Stock Market Today: February 18th - 22nd, 2019

30 Stocks Furthest Above and Below 50-DMAs
Feb 19, 2019

As the S&P 500 continues to rally off of its Christmas Eve low, many stocks have extended well past their 50-day moving averages. Below is a list of the 30 S&P 500 stocks that are trading the furthest above their 50-DMAs. At the top of the list is Coty (COTY) which currently sits 44.18% above its 50-DMA. Before reporting earnings on February 8th, the stock actually sat just below its moving average, but a strong report rocketed the stock well above its 50 and 200-day. While no other stocks are quite as overextended as COTY, there are currently nine that sit more than 20% above their 50-DMAs. Many of these saw a strong Q4 earnings report, like Xilinx (XLNX) which reported a triple play and gapped up 9.55% in reaction to the news. Other notables on the list of most extended stocks include Chipotle (CMG), Electronic Arts (EA), Advanced Micro (AMD), Boeing (BA), Netflix (NFLX), and General Electric (GE).



While these stocks have performed unbelievably lately, they are now reaching extremely overbought levels as shown through our popular Trend Analyzer tool. A couple like COTY and ANET have extended so far above their 50-DMAs that they are basically off the chart. As a result of these readings, many of these stocks have poor timing ratings as they are increasingly overdue for some downside mean reversion.



At the other end of the spectrum, below we show the 30 S&P 500 stocks that are furthest below their 50-DMAs. Newell Brands (NWL) is the leader of the group at 16.31% below. NWL plummeted over 9% on Friday after lowering guidance, whereas before reporting it comfortably sat above its 50-DMA. It has continued to decline today. The next stock that is far below its 50-DMA is Take-Two Interactive (TTWO) which also saw a sour response to earnings a couple weeks ago. This stock is another that actually sat above its 50-DMA before its earnings report was released. A similar name, Activision Blizzard (ATVI), joins TTWO on this list despite their peer EA being one of the most elevated stocks.

Note that there is just one stock in the S&P 500 that is more than 10% below its 50-day, while there are 30+ that are more than 15% above their 50-days!

 

Good Wednesday morning to all.

Here is this morning's pre-market news thread for those of you wanting to get a quick read before today's open-
<-- click there to read!

 

Morning Lineup – All Quiet Ahead of FOMC Minutes
Feb 20, 2019

Earnings season just ended yesterday, but things are already pretty quiet in terms of news today, and the futures reflect that with levels suggesting just a slightly negative open. Besides weekly mortgage applications which were released earlier, the only release of importance today is the FOMC Minutes from the January meeting.

On the subject of today’s FOMC Minutes, it will be interesting to read about the Committee’s discussion and the ultimate decision to pivot on rate policy. In terms of the market’s expectations for future rate policy this year, it is hard to believe that market pricing for a rate cut between now and the December meeting is still significantly higher than the odds of a hike. At just a 1% probability, market expectations for a rate hike are pretty much non-existent.

 

Treasury Yields Keep Drifting Lower
Feb 20, 2019

Despite continuing calls for a move higher in rates, US Treasury yields have been flat to lower across the curve recently. Let’s start with the short end of the curve. While you could practically set your watch to the pace of rising yields on the 3-month UST for most of 2018, the rise came to a halt late in Q4 as economic data slowed and the equity market declined. Last month’s pivot by the FOMC to pause its rate hiking cycle has only reinforced that trend. For now, 2.5% should be a ceiling.



At the long end of the curve, yields have not only not been rising, but they’ve also been falling. When equity markets bottomed in late 2018, the yield on the 10-year briefly started rising again, but that move higher in yields came to a halt just shy of 2.8%, which had formerly been a support level. As things stand now, the 10-year yield is at 2.65% and not far from one-year lows.



With lower yields at the longer end of the curve, the yield curve (10-year minus 3-month yield) has been flattening dramatically again. At today’s level, the yield curve is barely legal to drink and outside that brief period at the end of last year is at its lowest levels in over a decade. What will it take to get the curve steepening again?

 

kind of interesting stat i came across this afternoon.

so more than 90% of spx components are above their 50ma, which is historically a high number.

interestingly, future returns are pretty strong when we've seen this rare overbought signal.