Welcome Stockaholics to the trading week of November 12th! 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.
Stocks Slump As Post-Election Surge Ends With Post-Powell Purge It was such a great ride... until today... China stocks started the week confidently but ended weak with Shanghai Composite back below the 2600 Maginot Line... Very mixed picture in Europe with Spain outperforming, Italy worst and the rest unch... A roller-coaster week of oddness as US stocks were bid on post-election 'gridlock' when it was the opposite of gridlock that has sent stocks higher in the last two years... and then dumped when The Fed explained how great the economy was (and therefore it needs to be tamped down by hiking rates)... and then the ubiquitous Friday-closing-ramp... Futures show the post-election pump and post-Powell dump best... Dow bounced at its 50DMA, S&P bounced at its 200DMA, NASDAQ ended up below its 200DMA On the week, Communication Services was crushed and Healthcare outperformed (especially post-election)... FANG Stocks ended the week in the red after giving it all back today... Financials outperformed (perhaps because they know Maxine Waters is running the show now), even as the yield curve flattened notably post-Fed... GE was a bloodbath... Treasury yields tumbled after the stronger than expected PPI print struck and extended on Navarro's hawkish tone...30Y outperformed dramatically, 2Y was worst... The Yield Curve flattened significantly on the week... Breakevens tumbled today, finally catching down to crude's collapse... The Dollar was up for the second week in a row, erasing much of the drop from two weeks ago... Offshore Yuan tumbled this week - its worst week since July Bitcoin was unchanged on the week, Bitcoin Cash (ahead of its fork) was up 20%... Dollar gains left their mark on the commodity space which ended notably weaker across the board... WTI Crude fell for the 10th day in a row, retracing 50% of the two-year uptrend's gains... That is an all-time record losing streak... But if you think WTI below $60 is bad - Canadian crude is back below $20!! And the good news is - gas prices should come down... Gold had an ugly week as the dollar rallied... And while Yuan was weak, it strengthened notably against gold... Finally, completely burying the lead, we note the price action of the largest equity market capitalization index in the world - the $24 trillion NYSE Composite... As Brad Wishak notes, "Text book throw back fail at both the 200 and uptrend resistance...Bull trap the call from here...It's just a matter of trickle down..."
Spoiler: Weekend Reading: American Gridlock & Why Mid-Terms Don't Matter Authored by Lance Roberts via RealInvestmentAdvice.com, With some bit of relief, I am glad to see the mid-term elections now behind us as another cloud of uncertainty is removed. However, in reality, I suspect the outcome of the elections will have much less impact on the markets than most currently think. Barbara Kollmeyer penned a note earlier this week for MarketWatch: “For financial markets, one takeaway mattered above all others in the midterm election—no curveballs. And that’s basically what was delivered as pundits who got it so wrong in 2016, correctly forecast the end of one-party rule this time. With Dems calling the shots in the House, we could see no end to investigations, subpoenas and possibly impeachment talk and a hard push for POTUS to cough up those tax returns. All that may slow down President Donald Trump’s MAGA plans.” While that is entirely true, I think the markets are going to quickly look past the now “gridlocked” Congress to the more important drivers of the market – earnings and share buybacks. As I noted in yesterday’s missive on rising headwinds to the market, earnings expectations have already started to get markedly ratcheted down for the end of 2019. More importantly, beginning in 2019, the quarterly rate of change in earnings will drop markedly and head back towards the expected rate of real economic growth. (Note: these estimates are as of 11/1/18 from S&P and are still too high relative to expected future growth. Expect estimates to continue to decline which allow for continued high levels of estimate “beat” rates.) So, really, despite all of the excitement over the outcome of the mid-terms, such is really unlikely to mean much going forward. The bigger issue to focus on will be the ongoing impact of rising interest rates on major drivers of debt-driven consumption such as housing and auto sales. Combine that with a late stage economic cycle colliding with a Central Bank bent on removing accommodation and you have a potentially toxic brew for a much weaker outcome than currently expected. Of course, the one thing that a “gridlocked” Congress can likely agree on is “more spending.” While there will likely not be any funding approved for “boarder walls,” immigration reform, or further defense spending, they can probably reach an agreement for an “infrastructure spending” bill. The problem, as President Obama found out when he tried it, is that: “Shovel ready jobs weren’t all the shovel ready.” Furthermore, most of the things that will likely be funded are “pet projects” from Congressional members which have very low returns on investment. As Woody Brock wrote in his book “American Gridlock:” “Country A spends $4 Trillion with receipts of $3 Trillion. This leaves Country A with a $1 Trillion deficit. In order to make up the difference between the spending and the income, the Treasury must issue $1 Trillion in new debt. That new debt is used to cover the excess expenditures, but generates no income leaving a future hole that must be filled. Country B spends $4 Trillion and receives $3 Trillion income. However, the $1 Trillion of excess, which was financed by debt, was invested into projects, infrastructure, that produced a positive rate of return. There is no deficit as the rate of return on the investment funds the ‘deficit’ over time.” There is no disagreement about the need for government spending. The disagreement is with the abuse, and waste, of it. Keynes’ was correct in his theory. In order for government “deficit” spending to be effective, the “payback” from investments being made through debt must yield a higher rate of return than the debt used to fund it. The problem, as noted by Dr. Brock, is that government spending has shifted away from productive investments, like the Hoover Dam, that create jobs (infrastructure and development) to primarily social welfare, defense and debt service which has a negative rate of return. According to the Center On Budget & Policy Priorities, nearly 75% of every tax dollar goes to non-productive spending. In other words, the U.S. is “Country A.” As Dr. Brock aptly stated in his speech: “Today we are borrowing our children’s future with debt. We are witnessing the ‘hosing’ of the young.’” So, yes, the markets may love a “gridlocked Congress” as the restriction of “Trumponomics” will remove some of the daily angsts. However, longer-term, the trend of spending, deficits, and demographics will continue to weigh heavily on American prosperity. Just something to think about as you catch up on your weekend reading list. Economy & Fed Trump Will Probably Resist Common Grounds by Caroline Baum via MarketWatch Fed’s Rosy Outlook Snubs History by Danielle DiMartino-Booth via Bloomberg Is Gridlock Good? by William Watts via MarketWatch The Global Economy Is Going Down For A 4th Time by Jeffrey Snider via Alhambra Investments Can Dems Reverse Trumponomics Now? by IBD Rhetoric vs Reality: US-China Trade Warby Michael Wenderoth via Forbes American Inequality Boiled Down To One Chart by Shawn Langlois via MarketWatch Economic Lessons From “Fiddler On The Roof” by Matthew Rousu via Real Clear Markets Why America Needs Another Baby Boom! by Steven Mosher via New York Post Socialism Kills…Literally by Richard Rahn via Washington Times Markets Kolanovic: Split Congress Best Outcome For Markets by Tyler Durden via Zerohedge Midterms Impact On Your Retirement by Mark Hulbert via MarketWatch This Has Never Happened Before by Sven Henrich via Northman Trader What Is The Real Effective Exchange Rate by Simon Constable via Korn Ferry Institute Did October Stop The Bull by Dana Lyons via The Lyons Share It’s The Worst Year Since 1901 by Cecile Gutscher via Bloomberg What Midterm Outcome May Mean For Stocks by Mark DeCambre via MarketWatch The Bull Market Is Dependent On Just A Few by Vident Financial This Year Is Anything But Typical by Jeff Sommer via NYT Marks: Conditions Make This A Time Of Caution by Christoph Gisiger via Finanz Und Wirtschaft Even After The Correction, There Will Be More by John Hussman via Hussman Funds Most Read On RIA GE – Bringing Investment Mistakes To Life by Lance Roberts Blind Faith Isn’t An Investment Strategy by Michael Lebowitz A Divided Nation We Stand by Doug Kass The Important Role Of Recessions by Lance Roberts 4-Steps To Save Money by Richard Rosso The Tailwinds To The Bull Market Have Shifted by Lance Roberts Listen Watch Exclusive Interview: Peter Boockvar Exclusive Interview: Chris Martenson Research / Interesting Reads What Happens To Buybacks In A Recession by Nick Colas via Zero Hedge What Will The Next Financial Crisis Look Like by Daniel LaCalle via The Epoch Times Are You One Of Those “End Of The World Guys?” by Jeff Thomas via International Man Higher Ed Fading For Low Income Students By Patrick Hill via Progressive Ensign Warren Buffett Issues Another Warning by Simon Black via Sovereignman.com Everything You Know About The “G.R.” Is Wrong by Steve Goldstein via MarketWatch The Madame Bovary Effect by Ben Hunt via Epsilon Theory The “Wall Street” Math Hustle by Richard Wiggins & Michael Edesess via Institutional Investor Are You Overconfident In Your Financial Future by Peter Dunn via USA Today The George Costanza Portfolio by Cliff Asness via AQR Capital Management Millionaire Being Made By The Million Last Year by IBD Not All Corrections Become Bear Markets by Sue Chang via MarketWatch “Stupidity has a knack of getting its way.” – Albert Camus
Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2018- S&P sectors for the past week-
November Expiration Week: DJIA has Best Record DJIA has been up 10 of the last 14 years on Monday of expiration week and Friday is up 12 of the last 16 years with an average gain of 0.55%. For you fact-checkers our there it is not a mistake that November Op-Ex day has the same point change and percent change in 2014 and 2015. I triple checked, its right. If you go out 2 more decimal places in the percentage calculation it’s different, but that is getting way too wonky for a Friday afternoon post. S&P 500, NASDAQ and Russell 2000 have not been as bullish as DJIA around or on November option expiration. S&P 500 has advanced only 16 times during options expiration week while NASDAQ and Russell 2000 have climbed only 15 and 14 times respectively over the past 24 years. All four indices have posted average losses on Monday and aside from DJIA and S&P 500 have been essentially mixed on options expiration day. Friday’s solid average gains across the board are largely due to a sizable gain in 2008. Any weakness next week could be a good entry point for new longs ahead of the usually bullish Thanksgiving holiday. Note solid strength during the week after options expiration since 2002. The worst blemish on the recent history is 2011. Typical November Trading: Strength Early & Late As of the market’s close yesterday, DJIA was up 2.07% thus far in November. S&P 500 was higher by 1.61% and NASDAQ was higher by 0.96%. Small-caps, measured by the Russell 2000 were performing the best, up 2.96% over the first four trading days in November. Current gains are consistent with the historical trend of early November strength. However, historically early strength has faded after the fourth trading day. Election results coming in line with expectations has extended strength this year. Mid-month, from around the fifth trading day until the fourteenth trading day, has been choppy. From there until the penultimate trading day of November the market has historically booked solid gains. Recently the last trading day has been prone to more weakness than strength. Beyond the Midterm Elections…A Solid Rally Regardless Later today the first of the day’s election results will begin to trickle in and if history is any guide, the results will likely have a minor impact on the market. This is the “Sweet Spot” of the four-year cycle for the market. In the following chart the 30 trading days before and 60 days trading days after the last 17 midterm year elections appear (NASDAQ since 1974). Prior to 1969 the market was closed on Election Day so the close on the day before was used. By 60 trading days after the election (approximately three months), DJIA, S&P 500 and NASDAQ were all higher on average from 6.8% to nearly 10%. Digging deeper into the data, the following table shows S&P 500 performance 1-, 3-, 6- and 12-months after the midterm elections since 1950. 1- and 3-months after the election S&P 500 was higher 82.4% and 94.1% of the time respectively. By 6-months and 1-year after, S&P 500 was always higher, although gains did slow after 6-months. The years the President’s party lost control of the House of Representatives are shaded in grey. 5 Midterm Charts to Know Posted by lplresearch Here at LPL Research we’ve shared many charts over the past few months regarding midterm years and midterm elections. Here are five of the best ones. Chart 1 – Most equity gains tend to happen late in the year during a midterm year. Chart 2 – Since 1946, the S&P 500 Index has been higher 12 months after every single midterm election. That’s 18 for 18. Chart 3 – The S&P 500’s closing low for the month of October was October 29. Since 1950 in mid-term election years, the S&P 500 gained more than 10% on average from the October low close until the end of the year. Chart 4 – Under a Republican president, the best scenario for stocks has been a split Congress. This is the most likely scenario after today’s elections, according to most Washington insiders. Chart 5 – The fourth quarter of a midterm year historically have been the best quarter of the four-year presidential cycle. Not to be outdone, the next two quarters have been quite strong as well. S&P 500 Cumulative A/D Line Tracking Price Nov 9, 2018 We monitor all sorts of different breadth indicators in order to get a feel for how market internals compare to moves in the major market averages, and one of the most widely followed of these indicators is the S&P 500’s cumulative A/D line. The cumulative A/D line is simply a running total of the daily net number of stocks in the S&P 500 rising or falling. The chart below shows the cumulative A/D line for the S&P 500 (red line) and the index’s price over the last 12 months. At first glance, it looks like the cumulative A/D line has generally been tracking the price of the index during this period, but if you look closely, there are some key periods that are telling. Looking back at the late January through early Spring period, you can see that while equities sold off sharply in the initial leg lower, breadth held up relatively well. In fact, while the first bounce in February stalled out well short of the prior highs, the cumulative A/D line came close to making a new high. More importantly, though, when the S&P 500 tested the February lows, the cumulative A/D line didn’t come close to making a new low, and then the rally that followed, it actually made a new high well before the market. This was a key positive divergence at the time and suggested that the S&P 500 would eventually retake its prior highs. In the current period leading up to the S&P 500’s peak right up until now, we haven’t seen much in the way of divergences in either direction. Both the price and cumulative A/D line of the S&P 500 made new highs on the same day in September, sold off hard, and then in the ensuing rally retraced right around 60% of the high to low decline. Unfortunately, at this point breadth isn’t saying much good or bad. Looking forward, though, the key things to watch will be how breadth reacts if Friday’s decline is the beginning of a new leg lower, or what happens if the S&P 500 rebounds and makes a run for new highs. If you are a bull, you’ll want to see breadth remain above the recent low on any retest of the lows in price or a new high in breadth ahead of a new high in price. Bears, on the other hand, will want to see breadth accelerate to the downside on any weakness and lag prices on any upside.
Stock Market Analysis Video for November 9th, 2018 Video from AlphaTrends Brian Shannon ShadowTrader Video Weekly 11.11.18 - Gridlock Video from ShadowTrader Peter Reznicek
Here are the current major indices pullback/correction levels from ATHs as of week ending 11.9.18- Here is also the pullback/correction levels from current prices- ...and here are the rally levels from current prices-
Stockaholics come join us on our stock market competitions for this upcoming trading week ahead!- ======================================================================================================== Stockaholics Daily Stock Picking Challenge & SPX Sentiment Poll for Monday (11/12) <-- click there to cast your daily market vote and stock pick! Stockaholics Weekly Stock Picking Contest & SPX Sentiment Poll (11/12-11/16) <-- 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!
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 11.12.18 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! Monday 11.12.18 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! Tuesday 11.13.18 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 11.13.18 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 11.14.18 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 11.14.18 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 11.15.18 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 11.15.18 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 11.16.18 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! Friday 11.16.18 After Market Close: Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES! NONE.
And as promised here is the most anticipated earnings calendar for this upcoming trading week ahead- ($NVDA $CGC $HD $TLRY $CRON $WMT $AMAT $CSCO $GOOS $JCP $YY $M $MNGA $APRN $ATHM $ACM $TTNP $DFRG $AAP $WIX $NAT$NTAP $TSN $VIAB $NTES $JWN $ARMK $PETQ $HP $NVCM $SWCH $SONO $GLNG $KMDA $VERI $URGN $VIPS $FOCS $BZH $IZEA $GWGH) If you guys want to view the full earnings post please see this thread here- Most Anticipated Earnings Releases for the week beginning November 12th, 2018 <-- click there to view!
Good Monday morning to all. Here is the pre-market thread for those of you wanting to get a quick read before today's open- <-- click there to read! Good trading to all this week.
