Welcome Stockaholics to the trading week of June 25th! 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: T.B.A.
Crude Crescendo Helps Dow Beat Longest Losing Streak In 40 Years If you own Netflix alone in your portfolio - everything is awesome in the world - if you own anything else, not so much... Spot the odd one out...Nasdaq (green) vs World Stocks ex-US, the UST yield curve, EM FX, SIFIs, and Global Macro data... China was ugly this week... Emerging Markets ugly across all asset classes... DAX ended the week ugly - Trump trade tariffs on autos - but FTSE managed to end with a gain... Heavy volume in US markets on the Russell rebalance today. Since Fed Day, The Dow is down around 3% and Nasdaq and Small Caps up around 1% (losing some ground the last two days) On the day, S&P and Dow managed gains - flipping the script on the week...ugly close into the rebalance. On the week in stocks: Dow's worst week in 3 months (ends 8-day losing streak, worst in 40 years) Trannies' worst week in 3 months S&P worst week since early April Nasdaq ended the week lower - first down week in a month Small Caps up (barely) for 8th week in a row Here's the culprit for the tech wreck - Red Hat missed... (biggest drop since Oct 2006) "Most Shorted" Stocks up for the 8th time in the last 9 weeks... (the biggest short-squeeze ever)... But it has paused a little the last two days (but we've seen this before)... NYSE FANG+ Stocks ended the week lower - first down week in a month - even with dip-buyers scrambling in every day... After a four week melt-up short-squeeze, Tesla stocks and bonds tumbled this week... Mixed bag in US banks this week with Citi up and the rest down... (all lower after last night's stress test) A roller-coaster week for financials relative to tech that ended with the two unchanged relative to each other... Unusual action in bonds this week. All Treasury yields ended the week lower but the belly notably outperformed the wings.. The curve flattened very modestly on the week. This is the lowest weekly close for the 10Y Yield (and first below 2.90%) since April... The Dollar Index fell the most in almost three months this week (after last week's best gains since the US election after the ECB) Yuan weakened the most as JPY strengthened on the week... In fact - ever so quietly - Yuan has devalued by 4.5% from its highs of the year (which were very similar to the last devaluation level)... Another down week for cryptos - led by an 11% plunge in Litecoin - after Japanese regulatory crackdown sparked selling overnight... PMs were very modestly lower on the week (with a weaker dollar?) but copper was clubbed on trade tensions and crude exploded on OPEC... WTI Crude soared over 5% today - the biggest single-day surge since the OPEC meeting in Nov 2016... (though notably still 6% below the May highs)... Silver continues to outperform gold after last week's collapse...
Spoiler: Weekend Reading: The Next Big Bubble Authored by Lance Roberts via RealInvestmentAdvice.com, If you’re a frequent reader, you’ve noticed that we often find fault with the one-sided manner in which the mainstream media reports on economic topics and the asset markets. Of chief concern to us, the cheerleading for the markets and the economy fails to provide readers with the other side of the story. The fact is the economy and financial markets have been propelled higher since the financial crisis of 2008 by historically low interest rates, large fiscal deficits and a massive expansion of the Federal Reserve’s (Fed) balance sheet. We agree the monetary and fiscal policy prescriptions helped at the time, but we believe the ultimate consequences of these actions have yet to be felt. We have written volumes on this topic. We thought it appropriate to share an article published by the “mainstream” Washington Post. The Buyback Economy and the Next Big Bubble, by Steven Pearlstein, was published June 10, 2018. This “must-read” article focuses on many of our concerns such as stock buybacks, high debt levels, ETF’s and, importantly, Pearlstein’s assertion that: “Today’s economic boom is driven not by any great burst of innovation or growth in productivity.” To be honest, we could not have written it better ourselves, and we thank Mr. Pearlstein for providing the other side of the story. Following are a few important paragraphs from Mr. Pearlstein’s article. Beneath each of these are links to articles that elaborate on these points. Buybacks/Productivity “And once again, they are diverting capital from productive long-term investment to further inflate a financial bubble — this one in corporate stocks and bonds — that, when it bursts, will send the economy into another recession.” “Welcome to the Buyback Economy. Today’s economic boom is driven not by any great burst of innovation or growth in productivity. Rather, it is driven by another round of financial engineering that converts equity into debt. It sacrifices future growth for present consumption. And it redistributes even more of the nation’s wealth to corporate executives, wealthy investors and Wall Street financiers.” Short-Term Pain, Long-Term Gain The Death of a Virtuous Cycle Corporate Debt “The most significant and troubling aspect of this buyback boom, however, is that despite record corporate profits and cash flow, at least a third of the shares are being repurchased with borrowed money, bringing the corporate debt to an all-time high, not only in an absolute sense but also in relation to profits, assets and the overall size of the economy.” The Coming Collision of Debt & Rates How Corporate Debt Confirms the Everything Bubble Debt “For the bigger reality is that the global economy is now awash in debt — not just corporate debt but also record amounts of government debt, household debt and investor debt — at a time when interest rates are rising from historically low levels.” The Lowest Common Denominator Margin Debt and Valuations “Finally, there is the debt that investors large and small take on to buy stocks, bonds, derivatives and other securities. That’s also at an all-time high.” Courtesy Doug Short/Advisor Perspectives – Margin Debt and the Market The Risk Of Algo’s A Market Valuation that Defies Comparison ETFs “It’s hard to say what will cause this giant credit bubble to finally pop. A Turkish lira crisis. Oil prices topping $100 a barrel. A default on a large BBB bond. A rush to the exits by panicked ETF investors. Trying to figure out which is a fool’s errand. Pretending it won’t happen is folly.” The Inconsistencies Lurking in ETFs – Judgement Awaits Part 2 Summary/Animated Video We end with a short animated video that explains how debt has replaced the virtuous economic cycle. While simple, it will help put Mr. Pearlstein’s article and our links into perspective. Just something to think about as you catch up on your weekend reading list. Economy & Fed Why Immigration Is Pure Gravy For Finances by Caroline Baum via MarketWatch “Trade War” Sees Chinese Investments In US Plunge By 92% by Tyler Durden via ZeroHedge Is The Fed Rethinking It’s Balance Sheet Unwind by Mike Shedlock via The Maven The Phony Labor Shortage by Jeffrey Snider via Alhambra Partners America’s Debt Dependence Makes It An Easy Target by Brandon Smith via Alt-Market If You Like The Economy, You’re Republican by Ben Casselman & Jim Tankersley via NYT Economy Is NOT An Engine by IBD How Tariffs Could Sink The Market by Paul Whitfield via IBD Why Heads Are Exploding At The Fed by Peter Morici via MarketWatch Unhappy With China, Trump Takes Anger Out On U.S. by John Tamny via RCM The Real Cost Of A Trade War by Mukhisa Kituyi via Project Syndicate Universal Basic Income, What’s The Plural Of Apocolypse – by Wayne Crews via Forbes Will A Trade War Derail The Economy? by James Picerno via Capital Spectator Markets The Greatest Short Squeeze In History by Tyler Durden via ZeroHedge Jim Mellon: This The Start Of A Major Correction by Shawn Langlois via MarketWatch Markets Ignore Rise Of Global Earnings Recession by Adem Tumerkan via Palisade-Research 5-Reasons To Own Gold by Simon Constable via Forbes What Walgreens May Mean For The Dow by Mark DeCambre via MarketWatch Active Managers Go “All In”…Again by Dana Lyons via The Lyons Share Implicit Dangers Of Passive Investing by Derek Bergen via Value Expectations The #1 Rule Of Investing by Charlie Bilello via Pension Partners Visualizing The Longest Bull Markets In History by Jeff Desjardins via Visual Capitalist The Trouble With Being A Bear by Brian Maher via The Daily Reckoning Investors Fret A Trade War, But Stay Invested by Peter Eavis via NYT Yes, This Bull Market Will End by Jared Dillian via MarketWatch Most Read On RIA The Myth Of Buy And Hold Investing – Part III by L. Roberts, M. Lebowitz & J. Coumarianos The Drums Of “Trade” War by Lance Roberts Risk Happens Fast by Doug Kass Q1-Earnings Review & The Risk To Estimates by Lance Roberts Is Your Target Date Fund To Risky? by John Coumarianos How To Protect Your Senior Parents From Scams by Richard Rosso Research / Interesting Reads Smart Money Gets Ready For Next Credit Event by Wolf Richter via Wolf Street Investing Without People by Howard Marks via OakTree Capital White Deaths Outnumber Births For 1st Time In History by Tyler Durden via ZeroHedge How Big Is Your Alpha? by Rob Arnott via Research Affiliates Will Re-Defaults Undermine Housing by Keith Jurow via Advisor Perspectives Are We In A Corporate Debt Bubble? by Susan Lund via Project Syndicate Don’t Rush To Take Social Security by Dan Caplinger via Motley Fool It Ain’t What You Don’t Know That Gets You In Trouble by Cliff Asness via AQR Capital Mgmt “ The stock market is a device for transferring money from the impatient to the patient.” – Warren Buffett
Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2018- S&P sectors for the past week-
Tariffs Could Derail NASDAQ’s Mid-Year Rally In the mid-1980s the market began to evolve into a tech-driven market and the market’s focus in early summer shifted to the outlook for second quarter earnings of technology companies. Over the last three trading days of June and the first nine trading days in July, NASDAQ typically enjoys a rally. This 12-day run has been up 25 of the past 33 years with an average historical gain of 2.4%. This year the rally could begin on or around June 27 and last until around July 13. After the bursting of the tech bubble in 2000, NASDAQ’s mid-year rally had a spotty track record from 2002 until 2009 with three appearances and five no-shows in those years. However, it has been quite solid over the last eight years, up seven times with a single mild 0.1% loss in 2015. Last year, NASDAQ advanced a respectable 2.7% during the 12-day span. Consistent end-of-Q2 weakness, especially in the week after June’s option expiration week, usually contributes to the setup of NASDAQ’s mid-year rally. This year tariff concerns could either setup this rally nicely or possibly completely derail it if China and the U.S. continue to take turns implementing more and more. Any weakness, particularly sharp, brisk declines near the end of June could still make a great entry point as the first trading day of July is generally strong and the full-month of July is the best month of the third quarter. DJIA Recovery from 8-Day Losing Streak Could Be Tedious Coming into today’s trading session; DJIA has declined for eight consecutive trading sessions. The last DJIA losing streak of similar duration was in March 2017. Since 1950, DJIA has suffered 22 daily losing streaks of eight or more trading days. The longest was 12 trading days in January 1968, the worst based upon total decline was in October 2008 when DJIA shed 22.11% in eight trading days. Historically, it took DJIA more than 60 trading days to recover the losses accumulated during the streak. This is can be seen in the top chart of DJIA’s performance 30 trading days before and 60 trading days after the previous 22 streaks. Summer Slump or Summer Sizzle? Posted by lplresearch If all you saw were the headlines you might think that “trade wars” or “a flattening yield curve” was pushing equities to the brink of a new bear market as the U.S. economy teetered on recession. However, the data suggest the U.S. economy remains strong and the S&P 500 Index is sitting comfortably in positive territory year to date, having jumped nearly 5% since the start of the “sell in May and go away” period. “With today being the first official day of summer, can this surprise summer rally continue?” asked LPL Research Senior Market Strategist Ryan Detrick. “We think it can. When you have small caps, high-beta stocks, recent initial public offerings (IPO), and technology all leading – that isn’t the hallmark of a looming bear market. Not to mention the tailwinds of fiscal policy are still primed to support economic growth for the rest of this year and likely well into 2019; and possibly beyond.” Yes, the list of worries is long and well known: market sentiment may becoming quite optimistic, industrials are lagging, the yield curve is flattening, trade issues continue, and emerging markets are flashing potential issues, but we believe the positives outweigh the negatives and continue to expect double-digit equity returns when all is said and done in 2018*. That said, the S&P 500 Index has finished within 0.5% of the prior session’s close for the last 10 trading days, the longest streak this year; which suggests the coil is tightening and more volatility is likely coming. But as the LPL Chart of the Day shows, when the S&P 500 has been up 3% or more heading into the start of summer** (like 2018), the full year has been positive an incredible 35 out of 35 times. Not to mention the rest of the year has actually been stronger than the average year. That should comfort investors, regardless of the headlines. Dow Makes a Snowman in the Summer Heat Posted by lplresearch The Dow is officially down 8 days in a row for the first time since March 2017. Should it finish in the red today, that will tie its longest losing streak since 1978. What does it mean though? Well, for starters, in the face of this weakness, we’ve seen small caps and technology break out to new highs; so the whole market sure isn’t falling apart. Going all the way back to 1896, when the Dow started trading, there have been 29 other 8-day losing streaks, and the average decline during those streaks has been 7.0%. Considering the Dow is down “only” 3.4% on this losing streak, and the index has seen 390 single-day declines of 3% or more since its inception in 1896, things really are quite contained; dare we say normal? LPL Research Senior Market Strategist Ryan Detrick sums it up: “The 8-day losing streak will get all the headlines, but what you probably won’t hear is that this streak was quite modest in terms of its percentage decline. Also consider that the index remains above its 200-day moving average. Historically, this is very rare, but the future returns have been rather strong in these scenarios.” As our LPL Research Chart of the Day shows, the Dow has tended to bounce in the near-term after a long losing streak ends. In fact, you’d need to go back to 1982 to find that last instance where the index wasn’t higher three months after an 8-day (or longer) losing streak. But what is really important is that the future returns after a losing streak ends above the 200-day moving average have historically been even better. Although this current losing streak isn’t over yet, the Dow will likely remain well above the 200-day moving average when all is said and done; and this could be a good sign for the bulls. US Dollar Breaking Above Another Key Resistance Level Jun 19, 2018 The US Dollar index is now up 7.4% since its 2018 closing low hit on February 15th. This morning we just wanted to provide a heads up that the Dollar is breaking above another key resistance level at 95. The index had couldn’t break through 95 last October/November, and it failed once again at 95 at the end of May. The break above resistance at 95 this morning clears out additional supply and provides room to run towards 97 in the near term. Remember, dollar strength benefits companies that generate most or all of their revenues domestically, while it hurts large-cap companies that generate large portions of their sales outside of the US. This is a key reason why the small-cap space has been outperforming over the last few months — small-caps are much more “domestic” in nature versus large-cap, global behemoths.
Stock Market Analysis Video for June 22nd 2018 Video from AlphaTrends Brian Shannon ShadowTrader Video Weekly 6.24.18 Video from ShadowTrader Peter Reznicek (VIDEO NOT YET UP!)
Here are the current major indices pullback/correction levels from ATHs as of week ending 6.22.18- 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 6.25.18 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! Monday 6.25.18 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! NONE. Tuesday 6.26.18 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 6.26.18 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 6.27.18 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 6.27.18 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 6.28.18 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 6.28.18 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 6.29.18 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! Friday 6.29.18 After Market Close: Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES! NONE.
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 (6/25) <-- click there to cast your daily market vote and stock pick! Stockaholics Weekly Stock Picking Contest & SPX Sentiment Poll (6/25-6/29) <-- click there to cast your weekly market vote and stock picks! ======================================================================================================== It would be pretty awesome 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- ($NKE $CCL $LEN $WBA $GIS $PAYX $STZ $RAD $FDS $JKS $ACN $KBH $BBBY $INFO $MKC $SCHN $UNF $CAG $APOG $CUK $SONC $GMS $AVAV $PIR $EROS $SNX $LNN $OMN $SJR $FUL $XPLR $CAMP $PRGS $NG $FC $DTRM $IRET $GBX $DAC) If you guys want to view the full earnings post please see this thread here- Most Anticipated Earnings Releases for the week beginning June 25th, 2018 <-- click there to view!
The semiconductors double topped, and gapped right below the 50ma Transports also slicing right through the 50ma. If tomorrow is bad and this dip doesn't get bought, we'll have to think about certain MAs crossing.
Ok. Back to entering the game. I entered long at 2709. I don't care for this level but trading is about what has happened lately and everything is relative. And so, my theory says I shall be profitable entering at this level.
