Welcome Stockaholics to the trading week of October 19th! This past week saw the following moves in the S&P: Major Indices End of Week: Major Futures Markets on Friday: Economic Calendar for the Week Ahead: What to Watch in the Week Ahead: Monday Earnings: IBM, Zions Bancorp, PPG Industries, FNB, Steel Dynamics, Halliburton 9:00 a.m. Philadelphia Fed President Patrick Harker 9:00 a.m. New York Fed President John Williams 10:00 a.m. NAHB survey 2:20 p.m. Atlanta Fed President Raphael Bostic Tuesday Earnings: Procter and Gamble, Texas Instruments, Netflix, Travelers, Lockheed Martin, Snap, Philip Morris International, UBS, Paccar, Canadian Pacific Railway, Albertsons, CIT Group, Synchrony Financial, Comerica, Manpower Group, Prologis, WD-40, Tenet Healthcare, Teradyne, Canadian National Railway 8:30 a.m. Housing starts 8:30 a.m. Philadelphia Fed 12:00 p.m. Chicago Fed President Charles Evans Wednesday Earnings: Nasdaq, Verizon, Baker Hughes, Northern Trust, Knight-Swift Transportation, Avery Dennison, Keycorp, Winnebago, Interpublic, Manchester United, Tesla, CSX, Abbott Labs, Biogen, AutoNation, Lam Research, Equifax, Discover Financial, Xilinx, SLM, Chipotle, Whirlpool, Kinder Morgan 10:00 a.m. Cleveland Fed President Loretta Mester 2:00 p.m. Beige book Thursday Earnings: Earnings: AT&T, Coca-Cola, Intel, PulteGroup, Capital One, Kimberly-Clark, Quest Diagnostics, Freeport-McMoRan, Sirius XM, Grainger, Alaska Air, Fifth Third, Valero Energy, Nucor, Tractor Supply, Danaher, Genuine Parts, Dow, Southwest, American Airlines, Northrop Grumman, Union Pacific, Mattel, Check Point Software, Verisign, Capital One 8:30 a.m. Initial jobless claims 10:00 a.m. Existing home sales Friday Earnings: Barclays, American Express, Illinois Toolworks, Cleveland Cliffs, Norsk Hydro, Bloomin’ Brands , Daimler 9:45 a.m. Manufacturing PMI 9:45 a.m. Services PMI
VIX & Stocks Rise On Week; Banks Puke Ahead Of Black Monday Anniversary Nothing to worry about... Monday will be the 33rd anniversary of the 1987 Black Monday collapse in stocks... Source: Bloomberg Now that would be an 'October Surprise'... Excerpted from Art Cashin's reminisces of that day in 1987 (rings a lot of bells for 2020)... The first two-thirds of 1987 on Wall Street was nothing short of spectacular... Fear seemed to disappear, and junior traders laughed at their cautious elders. The brash youngsters told each other to “buy strength” rather than sell it, as each buying wave was soon followed by another. [ZH: Robinhooders?] One thing that helped banish fear was a new process called “portfolio insurance.” It involved use of the newly expanded S&P futures. Somewhat counterintuitively, it involved selling when prices turned down. [ZH: Nasdaq Whale buying calls, driving dealer gamma to extremes] The rally topped out about Aug. 25, with the hitting 2,722 (less than a tenth of its current numerical value). Interest rates had begun creeping up amid concerns of early signs of inflation. [ZH: Rally topped a week after that in 2020] ... On Wednesday, Oct. 14, there were widely discussed rumors of a new punitive tax on takeover profits. [ZH: Worries over Biden's tax plan?] Friday the 16th was an option expiration day... selling intensfied into the close. [ZH: Today is op-ex day.. and selling intensified into the close] The weekend was a rumormonger's delight. [ZH: We will wait and see] Retail Sales beat but Industrial Production plunged, Sentiment was mixed, and any stimulus deal was pronounced - for all intent and purpose - dead before the election. Guess which one of these 'facts' the market decided to 'act' on today (until the last hour - was that the op-ex unwind?)... And don't forget that we had margin increases across most of the major retail brokerages today. What is unusual is the coincident rise in VIX also... Source: Bloomberg European markets ended the week notably lower as COVID lockdowns re-escalated... Source: Bloomberg Two big squeezes this week got us "back to even" but that couldn't hold this afternoon... Source: Bloomberg Big-tech names managed gains (NOTE that buying panic on Monday driven the Nasdaq Whale reappearing and buying calls with both hands and feet)... Source: Bloomberg Banks were a bloodbath... Source: Bloomberg With Wells Fargo by far the worst and Morgan Stanley the best... Source: Bloomberg Momo outperformed but again mostly thanks to Tuesday's opening panic... Source: Bloomberg Despite stock market gains, bonds were also bid, led by the long-end... Source: Bloomberg 10Y yields found support at 70bps and bounced, but ended lower on the shortened week... Source: Bloomberg The dollar ended higher on the week but stalled at last week's highs... Source: Bloomberg Cryptos rallied on the week but mainly thanks to last weekend's spike, trading in a narrow range since... Source: Bloomberg Gold managed to hold above $1900... WTI managed to surge back to $41 after a decent intraweek plunge... Finally, here's what the 'experts' are worrying about - cases are starting to accelerate (just don't tell anyone that deaths are stable, suggesting mortality rates are plunging)... Source: Bloomberg Time to panic? Well Monday is the 19th of October!
Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2020- S&P sectors for the past week-
5 Charts We Are Watching There are many charts that caught our attention this week, and today we share the top 5 charts we’re watching. The S&P 500 Index recently had a four-week losing streak and fell nearly 10% along the way, while the Nasdaq and many large cap tech stocks fell even more. Then in a big move higher over the past two weeks, many stocks moved from oversold to overbought in a very quick timeframe. As the LPL Chart of the Day shows, more than 90% of the components in the S&P 500 were beneath their 10-day moving average on September 24 and within two weeks saw more than 90% above this short-term trend line. This type of buying thrust is consistent with future strong returns, suggests quick reversals from oversold to overbought are a good thing, and could bode well for stocks to outperform bonds well into 2021. Parts of the economy are opening back up, while employment continues to disappoint. One specific area that continues to improve is how many people are flying, as the seven-day average number of travelers going through Transportation Security Administration (TSA) checkpoints hit a new recovery high. We discuss other high-frequency data points in our COVID Surge Stalling Europe’s Recovery blog. We’ve noted before that stock market gains ahead of the election historically support the incumbent party, while if stocks are lower it tends to support new leadership in the White House. Taking this further, the US dollar also tends to send signals for who might win. In fact, when stocks are up and the US dollar is lower ahead of the election, or if stocks are lower and the US dollar is higher before an election, the results have accurately predicted the last seven times those scenarios took place. Given stocks are up and the US dollar is slightly lower, this could be one clue the upcoming election will be much closer than many are expecting. Sticking with the election, many investors are worried about higher taxes and more deregulation if former Vice President Joe Biden wins. “Higher taxes may be one part of it, but Biden is also looking at huge spending initiatives,” explained LPL Financial Chief Market Strategist Ryan Detrick. “Stock markets like spending, and this could more than help offset potentially higher taxes.” Lower tariffs could potentially provide another offset as well. Last, Friday’s retail sales report came in better than expected, marking five consecutive months of year-over-year gains. It is worth noting the economy has never been in a recession after 4 or more consecutive monthly gains. Still, in the face of one of the most severe recessions ever, it took only a few months for sales to get back to new highs, as shown below. Historically, new highs in retail sales happen in expansions—and this is yet another clue the recession is likely over. Record Surge In Business Formations As Economy Recovers From COVID Thu, Oct 15, 2020 Yesterday the Census updated business formation stats for Q3, and as indicated by high-frequency data from the Atlanta Fed, business formation exploded in Q3. As shown in the first chart below, total business applications rocketed upwards by 1.57 million, a record increase. Stripping out businesses that are unlikely to result in hiring, the numbers are much smaller in absolute terms but still rose 79% to a record pace. Finally, applications for businesses with planned wages surged 70% from a record low in Q2, to the highest levels since 2008. In all three instances, the recent behavior is a complete reversal of the post-Financial Crisis period, when the prolonged recession led to a huge decline in business starts. That’s a good sign for the breadth of the economic rebound, as business formation tends to lead to higher productivity thanks to more innovation and investment. Below we show changes in total business applications by state; Michigan, Illinois, and Georgia are the biggest winners, with applications more than doubling. This analysis was originally published in our evening report -- The Closer -- on 10/14/20. B.I.G. Tips - Retail Sales Rebound Fri, Oct 16, 2020 After a disappointment last month, Retail Sales saw a nice rebound in September as consumers seem undeterred from spending despite the expiration of extended UI benefits and the lack of an additional stimulus bill. For the month of September, headline Retail Sales rose 1.9% m/m versus expectations for a more modest increase of 0.8%. Ex Autos and Gas, growth was even better relative to expectations, although August’s already slower than expected growth was revised modestly lower. Breadth in this month’s report was strong. Of the thirteen sectors that comprise the total pie, all but one of them (Electronics and Appliances) showed growth. Normally, when a sector shows m/m growth of a percent or two, it’s impressive. This month, though, the volatility of the pandemic remains in place as two sectors showed growth of over 5%, including Clothing which saw double-digit growth relative to August! While the monthly pace of retail sales is back at all-time highs, the characteristics behind the total level of sales have changed markedly in the post COVID world. In our just-released B.I.G. Tips report, we looked at these changing dynamics to highlight the groups that have been the biggest winners and losers from the shifts. University of Michigan Mixed Again Fri, Oct 16, 2020 The University of Michigan reported preliminary consumer sentiment numbers for October. University of Michigan data has shown a much smaller bounce than other sentiment surveys, but the preliminary numbers for October did increase versus September. The strongest part of the survey was expectations, which has risen three months in a row to the highest levels since March. Consumers' current assessment of the economy fell sequentially and is sitting at about the same place it was back in early 2012. One feature of the University of Michigan poll with incomplete data prior to 2016 but more complete data since is a breakout of economic sentiment by political party affiliation. As shown below, their data shows Republicans getting a massive sentiment boost in the wake of the 2016 election. The key here though, is that the boost to the sentiment of Republicans and the decline for Democrats came after the election as this data is definitely lagging to political outcomes rather than leading. Air Passenger Traffic Achieves Upward Lift Mon, Oct 12, 2020 With COVID case counts on the rise throughout the country, you would think that Americans would be a bit more concerned about getting on airplanes. Rather than hunker down, though, Americans have been increasingly spreading their wings. The latest passenger throughout numbers released by TSA showed that on Sunday 984,234 passengers went through security checkpoints at US airports. That was the highest single-day reading since March 16th. This weekend's air passenger traffic also helped to push the 7-day average of traffic to new post-COVID highs. After rising and then falling back down after the Labor Day holiday, air passenger traffic has 'surged' in recent days to push the current 7-day average up to 819,384 passengers per day. Air travel has been on the rise, but the term surge may be too strong. When we compare air passenger traffic levels to where they were a year ago, we're still down over 65% on a 7-day average basis. Even yesterday's strong passenger numbers were still down over 61% from their same levels last year. In other words, there's still a lot of room for improvement! The chart below compares the y/y change in passenger throughput to the performance of the Airline ETF (JETS) since the start of the pandemic. Not surprisingly, there has been a pretty strong correlation between the two as increases in passenger traffic have been accompanied by rallies in the airlines and vice versa. Small Business Smiles Tue, Oct 13, 2020 Sentiment among small businesses continued to improve in the month of September according to the NFIB's monthly Small Business Optimism Index. As shown below, the index rose 3.8 points to 104 which is now just half of a point below the levels prior to the pandemic in February. That was also better than expectations of a smaller improvement to 101.2. Small business sentiment has now risen in four of the past five months. In the table below, we break down this month's report by each of the ten components of the headline number as well as the many other indices included in the report such as those not used as inputs to the headline number and what small businesses are reporting to be their biggest problems. Across all indices of the September report, breadth was solid with only a couple of indices falling month over month—Expected Credit Conditions and Credit Conditions Availability. Some of those that were higher saw record or near-record month-over-month increases. Some of the most notable indices this month included those regarding inventories. The Current Inventories index which gauges the net percent of owners viewing current inventory levels as too low rose 2 points to a record high reading of 5. Given this, the index for Plans to Increase Inventories is tied with the reading from November of 2004 for a record high of 11. Indicating low inventory levels, the report is consistent with some other recent data like the regional Fed manufacturing surveys. Those low inventories are resulting in higher prices as that index's 12-point increase in September marked the biggest one month gain on record. While the Higher Prices index is not at any sort of an extreme, September's move indicates that a rising number of businesses are raising prices. Additionally, those higher prices and lower inventory numbers appear to be a result of demand that continues to rapidly improve. The indices for Actual Sales and Actual Earnings Changes remain negative for a sixth and tenth month in a row, respectively, meaning a net number of businesses continue to see lower rather than higher top and bottom-line numbers. But these indices are seeing big moves higher. For the index of Actual Earnings Changes, the 13-point climb in September was the largest on record and the 9-point increase for Actual Sales Changes followed a 13-point increase in August; both being some of the largest one-month moves on record. In order to meet the needs of this demand, a higher number of businesses plan to increase employment with that index rising to 28; the highest level since December of 2018. Even though businesses seek to hire more, they also report it is hard to fill positions as the index of Job Openings Hard to Fill rose to the top 5% of all readings. Cost and quality of labor also were reported as two of the most pressing problems for businesses. Small Businesses Cautiously Optimistic Tue, Oct 13, 2020 In an earlier post, we highlighted the details of the September NFIB Small Business Optimism report. The report showed overall sentiment among small businesses has continued to improve as demand has bounced back (though it has not yet fully recovered as still more businesses report lower sales and earnings on a net basis) leading to low inventory levels, higher prices, and a need for more employment. While generally improved conditions have lifted optimism, that is not to say small businesses have given an all-clear. The Uncertainty Index from NFIB has risen each of the past three months with September's 2-point increase bringing it back to the same level as March of this year. In other words, it is perhaps best to say that small businesses are cautiously optimistic. From the pandemic to the Election, there are plenty of reasons for businesses to be uncertain. As for what they are reporting to be the biggest problems, labor remains at the top. 30% of businesses have reported that either cost (9%) or more predominately quality (21%) of labor are their biggest issues. While off the highs from the past few years, the current readings are still historically elevated. Behind labor, government related problems also are largely on the minds of business owners. Government red tape and taxes combine to account for 29% of businesses' biggest problems. While that is a large share, neither of those indices are at any sort of extreme. Poor sales, on the other hand, remains as the third major concern for businesses. 12% of businesses reported poor sales as the single most important issue in September, down from 15% in August and 7-percentage points lower than the April peak. While improved, the number of businesses seeing demand as a major issue is still at some of the highest levels of the past several years. Sentiment By State Thu, Oct 15, 2020 Below is a look at the year-to-date reading for the high-frequency Morning Consult daily consumer sentiment indicator. While still well off highs seen prior to the COVID Crash in late February and early March, sentiment has generally been ticking higher off the lows. You'll notice in the chart below, however, that while the "Future Expectations" reading is still bouncing back nicely, the "Current Conditions" reading has been going more sideways over the last couple of months. We can also look closer into state level readings from the daily Morning Consult sentiment numbers. In the heat map below, we show the changes in the levels of consumer sentiment for each state since mid-February. As shown, the lower 48 have seen much larger improvements than Alaska or Hawaii with the largest improvements coming in the Northeast and parts of the Midwest. On the other hand, in addition to Hawaii and Alaska, some of the key swing states like Maine, New Hampshire, and Nevada have improved the least. Of all 50 states, Vermont's current reading on sentiment is the closest to its February levels, but even Vermont is still down 17.9 points.
Here are the current major indices pullback/correction levels from ATHs as of week ending 10.16.20- Here is also the pullback/correction levels from current prices- Here are the current major indices rally levels from correction low as of week ending 10.16.20-
Stock Market Analysis Video for October 16th, 2020 Video from AlphaTrends ShadowTrader Video Weekly 10.18.20 Video from ShadowTrader
Here are the most anticipated Earnings Releases for this upcoming trading week ahead. ***Check mark next to the stock symbols denotes confirmed earnings release date & time*** Monday 10.19.20 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! Monday 10.19.20 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! Tuesday 10.20.20 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 10.20.20 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 10.21.20 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 10.21.20 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 10.22.20 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 10.22.20 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 10.23.20 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! Friday 10.23.20 After Market Close: Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES! NONE.
And finally here is the most anticipated earnings calendar for this upcoming trading week ahead- ($TSLA $NFLX $PG $INTC $LMT $ABT $KO $T $HAL $SNAP $PM $VZ $AAL $ERIC $LOGI $WGO $IBM $PLD $TMO $CMG $LGND $LUV $CDNS $TSCO $DGX $LII $NDAQ $LRCX $PHG $BIIB $CLF $ACI $ONB $TXN $SYF $NEE $GPK $TRV $SFNC $FCX $MAN $IRBT $CMA $LLNW) If you guys want to view the full earnings post please see this thread here- Most Anticipated Earnings Releases for the week beginning October 19th, 2020 <-- click there to view!
VIX coming out of a Bollinger band squeeze, already touched the top. Looking for more of a spike this week as we've fallen below last week's SPX low.
Have to see a dentist today and not trading, good luck to all of you and hope you guys make some money today
SPY and QQQ turned back down after touching the point of control, the level where they broke down yesterday (SPY~346, QQQ~288). Looks like today will finish as a range-bound day (had possibility to be a trending day but could not break resistance), likely finish green just to stop the red streak.
