and MASI have been unbelievable.
Here's a quick look at the futs tonight as of 11pm eastern time- Already shaping up to be an interesting open for the week ahead. What's on everyone's radar heading into this week?
-1% now. Haven't seen futures this red since the election. That ended up being a pretty big bear trap I'd say.
Good morning Stockaholics! Happy Monday. Hope you all had a nice relaxing weekend in here and are ready for the new trading week ahead. Here are your pre-market stock movers & news on this Monday morning- 3/27 Monday Market Movers & News: DOW, DIS, UPS, AAPL, AMZN, SNAP, SBUX, ADBE, KBH, AZN, GIII <-- click there to view! I hope you all have an awesome trading day & week ahead in here this week!
