Welcome Stockaholics to the trading week of July 23rd! 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: Alphabet, Illinois Toolworks, Halliburton, Hasbro, TD Ameritrade, Netgear, Kaiser Aluminum, Owens-Illinois, Luxottica Group 8:30 a.m. Existing home sales Tuesday Earnings: 3M, AT&T, Verizon, UBS, Lockheed Martin, Eli Lilly, Biogen, Kimberly-Clark, United Technologies, JetBlue, Avery Dennison, CIT Group, Harley-Davidson, Interpublic, Stryker, Hawaiian Holdings, Carlisle Cos, Equifax, LVMH, Chubb, Texas Instruments, Sherwin-Williams, Trustmark 8:30 a.m. Philadelphia Fed 9:00 a.m. FHFA home prices 9:45 a.m. Manufacturing PMI 9:45 a.m. Services PMI Wednesday Earnings: Boeing, Facebook, Coca-Cola, Imax, General Motors, Ford, GlaxoSmithKline, PayPal, Qualcomm, Visa, Las Vegas Sands, Mondelez,Tupperware, Six Flags, Trivago, Citrix, Mattel, Vertex Pharma, F5 Networks, Deutsche Bank, Fiat Chrysler, Gilead Sciences, Norfolk Southern, Northrop Grumman, Corning, Anthem, Freeport-McMoran, Boston Scientific 10:00 a.m. New home sales Thursday Earnings: Amazon.com, Starbucks, Mastercard, McDonald’s, Comcast, Celgene, Marathon Petroleum, Royal Dutch Shell, Nestle, Nissan, Amgen, Intel, Aflac, A-B Inbev, Bristol-Myers Squibb, Diageo, AstraZeneca, Alaska Air, PulteGroup, Dunkin Brands, Tractor Supply, American Airlines, Southwest Air, Under Armour, Valero Energy, Hershey, Brunswick, Chipotle Mexican Grill, Discover Financial, Spotify, Expedia, Juniper Networks, First Solar, Electronic Arts, Raytheon 8:30 a.m. Initial claims 8:30 a.m. Durable goods 8:30 a.m. Advanced economic indicators 10:00 a.m. Housing vacancies Friday Earnings: ExxonMobil, Chevron, Colgate-Palmolive, Eni, Synchrony Financial, Twitter, Virtu Financial, Moody’s, Merck, Cabot Oil and Gas, Embraer, Aon 8:30 a.m. Real GDP 10:00 a.m. Consumer sentiment
Dollar Dumps & Bond Yields Jump On Putin Panic, Trump Tantrum, Japan Jawboning Anyone else find it interesting that UST bonds collapse the day after Trump directly slams China over its manipulation of the currency... After China's offshore Yuan collapsed overnight, it seems pretty clear that The National Team stepped in to save Chinese stocks... (SHCOMP ended unchanged on the week with PBOX Yuan Fix dropping second most since Aug 2015) European stocks were hit today, erasing the gains for the week... On the week, The Dow, S&P, and Nasdaq were practically unchanged, Trannies outperformed and Small Caps gained... Futures show the chaotic moves better on the week... The last 24 hours in futures show the exuberance in Nasdaq fading after each of its impulsive BTFD ramps from Trump... FANG stocks faded intraday today... But NFLX was the big loser, unable to sustain any bounce above its 50DMA... this was NFLX's worst week since July 2016. US Bank stocks had a good week but faded from midweek... VIX closed with a 12 handle on the week, pushing back lower after testing its 100DMA... While VIX dropped, SKEW soared (crash risk)... Global bonds were plugging along nicely all week until Trump and The BoJ wrecked it all... It appears Trumpflation is back as the 10-year breakeven inflation rate had its biggest daily increase since February... Treasuries spiked at the longer-end (chatter of rate-locks also helped) Dramatically steepening the yield curve...biggest curve steepening in 5 months... 10Y roundtripped yesterday's gains... The 30Y yield jumped 7bps, back above 3.00% - the biggest absolute jump since February... Before we move on, we note that there was NO CHANGE today in the Fed Funds Futures implications for Fed Rate Hikes this year and all the weakness in TSYs was in the long-end (not what one would expect if Trump-related). We suspect the rate-locks reasoning is more realistic. And the short-end of the curve remains inverted (implying rate cuts more likely in 2020 than rate-hikes)... The Dollar ended the week unchanged - slammed lower by the last 24 hours of Trump tweets and comments... (biggest daily drop in the USD in 4 months) Yuan was a bloodbath this week... (overnight saw the biggest drop in the Yuan fix since 2016)... Here's an interesting one - notice how UST Futs are bid away from, then dumped back down to the sliding Yuan... Net FX speculative positioning has reached its longest USD since March 2017 (but note the decoupling from positioning and the USD) When will yuan's collapse spread to US stocks? Cryptos had a good week...with Bitcoin outperforming... Bitcoin jumped 20% on the week - its best week since early Dec 2017... Despite the dollar's weakness on the week, commodities ended lower (though were bid today...) President Trump did his best to make gold great again on the week... With everyone and their cat complaining about tariffs driving prices Up (or down), we note that Lumber prices are now unchanged since softwood lumber tariffs were introduced... And soybean prices are at their lowest since 2008 (having fallen almost constantly for 5 years)... Will commodity's collapse start spreading to stocks? Finally, we note that while there is plenty of potential for more, The Dow is back to its richest relative to Gold since June 2007... h/t @Schuldensuehner
Spoiler: Weekend Reading: Price Is What You Pay Authored by Lance Roberts via RealInvestmentAdvice.com, Yesterday, I discussed the failure of tax cuts to “trickle down” as they have primarily been used for corporate share repurchases. As I was digging into the data, Doug Kass emailed me a quick note: “Berkshire Hathaway, likely under the weight of an enormous cash horde and more scarce alternative investment opportunities, has announced that it is loosening the terms of its buyback policy. It is also a signpost that the company has matured and will only duplicate GDP-like growth.” While the announcement set the shares of Berkshire (BRK/A) (BRK/B) surging higher yesterday, there is a much more important message that investors should be heeding. We recently delved into the performance of Berkshire as it has become the 10th-largest company in the world in terms of revenues. To wit: “The graph below highlights this concern. It shows that 90-day rolling correlation of price changes in BRK/A and the S&P 500 are statistically similar. In the market crash of 2008/09 BRK/A’s price was cut in half, similar to the S&P 500. Based on correlations we suspect a similar relationship will hold true for the next big market drawdown.” Both the sheer size of Berkshire, and the chart above, confirm Doug’s comment that Berkshire is likely to only generate rates of growth equivalent to GDP going forward. So what’s the message that Mr. Buffett is sending? Simple: “Price is what you pay, value is what you get.” Investing is about maximizing the return on invested dollars by buying something that is undervalued and selling it when it is overvalued. This is the point missed by those who promote “buy and hold” investing which is the same as “buy at any price.” Corporations are, in many ways, held hostage by Wall Street and short term investors. An earnings miss can be disastrous to a companies stock price which can have severe consequences to stock option compensated executives and employees, shareholders and even bondholders. So, with pressure on companies to deploy excess cash, what are the options considering the “beat the estimate” game that must be played. Hire Workers? Employees are a high cost and have a direct impact on profitability. Companies hire as needed to meet excess demand. Demand has remained stable and increased at the rate of population growth which is also the rate of employment increases: (Read this) Invest To Produce More Products? Investments in future growth are accompanied by a negative short-term impact to profitability. Further, with rates rising the cost of borrowing for CapEx adds to the negative impact on current earnings. Mergers & Acquisitions? Using cash to acquire revenue can be accretive to bottom line profitability. However, with stock price valuations elevated the costs to acquire revenue in many cases is becoming less attractive and often not immediately accretive. Share Repurchases? While share repurchases do not increase top-line revenue growth or bottom line profitability, it does make it APPEAR the company is more profitable when they report earnings on a per share basis. The illusion of an immediate increase in profitability supports asset prices in the short-term despite potentially decreasing fundamental value. From an investment standpoint, share repurchases by companies are a message that companies simply have no better options available with which to grow earnings and protect shareholder value. So, back to Mr. Buffett who has been sitting on over $100 Billion in cash and T-bills over the last few quarters. With a dearth of value in the market, there have been few opportunities for a legendary value investor to deploy capital in a manner that will generate an attractive future rate of return. However, sitting on cash, in a low interest rate environment, is also not conducive as the purchasing parity power of cash is eroded by inflation. So, what does the “World’s Greatest Value Investor” do when there is no better use for cash – buy back shares of your own company, of course. The message from Buffett is quite clear – there is little value left in the market today otherwise he would be allocating his cash hoard very differently. While many suggest that individuals should just “buy and hold” investments regardless of what the market does, Mr. Buffett’s actions reinforce the view that buying assets at current valuations is likely to have a disappointing outcome. Does this mean you should never invest? Of course, not. But as Mr. Buffett himself has stated: “Be fearful when others are greedy. Be greedy when others are fearful.” Just something to think about as you catch up on your weekend reading list. Economy & Fed The Bond Market Goes Its Own Way by Caroline Baum via MarketWatch Still Haven’t Learned Friedman’s Lessons On Trade by Mark Perry via FEE Trump Will Kill The Global Recovery by Nouriel Roubini via Project Syndicate Four Questions For Chairman Powell by Norbert Michel via Forbes Game Theory & Trumps Trade Strategy by Mohamed El-Erian via Bloomberg The Flattening Yield Curve by Neel Kashkari via Medium Mass Hysteria by Mike “Mish” Shedlock via TheMaven Tax Cut Bill Triggers $437 Billion In Stock Buybacks by Matt Egan via CNN Bubble World Is Here by Scott Sumner via The Money Illusion Global Population Growth Ceased In 1988 by Chris Hamilton via Econimica Blog What If Economic Growth Isn’t A Positive As You Think by Martin Kirk via Fast Company How Socialists Misunderstand Poverty by Andrew Moran via LibertyNation.com Gallup Shows How Much Americans Really Care About Russia by Tyler Durden via Zerohedge How Much Damage Will Trade War Do? by Annie Lowrey via The Atlantic Markets Nomura: We’re Nearing The Pain Point From THE PBOC by Tyler Durden via ZeroHedge Cyclically Non-Adjusted Earnings by Eric Cinnamond Gartman: A Stunning Rally Is On The Way by Shawn Langlois via MarketWatch How To Prepare For A Market Surprise by Jeff Sommer via NYT Support Can’t Stop Silver’s Slide by Dana Lyons via The Lyons Share Don’t Worry About The Yield Curve by Michael Cannivet via RealClearMarkets Rising Energy Prices & Iran by Simon Constable via PJ Media Stock Market Sets A Bearish Record by Ryan Vlastelica via MarketWatch A 2019 Recession Is The Most Likely Outcome by Paul Kasriel via Financial Sense Bull Market Rallies Past One Obstacle After Another by Mark Decambre via MarketWatch Fed Is Whistling Past Two Looming Threats by Pedro Da Costa via Business Insider A Stealth Bull Market by Jeffrey Saut via Financial Sense Warning Signs Are Very Pronounced by Sven Henrich via NorthmanTrader.com Most Read On RIA The Myth Of Buy And Hold Investing – Part VII by L. Roberts, M. Lebowitz & J. Coumarianos Is The Fed’s New Yield Curve “Professional Grade/” by Michael Lebowitz Quick Take: I Call B.S. by Doug Kass A Look At The A/D Line by Lance Roberts Do You Have Too Much Stock Exposure by John Coumarianos The Data Is In: Tax Cuts & The Failure Of Trickle Down by Lance Roberts Research / Interesting Reads When Risk Disappears From View by Wolf Richter via Wolf Street Three Metrics Of Stock Market Overvaluation by William Baldwin via Forbes Why Real Wages Still Aren’t Rising by Jared Bernstein via NYT Marks: Warning Of A Late Stage US Economy by Anneken Tappe via MarketWatch Pretty Soon You Will Invest Like Ray Dalio by Nir Kaissar via Bloomberg Soon There Will Be Only 1-BlockBuster Left by Julia Jacobs via NYT The Fallacy That Became A Fallacy Itself by Koen Smets via Medium Earnings Growth – A One Trick Pony by Jamie Powell via FT Alphaville Gig Economy: Boomers Make 60% More Than Millennials by Patrick Kiger via AARP Mind The Trap Door (Understanding Valuations) by John Hussman via Hussman Funds “Predicting rain doesn’t count. Building arks does.” – Warren Buffett
Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2018- S&P sectors for the past week-
Market Fireworks Still Blazing Jul 20, 2018 Heading into the July 4th holiday, US equities were in a bit of a funk with the S&P 500 down nearly 3% from its recent high in June. The July 4th holiday must have been just the rest the bulls needed, though, because since then the S&P 500 has gone on to make a higher high with eight daily gains in the eleven trading days since July 4th. So, which sectors have been behind the market’s recent strength? Leading the way higher has been Technology (what else is new?), which is up over 5%. Behind tech, though, Financials and Industrials have been noticeable outperformers while Consumer Discretionary is just barely outpacing the S&P 500. On the downside, four sectors are actually down during the S&P 500’s recent rally, with Telecom Services acting as the largest drag with a decline of 2.5%. In terms of individual stock performance, gains have been pretty broad-based. For the Russell 3000, 64% of stocks in the index are positive since July 4th and the average stock is up 1.68%. In the S&P 500, however, performance has been even more positive with the average stock up 2.44% and three out of four stocks in the index posting gains. So, large caps have definitely been leading of late. In the tables below, we just wanted to quickly run through what have been some of the best and worst performing stocks since July 4th. We’ll start with the Russell 3000. The table below lists the index’s 25 best performing components since the close on July 3rd. Looking at this list, there are three things worth highlighting. First, all of these stocks have had big gains in a short period of time. Second, most of them, you have probably never even heard of. Third, it’s been a good month for Drugs and Biotech. Of the 25 names listed below, eleven of them are either biotechs or pharma stocks. Another stock we wanted to point out was Turtle Beach (HEAR). Back on July 3rd, we highlighted this stock as the best performing stock in the Russell 3000 YTD as it had already returned 1,050%. Since that post, the stock has rallied another 27% taking its total YTD return to 1,400%. How’s that for compounding? Even more surprising is that even after a 14-bagger, the company’s market cap is less than $400 million. Since you’ve probably never heard of most of the names above, in the table below we list the 25 best performing large-cap S&P 500 stocks since 7/3. These stocks haven’t seen quite as impressive gains as the stocks in the table above, but all of them are up over 8%, which isn’t bad for a little over two weeks. Topping this list with gains of more than 20% are CA and Biogen (BIIB), which were also both on the list above. behind these two, another ten stocks are up over 10%. With all the talk about how FANG is carrying the market lately, it is worth noting that the only one to make the list was Facebook (FB). Finally, not to end on a bad note, but the stocks listed below are the 25 worst performing S&P 500 stocks since the July 4th holiday. As mentioned above, breadth for the stocks in the S&P 500 has been strong, so there haven’t been a whole lot of big losers. Of the 25 biggest dogs in the index, just two are down more than 10% (Broadcom-AVGO and L Brands-LB). The most notable stock listed, however, is Netflix (NFLX). After a run in 2018 where the stock more than doubled, NFLX’s weak earnings report on Monday, hit the stock hard. While NFLX did recover a bit of its initial weakness on Tuesday, it hasn’t been able to really catch its footing since. What Happened to the Transports and Small Caps? Jul 19, 2018 When looking to get a handle on the overall health of the market, many technicians like to pay attention to Transports and Small Caps, but judging by the relative strength charts of the Dow Jones Transports and Russell 2000 versus the S&P 500, the broader market hasn’t been quite as strong. First, in the case of the Dow Transports, the index hasn’t been much of an outperformer at any point in the last year. Over the last month, though, the Transports have been extremely weak and are currently near their lowest level on a relative basis at any point in the last year. The performance of small caps versus the S&P 500 has been a lot stronger than the Transports, but even here, we’ve recently seen a bit of weakness in the group. From when the China tariffs were first announced earlier this year right up until mid to late June, the Russell 2000 was a steady outperformer. Over the last month, though, the Russell 2000 has been a laggard. Granted, the index got a bit ahead of itself in the run-up, but notwithstanding today’s bounce, for the last couple of weeks as the S&P 500 has been in rally mode, Transports and Small Caps have been left behind. China and US Drifting Apart Jul 18, 2018 In an interview with CNBC today, President Trump’s top economic advisor Larry Kudlow highlighted the Administration’s growing frustration with China’s seeming lack of interest to reach any deal in the ongoing trade dispute. As the US and China continue to drift apart in terms of reaching a potential trade deal, so too have the stock markets of both countries. Below we highlight the YTD return of the S&P 500 versus China’s benchmark Shanghai Composite Index. While the two indices started off the year tracking each other relatively closely, the gap between the two has steadily widened and even picked up the pace ever since the President announced the first round of tariffs against China in early March. Through Wednesday, the YTD gap between the two indices is over 20 percentage points in favor of the US, and that’s before even taking the decline in the value of the yuan into account. With the President’s intent focus on the performance of the stock market under his tenure, you can bet that as long as this trend continues, there will be no urgency on the part of the US to make much in the way of concessions, especially after relaxing restrictions on the ZTE ban and seemingly getting nothing in return. Equity Relative Strength vs Bonds Testing Resistance Jul 18, 2018 The chart below is updated on a daily basis in our Morning Lineup report and shows the relative strength of the S&P 500 versus the price of the Treasury Long Bond Future over the last 12 months. In the chart, a rising line indicates that equities are outperforming long-term Treasuries and vice versa. As you can see in the chart, the final four months of 2017 saw a steady trend of equity outperformance right up until the January highs. You may recall that back in late January, sentiment towards equities was at multi-year highs while the overriding consensus was that Treasury yields were going to the moon, which would put bonds in a swoon. Well, with the benefit of hindsight, we all know that stocks didn’t keep rallying and long-term Treasury yields fell (meaning bonds are up in price). In the last couple of weeks, though, equity performance has picked up steam and while the S&P 500 just cleared frustrating resistance at the 2,800 level in the last few days, equity relative strength is also making a move to test a resistance level that has been problematic over the last few months. Technicians often say that the more often a support or resistance level is tested, the weaker it becomes. That ultimately proved to be the case with 2,800 for the S&P 500 last week, and given all the tests in the relative strength chart below, we think resistance will eventually give way to a breakout here as well. What Does an Inverted Yield Curve Mean? Part Deux Posted by lplresearch Last week, we took a closer look at the yield curve to show why an inverted yield curve didn’t necessarily mean a recession was right around the corner and why years of economic growth and stock market gains were still possible. Today we’ll take a different look. First, you may wonder why the yield curve is in the news so much and why we are writing about it again. Well, according to the San Francisco Federal Reserve, which defined the yield curve as the difference between the yields on 10-year and 1-year Treasury securities, a negative yield curve preceded the last nine U.S. economic recessions. Another commonly referenced measure of the shape of the yield curve looks at the difference between 10- and 2-year Treasury yields, which has also continued to flatten and last week was at its flattest level since ahead of the financial crisis more than 10 years ago. Of course, neither measure has inverted yet, but there have been periods with a relatively flat yield curve that have lasted years before a recession (the mid-to-late 1990s for instance). As we lay out in our recently released Midyear Outlook 2018: The Plot Thickens publication, we remain positive on the economy thanks to the benefits of fiscal policy, government spending, and financial deregulation. For these reasons, we do not anticipate a recession over the next 12-18 months. But what happens when the yield curve finally inverts? As our LPL Chart of the Day shows, equities can continue moving higher even after the yield curve inverts. LPL Research Senior Market Strategist Ryan Detrick added, “Contrary to what many people think, inverted yield curves don’t always sound the alarm to sell. In fact, looking at the past five recessions, the S&P 500 didn’t peak for more than 19 months on average after the yield curve inverted, along the way adding more than 22% on average at the peak.” For more of our thoughts on the yield curve and what we think stocks, bonds, and the economy will do the rest of 2018, please be sure to read our Midyear Outlook 2018: The Plot Thickenspublication. Stocks’ Summer Strength Points to More Gains Posted by lplresearch The S&P 500 Index is on a three-month winning streak, and more gains may be in store for bulls. As shown in our LPL Chart of the Day, in the last 15 instances when the S&P 500 has closed higher in April, May, and June (like 2018 just did), all but one of those years saw unusually strong returns in the second half. In fact, in those 15 years, the S&P 500 returned 10.6% on average from July to December. The chart also illustrates that weakness in July following a strong second quarter doesn’t necessarily portend the remainder of the year; and, with the index up roughly 3% on the month so far, note that third quarter and full-year returns were positive in every instance where July finished in the green. “Summer can be a tenuous time for stocks,” according to LPL Research Senior Market Strategist Ryan Detrick. “However, when the S&P 500 gained in April, May and June, it has usually been a sign that stocks had enough momentum to continue higher in the second half.” Interestingly, four of the 15 instances have occurred in the current bull market, which began in March 2009. While stocks have benefitted from global accommodative monetary policy over the past several years, we anticipate robust (20%) corporate earnings growth and tailwinds from tax reform and government spending to help equities continue the second-half trend we’ve seen in these scenarios, even as the Federal Reserve further tightens monetary policy. As we mentioned in the Midyear Outlook 2018: The Plot Thickens, we expect the S&P 500 to end 2018 in the 2900-3000 range, based on an estimated aggregate Earnings Per Share of $155 per share and a price-to-earnings ratio of 19. If the S&P 500 ends in the midpoint of our range, it will have gained 10% on the year. LEI’ding The Way To A Stronger Economy Posted by lplresearch The Conference Board’s Leading Economic Index (LEI) is one of our favorite economic indicators. It is designed to predict future movements in the economy based on a composite of 10 economic indicators (like manufacturers’ new orders, stock prices, and weekly unemployment claims) whose changes tend to precede shifts in the overall economy. Yesterday, it painted a continued strong backdrop for future economic growth, as it rose 0.5% month over month and 5.8% year over year. Looking under the hood, the LEI has risen for 25 consecutive months, the longest such streak since one lasting 26 months ended in 2011. While the yield curve has been getting all the attention recently, every recession going back to the early 1970s first saw the LEI turn negative year over year; and because of its solid track record of predicting recessions, the LEI is a component of LPL Research’s Five Forecasters. As our LPL Chart of the Day shows, the LEI is nowhere near turning negative. “The fact that the LEI has been successful at forecasting recessions, and is one of the few forward-looking economic indicators, makes it one of our favorites. The strong recent data suggests a recession is nowhere in sight and signals solid underlying fundamentals in the U.S. economy,” said Ryan Detrick, LPL senior market strategist. For more insights on our thoughts on the economy, be sure to read our recently released Midyear Outlook 2018: The Plot Thickens publication. August Is Worst Performing Month of Year Since 1988 Money flows from harvesting made August a great stock market month in the first half of the Twentieth Century. August was the best month from 1901 to 1951. In 1900, 37.5% of the population was farming. Now that less than 2% farm, August is amongst the worst months of the year. It is the worst DJIA and S&P 500 month since 1987 with average declines of 1.0% and 0.8% respectively. August is also the worst month for NASDAQ (–0.1%) and Russell 1000 (–0.7%) over the same time period. Contributing to this poor performance since 1987; the shortest bear market in history (45 days) caused by turmoil in Russia, the Asian currency crisis and the Long-Term Capital Management hedge fund debacle ending August 31, 1998 with the DJIA shedding 6.4% that day. DJIA dropped a record 1344.22 points for the month, off 15.1%—which is the second worst monthly percentage DJIA loss since 1950. Saddam Hussein triggered a 10.0% slide in August 1990. The best DJIA gains occurred in 1982 (11.5%) and 1984 (9.8%) as bear markets ended. Sizeable losses in 2010, 2011, 2013 and 2015 of over 4% on DJIA have widened Augusts’ average decline. A strong August in 2014 of S&P 3.8% and NASDAQ 4.8% preceded corrections of 7.4% and 8.4% respectively from mid-September to mid-October. In midterm years since 1950, Augusts’ rankings improve slightly: #8 DJIA, #9 S&P 500, #11 NASDAQ (since 1974), #7 Russell 1000 and #11 Russell 2000 (since 1982). Average losses range from 0.1% for Russell 1000 to 1.9% for Russell 2000. DJIA suffered double-digit losses in 1974, 1990 and 1998. Tepid Summer Rallies Precede Above Average Slumps It’s usually about this time of the year, when trading volumes begin to slump and markets meander that we begin to hear talk of the infamous “Summer Rally” featured on page 70 of the Stock Trader’s Almanac 2018. Long story, short, the elusive “Summer Rally” is the weakest seasonal rally of them all. So we took a look at the current Summer Rally and found it to be rather weak so far, up only 5% from the Spring low on May 2, and that does not portend so well for the Summer and Fall Corrections. We lined up the Summer Rallies ranked from weakest to strongest since 1964. Over the past 54 years prior to this year DJIA has rallied and average of 9.0% from its May/June low until its Q3 high. The Fall Rally averages 11.0% and the Summer and Fall Corrections average a loss of just under 9% for a net average gain of a few percentage points over the summer and fall. However, as shown in the table below, when the Summer Rally is below the 54-year 9.0% average, the summer and fall correction tend to be bit steeper, -10.7% and -9.5%, respectively. It gets worse as the Summer Rally numbers dwindle. So, if the market does not get excited about something soon, we may be looking at a summer selloff that could be a bit deeper than usual. Fading volume indicates arrival of summer doldrums The “Best Six/Eights Months” for stocks are over and it also looks like the summer doldrums could be right around the corner. We refer to the summer months as the doldrums due to the anemic volume and uninspired trading on Wall Street. The individual trader, if they are looking to sell a stock, is generally met with disinterest from the street. It becomes very difficult to sell a stock at a good price. That is also why many summer rallies tend to be short lived and are quickly followed by a pullback or correction. Below we have plotted the one-year seasonal volume patterns since 1965 for the NYSE and 1978 for NASDAQ against the annual average daily volume moving average for 2018 so far. The typical summer lull is highlighted in yellow. Note the spike in volume that occurred in late June as the market began to weaken after mid-month. The recent volume trend for the current year shows a perennial trail off in volume may be underway. An atypical surge in volume this summer, especially accompanied by outsized gains, would be an encouraging sign that the bull market will continue. However, should traders lose their conviction and participate in the annual summer exodus from The Street, a market pullback or correction could quickly unfold.
Stock Market Analysis Video for July 20th, 2018 Video from AlphaTrends Brian Shannon ShadowTrader Video Weekly 7.22.18 - It's Jumbotron Week! Video from ShadowTrader Peter Reznicek
Here are the current major indices pullback/correction levels from ATHs as of week ending 7.20.18- 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 7.23.18 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! Monday 7.23.18 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! Tuesday 7.24.18 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 7.24.18 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 7.25.18 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 7.25.18 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 7.26.18 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 7.26.18 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 7.27.18 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! Friday 7.27.18 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 (7/23) <-- click there to cast your daily market vote and stock pick! Stockaholics Weekly Stock Picking Contest & SPX Sentiment Poll (7/23-7/27) <-- 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- ($AMZN $AMD $FB $TWTR $GOOGL $BA $T $V $INTC $LRCX $HAL $LMT $PYPL $MA $VZ $MMM $CELG $MCD $HAS $F $ABBV $XOM $SBUX $BIIB $KO $AAL $PETS $ALGN $CMG $GRUB $RTN $UAA $GILD $NTGR $UTX $HOG $WDC $AMTD $NOK $DGX $UPS $JBLU $GM $CVX) If you guys want to view the full earnings post please see this thread here- Most Anticipated Earnings Releases for the week beginning July 23rd, 2018 <-- click there to view!
Weird Your list says Amazon earnings is on Thursday, but CNBC says Wednesday... Once again, CNBC is wrong.
Longest Streaks Without a New Bull Market High Since 2009 Mark August 10th on your calendar. That is the day when the current streak of trading days without a new bull market closing high will move into third place overall going back to March 2009. The chart below shows the longest streaks that the S&P 500 has gone without closing at a new bull market high. While the current drought is just about six months long, there have been four streaks since March 2009 that were longer. The longest of these streaks lasted more than a year when the S&P 500 went 285 trading days ending in early July 2016 without a new high. The reason that streak lasted so long was largely due to China’s yuan devaluation in August 2015, and it ended surprisingly enough when US equities actually surged in the days that followed the surprise Brexit vote. After the 2015/2016 streak, the only other streak of 200+ trading days without a new closing high ended in February 2012. The catalyst for that dry spell of new highs was when the US was stripped of its AAA rating in early August 2011 amid the debt ceiling debate. Then, in the fall of 2011, FOMC chair Ben Bernanke announced “Operation Twist” which helped to get financial markets back on a firmer footing. With the S&P 500 down just 2.56% from its prior bull market high in January, all the bulls need is a few good days strung together in order for this streak to end. Then again, it is the middle of earnings season, so a run of a few bad days would easily extend this streak to third place overall.
BOJ Policy Tweak Prospects Jolt Japanese Markets, Yen https://www.nytimes.com/reuters/2018/07/23/business/23reuters-japan-markets.html Japan's yen hit two-week highs against the dollar and the 10-year benchmark bond yield jumped to a six-month peak on Monday, following reports the central bank was debating moves to scale back its massive monetary stimulus. I guess that’s why our bond yields also moving higher today
Yup, bond prices getting knocked down again. But in a couple months we'll see if they can break lower.
