Welcome Stockaholics to the trading week of December 17th! 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: Oracle, Red Hat, Heico 8:30 a.m. Empire State manufacturing 10:00 a.m. NAHB survey 4:00 p.m. TIC data Tuesday Earnings: FedEx, FactSet, Darden Restaurants, Micron, Jabil Circuit, Navistar, Worthington Industries Two-day FOMC meeting begins 8:30 a.m. Housing starts 8:30 a.m. Business leaders survey Wednesday Earnings: General Mills, Paychex, Winnebago, Herman Miller, Rite Aid, Pier 1 Imports 8:30 a.m. Current account 10:00 a.m. Existing home sales 2:00 p.m. FOMC statement, projections 2:30 p.m. Fed Chairman Jerome Powell press briefing Thursday Earnings: Nike, Walgreen Boots Alliance, Carnival, Sanderson Farms, Actuant, Accenture 8:30 a.m. Initial claims 8:30 a.m. Philadelphia Fed manufacturing survey Friday Earnings: Carmax 8:30 a.m. Durable goods 8:30 a.m. Real GDP Q3 final 8:30 a.m. Personal income/spending 10:00 a.m. Consumer sentiment
Meltdown: Traders Tremble As Trump, Trade & Talc Trigger Turmoil Well that was a week... Despite The National Team's efforts on Thursday, the week ended ugly in China...with CHINEXT (China's small cap/tech heavy index) ending red after terrible economic data hit overnight... European stocks ended the week higher, despite an ugly Friday... And after a strong start which prompted every media type to claim the bottom is in, Thursday and Friday were a bloodbath... The S&P 500 closed at its critical 2,600 support level... US Small Caps broke to fresh 2018 lows - to their lowest since Sept 2017... 6th day of "sell the fucking rip" in a row... Year-to-Date, all the majors except Nasdaq are back in the red... All the major US equity indices are in correction (down 10%) or worse... Dow -10.5% from highs S&P -11.3% from highs - lowest weekly close since March 2018 Nasdaq Comp -14.6% from highs Trannies -17.8% from highs - Nov 2017 lows, worst 2-week drop since Aug 2011 Russell 2000 -18.5% from highs - lowest since Sept 2017 The number of bulls in the AAII survey of U.S. retail investors suffered its biggest one-week decline since 2010 this week. In aggregate, sentiment is still nowhere near the overly pessimistic extremes that typically develop at major lows, but this freak out in the retail channel is a constructive development. The S&P Banks and Financials indices are both down over 20% from their highs (in bear market)... For The Big 4 Bulge Bracket Banks, December has been a bloodbath... FANG stocks gave back the mid-week squeeze gains (down 23% from their highs)... AAPL was hammered (down 29% from the highs)...so much for Monday afternoon's panic-bid that CNBC crowed so loud about... And JNJ crashed most since 2002 as cancer-causing talc headlines hammered the stocks down below its 200DMA (and dragged the Dow down 100pts alone). JNJ lost almost $35 billion market cap... Tesla stock had another great week... but TSLA bonds didn't - who do you believe? Breadth is getting extremely weak with just 24% of all NYSE stocks now trading above thei 200DMAs... And the S&P's put/call ratio has crashed... And the market's implied correlation is soaring (implying traders using macro overlays to hedge and not being idiosyncratically careful)... As soon as Tuesday/Wednesday's short-squeeze ran out of ammo, the week went a little pear-shaped... Credit markets actually rallied on the week in IG and HY spreads... But Leveraged Loans were a bloodbath... And stocks have a long way to catch down... Treasuries rallied on the day as stocks stumbled with 30Y back to unchanged on the week... And if equity markets are right, bond yields have a long way to fall... 2s5s remains inverted... And as far as next week's Fed meeting, odds of a hike have slumped (very weak this close to a meeting)... And the market is now pricing in just 9.5bps of hikes in 2019, and a 10bps cut in rates in 2020... The Dollar Index soared again today (best week since September) - touching its highest since May 2017 intraday... Offshore Yuan roundtripped on the week Cable plunged again (5th week in a row) to the lowest weekly close since April 2017... despite a rally on May's confidence vote Cryptos had another ugly week with Bitcoin Cash crashing 25% ... Despite the terrible China data, only copper ended the week higher in commodity-land as a strong dollar dragged down PMs and WTI algos went wild... After two weekly gains (following 7 weeks straight down), WTI resumed its down trend this week testing back to a $50 handle... Gold was lower in USDollars and in Yuan... Finally, we note that after this week's rounds of economic data disappointments, all of the major economies in the world are now in negative surprise territory (but ironically the US is least worst for now)... The Global macro surprise index is at 6-month lows And this is probably nothing to worry about - the world's most systemically important banks continue to collapse...
Spoiler: Weekend Reading: Did The Grinch Steal Christmas? Authored by Lance Roberts via RealInvestmentAdvice.com, On Tuesday, we put on a small S&P 500 trading position for an oversold bounce. At first, it didn’t work and we were almost stopped out, but a late day rally kept us in the position. Wednesday was a different picture as stocks rocketed out of the gate on more “trade talk” news with China, but that rally faded as well heading into late day as the owner of the “National Enquirer” was granted immunity in exchange for details on another Trump-related “hush money” payment. Yesterday, the markets struggled out of the gate as economic data pointed to slowing rates of inflationary pressure and economic growth, fell into negative territory, and then ended the day flat. This morning stocks opened down as concerns of global economic weakness rose from China. So far, the “Santa Rally” has failed to appear and traders are beginning to wonder if they are on the “Naughty List”this year? With all of the rhetoric over trade, White House shenanigans, and weak economic data, it certainly would seem to be the case. But, it may actually be more of the “Grinch (aka The Fed) That Stole Christmas” this year. While the Fed’s rate hikes do indeed raise borrowing costs and slow economic growth, it is the extraction of liquidity from the markets which is most important. As shown in the chart below, the Fed is now reducing their flows by $50 billion each month. This is in direct contrast to the billions they were injecting previously which corresponds with the markets decade-long bull market despite weak revenue growth due to a sluggish economic expansion. But it is no longer just the Fed. On Thursday, the European Central Bank made two important announcements. They will stop adding to its stock of government and corporate bonds at the end of December, and; They are seeing signs of weaker inflation and economic growth. In other words, as world markets are beginning to struggle as the driver of the decade-long bull market is being removed. But yet, despite the market turmoil this year, which certainly got investors attention, the debate has turned to whether the decline is over or has it just begun? Dana Lyons had an interesting point earlier this week on the bout of selling. “Specifically, regardless of the closing performance, the past 4 days have seen the S&P 500 drop at least 1.89% each day on an intra-day basis. That is just the 11th streak of such selling pressure in the S&P 500 going back to 1960, and the first since 2008. If we relax the parameter a bit to 4 straight intraday drops of at least 1.7%, we observe 17 occurrences going back to 1960. Many of them occurred at interesting market junctures.” “As the chart displays, several of these instances occurred in the direct vicinity of cyclical market bottoms, including 1974, 1982, 1987, 2002 and 2009. That might give bulls some hope that perhaps things have gotten so bad, i.e., rock bottom, that there’s nowhere to go but up. Although, it is probably a stretch to conclude that we are at a cyclical low right now since we were at all-time highs just about 10 weeks ago. And looking back at the chart, we see that some of the other historical events, e.g., 1974, 2001, 2008, occurred during the meat of a bear market and saw stocks just continue to fall further, going ‘subterranean’ if you will.” I agree with Dana that it is hard to imagine we are at a cyclical low when we were just pegging all-time highs a few short weeks ago. As noted by Barbara Kollmeyer, Jeff Gundlach may have this right: “DoubleLine founder Jeff Gundlach, who told clients Tuesday evening that the S&P 500 could take out February’s 2018 low due to a growth slowdown hitting company profits. ‘Many equity markets are down over 20%, which some people call a bear market,’ Gundlach said in his latest webcast, according to Reuters. ‘I don’t really define bear markets as a certain fixed arbitrary percentage. I think of it more as mood. And certainly, the setup for the equity markets looked like a bear market going into the middle of this year…the global equity market which is strongly in a bear market at the present time.’ Bottom line, his mood is still bearish, considering he warned us in November that stocks still hadn’t hit a ‘panic low.'” While the Fed could certainly reduce, or even eliminate, their rate hike campaign, the extraction of liquidity is a much more problematic issue. Combined with still elevated valuation, weaker economic growth, and declining profit growth, it is highly likely that Lyons and Gundlach are correct in that the S&P 500 has yet to find a lasting bottom. For now, “we have our stocking hung with care in hopes that Saint Nick will soon be there,” but don’t be surprised if you wind up with a “big lump of coal.” Just something to think about as you catch up on your weekend reading list. Economy & Fed Bad Communication All The Way Around by Jonathon Trugman via NY Post How Meng Wanzhou’s Arrest Might Backfire by Tyler Cowen via Bloomberg The Economy Faces Big Risks In 2019 by Neil Irwin via NYT It Is Not About Trade War – It’s Global Debt Saturation by Daniel Lacalle via dlacalle.com Yield Curves, Economics & Markets by Musings On Markets IMF Issues Stark Warning On Leveraged Loans by Pedro Da Costa via Forbes The Fed Is About To Try A Tricky Balancing Act by Greg Robb via MarketWatch Fears About The Economy Are Overblown by Gad Levanon via MarketWatch Fed’s Long History Of Bowing To Presidential Pressure by Scott Burns via FEE Snake Oil Economics – Bad Math Behind Trump Policies by Gregory Mankiw via Foreign Affairs Small Business, The Casualty Of Rising Rates by Mitchell Gunter via Washington Times Americans Are Friendly Fire Victims Of Trade Warby Allan Golombek via RCM Markets Gundlach: “Scared To Look At It” by Tyler Durden via ZeroHedge 2018 Forecasts: Who Nailed It & Who Didn’t by Shawn Langlois via MarketWatch It’s The Bullish Bear Market by Michael Santoli via CNBC I’ve Been High by Eric Cinnamond via EricCinnamond.com Did Stocks Hit A Bottom by Dana Lyons via The Lyons Share How To Lock In A Return On A Bond Fund by William Baldwin via Forbes No Ones In Charge by William Watts via MarketWatch Stock Market Risks Going Into 2019 by Barbara Kollmeyer via MarketWatch Birds Of A Feather – Get Plucked Together by DataTrek Research via Zerohedge 3-Ways To Reduce Risk In A Portfolio by Susan Dziubinski via Morningstar What A Shutdown Could Mean For Stocks by Chris Matthews via MarketWatch Most Read On RIA Bond Rally Was No Surprise by Lance Roberts Shiller Is Worried About Housing Again by John Coumarianos Top 10-Reasons We Could Be Heading Into A Bear Market by Doug Kass 3-Really Big Lies By Financial Advisors by Richard Rosso Will Santa Visit Broad & Wall by Lance Roberts What Caused Powell To Flinch by Michael Lebowitz Why Another 50% Correction Is Possible by Lance Roberts Watch Danielle Dimartino-Booth – Quill Intelligence, LLC Peter Atwater – Financial Insyghts Research / Interesting Reads The Market’s “Long-Term” Is Changing via Fundamental Capital via Seeking Alpha US Banks Haven’t Behaved Like This Since 2009 by Jeffrey Snider via Alhambra Partners Netflix Christmas Movies – Appalling Economics by Aaron Brown via RCM Yep, Bitcoin Was A Bubble & It Popped by Noah Smith via Bloomberg Your Love Of Index Funds Is Economically Terrible by Michael Brush via MarketWatch Tales From The “Trading” Crypt by Shawn Langlois via MarketWatch Do American’s Marry For Love Or Money – An Answer by Quentin Fottrell via MarketWatch Oil Prices And The Global Economy by John Stepek via MoneyWeek 7-Questions To Ask In A Volatile Market by Brett Arends via MarketWatch Low Rates And “Good” Are A Delusion by John Hussman via Hussman Funds “The market may be bad, but I slept like a baby last night. I woke up every hour and cried.“ – Anonymous
Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2018- S&P sectors for the past week-
he Bespoke Report — Fresh Lows Dec 14, 2018 We’ve just published our weekly Bespoke Report newsletter for subscribers. Below is one of many tables and charts featured in this week’s report. The table shows all years in which the S&P 500 fell 10%+ in the fourth quarter. As shown, Q4 2018 is tracking to be just the 10th time since 1928 that the S&P has fallen 10%+ in Q4. Not good. And unfortunately, when Q4s have been bad for the S&P, the following Q1s have been bad more often than not as well. US Stock Market Performance During Years Ending In… Dec 10, 2018 Below is a quick market stat to log as 2018 nears an end and 2019 approaches. In the chart, we show the S&P 500’s average price change in years ending in 0 through 9. This data goes back to 1928 when the S&P 500 begins. As shown, years ending in “8” have historically seen the S&P 500 gain an average of 10.7%. At one point earlier in 2018, this type of gain seemed likely, but not anymore now that the S&P is down 2% YTD. Years ending in “9” have historically seen an average gain of 8.1%, which is just a hair above the average of 7.5% seen for all years since 1928. The best years have come in years ending in “5” with an average gain of 22.4%. Years ending in “3” rank second with a gain of 15.4%. On the negative side, years ending in “0” and “1” have both averaged losses throughout history. Below we show the consistency of positive returns for the S&P 500 in years ending in “0” through “9”. As shown, years ending in “5” have been positive 88.9% of the time (8 out of 9), while years ending in “0” and “1” have been positive just 44.4% of the time (4 out of 9). The Intraday Correction Dec 10, 2018 A key characteristic of this correction during its early stages in late September and October was the unrelenting selling pressure that went on during regular trading hours. While futures were either flat or even pointed higher on a lot of trading days, the selling began pretty much immediately after markets opened at 9:30 AM ET and didn’t let up until the 4 PM close. This type of intraday selling is not a bullish sign, so today we wanted to update the readings to see where things stand as the correction closes in on three months in length. Below we show the cumulative change since 9/20 (the date of the high for the S&P) of buying SPY at the close every day and selling at the next open (after hours) versus buying at the open every day and selling at the close (intraday). If you only owned SPY after hours during the current correction, you’d actually be in the green with a gain of 1.1%. Had you only owned intraday by buying at the open and selling at the close, however, you’d be deep in the red with an 11.2% decline. This means that more than 100% of the S&P’s losses during the current correction have come during regular trading hours. Looking at this strategy for all of 2018, had you only owned SPY after hours this year, you’d still be up 10.8%. If you only owned during regular trading hours, you’d be down 10.9%. As you can see in the chart, there were two periods where these two strategies diverged. One came towards the end of Q1 into early Q2 when the after-hours strategy traded sharply higher as the intraday strategy plummeted. The second came at the start of the current correction when the intraday strategy started to collapse while the after-hours strategy continued to tick higher. Stocks Tend to Ignore Shutdowns Posted by lplresearch Next week could bring the third government shutdown of 2018, especially after the fireworks out of Washington yesterday. In a widely watched live TV debate, President Trump sparred with Senate Minority Leader Schumer and House Minority Leader Pelosi regarding funding for the proposed wall on the Mexican border and potentially shutting down the government. What exactly does a shutdown mean for stocks? “Although shutdowns get a lot of media hype, the reality is that stocks tend to take them in stride. In fact, the S&P 500 has gained during each of the five previous shutdowns,” explained LPL Senior Market Strategist Ryan Detrick. As our LPL Chart of the Day shows, shutdowns rarely push stocks significantly lower and have corresponded with a flat median return in the previous 20 shutdowns going back more than 40 years. One would think shutdowns in December might be rare, but they’re actually fairly common. Three shutdowns in the same year, however, is not. Could this year be the first since 1977 with three separate shutdowns? If yesterday’s drama was any indication, the odds may have increased. However, next summer’s debt ceiling debate will be a more important issue when Treasury interest payments are at risk. Fed & Trade Crushing Q4 Rally As of today’s close, DJIA is down 0.78% year-to-date. S&P 500 is slightly weaker off 0.84%. NASDAQ is doing best, as it has been for the majority of the year, up 2.82%. DJIA’s performance is well below its historical average midterm year at this time of the year. S&P 500 is also substantially below its average midterm performance while NASDAQ is currently just above its average for a midterm year. The market’s performance thus far in Q4 has been the exact opposite of historical averages. Higher interest rates, trade disputes and Brexit all appear to be weighing on the market. Tougher corporate earnings comparisons and slowing earnings growth are also hindering the market. And let’s not forget the possibility of a Federal government shutdown. But, some of these concerns are beginning to ease. U.S. – China trade negotiations may have finally taken a step in a positive direction and the Fed has toned down some of its more hawkish rhetoric. It would take one impressive rally to put Q4 back in the black, but there is still time for a more modest yearend rally that could return DJIA and S&P 500 to a positive full-year performance. Copper poised for seasonal rally Copper has a tendency to make a major seasonal bottom in December and then a tendency to post major seasonal peaks in April or May. This pattern could be due to the buildup of inventories by miners and manufacturers as the construction season begins in late-winter to early-spring. Auto makers are also preparing for the new car model year that often begins in mid- to late-summer. Traders can look to go long a May futures contract on or about December 17 and hold until about February 24. In this trade’s 46-year history, it has worked 30 times for a success rate of 65.2%. After four straight years of declines from 2012 to 2015, this trade has been successful the last two years. In the above chart, the front-month copper futures weekly price moves and seasonal pattern are plotted. Typical seasonal strength in copper is highlighted in yellow. Last year’s seasonal period was actually tepid. The move off of copper’s December low to its late-December high was greater than the gain over the entire holding period. Copper also spiked in mid-June before succumbing to typical seasonal weakness. Copper has been essentially range bound since late-September. A reduction in Chinese tariffs on imported autos (along with the potential easing of other tariffs) could be a catalyst for copper to begin its seasonal rally soon. Any improvement in the U.S. housing market will also likely support higher prices for copper.
Stock Market Analysis Video for December 14th, 2018 Video from AlphaTrends Brian Shannon ShadowTrader Video Weekly 12.16.18 - Box Update, AAII Investor Survey, FOMC Monster Truck Rally Video from ShadowTrader Peter Reznicek
Here are the current major indices pullback/correction levels from ATHs as of week ending 12.14.18- 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 Pick Challenge & SPX Sentiment Poll for Monday (12/17) <-- click there to cast your daily market vote and stock pick! Stockaholics Weekly Stock Picking Contest & SPX Sentiment Poll (12/17-12/21) <-- click there to cast your weekly market vote and stock picks! Stockaholics Weekly T/A Charting Challenge (12/17-12/21) <-- click there to participate! ======================================================================================================== 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 12.17.18 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! NONE. Monday 12.17.18 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! Tuesday 12.18.18 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 12.18.18 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 12.19.18 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 12.19.18 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 12.20.18 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 12.20.18 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 12.21.18 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! Friday 12.21.18 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- ($MU $FDX $NKE $BB $ORCL $RHT $GIS $DRI $RAD $PAYX $NCS $FDS $NAV $WOR $ACN $HEI $CSBR $WBA $KMX $SCS $LOVE $CAG $JBL$WGO $CCL $APOG $MLHR $NEOG $CTAS $PIR $SAFM $ABM $AIR $CAMP $ATU $REVG $SCHL $LAKE $TWST) If you guys want to view the full earnings post please see this thread here- Most Anticipated Earnings Releases for the week beginning December 17th, 2018 <-- click there to view!
Good Monday morning to all. Welcome to a new week, fresh start! Here is the pre-market thread for those of you wanting to get a quick read before today's open- <-- click there to read! Hope everyone has a great trading week ahead!
Morning Lineup – A December to Remember…For All the Wrong Reasons Dec 17, 2018 After the fourth down week in the last five, US equities are looking lower once again this morning and the magnitude of the implied decline is getting worse as the opening bell nears. Even though it’s only Monday, the focus is already on Wednesday’s FOMC meeting, even more so now that Stanley Druckenmiller and former Fed Official Kevin Warsh have urged Powell and Company to pause its tightening ‘blitz’ in a WSJ op-ed. Today, we’ll get reads on Empire Manufacturing and Homebuilder sentiment for the month of December. Last month’s homebuilder sentiment report showed the largest decline since February 2014, so that will be an important release to watch for signs of a bounceback or further deterioration. Read today’s Bespoke Morning Lineup below for major macro and stock-specific news events, updated market internals, and detailed analysis and commentary: Bespoke Morning Lineup – 12/17/18 Plain and simple, the first half of December has been awful. Normally one of the strongest months of the year, the S&P 500 has dropped over 5% so far this month putting it on pace to be one of the worst Decembers in the post WWII period. Looking back over the last 25 years or so, it hasn’t been uncommon to see weakness in the first half of December but not declines of 5%+! Going back to 1945, there have only been two other months where the S&P 500 was down 5% or more through the close on 12/14 – 1980 (-8.03%) and 2002 (-5.00%). So is it time to cancel Christmas? The chart below shows the performance of the S&P 500 in the period covering the close on 12/14 through the close on Christmas Eve. Since 1945, the S&P 500 has seen an average gain of 0.82% (median: 0.70%) during this period with positive returns 63% of the time. And how about the two prior years highlighted above where the S&P was down over 5%? In 1980, stocks really rallied leading up to Christmas with a gain of 5.15%, while in 2002, the rebound was a more muted 0.34% (at least it stopped going down).
Oh man, these bears are relentless. I expected to test 2581 this week but we just blew right through it. I guess 2554 on tap now?
