Welcome Stockaholics to the trading week of February 3rd! 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: Sector Performance WTD, MTD, YTD: What to Watch in the Week Ahead: Monday Monthly vehicle sales Earnings: Alphabet, Sysco, American Financial Group, Check Point Software, ON Semiconductor, Kilroy Realty, Leggett and Platt, Cabot, Valvoline 9:45 a.m. Manufacturing PMI 10:00 a.m. ISM manufacturing 10:00 a.m. Construction spending 2:00 p.m. Senior loan officer survey 4:00 p.m. Atlanta Fed President Raphael Bostic Tuesday Earnings: Disney, Gilead Sciences, Ford, Aflac, BP, Conoco Phillips, Royal Caribbean, Clorox, Chipotle, Ethan Allen, Seagate Technology, Microchip Tech, Snap, Owens-Illinois, Ralph Lauren, Genworth Financial, Viavi Solutions, Allstate, Sony, Cummins, Chubb 10:00 a.m. Factory orders Wednesday Earnings: Merck, Qualcomm, General Motors, GlaxoSmithkline, Capri Holdings, IAC/Interactive, Fox, FireEye, GrubHub, Zynga, Boston Scientific, Humana, Twilio, Peloton, Penske Auto Group, GoPro, Timken, Siemens, Yum China 8:15 a.m. ADP employment 8:30 a.m. International trade 9:45 a.m. Services PMI 10:00 a.m. ISM nonmanufacturing Thursday Earnings: Bristol-Myers Squibb, News Corp, Twitter, Wynn Resorts, Toyota Motor, Sanofi, Dunkin Brands, Uber, Baidu, Tyson Foods, Tapestry, Columbia Sportswear, Pinterest, VeriSign, Becton Dickinson, Carlisle Cos, Activision Blizzard Bill.com, BellRing Brands, 8:30 a.m. Initial claims 8:30 a.m. Productivity and costs 9:15 a.m. Dallas Fed President Rob Kaplan 7:15 p.m. Fed Vice Chairman Randal Quarles Friday Earnings: AbbVie, Honda Motors, CBOE Global Markets, Avantor, Norsk Hyrdo 8:30 a.m. Employment 10:00 a.m. Wholesale trade 3:00 p.m. Consumer credit
Pandemic-onium Sparks Global Market Meltdown, Bonds Soar Most In 5 Years After months of cool, calm, and collected risk-on rallies, January saw traders shit the bed as BTFD strategies faltered across every asset-class... ...as The Fed balance sheet stopped expanding... Source: Bloomberg How bad was January? US Stocks worst start to a year since 2016 China stocks (futures) worst start to a year since 2016 UK Stocks worst start to a year since 2014 Biggest January jump in VIX since 2014 Treasury yields biggest January drop since 2015 Yield curve flattened 2nd most in four years Copper's worst start to a year since 2015 (and worst losing streak in history) WTI's worst start to a year since 1991 Gold's best start to a year since 2017 And as stocks and industrial commodities plunged, so the rates market panicked and started to price in almost 2 rate-cuts in 2020 - Please Jay Powell, save us!! Source: Bloomberg Chinese markets have been shut all week but judging by A50 futures, the Shanghai Composite is set to open down 350 points (about a 12% drop) Source: Bloomberg Europe was red across the board with UK's FTSE worst as Brexit Day finally arrives... Source: Bloomberg "Dead-Bat-Bounce" Dies. Dear investors, unfortunately we have some bad news. Going into Friday we used 50x leverage, so...https://t.co/hEeEUeg2ui — zerohedge (@zerohedge) January 31, 2020 S&P, Dow Industrials, Dow Transports, and Russell 2000 suffered their biggest daily drop since August... US markets ended the month on an escalatingly ugly note with The Dow joining Trannies and Small Caps in the red for the month and the S&P clinging to unchanged... The final pumpathon from the Task Force was desperate to get the S&P back above 3230.78 - positive for the year... Things could have been worse - AMZN saved the Nasdaq and S&P from worse days, and IBM saved The Dow from being even uglier. AMZN joined the 'cuattro comas' club... Source: Bloomberg Notably, 2020’s top-five S&P 500 gainers contributed more points to the index than in any other January going back to 1999. Source: Bloomberg Notably stocks really accelerated as prices dropped through their peak exposure and gamma flipped negative... All the US majors fell back through to to crucial technical levels... Dow futures plunged over 600 points back near the Iran Missile Strike spike lows from early January...the Strike Force press conference at the end of the day was used to manipulate prices off the lows Defensives ended the month in the green while cyclicals were hit hard late on... Source: Bloomberg VIX soared above 19 today - highest since October 10th... Source: Bloomberg And both equity and credit protection costs soared in the last week... Source: Bloomberg HY Bond prices had their worst month since May 2019... Source: Bloomberg But the decoupling between bond yields and stocks this month was farcical... Source: Bloomberg Treasury yields tumbled this week (and month)... Source: Bloomberg Don't worry though... Clarida: Drop in Long-Term U.S. Treasury Yields Reflects Global Uncertainty Clarida: "I'm Not Today Concerned About the Inverted Yield Curve" 30Y Yields broke below 2.00%... Source: Bloomberg 2Y Yields plunged to their lowest since Sept 2017... Source: Bloomberg The yield curve flattened massively in January - the second biggest monthly drop since Jan 2016 - 3m10Y flattened 40bps and is back inverted... Source: Bloomberg And finally, January saw negative yielding debt jump over 20% (almost $2.3 trillion) - most since Aug 2017... Source: Bloomberg The Dollar dumped today but ended the month higher... Source: Bloomberg Offshore Yuan fell on the month, its first monthly drop since August, back to the crucial 7.00 level... Source: Bloomberg Cryptos had a huge January with Bitcoin up over 30% - best month since June... Source: Bloomberg Crude and Copper were clubbed like baby seals in January, Gold managed gains... Source: Bloomberg Lean Hogs collapsed... Source: Bloomberg Soybeans crashed... Source: Bloomberg Copper Carnage... Source: Bloomberg WTI tumbled to a $50 handle intraday - a critical support level... Source: Bloomberg Gold jumped back up near $1600...to its highest close since March 2013 Source: Bloomberg Finally, don't forget that none of this decline should surprise you - did it really take a global pandemic to reintroduce some market rationality? Source: Bloomberg And if Dr.Copper is right, the global economy is in for some serious turbulence... Source: Bloomberg Reminder - one week ago in Davos, Ray Dalio told the world that "cash is trash!"
Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2020- S&P sectors for the past week-
What a Difference Two Weeks Makes! Fri, Jan 31, 2020 The tone of the market sure did change over the last two weeks! The image below is from our Trend Analyzer screen of US indices as of the close two weeks ago on 1/17. Heading into that weekend, the major US averages were all at 'Overbought' or 'Extreme Overbought' levels, and while their Trend ratings were all positive, the Timing scores for nearly all of them was 'Poor'. Fast-forwarding to the present, it's a completely different picture for the major US indices. Today, not a single one of the major US index ETFs is overbought, and a few of them are even oversold. Here's the silver lining, though; since all of their Trend ratings are still positive, their timing scores all currently rank as 'Good'. While not what we would classify as a 'Perfect' set up right now, for investors who have been waiting for a pullback, the window is starting to open. Short Circuit Fri, Jan 31, 2020 It was just a week ago that the Philadelphia Semiconductor Index (SOX) gapped sharply higher to record highs on the back of strong earnings from Intel (INTC). So much for that rally. By the end of the day last Friday, the SOX was actually down over 1%, and outside of a rally this past Tuesday, it has traded down every day since. From record highs on Friday morning, the SOX is closing out this week down more than 8% from last Friday's highs and below its 50-day moving average (DMA) for the first time since October. For the last several months, the 50-DMA has acted as support for the SOX, so we'll be watching closely to see how the index holds up in the days ahead. We've repeatedly discussed the importance of the semis as a barometer of the health of the broader market, so it will be important for the group to find its footing soon. In terms of the SOX's individual components, the weakness has been broad-based. Since its closing high on 1/23, every member of the SOX besides INTC is down, and INTC is barely up! The average performance of the index's components since 1/23 has been a decline of nearly 9%, and a third of the components are down by double-digit percentages. Semis had been a leadership group for the market as recently as last week, but after the declines over the last five trading days, the average 2020 performance of stocks in the index is a decline of 3.5% and only eight components are up. Even for the semis, this has been a quick reversal. 49ers Or Chiefs? The Super Bowl Indicator suggests stocks rise for the full year when the Super Bowl winner has come from the original National Football League (now the NFC), but when an original American Football League (now the AFC) team has won, stocks have fallen. We would be the first to admit that this indicator has no connection to the stock market, but “data don’t lie”: The S&P 500 Index has performed better, and posted positive gains with greater frequency, over the past 53 Super Bowl games when NFC teams have won. Of course, it doesn’t always work, as stocks did great last year even though the dreaded Patriots (from the AFC) won the Super Bowl. A simpler way to look at the Super Bowl indicator is to look at the average gain for the S&P 500 when the NFC has won versus the AFC—and ignore the history of the franchises. As shown in the LPL Chart of the Day, this similar set of criteria has produced an average price return of 10.2% when an NFC team has won, compared with a return of 6.8% with an AFC winner. An NFC winner has produced a positive year 79% of the time, while the S&P 500 has been up only 64% of the time when the winner came from the AFC. The 49ers have won the Super Bowl five times, putting them just behind the six that the Patriots and Steelers have won. The Chiefs, meanwhile, have won the Super Bowl only once, exactly 50 years ago. The year the Chiefs won the Super Bowl (1970), the S&P 500 was virtually flat. Meanwhile, we’ve seen some impressive market returns the years the 49ers made it to the big game. In fact, the S&P 500 has averaged nearly 21% in the six years they made it to the final game, and 19% in the five years they won. “There have been 53 Super Bowl winners, yet only 20 teams account for those wins,” said LPL Financial Senior Market Strategist Ryan Detrick. “And wouldn’t you know it, the 49ers have recorded the third-best market return out of those 20 teams when they win.” Here’s a breakdown of the 20 Super Bowl winners and how the S&P 500 has done following their victories. LPL Research would like to reiterate that in no way shape or form do we recommend investing based on this data, but those of us outside of New England can all agree we’re glad the Patriots aren’t in the game! Have a great Super Bowl weekend everyone. Viral Outbreak Ends Period of Market Calm Fears that the deadly coronavirus would spread further around the globe intensified Monday and led to the biggest one-day drop in the S&P 500 Index since October 8, 2019. In fact, it was the first time the index moved 1% in either direction since early October—spanning 71 trading days. Not only that, but the index’s streak of 30 consecutive days without back-to-back declines, tying the longest such streak in over 60 years as shown in the LPL Chart of the Day, came to an end. Stocks had been eerily calm. We know from history these calm periods haven’t lasted very long. We were due for some volatility with stocks up about 15% in less than four months and valuations elevated. But a catalyst for a sell-off wasn’t obvious after the U.S.-China phase-one trade deal was signed on January 15. Economic data has been better globally, central banks remain supportive, and the major escalation in the U.S.-Iran conflict had minimal market impact. Then the coronavirus outbreak happened. “The coronavirus outbreak brings uncertainty to markets, and investors are understandably nervous,” said LPL Financial Chief Investment Strategist John Lynch. “While economic activity in China is being impacted, particularly travel-related businesses, we expect limited U.S. economic impact as with SARS in 2002–2003, bird flu in 2006, and Zika in 2016.” More than 100 deaths have been confirmed out of more than 4,500 cases of the coronavirus. Initial reports suggest this virus may be less deadly than SARS, which led to 774 deaths with more than four times the mortality rate as corona. Our hope at this point is that the current outbreak will be better contained and less deadly than SARS. We certainly don’t want to minimize human losses, however, our job is to provide you information on the potential impact to the markets. History tells us that the economic and market impact after potentially similar events tended to be modest and short-lived. The SARS outbreak started in November 2002, global equities bottomed in March 2003, and the outbreak was fully contained by July 2003—several months into the 2003–2007 bull market. The temporary loss of global output was quickly recovered in the third quarter of 2003. So while this situation is fluid and unnerving, we would advise suitable investors to stick with their long-term investing plans where appropriate and focus on generally supportive fundamentals of the economy, interest rates, and corporate profits. February’s First Trading Day: DJIA & NASDAQ up 76.2% of the Time Last 21 Years February may be the weak link in the “Best Six Months,” but its first trading day has a solid, bullish bias. Over the past 21 years, S&P 500 has advanced 71.4% of the time with an average gain of 0.38%. DJIA and NASDAQ also exhibit strength. DJIA has been up 76.2% of the time with an average advance of 0.37%. NASDAQ has been best, also up 76.2% of the time but with an average gain of 0.42%. February Almanac: Weak Link in Best Six Months Even though February is right in the middle of the Best Six Months, its long-term track record, since 1950, is rather tepid. February ranks no better than sixth and has posted meager average gains except for the Russell 2000. Small cap stocks, benefiting from “January Effect” carry over; tend to outpace large cap stocks in February. The Russell 2000 index of small cap stocks turns in an average gain of 1.2% in February since 1979—just the sixth best month for that benchmark. A strong February in 2000 boosts NASDAQ and Russell 2000 rankings in election years. Otherwise, February’s performance, compared to other presidential-election-year months, is mediocre at best with no large-cap index ranked better than seventh (DJIA and S&P 500 since 1950, Russell 1000 since 1979). DJIA Down Friday/Down Monday: Inflection Point in Rally Today’s retreat triggered the first DJIA Down Friday/Down Monday of 2020. The combination of a DJIA Down Friday* followed by a Down Monday** has been a rather consistently ominous warning, but they have also occurred at significant market inflection points (interim tops and bottoms). The last occurrence was in August of last year. That declined proved to be a good entry point for new long positions as the market enjoyed a solid rally through the end of the year. Since January 1, 2000 through today’s close there have been 212 DJIA Down Friday/Down Mondays (DF/DM). Declines following the DF/DM were greater in bear market years and milder in bull market years (see page 76 of Stock Trader’s Almanac 2020). Using DJIA’s close on Monday of the DF/DM as the starting point of the subsequent decline, DJIA has declined an average of 5.4% over the next 90 calendar days, but there were 37 times when no further decline occurred. In the chart above, the 30 trading days before and 60 trading days after a DJIA DF/DM have been plotted alongside the 37 times there was no lower low after Monday. Based upon this chart, if DJIA recovers its recent losses within about 4-7 trading days, then the DF/DM that just occurred was likely the majority of the decline. However, if DJIA is at about the same level or lower than now, additional losses are more likely sometime during the next 90 calendar days. *Friday or the last trading day of the week. **Monday or the first trading day of the next week. Market May be Immune to Coronavirus Over the years the market has built up a rather strong immunity to viruses, outbreak, epidemics and pandemics. While economies and communities around the world have suffered from these outbreaks and the horrific human toll they have taken, the market has proven to be resilient. We took a look back at 14 previous such contagions since 1950 and how the market performed right after the disease was confirmed publically by health officials and where the market was 3, 6 and 12 months later. HIV/AIDS continue to be an ongoing problem and is the longest running, widest spread and deadliest infectious human disease since the Spanish Flu that killed 50-100 million people worldwide from 1918-1920. HIV/AIDS is estimate to have taken the lives of some 30 million people. However, from the time these epidemics have become known to the public at large they have had little negative impact on the S&P 500 since 1950. As you can see in the table here the market was weaker during the outbreaks of the first three on the list, but there were arguably other factors that had a greater impact than these diseases. In 1957, during the Asian Flu pandemic the market was pushed into a bear market by a hawkish fed that had been raising interest rates culminating in a bear market bottom in October 1957. The downdraft surrounding the Hong Kong Flu in 1968 was likely cause more by heightened hostilities in the Vietnam War and the related protests and events in the USA that culminated in the bear market bottom on May 26, 1970. When the HIV/AIDS epidemic became known in 1981 the market was suffering from the nasty double-dip recession from 1980-1982. The Iraq War held the market down in early 2003 during the SARS outbreak. The sovereign debt crisis and the downgrade of US debt in 2011 likely hurt the market more than the horrendous Haitian Cholera outbreak. The Measles scare in the US in late 2014-early 2015 had little impact on the market, though we suffered a mini-bear in 2015-2016 due to the EU Sovereign Debt Crisis, Brexit fears and the Chinese bear market. So while the new Wuhan Coronavirus is a major health and economic concern, especially to the affected areas, if history is any guide, the market is not likely to suffer from it.
Here are the current major indices pullback/correction levels from ATHs as of week ending 1.31.20- Here is also the pullback/correction levels from current prices- ...and here are the rally levels from current prices-
Stock Market Analysis Video for January 31st, 2020 Video from AlphaTrends Brian Shannon (VIDEO NOT YET POSTED!) ShadowTrader Video Weekly 2.2.20 Video from ShadowTrader Peter Reznicek
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 (2/3) <-- click there to cast your daily market vote and stock pick! Stockaholics Weekly Stock Picking Contest & SPX Sentiment Poll (2/3-2/7) <-- click there to cast your weekly market vote and stock picks! Stockaholics February 2020 Stock Picking Contest & SPX Sentiment Poll <-- click there to cast your monthly 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!
Here is a look at this upcoming week's Global Economic & Policy Calendar- (GLOBAL ECONOMIC AND POLICY CALENDAR NOT YET POSTED!)
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 2.3.20 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! Monday 2.3.20 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! Tuesday 2.4.20 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 2.4.20 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 2.5.20 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 2.5.20 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 2.6.20 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 2.6.20 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 2.7.20 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! Friday 2.7.20 After Market Close: Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES!
And finally here is the most anticipated earnings calendar for this upcoming trading week ahead- ($DIS $GOOGL $SNAP $TWTR $ABBV $F $QCOM $UBER $SYY $SPOT $ON $PINS $TWLO $BMY $CMG $IRBT $CHKP $MRK $CNC $SNE $SIRI $GM $GILD $PTON $BP $ABG $LITE $WYNN $ATVI $CTLT $NSSC $ACM $GOOS $SAIA $DSPG $RACE $RCL $COP $AMG $RL $PLUS $NXPI $MCK $CI) If you guys want to view the full earnings post please see this thread here- Most Anticipated Earnings Releases for the week beginning February 3rd, 2020 <-- click there to view!
Good Monday morning traders and welcome to a new month, fresh start! 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! Hope everyone in here has a great trading week and month ahead!
On Friday, I finally decided to enter at 3230 SPX. I exited this morning at 3265. I realized that it doesn't matter what the price is. It could be too high, for example, fundamentally or whatever. But trading is not about whether the price is too high, just right, or too "cold" [reference fairy tale]. But, whatever the case, trading is about "opportunities." I shall focus on that from this point forward. So, a 35 handle profit. Ok. Not as "glorious" as I'd like. But, you take what the silly market gives you.
Iowa caucus tonight. Seems like Sanders has the upper hand according to the polls, will be interesting to see how the market reacts tomorrow if Sanders wins tonight
Probably not for the whole market, but the healthcare sector has reacted to Warren or Sanders headlines in the past at least for a very short term
