Welcome Stockaholics to the trading week of April 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, UBS, Kimberly-Clark, Barrick Gold, Hasbro, SLM, Owens-Illinois, Ameriprise, Canadian National Railway, FirstEnergy, TD Ameritrade, Cadence Designs, Crane 9:45 a.m. Manufacturing PMI 9:45 a.m. Services PMI 10:00 a.m. Existing home sales Tuesday Earnings: 3M, Coca-Cola, Caterpillar, Biogen, Amgen, Capital One, Equity Residential, Travelers, United Technologies, Corning, Fifth Third, Freeport-McMoRan, PulteGroup, Eli Lilly, Verizon, Lockheed Martin, JetBlue, Six Flags, Chubb, Boston Properties, Illumina, Trustmark 9:00 a.m. S&P/Case- Shiller home prices 9:00 a.m. FHFA 10:00 a.m. New home sales 10:00 a.m. Consumer confidence Wednesday Earnings: Boeing, GlaxoSmithKline, AT&T, Viacom, Comcast, Facebook, Twitter, General Dynamics, Norfolk Southern, Anthem, Credit Suisse, Dr. Pepper Snapple, Nasdaq OMX, Boston Scientific, Northrop Grumman,Visa, Ford, Samsung, Qualcomm, Advanced Micro Devices, Aflac, Chipotle Mexican Grill, Cheesecake Factory, Boston Beer, Morningstar, Sirius XM, PayPal Thursday Earnings: Amazon.com, Microsoft, Intel, Bristol-Myers Squibb, ConocoPhillips, Pepsico, Starbucks, Southwest Air, UPS, Union Pacific, Time Warner, General Motors, Barclays, Deutsche Bank, Fiat Chrysler, Volkswagen, Dunkin Brands, Illinois Tool Works, CME Group, Nintendo, Hershey, Nokia, DR Horton, Spirit Airlines, Tractor Supply, Brunswick, Marsh and McLennan, Air Products, Discover Financial, Expedia, Mattel, Lattice Semiconductor, U.S. Steel 8:30 a.m. Initial claims 8:30 a.m. Durable goods 8:30 a.m. Advance economic indicators 10:00 a.m. Housing vacancies Friday Earnings: Exxon Mobil, Chevron, TransCanada, Phillips 66, Autoliv, Tenneco, Honda Motor, Sanofi, Colgate-Palmolive, Charter Communications 8:30 a.m. Real GDP Q1 8:30 a.m. Employment cost index 10:00 a.m. Consumer sentiment
Fistfuls Of Dollars And The Good (Bitcoin), Bad (Bonds), & Ugly (Semis) Markets Take your pick - Good, Bad, or Ugly... Good: The Dollar's best week in over 4 months Silver's best week in 4 months Bitcoin's best 2-week gain in 4 months Not Good: 30Y Bond's worst week in 3 months 10Y highest yield close since Dec 2013 Semi stocks worst week in a month Techs worst weekly underperformance relative to Banks in over 3 months Gold's worst week relative to silver since Sept 2016 How about next week? Do you feel lucky? Odd week, all in all - major reversal midweek in many momentum strategies. Big shift in momentum midweek, left Dow, S&P and Nasdaq unchanged on the week, Trannies outperformed... S&P closed below its 50- and 100DMA... The Dow, S&P, and Trannies all tumbled back into the red for 2018 today; only Nasdaq (green) and Small Caps (dark red) remain green for the year... Growth was favored early in the week but rejected for value after Wednesday's open... Tech was the early week leader over banks.. but then XTE's ban and Taiwan Semi's warning spoiled the party... Since The Fed hiked rates in March, stocks notably underperformed bonds into the end of March - then stocks outperformed bonds since April began... until the last couple of days... Mixed bag for the FANGMAN stocks... Mixed picture for banks too... MS leading, GS lagging... Ugly week for HY bonds - HYG tagged its 100DMA and rolled over... Bonds and Stocks recoupled after two weeks of trying... (green - buy both, red - sell both, orange - buy stocks, sell bonds) 3rd day in a row of negative aggregate returns for a stock and bond portfolio... Treasury yields ended notably higher on the week, reversing dramatically midweek... Real Yields and Breakevens surged...but breakevens dumped and pumped today... 10Y Yields tested 2.9500% for the first time since 2/21 (when stocks got spooked) and closed at the highest yield since Dec 2013... The yield curve also reversed course midweek after flattening to fresh cycle lows, it ripped steeper from Wednesday's European close... (2s10s jumped 8bps to 49bps off the lows, and 2s30s +10bps off the lows to 68bps) Which comes first - geopolitical-crisis-driven oil-price spikes... or inflation expectations... The Dollar Index surged this week back to its highest level since The Fed hiked rates in March... With the world and their pet rabbit short the Dollar... This could end badly... Cryptos had a great week... again... as maybe the Tax-selling-pressure thesis is being proved out... But perhaps most notable was Ethereum's dramatic outperformance of Bitcoin as 'risk-on' trades return... On the week, despite USD strength, Silver was the winner with Copper and Crude gaining but Gold ended the week red... WTI topped $69, and RBOB topped $2.00.. This was silver's biggest week relative to gold since Sept 2016... (early indications are that the record net short silver position has started to liquidate) Finally we note that hard and soft data continues to tumble... The SMART money is still leaving... Bonus Chart: Why the sudden reversal midweek? Simple - The HKMA had to start buying Hongkers to protect the peg and started selling everything else!!
Spoiler: Weekend Reading: The Return Of Stagflation Authored by Lance Roberts via RealInvestmentAdvice.com, One of the worst possible outcomes for the U.S. economy, and ultimately for investors, is stagflation. Of course, if you weren’t around in the 60-70’s, there is a reasonably high probability you are not even sure what “stagflation” is. Here is the technical definition: “stagflation – persistent high inflation combined with high unemployment and stagnant demand in a country’s economy.” How can that happen? Exactly in the way you are witnessing now. While the current Administration is keen on equalizing trade through tariffs, trade deals, and trade deficit reduction, they have also embarked on a deficit expanding spending spree which has deleterious long-term effects on economic growth. At the same time, the administration is attacking our major trading partners, particularly China, leading to a push to shift away from the U.S. dollar as a reserve currency. What does all that mean? Here is the problem with the current trajectory. A weaker dollar leads to higher commodity prices creating cost-push inflation. As fears of inflation infiltrate the markets, interest rates increase which raises borrowing costs. As the dollar weakens, exports come under pressure which comprises about 40% of corporate profits. Higher input costs, borrowing costs, and weaker profits ultimately force corporations to suppress wage growth to protect profits. As wage growth is suppressed, particularly with a heavily indebted consumer, demand falls as higher costs, both product and borrowing costs, cannot be compensated for. As demand falls, companies react by reducing the highest costs to their bottom lines: wages and employment. As profits come under pressure, stock prices fall which negatively impacts the “wealth effect” further curtailing consumptive demand. As the economy slumps into recession, unemployment rise sharply, demand falls, and interest rates decline sharply. As I discussed just recently, the bottom 80% of U.S. households are heavily indebted with no wage growth to offset the rising costs in “non-discretionary” spending requirements of rent, utilities, food and healthcare and debt payments. However, as the dollar weakens, the input costs to manufacturers rise leading to concerns of inflationary pressures which pushes interest rates higher. The biggest risk to the markets, and investors, is both the current Administrations trade policies, particularly as it relates to China, and the reduction of the Federal Reserve’s balance sheet. Combined, these two represent the largest buyers of U.S. Treasuries which is most inopportune at a time where the fiscal deficit is set to swell creating a surge in U.S. debt issuance. (The chart below is the annual rate of change of foreign holdings of U.S. Treasuries versus the annual change in interest rates.) Furthermore, this is all occurring at a time when global liquidity is being withdrawn. “The removal of global policy stimulus has naturally come about as the world economy finally managed a couple of quarters of synchronised growth in 2017. But our view is that this growth is tenuous and very late-cycle, particularly in China and the US, as the credit cycle has already turned. And the next challenges for markets are just around the corner.” While much of the mainstream media continues to promote expectations of a global resurgence in economic growth, there is currently scant evidence of such being the case. Since economic growth is roughly 70% dependent on consumption, then population, wage, and consumer debt growth become key inputs into that equation. Unfortunately, with real wage growth stagnant for the bottom 80%, demographics running in reverse, and consumers extremely leveraged, a sustained surge in economic growth to offset higher interest rates becomes unlikely. So, to summarize, we have a depreciating dollar policy from the White House, which is inflationary, with the Fed and foreign purchasers of our bonds not keeping pace with burgeoning deficits. With inflation, not generated by economic growth but by a weak dollar instead, pushes interest rates higher, the combination is a deadly one-two punch for the economy. This is an outcome to which the market is currently ill-prepared for. Just something to think about as you catch up on your weekend reading list. Economy & Fed This Is Not Your Father’s Economy by Caroline Baum via MarketWatch Say Goodbye To The Old Tax Code by Kevin Brady via USA Today Trump Tax Cuts Still Unpopular by Eric Levitz via New York Magazine Analysis Of CBO’s 2018 Budget Outlook by Committee For A Responsible Federal Budget A Synchronized Global Slowdown by Edward Harrison via Credit Writedowns Trump Inherited Trillion Dollar Deficits by Stephen Moore via Washington Times Both Parties Have A Plan For The Debt: Do Nothing by Robert Samuelson via Washington Post After Failed Tax Cutting, GOP Looks For New Deal by Geoffrey Kabaservice vai NYT The Tax Cut Is Just A Financial Engineering Game by Macromon via Global Macro Monitor Deficit: The GOP Has Been Playing Us For Suckers by Stan Collender via Forbes Markets IMF Sounds Alarm On Global Debt by Tyler Durden via ZeroHedge Uncharted Territory For Stock Valuations by Bryce Coward via Knowledge Leaders On Big Market Tops by Sven Henrich via Northman Trader Oil Prices Haven’t Peaked Yet by Simon Constable via US News The Yield Curve Knows Best by Kevin Muir via The Macro Tourist Saxo Bank: The End Of A Cycle by Mike Mish Shedlock via MishTalk Bond Bears Still Bet On Higher Rates by Sunny Oh via MarketWatch How Long Will The Momentum Party Last by James Picerno via Capital Spectator When Failing To Prepare Is Preparing To Fail by Tad Rivelle via Trust Co Of The West S&P500 Faces Tougher Growth Comps In 2018 by Michael Cannivet via Forbes The Bullish & Bearish Case For Oil by Nick Cunningham via OilPrice.com Most Read On RIA Selling The 200-DMA by Lance Roberts Triffin Warned Us by Michael Lebowitz How Libor’s Surge Will Help Pop The Global Bubble by Jesse Colombo The Risk To Markets – Global Growth by Lance Roberts Market Is Underpricing Risk…Again by Doug Kass Research / Interesting Reads Junk Bond Market Still In Denial by Wolf Richter via Wolf Street US Pension Fund Collapse No Longer A Distant Prospect by Aaron Brown via Bloomberg Win The Game By Understanding Risk & Players by Johnny Kampis via American Spectator Some Things I Am Pretty Sure About by Morgan Housel via Collaborative Fund The Global Recovery Levels Off As Vulnerability Rises by Brookings Institute In The Land Of Lost by Nick Maggiulli via Dollars and Data Four Flash Points Of Volatility by Nomi Prins via The Daily Reckoning Stocks Are Spinning Their Wheels by Dana Lyons via The Lyons Share Heading For Another Minsky Moment by Jesse Felder via The Felder Report “The trick of successful investors is to sell when they want to, not when they have to.” – Seth Klarman
Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2018- S&P sectors for the past week-
Groups Breadth Leaning Weak Apr 20, 2018 Two days ago, the percentage of S&P 500 Industry Groups trading above their 50-DMAs reached 66.6%, which was a huge improvement from the 0% reading we saw back in late March. Over the last two days, we’ve seen this percentage dip back below 50% just as the S&P 500 did the same today. At the surface, breadth in individual groups appears to be tracking the S&P 500 pretty closely. Looking a little more closely, though, breadth isn’t as solid as it may seem. The table below shows each of the 24 S&P 500 Industry Groups and how they’ve performed YTD as well as where they are trading relative to their 50-DMAs. Note in this table that although 11 out of 24 Industry Groups are above their 50-DMAs, many of them are hanging on by a thread. For example, three of the Industry Groups (Materials, Div Financials, and Software and Services) are less than 0.1% above their 50-DMAs and another two are less than 1% above that level. In this current market environment, it wouldn’t take much of a decline to send all five of these Industry Groups back below their 50-DMAs. In fact, the only Industry Group that would be immune to a one-day sell-off dragging it below its own 50-DMA is Energy! On the flipside, the only Industry Group currently below its 50-DMA that is within a percent of getting back above that level is Capital Goods (-0.18%). In other words, while it wouldn’t take much of a decline to make this breadth reading look really bad, it would take a pretty sizable rally to make it look good. In terms of YTD performance, just eight Industry Groups are in the green for the year as of now, while twice that number are down on the year. The biggest losers by far are both from the Consumer Staples sector. The Household and Personal Products group is down a whopping 14.9% on the year already, while Food Beverage & Tobacco stocks are down over 12%. Perhaps the irony of all ironies this year is that the Retailing Group is up 14.6% YTD. Before anyone starts thinking retail stocks are seeing some sort of renaissance, keep in mind that practically all of the gains in the group are the result of Amazon.com (AMZN), which is up 31% YTD and Netflix (NFLX), which is up over 70%. Besides these two big winners, the average YTD performance of stocks in the Retailing group is a decline of over 3%. Earnings & Economic Surprises Apr 20, 2018 Earnings beat rates have been very strong recently. In the 12 weeks ending February 16th, 69.1% of companies beat EPS, and over 72% of companies beat on revenues. These numbers have moderated somewhat since then but still remain extremely strong (65.8% and 70.2% respectively). For EPS, recent levels of beat rates on a rolling 12 week basis have been the strongest since the aftermath of the last recession. Revenue beat rates have been dramatically stronger, with the best beat rate since 2004. It shouldn’t be surprising that economic data has also been very strong relative to expectations. In the charts below, we show the rolling 12 week beat rates for EPS and revenues, versus the 12 week rolling average of the Citi Economic Surprise Index for the United States. As the charts show, while the correlation between these two related indicators of strong results versus expectations aren’t perfectly correlated, they do tend to move together over time. One note of caution: the Citi Economic Surprise index has continued to pull back in recent weeks, and is currently at the lowest levels since October of 2017. That suggests that the stellar beat rates of last earnings season won’t repeat as this earnings season heats up, though they are likely to remain pretty strong given the first few reports we’ve gotten. Another Sign Markets Just Bottomed Posted by lplresearch As this week’s Weekly Market Commentary suggested, we are seeing signs that indicate equities may have bottomed for the year. Today, we’ll take a look at market breadth—one of our favorite technical indicators—to explore whether it may be pointing to better times ahead for equities. Market breadth measures how many stocks are participating in the movement of broader indexes. One of the easiest ways to measure this is via advance/decline (A/D) lines on various exchanges. An A/D line is a ratio of how many stocks go up versus down each day. The thinking is, if gains are caused by increases in many stocks, then there are plenty of buyers and the upward trend should likely continue, all else equal. On the other hand, if an upward move in a broad market gauge is driven by relatively few stocks, this can be a warning sign of cracks in the bull’s armor. Looking at today’s Chart of the Day shows that the NYSE Common Stock Only A/D line has broken out to a new all-time high. “This is another clue to market participants that things are actually quite healthy under the surface. When advance/decline lines are breaking out to new highs, history tells us that stocks usually aren’t too far behind,” explained Ryan Detrick, Senior Market Strategist. The Bottoming Process Posted by lplresearch The S&P 500 Index continues to find support near its 200-day moving average and recently bounced near the early February lows. Additionally, the retest of the February lows took place on lower volume, which is a positive sign that we could be nearing the end of this bottom process. “The last time we made a major bottom it took nearly six months, from August 2015 to February 2016. One major difference between then and now is we were in an earnings recession in 2015 and credit markets were flashing potential recessionary warnings. Fortunately, this time earnings are expanding nicely and credit markets have remained fairly calm,” according to John Lynch, Chief Investment Strategist. In fact, we are seeing signs that higher prices could be on the horizon. Find out why in this week’s Weekly Market Commentary due out later today. NYSE Advance-Decline Climbed to New High Although the major indexes finished the day mixed, DJIA was modestly lower while S&P 500 and NASDAQ closed modestly higher, all three bullishly remained above their respective 50-day moving averages for a second day. Further signs of strength can be seen in advance-decline lines (plotted in the above chart). S&P 500, Russell 2000, NASDAQ and NYSE Comp advance-decline lines have all been moving higher during the month of April. During yesterday’s trading, April 17, the NYSE Comp advance-decline line actually closed at a new high for the first time since late January. Mid-month or end-of month April peak? It likely depends on earnings. Digging deeper into the historical performance of April reveals two distinctly different patterns. This was first noted last week in a post titled “Key Inflection Point in Midterm Seasonal Pattern Approaching.” In that post, three annual patterns were compared and mid-April was identified as a key point as that was where the three patterns began to noticeably diverge and head in opposite directions. Today’s focus is on just April. This April’s market performance, through the close of trading yesterday, is represented in the first chart below. In the second chart is April’s historical performance over the last 21-year period and in the third chart is April’s historical performance in midterm years since 1950. Although the magnitude of this year’s daily moves has exceeded historical averages, the choppy nature of the first half of April this year is reasonably consistent with the choppiness that exists in the recent 21-year Performance and Midterm April Performance. The key difference between the 21-year chart and Midterm Aprils is where the markets reach a peak in the month. The vertical black lines represents today, the 12th trading day of April. In past Midterm year Aprils, the market has reached a peak on either the 14th or 15th trading day while during the recent 21-year period the peak has arrived around the 20th trading day. Small-caps, represented by the Russell 2000 however, peaked earlier on the 15th trading day. Provided today’s early gains hold, DJIA, S&P 500 and NASDAQ will have reclaimed their respective 50-day moving averages. If they can hold and build upon current gains in the near-term while earnings continue to come in strong, this April could easily finish with strength and track the pattern of the most recent 21-years.
Stock Market Analysis Video for April 20th 2018 Video from AlphaTrends Brian Shannon ShadowTrader Video Weekly 4.22.18 - Look above and fail part II Video from ShadowTrader Peter Reznicek
Here are the current major indices pullback/correction levels from ATHs as of week ending 4.20.18- 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 4.23.18 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! Monday 4.23.18 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! Tuesday 4.24.18 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 4.24.18 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 4.25.18 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 4.25.18 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 4.26.18 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 4.26.18 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 4.27.18 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! Friday 4.27.18 After Market Close: Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES! Here are the scheduled earnings before the open on Monday morning (4/23/18)- ($HAL $ALK $KMB $HAS $LECO $SALT $TNC $LII $BOH $FE $BMRC $PHG $AGR $OPB $IBCP $TFC $ONB)
Stockaholics come join us on our stock market challenge threads for this upcoming trading week ahead!- ======================================================================================================== Stockaholics Daily Stock Pick Challenge & SPX Sentiment Poll for Monday (4/23) <-- click there to cast your daily market vote and stock pick! Stockaholics Weekly Stock Picking Contest & SPX Sentiment Poll (4/23-4/27) <-- click there to cast your weekly market vote and stock picks! ======================================================================================================== And finally, we have our mystery chart challenge now up as well! Weekly Mystery Chart & Technical Analysis Challenge (4/23-4/27) <-- click there to participate! ======================================================================================================== It would be pretty sweet to see some of you join us and participate on these! I hope you all have a fantastic weekend ahead!
And as promised here is the most anticipated earnings calendar for this upcoming trading week ahead- ($AMZN $FB $AMD $MSFT $BA $TWTR $GOOGL $INTC $CAT $HAL $X $V $LMT $PYPL $ALK $XOM $ABBV $F $MMM $AMTD $VZ $T $FCX $WYNN $KMB $UPS $HAS $KO $CMCSA $RTN $AAL $WDC $BIIB $STM $QCOM $TXN $SBUX $GM $ALGN $LUV $UTX $NOK $CMG $CVX $SIRI) If you guys want to view the full earnings post please see this thread here- Most Anticipated Earnings Releases for the week beginning April 23rd, 2018 <-- click there to view!
A lot of big names reporting the next week, should be a very interesting week Also some big economic data next week and we might see the 10 year yields finally breaking above of 3%
yup 3rd or 4th week in the month is usually when we get a bulk of the big boys reporting, should be an interesting week to say the least. cou0ple stocks i own report on wednesday, twtr and T, cant wait for the fireworks.
In spite of what the economic data may bring, I'd be surprised if the 10 yr yield goes over 3% right now. It's already made a huge move, and may be nearing the resistance. Looking at price chart support (inverse of yield resisstance) For the yield to get over 3%, it would have to make more than a 1% move (~1.3%)
indeed! here are the 40 largest companies reporting this week. i like this table as it also includes the eps/rev. beat rates and the avg. daily 1-day moves post ER-
For this week, around 2630 might be a worthy level for a long entry. Of course, we are still range bound and it could collapse to non above that--and those would be a solid long entry for a swing trade
