Welcome Stockaholics to the trading week of January 18th! 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: What to Watch in the Week Ahead: Monday Martin Luther King Jr. Day Markets closed Tuesday Earnings: Bank of America, Goldman Sachs, Netflix, Charles Schwab, Comerica, Halliburton, State Street, Interactive Brokers, J.B. Hunt, Zions Bancorp, FNB 8:30 a.m. Business leaders survey 4:00 p.m. TIC data Wednesday Inauguration Day Earnings: Procter & Gamble, U.S. Bancorp, Citizens Financial, Bank of NY Mellon, Fastenal, United Airlines, Alcoa, Discover Financial 10:00 a.m. NAHB survey Thursday Earnings: Intel, IBM, Travelers, Baker Hughes, CSX, PPG Industries, Intuitive Surgical, Northern Trust, Union Pacific, Truist Financial, Fifth Third, KeyCorp 8:30 a.m. Initial claims 8:30 a.m. Housing starts 8:30 a.m. Philadelphia Fed manufacturing Friday Earnings: Regions Financial, Schlumberger, Ally Financial, Huntington Bancshares, Kansas City Southern 9:45 a.m. Manufacturing PMI 9:45 a.m. Services PMI 10:00 a.m. Existing home sales
Gamma-geddon Sparks Stocks' Biggest Weekly Loss Since Halloween Complacency is extreme. With the put-call ratio near record lows... Source: Bloomberg One measure of risk in the options market is flashing the reddest of red lights possible, as dealer's gamma exposure reaches a record high... Source: Bloomberg “Dealers are short calls due to the unprecedented call activity previously mentioned, and as a result have been forced to chase stocks higher to hedge,” Chris Murphy, Susquehanna’s co-head of derivatives strategy, wrote in a note to clients. “The unwind could potentially be violent given all the excess euphoria. It is more likely a question of when and not if.” Small Caps managed gains on the week...But, the gamma unwind is evident as stocks tumbled to push the market to its worst week since Halloween... Stocks saw a massive short-squeeze on Thursday dominate the week as the ongoing overall squeeze since Halloween remains in place... (the most-shorted stocks have squeezed higher for 9 of the first 11 days of the year)... Source: Bloomberg Tech stocks were the week's biggest losers as the energy sector continued to soar this week, despite a big knock today on XOM probe headlines... Source: Bloomberg Was today a "sell the news" day after Biden's bailout bonanza was unveiled? Growth and Value tumbled today, but growth was definitely weakest on the week... Source: Bloomberg Treasury yields ended the week marginally (2-3bps) lower... Source: Bloomberg As the 1.10% line in the sand appears to hold once again for 10Y yields... Source: Bloomberg Real yields tumbled on the week to one-week lows (decoupling from gold's weakness) Source: Bloomberg The dollar managed very modest gains on the week... Source: Bloomberg Helped by weakness in Euro (as Italian and Dutch politics mixed with vaccine issues dominated)... Source: Bloomberg Cryptos had an ugly week... Source: Bloomberg With Bitcoin's worst week in 4 months (and only second down week since the end of September)... Source: Bloomberg Dollar strength weighed broadly on the industrial commods and precious metals.... Source: Bloomberg Gold tumbled back below $1850... But, Ags continued to explode higher this week, led by wheat... Source: Bloomberg And finally, did the Trump-tweet-juice really kill the market's momo igniting algos? And some good news on the virus - despite constant terrifying headlines, the US hospitalization rate is tumbling... We saw a 2,091 person decrease in the number of people hospitalized in the US with Covid-19 over the last week, the first decline since September 23rd Source: Bloomberg And LA County sees a decline in the number of hospitalizations... Which is odd given that LA County's Board of Supervisors is considering even more draconian business closures and lockdown orders.
Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2020- S&P sectors for the past week-
Martin Luther King Jr. Holiday Week Trading: Leans Bearish Although Martin Luther King Jr. Day was a holiday in many states and cities throughout the U.S. beginning in 1971, it did not become a federal holiday until 1986. Even then it was not observed by the NYSE until 1998. In the 23 years since, the market’s performance during this four-trading-day week has been somewhat lackluster with average weekly performance negative for DJIA, S&P 500, NASDAQ, Russell 1000 and Russell 2000. Average losses range from 0.81% by DJIA to 0.16% by NASDAQ. Of the five indexes, not one has a record better than 50/50. However, since 2012 performance has shown signs of improving. DJIA, NASDAQ and Russell 2000 have risen in six of the last nine years. S&P 500 and Russell 1000 have climbed in five of the last eight. Seasonal Soft Patch Ahead Starting Next Week With nine trading sessions of the New Year complete, January and 2021 are off to a solid start. DJIA is up 1.26% as of today’s close, S&P 500 stands at 1.05%, NASDAQ 1.74% and small caps, measured by the Russell 2000 are up a whopping 9.14%. These gains all point to and confirm the return of seasonality that we have recently noted. Last September was weak as it has historically been, then October exhibited it historical tendency toward volatility while November and December were both positive, in line with typical seasonal patterns. A positive Santa Claus Rally and First Five Days are also encouraging indications that seasonal forces are once again tracking. We expect seasonality will continue to present itself going forward as extraordinary efforts are made to quell the pandemic and return to a pre-Covid, open-for-business, way of life. Due to the reemergence of seasonality, we would not be surprised to see some market weakness in the second half of January next week that could persist throughout the rest of January and possible spill over into February. In the following seasonal pattern chart of January, the last 21 years of data for DJIA, S&P 500, NASDAQ, Russell 1000 and 2000 have been plotted with January 2021 through today’s close plotted on the right vertical axis. Over the last 21 years, it has been NASDAQ leading at the halfway point, this year it is Russell 2000. Other than that, the major indexes have been tracking their historical patterns fairly well. There was strength early on, followed by sideways action. Should the current trend follow historical patterns then weakness after the eleventh trading day (January 18) is possible. 5 Charts on the Democratic Blue Wave January 15, 2021 One of the top questions we’ve received recently has been what a blue wave may mean for investments. After the Democrats won the two Senate runoff elections in Georgia, they will now control the White House and both chambers of Congress. Our January 11 Market Policy Projections for 2021 gave some of the immediate and longer-term policy impacts of the Democratic “blue wave,” and here we surf the blue wave with some interesting charts. First off, blue waves have not been bearish for stocks, with the S&P 500 Index higher 6 of the past 7 times and up a respectable 9.1% on average since 1950. We shared this chart in 2020, and it shows that historically, stocks do better if an incumbent president wins versus a new president in office. This makes sense, as a new president will bring in new policies and likely question marks—while you know what you will get with a re-elected president. Remember, markets hate uncertainty and surprises. “Make it all nine new Democratic presidents since 1900 to bring with them both the House and the Senate. In fact, stocks do quite well that first year under such circumstances, up nearly 12% on average,” explained LPL Financial Chief Market Strategist Ryan Detrick. “Maybe investors shouldn’t fear a blue wave after all.” As shown in the LPL Chart of the Day, when a new Democratic president has brought with them the House and Senate, stocks gained that first year of their new presidency 6 of 8 times. What stands out to us for 2021, though, is the House majority is only 11—the smallest for a new Democratic president since 1900. Looking at all of the times the Democrats controlled the House (since the 35th Congress when it was Democrats and Republicans), the 11-seat majority is the lowest since 9 seats in 1879. Yes, the Democrats are in power, but this small majority will make it very tough for any of the more extreme policies to pass. Lastly, the Senate is split a perfect 50/50, which is again extremely rare. In the chart below we share the seat difference between the two parties. “A 50/50 Senate coupled with only an 11-seat majority in the House, and it is safe to say we have about as close to a perfectly divided government as we’ve ever seen,” said Detrick. Rest of the World Catching Up Tue, Jan 12, 2021 Over the past year, US equities—proxied by the S&P 500 (SPY)—have consistently outperformed global equities more broadly. As shown below, over the past year the S&P 500 (SPY) has risen just over 16%. That compares to 11.26% for the rest of the world as proxied by the Vanguard FTSE All-World ex US ETF (VEU). Breaking that down a bit further by developed and emerging markets, US equities have outpaced both emerging and other developed markets. While emerging markets (SPEM) are right on the heels of the US with just under a 14.78% gain, developed markets (SPDW) have lagged with just a 10.56% gain. So far in 2021, though, the rest of the world has been outperforming the US. Whereas SPY has risen around 1% YTD, VEU is up almost 3 times that. Emerging markets in particular have shown the greatest degree of strength currently having risen 3.87%. Meanwhile, SPDW has gained less (2.7%), though, it is still outperforming the US. In the charts below, we show the ratio of SPY to these other ETFs. A rising line would indicate that the US is outperforming these other measures of global equities while a downward trending line indicates underperformance of SPY. As shown, the longer-term trend has pretty consistently been US outperformance over the past decade but that has faltered at the tail end of 2020 and into 2021. In the case of emerging markets, the line has been on the decline throughout the second half of 2020 as the ratio has hit its lowest level in a year in the past week. The S&P 500's underperformance relative to other developed markets (SPDW) has been more recent as that line peaked in early September but the trend remains the same over the past few months with SPY weaker than global equities more broadly. That is further exemplified by the recent downtrend of SPY versus the All World ex US ETF (VEU). Small Business Owners Didn't Like the Election Results Tue, Jan 12, 2021 Today's release of the December Small Business Optimism Index from the NFIB saw a large drop as the index dropped from 101.4 to 95.9. After a sharp drop in the wake of the COVID outbreak, the index bounced back nicely but now looks like it's really rolling over. Not only was this month's headline index weak, but it caught economists completely off guard. While the index fell to 95.9, economists were expecting a drop to 100.2. That 4.3 spread between the actual and expected reading was the biggest miss relative to expectations in more than five years (July 2015) and was the third weakest reading relative to expectations since the December 2012 report. Given the big drop in the headline index and the fact that it was so weak relative to expectations, should we be concerned about a double-dip? As an investor, we should always be worried about what could go wrong, but in the case of this report, you can probably wait for further confirmation from other data. The reason for the skepticism is that you could argue that politics plays a role in this report. To illustrate this, we would note that going back to 2010 (as far back as we have data) and right up through Election Day 2016, the NFIB only topped expectations 42% of the time. Following Trump's election in 2016, though, this index surged and has since topped expectations 63% of the time. Since Election Day 2020, though, the headline index has now missed expectations three times. From a longer-term perspective, dating back to 1974, the average reading of the NFIB Small Business Index during Republican administrations has been 100.1 while the average level under Democratic Presidents has been 96.2. Now, that would make sense if the economy was also in a recession more often in those periods, but over that same span, even though the percentages are low for both political parties (<20%), the economy has actually been in a recession a higher percentage of the time during Republican administrations than it has in Democratic administrations. The lesson to take from all this is that even if it's often hard to separate when it comes to business or investing (or a lot of other aspects of our lives for that matter), it's usually best to leave politics outside.
Here are the current major indices pullback/correction levels from ATHs as of week ending 1.15.21- Here is also the pullback/correction levels from current prices- Here are the current major indices rally levels from correction low as of week ending 1.15.21-
Stock Market Analysis Video for January 15th, 2021 Video from AlphaTrends ShadowTrader Video Weekly 1.17.21 Video from ShadowTrader
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 1.18.21 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! NONE. (U.S. MARKETS CLOSED IN OBSERVANCE OF M.L.K. DAY.) Monday 1.18.21 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! NONE. (U.S. MARKETS CLOSED IN OBSERVANCE OF M.L.K. DAY.) Tuesday 1.19.21 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 1.19.21 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 1.20.21 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 1.20.21 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 1.21.21 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 1.21.21 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 1.22.21 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! Friday 1.22.21 After Market Close: Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES! NONE.
And finally here is the most anticipated earnings calendar for this upcoming trading week ahead- ($NFLX $BAC $FCEL $GS $PG $INTC $SCHW $UNH $MS $HAL $FAST $CMA $STT $ASML $UAL $ONB $IBM $TFC $JBHT $MBWM $CTXS $USB $UNP $ALLY $TRV $BK $AA $LOGI $SLB $ZION $CFG $KEY $FBC $ISRG $IBKR $FHN $BKR $KMI $NTRS $DFS $CSX $EDU $HOMB) If you guys want to view the full earnings post please see this thread here- Most Anticipated Earnings Releases for the week beginning January 18th, 2021 <-- click there to view!
REMINDER: U.S. MARKETS ARE CLOSED ON MONDAY, JANUARY 18TH, 2021 IN OBSERVANCE OF M.L.K. DAY. Here is the CME Globex holiday schedule for the upcoming M.L.K. Day holiday-
From last week's thread, @stock1234 said he believed space stocks had more room to blast off. Good news to start the week with SPCE making a successful space flight.
This story is all around the place, not explicitly about stocks but mentioning it here. The NY Mets fired their general manager for sexual harassment of a reporter. And it is pretty infuriating to me that people are praising Steve Cohen for this. New Yorkers can be insufferable at times; they so want to like their #2 baseball team. This is a good read about how hedge funds get inside information and how hard it is for the government to nail them. And if everyone read this then no one would be letting Cohen own a baseball team. Much less praising him for firing the general manager. https://www.newyorker.com/magazine/2014/10/13/empire-edge It's a long read over 10,000 words, but worth sharing to the right people. It's 6 years old, but I go back to read it frequently because it is entertaining and interesting. On the other hand, it's just 6 years old and people have already forgotten the shit Cohen does. Isn't the show Billions about Cohen too? I've never gotten to see it since it was on Showtime. Anyway, I'm sure it's not as honest a take as this article.
FVRR has some crazy valuation I have UPWK instead, slower growth but the valuations look more reasonable