Welcome Stockaholics to the trading week of February 6th! This past week saw the following moves in the S&P: Major Indices End of Week: Bird's Eye view of the Major Markets on Friday: Economic Calendar for the Week Ahead: Sector Performance WTD, MTD, YTD: What to Watch in the Week Ahead: Monday Earnings: Toyota Motors, Hasbro, CNA Financial, Diamond Offshore, Tyson Foods, Sysco, Ryanair, 21st Century Fox, Tesoro, Boardwalk Pipeline 2 p.m. Senior loan officer survey 4:30 p.m. Philadelphia Fed President Patrick Harker Tuesday Earnings: Disney, Gilead Sciences, BP, General Motors, Archer Daniels Midland, Cardinal Health, Statoil, BNP Paribas, Intercontinental Exchange, Michael Kors, Vulcan Materials, Tenneco, Wellcare Health, Mondelez International, Buffalo Wild Wings, Plains All American, Pioneer Natural Resources, Panera Bread, Zillow 8:30 a.m. International trade 10:00 a.m. JOLTs 1:00 p.m. 3-year note auction 3:00 p.m. Consumer credit Wednesday Earnings: Time Warner, Glaxo SmithKline, Whole Foods, Prudential Financial, Carlyle Group, Alaska Air, Humana, Allergan, Rayonier, Suncor, Lions Gate, Owens Corning, Sanofi, Level 3 Communications, Jacobs Engineering 1:00 p.m. 10-year note auction Thursday Earnings: Coca-Cola, Kellogg, Twitter, Yum Brands, Beazer Homes, Cummins, Total, Agrium, Occidental Petroleum, Nissan, Borg Warner, Dunkin Brands, Expedia, News Corp, Nvidia, Pandora Media, Activision Blizzard, Thomson Reuters, KKR 8:30 a.m. Initial claims 9:10 a.m. St. Louis Fed President James Bullard 10:00 a.m. Wholesale trade 1:00 p.m. 30-year bond auction 1:10 p.m. Chicago Fed President Charles Evans Friday Earnings: Aon, Calpine, Buckeye Partners, ArcelorMittal, Ventas, Nippon Telegraph, Interpublic 8:30 a.m. Import prices 10:00 a.m. Consumer sentiment 2:00 p.m. Factory orders
Disappointing Wages Spark Biggest Market Rally Of The Year Bad news is good news again... US Macro Surprises continue to disappoint... And to be clear - all the gains in macro data have been 'soft' survey gains with 'hard' real data completely unchanged... But bad news is great news and stocks had their best day of the year... Dow back above 20,000... Stocks managed to scramble back to green on the week (Dow and Trannies red)...Small Caps squeezed to best of the week On another big short squeeze... VIX was crushed back to a 10 handle - after all it was a payrolls day and you always buy the fucking payrolls day dip... Led by banks surging on Dodd-Frank repeal executive orders... Goldman and JPMorgan accounted for half of The Dow's gains today. But it was an ugly week for FANG stocks... And Energy stocks were the worst on the week... Weak jobs data was trumped by Fed speak today to ramp yields back higher (30Y notable underperformer)... The 2s30s Treasury yield curve steepened dramatically this week (post-Fed, post-payrolls) to its steepest since December... But as we noted earlier, real yields have erased all the trumpflation gains... The USD Index fell for the 6th week in a row (every week in 2017) - and this week was the worst for the greenback since July 29th... falling to 2-month lows The USD Index rallied back into the green briefly today thanks to a comment from The Fed's Williams but ended lower... As the dollar dropped on the week, Bitcoin rallied during China's Golden Week... back above $1000. Gold also gained (up 5th of last 6 weeks), closing at its highest weekly close since the election... Copper had its worst week of the year as gold won... Gold had its best week since April 2016 Just one thing...
Spoiler: Weekend Reading: And... It's Only Week Two Submitted by Lance Roberts via RealInvestmentAdvice.com, As we conclude week two of the new Presidential cycle, it certainly has not been dull. The markets have started struggling with an Administration which is hanging up on heads of state, threatening to send troops to Mexico, discussing border taxes and thinking about doubling the required wages for HB-1 visas. Of course, those issues are still currently offset by hopes for a sea of infrastructure spending, tax cuts and reform and an increase in jobs and wages. The “hope” is most clearly seen in the sentiment surveys, but remains elusive in the “hard data.” As noted recently by Charlie McElligott via RBC: “The US data has been running at such a clip, as a matter of fact, it’s an increasingly (and massively rhetorical) popular question asked by clients: when do analyst / strategist expectations begin to overshoot? Tied-into this, the Bloomberg ‘econ surprise’ series gives an interesting breakout of the drivers of the directional data surprises, and it crystalizes one ‘area’ that Mark Orlsey and I have been paying a lot of attention to with regards to where the largest ‘beats’ are coming from. The economic surveys and ‘animal spirits’ indicators have been ‘en fuego’ (see Friday’s U Mich Confidence printing highs since 2003!), and the chart below captures just how much of the ‘surprise index’ upside that surveys have been dictating – it’s visually stunning, and reiterates that ‘rubber needs to meet road’ in coming months.“ We can see this more real time by looking at the Chicago Fed National Activity Index (CFNAI) which is arguably one of the more important economic indicators. The index is a composite made up of 85 subcomponents which give a broad overview of overall economic activity in the U.S. However, unlike backward-looking statistics like GDP, the CFNAI is a forward-looking metric that gives some indication of how the economy is likely to look in the coming months. Importantly, understanding the message the index is designed to deliver is critical. From the Chicago Fed website: “The Chicago Fed National Activity Index (CFNAI) is a monthly index designed to gauge overall economic activity and related inflationary pressure. A zero value for the index indicates that the national economy is expanding at its historical trend rate of growth; negative values indicate below-average growth, and positive values indicate above-average growth.“ The overall index is broken down into four major sub-categories which cover: Production & Income Employment, Unemployment & Hours Personal Consumption & Housing Sales, Orders & Inventories Here is my point. While “exuberance” in terms of “attitudes” is surging, actual activity remains quite subdued. The first chart compares my combined consumer confidence composite to the CFNAI. The next chart is the dispersion of the components of the CFNAI also compared to consumer “confidence.” In both instances there is a wide deviation between “attitude” and “activity.” More importantly, “attitudes” have typically reverted back to “activity” rather than the other way around. This potentially leaves the market set up for disappointment in the months ahead. Be careful. In them meantime, here is what I am reading this weekend as I put my “Dow 20,000” hat back in the drawer for now. Trump/Economy Peril In The Casino – You’re Fired by David Stockman via Daily Reckoning The Vampire Squid Is Back by Nomi Prins via The Daily Reckoning My Trump Bubble Bursts by John Stossel via Reason.com Trump & Trade by Eduardo Porter via NY Times Optimistic Growth Forecasts Miss The Risk by Ashoka Mody via Project Syndicate The Left Underestimates Trump’s Plans by Tyler Cowen via Bloomberg Fed Rates Hikes May Haunt Trump by Paul La Monica via CNN Money Border Tax May Backfire On Economy by Brad McMillan via Commonwealth Sharing Economy: Does It Create Real Jobs? by Shellie Karabell via Forbes Biggest Test For Trump Is Trump by Matt Egan via CNN Money What Happens Next May Scare You by Lawrence Summers via Wonkblog Trade Is Not The Driver Of Job Loss by Robert Samuelson via Real Clear Markets Trump Tweets Won’t Stop Job Departure by Justin Wolfers via NYT So Goes Tax Reform, So Goes The Nation by Ernest Christian via IBD Markets/Fed Fed: The Cash Menagerie by Danielle DiMartino-Booth via Money Strong The Bond Bull Isn’t Dead Yet by Jim Rickards via The Daily Reckoning Everything You Know About Bonds Is Wrong by Sid Verma via Bloomberg The Stock Market Bubble Is Inflating by Michael Sincere via MarketWatch 3-Trends Point To Stock Upside by Sue Chang via MarketWatch The Honeymoon Is Over by Tim Mullaney via MarketWatch Wall Street Faces Rude Awakening by Matt O’Brien via Wonkblog Phase 3 Of The Trump Rally by Mohamed El-Erian via Bloomberg Has The Love Affair Already Ended? by Anthony Mirhaydari via Fiscal Times Don’t Worry About Bond Pullback by Simon Constable via US News Trump Will Market Uncertainty Great Again by Doug Kass via Real Clear Markets Is The Trump Rally Over Already by Edward Harrison via Credit Writedowns Dow 20,000 Running On Fumes by Kenneth Rapoza via Forbes How To Confuse The Markets by Buttonwood via The Economist Favorite / Interesting Reads Countries Where Millennials Will Support Parents by Tyler Durden via ZeroHedge Will Trump’s Walls Literally Divide Us by Caroline Baum via MarketWatch America’s Declining Dynamism by The Economic Innovation Group The Delusion Of Wind/Solar Salvation by Gail Tverberg via Our Finite World America’s Student Debt Problem Larger Than Imagined by Shaun Bradley via TheAntiMedia.org Retirement: $350k For Healthcare? by Robert Powell via MarketWatch Apple’s Results Worse Than You Think by Thomas Kee via MarketWatch Surviving The next Housing Market Crash by Mark Roe via Project Syndicate America’s Great Divergence by Alana Semuels via The Atlantic The $60 Billion Euro Brexit Battle by Mark Gilbert via Bloomberg View Millennial’s Doing Worse Than Boomers by Jim Probasco via Investopedia Earnings Are Still A Confusing Mess by Clara Linnane via MarketWatch Watch Out FedEx, Amazon Is Coming After You by Tyler Durden via ZeroHedge Harry Dent: A 70% Correction Is Coming by Adam Taggart via Peak Prosperity The Case For A 50% Correction by John Hussman via Hussman Funds So Goes January, So Goes The Year? by Dana Lyons via Tumblr The Unintended Consequences Of QE by Jesse Felder via The Felder Report “Bubbles Are Invisible To Those Inside The Bubble.” -? Jim Dines
S&P 500 Streaks without 1% or greater daily loss over 79 trading days or longer Barring a major late day reversal, S&P 500 is on track to extend its daily streak of trading days without a 1% or greater decline to 79 today. Since 1950, there are only 20 other S&P 500 streaks of this duration or longer. The longest streak was 184 trading days in 1963. The average gain during the past 20 streaks was 11.20%. Compared to S&P 500 streaks lasting 70 trading days or longer, this list has three fewer and is showing a modest improvement in longer-term performance. The chart above is the average performance of these past 20 streaks 30 trading days before the streak ended and 60 trading days after. The following table has S&P 500 returns over the next 1-, 3-, 6-months and 1-year after the streak ended. More on our January Indicator Trifecta: 24% S&P 500 Gain in Post-Election Years Yesterday we presented a 1-year seasonal pattern chart of S&P 500 for the last 28 times since 1949 where our Santa Claus Rally, First Five Days and January Barometer were all positive. Today we present charts of DJIA and NASDAQ performance in those years as well. Full-year performance is stellar on average for these January Trifecta years. DJIA and S&P 500 average about 17%, NASDAQ exceeds 23%. This level of performance in Trifecta years is in conflict with other seasonal patterns that apply to full-year 2017. All post-election years (four-year presidential election cycle), years ending in 7 (decennial cycle) and the first years of new, elected presidential administrations have historically been weaker, depending on index, averaging somewhere between 6 to 8%. Because of the greater influence of the 4-year presidential-election cycle, we do not place much emphasis on the decennial pattern. And based upon the following table where all Trifecta years are broken down into year of the 4-year cycle, it would appear Trifecta years outrank the four-year cycle. Strong results are seen across the board regardless of which year of the 4-year cycle. Regardless of which year of the four-year cycle past Trifectas occurred, S&P 500 performance over the next 11 months or for the full year was robust. There have been more January Trifectas in pre-election and election years, but past post-election year Trifecta years posted the greatest full-year gains. Based solely upon these January Indicator Trifecta years, February 2017 could still be flat to lower and full-year gains could reach into the mid to upper teens. For this to transpire, corporate earnings and economic data will need to continue to improve and the Trump administration will need to be largely successful implementing new policy changes with minimal disruption and confusion. January Indicator Trifecta Implying Positivity Our January Indicator Trifecta combines the Santa Claus Rally, the First Five Days Early Warning System and our full-month January Barometer. The predicative power of the three is considerably greater than any of them alone; we have been rather impressed by its forecasting prowess. This is the 28th time since 1949 that all three January Indicators have been positive. As we detailed in the “Proving Grounds” last week this is rather constructive. The following one-year seasonal pattern chart shows some bang up performance in post-election years with a positive January Indicator Trifecta.
A Third of Individual Investors Are Bullish Bullish stock market sentiment from individual investors spiked immediately following Trump’s victory last November. There was a thought that this might mark the beginning of a new trend, but the bounce was short-lived. At this point, AAII bullish sentiment (which is reported weekly) is back down to where it was a couple of months before the election. This week’s bullish sentiment reading came in at 32.8%, which is up a point from where it stood last week. It appears as if the steep post-election rally that has taken the Dow up to 20,000 has individual investors concerned about stocks going “too far, too fast.” But that means that sentiment should start to increase again if we see a pullback. Unfortunately, sentiment readings don’t tend to work that way. Any market decline will likely get investors even more cautious. With 32.8% bullish, 33.03% neutral, and 34.17% bearish, individual investor sentiment couldn’t get more evenly distributed. No wonder the market has been trendless with no upside or downside momentum experienced in weeks. Quiet January You would think that with all the headlines over the past month suggesting political chaos in Washington, it would have been a volatile January for stocks. With the first month of the year now in the books, though, it was among the most stable Januarys in terms of market performance we have seen in quite some time. For starters, the largest drawdown that the S&P 500 saw from a closing high during the month was just 0.85%, which is the smallest since last July. Even more impressive, though, was the S&P 500’s average daily percent change in January of just +/-0.33%. In the 1,069 months since 1928, January ranks as the 66th smallest average daily move for a given month in the S&P 500’s history. For the month of January specifically, there have only been five other Januarys where the S&P 500 saw an average daily percentage move that was smaller than this January. In the table below, we have highlighted each of those Januarys along with how the S&P 500 traded for the remainder of the year. As far as the month of February is concerned, quiet Januarys haven’t had any notable impact on market returns in February as the S&P 500 has been up three out of five times for a median gain of 0.99%. For the remainder of the year, the S&P 500 has been up a median of 6.31% with positive returns four out of five times, but here again, these results don’t show any meaningful variance from overall historical returns for all other years. A Confidence Boost For the Forgotten Man Consumer Confidence for the month of January was released earlier today, and after hitting the highest level in over a decade last month (August 2001), sentiment saw a slightly larger than expected pullback. While economists were forecasting the headline reading to come in at 112.8, the actual reading printed at 111.8. As shown in the chart below, though, this month’s decline barely registers relative to the move we have seen in the past few months, and sentiment remains comfortably above its historical average of 93.6 dating back to 2000. What really stood out in this month’s report is how confidence varied by income level. As shown in the chart, for all three income levels, sentiment surged post-election. However, the only income level where sentiment hit a new high was in the middle-income level of consumers with incomes of $35K to $50K. Among many political scientists, this is the heart of President Trump’s base and consists of the “Forgotten Man” among the US population. The term “Forgotten Man” was first coined in an essay by William Graham Sumner. In a nutshell, when the rich see an injustice from which the poor are suffering, it is often the people in the middle who bare the burden of the remedying of the situation. Trump took this theme and campaigned on the idea that while traditional Republicans were the party of the rich and Democrats were increasingly focused on catering to lower income Americans, no one was fighting for the middle class. Given the results of the election, it only makes sense that confidence among this group has seen the biggest improvement since Trump. Whether their confidence continues remains to be seen, but for now, the “Forgotten Man” is still with Trump.
What Will This Year’s Super Bowl Indicator Tell Us? Posted by lplresearch The Super Bowl indicator claims that the Dow Jones Industrials Average (DJIA) rises for full years when the Super Bowl winner comes from the original National Football League, but when an original American Football League team wins, the DJIA falls. Expansion teams count for their conference. We would be the first to admit that this indicator has no connection to the stock market so the relationship is random, but there is also no arguing that the Dow has performed better when NFC teams have won over the past 50 years. A simpler way to look at the Super Bowl indicator is to look at the average gain for the Dow when the NFC has won versus the AFC—and ignore the history of the franchises. This similar set of criteria has produced an average price return of 10.9% when the NFC has won, compared with only 4.3% with an AFC winner. An NFC winner has produced a positive year 82% of the time while the Dow has been up only 61% of the time when the winner came from the AFC. Interestingly, the New England Patriots have an even worse record for markets than the AFC as a whole, as the chart below shows. Of the eight previous times the Patriots have played in the Super Bowl, the Dow has been up for the full year an even 50% of the time, with an average gain of just 0.3%. Years where they won fared the worst, seeing an average loss of 4.1%. Those who love Tom Brady will be glad to see him starting in his record seventh Super Bowl, but those who don’t will be interested to note that markets have actually fallen for the full year 67% of the time (four out of six) that he has started in the big game, with an average loss of 7.2%. However, to be fair two of those years were extreme outliers, with 2002 seeing the largest decline in the Dow (-17%) since 1977, and 2008 seeing an even larger drop of -34%, the largest since the Great Depression. Even the most ardent Patriots detractors can’t realistically fault Tom Brady or Bill Belichick for the Financial Crisis. So what does this mean for the upcoming Super Bowl? Per Ryan Detrick, Senior Market Strategist, “It means investors should be rooting for the NFC’s Atlanta Falcons (though LPL employees in the Boston home office may disagree). As an expansion team in the NFC, an Atlanta victory would point toward a positive and above-average year for the Dow, while the Patriots, an original AFL team that morphed into the AFC, would signal a down year and below-average returns. Whatever happens, hopefully everyone enjoys their Super Bowl parties and are able to wake up for work on Monday morning.” So Goes January, So Goes The Year? Posted by lplresearch The first month of the year is in the books, and the S&P 500 gained 1.8% for the third month in a row of gains. This of course brings up the discussion of the January barometer. This popular trading axiom says that the performance in January can predict what will happen in the rest of the year and was first mentioned by Yale Hirsch in 1972 in the Stock Trader’s Almanac. It is better known as “So goes January, so goes the year.” First things first: January has been lower in the previous three years, and the S&P 500 bounced back to finish the remaining 11 months positive all three times. In other words, this potential warning sign didn’t work so well recently. Last year, for example, was one of the worst Januarys ever, with the S&P 500 losing 5.1%; meanwhile, the S&P 500 jumped more than 15% in the final 11 months of the year. Turning to the years when January was in the green like this year, since 1950* the rest of the year was higher an impressive 88% of the time with an average return of 12.1%. Compare that with a 1.2% gain in the final 11 months when January has been lower, and it is safe to say a higher January tends to bode well for future gains. Per Ryan Detrick, Senior Market Strategist, “Although the January barometer hasn’t been so accurate in the past few years, where January weakness wasn’t a warning of coming lower prices, the bottom line is a strong January has a nice track record for future gains. With another solid quarter of earnings growth taking place, accelerating earnings growth the next few quarters, and the chance of a recession in 2017 very minimal, this all should bode well for this old trading mantra to be correct once again with higher prices in the final 11 months of the year.” Last, don’t forget that the Santa Claus rally and first five days of the year were also higher this year, along with the month of January. To see all three higher is rather rare, with 2013 the last time this trifecta took place. In fact, all three have been higher only 28 times since 1950, and the final 11 months have finished higher 25 times (89.3%) with an average return of 12.7%.
Here are where the major indices stand since the Nov. 8th Presidential Election and Inauguration Day as of market close 2/3/17-
Stock Market Analysis for Week Ending 2.3.17 Video from AlphaTrends Brian Shannon ShadowTrader Video Weekly 2.5.17 - Cumulative Tick now for Swing Video from ShadowTrader Peter Reznicek
Here are the most anticipated ERs for this upcoming week ahead (I'll also have the earnings chart posted in here as well once it's ready) ***Check mark next to the stock symbols denotes confirmed earnings release date & time*** Monday 2.6.17 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! Monday 2.6.17 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! Tuesday 2.7.17 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 2.7.17 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 2.8.17 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 2.8.17 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 2.9.17 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 2.9.17 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 2.10.17 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! Friday 2.3.17 After Market Close: NONE.
Stockaholics come join us in our weekly market poll and vote where you think the markets will end this upcoming week ahead!- Weekly SPX Poll - Sentiment (2/6-2/10) <-- click there to cast your vote for this week! In addition we have our weekly stock picking challenge now up and running as well!- Stockaholics Weekly Stock Picking Contest for the Week of (2/6-2/10) <-- click there to post your picks for this week! We also now have a daily stock picking & market direction guessing challenge running here!- Stockaholics Daily Stock Pick Challenge & SPX Sentiment Poll for Monday (2/6) <-- click there to cast your vote & post your pick for Monday! It would be pretty awesome to see some of you join us and participate on these. Hope you all have a fantastic weekend!
As promised here are some of EW's most anticipated ERs due out for this upcoming week ahead: ($NVDA $TWTR $GILD $DIS $TWLO $GM $ATVI $CLF $BP $CVS $ONVO $TSN $NWL $SKX $HAS $KO $WLTW $AGN $SYY $AXTA) And in my quote below are all of those ERs with the date/time and estimates-
Feb 6-10 2017 Market Wrap and sector Watch Bulls still in control. Could be looking at more all time highs but need to be respectful of the complacency out there in the market. Anything can happen. There are a lot of great looking setups out there. Come join us tomorrow morning 8 AM Vegas time here http://ticker.tv/vegastrader66 for this weeks stocks to watch
I have come to acceptance I will have to sit through more highs likely this week with my NDX short at 5135 average.
I keep waiting for the markets to panic and sell off over something Trump does. Could this be the week?
Good morning Stockaholics! Hope y'alls had a nice relaxing weekend in here. Here are your pre-market movers & news on this Monday morning- 2/6 Monday Market Movers & News: HAS, FDX, TSN, NWL, TIF, DIS, JPM, GOOGL, AAPL, AMZN, CBS, TRUE, GE <-- click there to open! Happy trading to everyone in here this week!
The SPX has gone 34 consecutive trading days without a 1% daily range, tying the all-time record from 1995. Today could break that record.
