Welcome Stockaholics to the trading week of June 18th! 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: T.B.A.
Dovish Draghi Dominates Powell As Dollar Spike Wreaks Global Havoc That was a week... Total chaos in FX, debt, and commodity markets and the S&P 500 ends unchanged?!! The Dow ended the week red, S&P was manipulated perfectly to unchanged, and Trannies and Nasdaq led the surge... From The Fed's rate-hike, Dow and S&P are red... It's Quad-Witch so what else did you expect today? Standard 200 point insta-ramp in The Dow (and VIX-crusher algo to an 11 handle!)... all to get the S&P green for the week very briefly (2779) and run some stops... The big banks ended the week - an FOMC week - red! Treasury yields were extremely mixed with the short-end higher and long-end well bid... 10Y Yield briefly tagged 3.00% before plunging.. The yield curve collapsed to a new flattest level since Oct 2007... In FX land, it was chaos: Dollar Index's best week since US Election (Nov 2016), highest weekly close since July 2017 EUR lowest weekly close since July 2017 EM FX down 9 of last 11 weeks - lowest weekly close since Nov 2016 EM FX was carnage with Rand, Lira, and Peso getting pounded... The Argentine Peso was a total disaster... Despite the SEC-driven bounce, Cryptos had another ugly week - worst since March - with Bitcoin's lowest weekly close since Oct 2017... Commodity markets were crazy... Bloomberg Commodity Index worst week since Feb, lowest close since April Gold lowest weekly close since Dec 2017 Silver's worst week since April Oil's 4th losing week in a row - lowest weekly close since April Copper's worst week since Feb WTI tumbled back to a $64 handle to close the week and RBOB plunged to 2-month lows... Gold and Silver were both monkeyhammered on massive volume today... Gold/Silver soared back to unchanged on the week... The broad commodity complex was crushed this week...
Spoiler: Weekend Reading: Merger Mania Authored by Lance Roberts via RealInvestmentAdvice.com, On May 24, 2018, Paul La Monica penned an article for CNN Money entitled Companies have spent a stunning $2 trillion on mergers so far this year. The article notes that in 2018 merger activity has hit a feverish pitch fueled by “healthy balance sheets and strong share prices.” While somewhat true we think it is important to tell the whole story. We have written numerous articles describing how cheap money and poorly designed executive compensation packages encourage corporate actions that may not be in the best interest of longer-term shareholders or the economy. The bottom line in the series of articles is that corporations, in particular shareholders and executives, are willing to forego longer term investment for future growth opportunities in exchange for the personal benefits of short-term share price appreciation. Buybacks and mergers, both of which are fueled by the Federal Reserve’s ultra-low interest rate policy have made these actions much easier to accomplish. On the other hand, corporate apologists argue that buybacks are simply a return of capital to shareholders, just like dividends. There is nothing more to them. Instead of elaborating about the longer term ill-effects associated with buybacks or the true short-term motivations behind many mergers, the powerful simplicity of the following two graphs stands on their own. The first graph, courtesy Meritocracy, shows how mergers tend to run in cycles. Like clockwork, merger activity tends to peak before recessions. Not surprisingly, the peaks tend to occur after the Federal Reserve (Fed) has initiated a rate hike cycle. The graph only goes through 2015, but consider there has been $2 trillion in mergers in 2018, and its only June. The following graph shows how corporate borrowing has accelerated over the last eight years on the back of lower interest rates. Currently, corporate debt to GDP stands at levels that accompanied the prior three recessions. There is a pattern here among corporate activities which seems similar to that which we see in investors. At the point in time when investors should be getting cautious and defensive as markets become stretched, they carelessly reach for more return. Based on the charts above, corporate executives do the same thing. The difference is that when an investor is careless, his or her net worth is at risk. A corporate executive on the other hand, loses nothing and simply walks away and frequently with a golden parachute. Being a good steward of wealth is most difficult when everyone else is chasing the bubble. Corporate executives are no exception. Their actions may seem harmless as the economy is growing and the market steadily rises, but the last two recessions demonstrate that the wreckage of poor corporate decision-making falls mostly on workers and investors in the guilty companies. This time will be no different; the only question is how much higher does the Fed need to boost interest rates before the consequences of their actions become obvious? Just something to think about as you catch up on your weekend reading list. Economy & Fed Fed’s Powell Orchestrates A Masterful Move by Danielle DiMartino-Booth via Money Strong Is The U.S. The World’s Piggy Bank? by Caroline Baum via MarketWatch Social Security Crisis Already Here by IBD Is The Fed Rethinking It’s Balance Sheet Unwind by Mike Shedlock via The Maven Side Hustles Changing How Retirement Planning by Daniel Kline via Motley Fool If Economy Is So Great, Why Are 78 Million Working Gigs by Rex Nutting via MarketWatch Fed’s Phillips Curve Isn’t Dead by John Tamny via RCM Trump Economy Doing Just Fine by Peter Morici via MarketWatch The Facts On U.S. – Canada Trade by Patrick Hill via The Progressive Ensign $5089 – Why Trumps Tariffs Worry Automakers by Johnny Kampis via American Spectator Tight Labor Market Should Increase Wages by Noah Smith via Bloomberg Americas Fertility Problem, Not A Problem by Adair Turner via Project Syndicate ECB Volatility, Business Building And Speculation by Seth Levine via The Integrating Investor Recession Alert: World Headed For Slowdown by Dwaine Van Vuuren via Financial Sense How Good Is The Trump Economy Really? by Neil Irwin via The Upshot Trumps Tariffs Are Succeeding – In Upsetting Everyone by Editorial via USA Today Markets Someone Just Made A $75 Bet Gundlach Is Wrong by Tyler Durden via ZeroHedge How To Weather The Next Market Correction by Shawn Langlois via MarketWatch Global Earnings Recession All But Certain by Adem Tumerkan via Palisade-Research JP Morgan: US Losing Fiscal Discipline A Huge Risk For Markets by Pedro De Costa via BI A Deep Look Inside The GIG Economy by Simon Constable via Forbes Yields Retreat As ECB Lays Out Timetable For QE’s End by Mark DeCambre via MarketWatch An Average Rally by Dana Lyons via The Lyons Share Goldman: The Past Month Has Been A Giant Short Squeeze by Tyler Durden via ZeroHedge Fed Policy Close To Contractionary, Bull Market Close To End by Upfina Here We Go Again… by Charles Hugh Smith via Of Two Minds It Can Happen To Anyone by Nick Maggiulli via Dollars and Data Either GE, Or It’s Dividend, Is Set To Shrink by Ironman via Political Calculations Why Momentum Investing Is Actually Contrarian by Ivaylo Ivanov by Ivanhoff Capital Most Read On RIA The Myth Of Buy And Hold Investing – Part II by L. Roberts, M. Lebowitz & J. Coumarianos The Risks To Our Bullish View by Lance Roberts Monthly Fixed Income Update by Michael Lebowitz Pascal’s Wager: Why Stocks Get More “Risky” Over Time by Lance Roberts The Importance Of “Sequence Of Return Risk” by John Coumarianos 9-Minutes To Change Your Financial Life by Richard Rosso Research / Interesting Reads Fed Grows More Hawkish by Wolf Richter via Wolf Street Buffett: Balderdash With A Side Of Hypocrisy by Felix Salmon via Slate 10-Best Universities In The World by Abigail Hess via CNBC What Lunch With Buffett Taught Me About Investing & Life by Guy Spier via MarketWatch The Hallmark Of An Economic Ponzi Scheme by John Hussman via Hussman Funds Retirement Cut Proposals & Federal Employment by Dan Caplinger via Motley Fool Lessons From West Point That Can Make You A Better Investor by Moose via MarketWatch Maybe You’re Asking The Wrong Questions by Scott Bell via I Heart Wall Street “ The stock market is the story of cycles and of the human behavior that is responsible for overreactions in both directions.” – Seth Klarman
Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2018- S&P sectors for the past week-
DJIA Down 24 of Last 28 Weeks after June Option Expiration Historically, next week has been horrendous for DJIA, S&P 500 and to a slightly lesser degree NASDAQ. DJIA has dropped 24 times in 28 years during the week after June option expiration. DJIA’s average loss is 1.06%. S&P 500 is somewhat better with 20 losses and an average loss of 0.73%. NASDAQ has the best record since 1990 and yet still has 15 loses since 1990 and its average performance is –0.21%. Happy Birthday, Expansion! You Don’t Look at Day Over 9 Posted by lplresearch This month, the U.S. economic expansion officially turns nine years old. Last month, it topped what was the second-longest expansion in the 1960s, with only the record 10-year expansion from the 1990s standing in the way. For starters, consider that going clear back to the Civil War, the United States has never gone a full decade without a recession (the 1990s expansion straddled the century mark). Is there a chance this could be both the first decade to go without a recession and set the streak for the longest expansion? We like the odds. As LPL Research Senior Market Strategist Ryan Detrick explained, “Here’s the catch: Bull markets don’t die of old age; they die of excesses. We aren’t even seeing wage growth over 3% yet, and overall inflation remains tame. In our view, this economic recovery could have at least a few years left thanks to strong corporate profits, continued growth in the services and manufacturing sectors, and a tailwind from fiscal policy.” Our LPL Chart of the Day shows that this is now the second-longest economic expansion on record, but the economic growth seen during this expansion leaves plenty to be desired. Value Time? Posted by lplresearch After the longest run of outperformance of growth over value stocks ever, we believe value may be poised for a comeback. Year to date as of 6/11/2018, the Russell 1000 Growth Index has returned 9.5%, compared with just 0.5% for the Russell 1000 Value Index. As our LPL Chart of the Day shows, over the past 10 years, including the 2008–09 financial crisis, large cap growth stocks have outperformed value stocks consistently and significantly— by about 80 percentage points on a total return basis. How much longer can this outperformance continue? According to LPL Research Chief Investment Strategist John Lynch, “Generally, value stocks benefit from an economic growth tailwind, whereas growth stocks tend to be more in favor when the growth potential they offer is scarce. Although the timing of a turnaround is difficult to predict, we expect modest outperformance of value stocks over the balance of the year, supported by accelerating economic growth, attractive relative valuations, and potentially better financials sector performance.” Check out our Weekly Market Commentary for more insights on growth and value stocks. Fed Hikes, Market Slips. Another Dip to Consider Surprise, surprise, the Fed did exactly what was widely anticipated today. Interest rates were raised 0.25% to a new range of 1.75-2.00%. And at the end of the day, DJIA, S&P 500, NASDAQ and Russell 2000 all slipped modestly lower. Historically, down announcement days have been better buying opportunities than positive announcement days. In the above chart the 30 trading days before and after the last 82 Fed meetings (back to March 2008) are graphed. There are three lines, “All”, “Up” and “Down.” Up means the S&P 500 finished announcement day with a gain, down it finished with a loss. Note how past down announcement days have, on average, enjoyed the best gains over the next 30 trading days. Of the last 82 announcement days, the S&P 500 finished the day positive 48 times. Of these 48 positive days S&P 500 was down 28 times (58.3%) the next day. Of the 34 down announcement days, the following day was down 19 times (55.9%). All 82 announcement days have 0.41% average S&P 500 gains while the day after has been a net loser with S&P 500 declining 0.32% on average. June is Gold’s Second Worst Performing Month of the Year Although the historic summit between President Trump and North Korea leader Kim Jong Un captured the headlines today, the Fed also began a two-day meeting. Latest data from CME Group’s FedWatch Tool indicates a 95.0% probability that the Fed will increase rates tomorrow by 0.25% to a new range of 1.75% to 2.00%. Generally, the higher interest rates go, the less desirable gold can become. Gold does not have a yield and typically storage of physical gold has a cost. However, any weakness in gold in June could prove to be a good buying opportunity for a short-term trade. In the above chart, gold’s monthly performance from 1975 to 2017 is displayed. Historically, October has been gold’s worst month and June is a close second. However, after weakness in June, gold has, on average, enjoyed solid average, historical gains in July, August and September. Some of this strength in gold is likely due to safe haven demand during the stock market’s worst two months, August and September.
Stock Market Analysis Video for June 15th 2018 Video from AlphaTrends Brian Shannon ShadowTrader Video Weekly 6.17.18 - Won't Get Fooled Again Video from ShadowTrader Peter Reznicek
Here are the current major indices pullback/correction levels from ATHs as of week ending 6.15.18- Here is also the pullback/correction levels from current prices- ...and here are the rally levels from current prices-
Here are the most anticipated ERs for this upcoming week ahead (I'll also have the weekly earnings calendar posted in here as well once it's out) ***Check mark next to the stock symbols denotes confirmed earnings release date & time*** Monday 6.18.18 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! NONE. Monday 6.18.18 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! NONE. Tuesday 6.19.18 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 6.19.18 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 6.20.18 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 6.20.18 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 6.21.18 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 6.21.18 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 6.22.18 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! Friday 6.22.18 After Market Close: Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES! NONE.
Stockaholics come join us on our stock market competitions for this upcoming trading week ahead!- ======================================================================================================== Stockaholics Daily Stock Pick Challenge & SPX Sentiment Poll for Monday (6/18) <-- click there to cast your daily market vote and stock pick! Stockaholics Weekly Stock Picking Contest & SPX Sentiment Poll (6/18-6/22) <-- click there to cast your weekly market vote and stock picks! ======================================================================================================== It would be pretty sweet to see some of you join us and participate on these! I hope you all have a fantastic weekend ahead!
And as promised here is the most anticipated earnings calendar for this upcoming trading week ahead- ($MU $ORCL $FDX $KR $RHT $SGH $BB $WGO $DRI $KMX $AOBC $LZB $BKS $MEI $SECO $ATU $PDCO $BNED $CMC $SOL $SCS $AMS) If you guys want to view the full earnings post please see this thread here- Most Anticipated Earnings Releases for the week beginning June 18th, 2018 <-- click there to view!
Yeah small caps outperforming big caps once again today Small caps could be becoming some kind of “safe haven” for traders on global trade fears
Chip makers seem to be struggling a bit today except for AMD. Homebuilders stocks continue to struggle, they have been weak lately and ITB down well over 1% again today
yea i was contemplating taking some off the table, but decided to hold my current positions, glad i did, everything went positive lol.
I agree - still holding my 1 contract of /ES - back to break even now. I did get screwed out of a trade by Tradestation on SVXY @ 13.91 - they must've changed how they calculate their daytrading buying power. They explained that if I hold a position overnight my next day daytrading power will only be as much as what was calculated overnight? WTF - how are you supposed to daytrade with that stupid restriction! sometimes I open a position before the close and might close the next day and now I'm stuck with like $100 in buying power.
