Welcome Stockaholics to the trading week of June 27th! This past week saw the following moves in the S&P: Bird's Eye view of the Markets on Friday: Economic Calendar for the Week Ahead: Sector Performance WTD, MTD, YTD: What to Watch in the Week Ahead: Monday 8:30 a.m. Trade deficit 9:45 a.m. Markit services PMI 10:30 a.m. Dallas Fed survey Tuesday 8:30 a.m. Q1 GDP, 3rd read 9:00 a.m. S&P Case-Shiller home prices 10:00 a.m. Consumer confidence 10:00 a.m. Richmond Fed survey 7:00 p.m. Federal Reserve Governor Jerome Powell speaks on recent economic developments, monetary policy considerations and longer-term prospects Wednesday 8:30 a.m. Personal income, consumer spending 9:30 a.m. Fed's Yellen, ECB's Draghi and BOE's Carney participate in panel discussion at ECB Forum on Central Banking in Portugal 10:00 a.m. Pending home sales Thursday 8:30 a.m. Jobless claims 9:45 a.m. Chicago PMI 3:20 p.m. St. Louis Fed President James Bullard speaks on U.S. economy and monetary policy Friday Vehicle sales 9:45 a.m. Markit manufacturing PMI 10:00 a.m. ISM manufacturing 10:00 a.m. Construction spending 11 a.m. Cleveland Fed President Loretta Mester on economic outlook and monetary policy
Spoiler: Brexistential Bloodbath - Dow Crashes 600 Points As Vol Explodes Overheard in Britain today... Well they did it... and no one expected it... UK Stocks -3.14% worst since Jan 2016 US Stocks -3% worst since Aug 2015 (biggest opening gap down since 1987) VIX +6pts biggest daly rise since Aug 2015 crash Japan Stocks -7.9% worst since 2011 (Tsunami) Spain Stocks -12.5% worst since 1987 Italy Stocks -12% worst since 1997 EU Banks -14.5% worst ever US Banks -4.75% worst since Nov 2011 US 30Y Yield -14bps biggest drop since 2011 US 2Y Yield -14bps biggest drop since 2009 German 10Y Yield -14bps biggest drop since 2011 GBPUSD -11% biggest drop ever USDJPY -4% biggest drop since 1998 EURUSD -2% biggest drop since Oct 2015 Gold +5% biggest day since Lehman 2008 Crude -4.4% most since Jan 2016 But apart from that everything is awesome. What it looked like when Brexit news hit gold and currencies (h/t @NanexLLC) The broad EU banking system bore the brunt of it... and peripheral Europe was a bloodbath... As Cable saw its biggest intraday swing ever... Across asset classes, here is how the day went... On the day, the early dead cat bounce died... *DOW AVERAGE PLUNGES 610 POINTS AT 4 P.M., MOST SINCE AUGUST *NASDAQ COMPOSITE TUMBLES 4.1% IN BIGGEST ROUT SINCE 2011 Dow dropped 850 from pre-Brexit highs... Today's S&P drop was just shy of the collapse on Aug 24th last year... Financials were a yuuge loser, catching down to the yield curve... worse drop that Aug crash and broke all major technical support... Since the Jo Cox death lows, stocks are now red... All major US equity indices are now red year-to-date... Since The Fed raised rates, Gold is up 23%, Bonds up 12%, and Dow down 1.7%... VIX exploded (but we note that XIV - inverse VIX ETF - dropped almost 30%, the biggest move ever and 7 standard deviation shift) It was one of the Top 5 moves in VIX ever: View image on Twitter Follow Stalingrad & Poorski @Stalingrad_Poor And the Final Print as of 4:15pm puts today as the 5th largest move in history. 4:16 PM - 24 Jun 2016 1212 Retweets 1717 likes With S&P losing 2,100 as VIX topped 24... On the day, VIX surged after the cash close, dragging futures even lower... So next we turn to FX markets... Cable fell to 31year lows... Today's drop was a 16 standard deviation crash The USDollar Index rose 1.3% on the week (best in 4 months), driven by major spike today, but the GBP and JPY moves were colossal... And on the day - GBP and JPY were the big movers... Treasury yields dropped drastically today, puking before the US open but bounced higher to leave 30Y yields unch on the week... Commodities flipped overnight with crude ending the week the biggest loser and PMs best... On the day, gold unusually outperformed silver... Gold and Silver soared... AND JUST REMEMBER - CHINA WAS CLOSED BEFORE THIS BLOODBATH STARTED... Charts: Bloomberg Bonus Clip: Risk just went to 11...
Brexit shock fades–focus on fundamentals and Fed Brexit day finally arrived. Unfortunately, we will not know the official results until much later tonight at the earliest and possibly not until the early morning hours of tomorrow, if the vote is close. Nonetheless, this fact did not stop European markets from rallying or our market from following suit. The fact that the vote is not legally binding and the reality that any Brexit would likely be a multi-year process may be setting in. Or perhaps the potential risks and the market’s initial reaction were overblown. The point being, we are not likely going to wake up one day to learn that the United Kingdom has completely bailed on the European Union. Today’s vote may begin a process in which the U.K. begins to exit. It could be partially or fully, only time would tell exactly. Like other past political and economic events, such as the collapse of the Soviet Union, there will be traders and investors that sell first and ask questions later. Or in the case of sovereign bonds with negative yields, buy first. Regardless of the event or shock, the market has largely continued on once the shock or event passed. When today’s vote finally comes to a close, the market is likely to shift its focus back to fundamentals, technicals and of course the Fed and interest rates–at least until the next shock happens. Last week, the Fed threw a cold bucket of water on its economic growth outlook which is a fundamental negative, but as a result also acknowledged that interest rates are likely to remain low, longer. This is a potential positive that could offset the drag of tepid growth. Today’s initial weekly jobless claims were also better than expected suggesting the U.S. labor market is at a minimum resilient. The market is bouncing back in the short-term. In the longer-term, the Presidential election is heating up and solid, sustainable growth remains elusive. Ominous Chart Pattern Potential Set Up As we await the crucial Brexit vote in the UK tomorrow I wanted to take a step back and look at the currently developing potential for a Three Peaks and a Domed House Top Pattern (3PDH). It is far from certain that this current patter will even evolve into a 3PDH pattern. Until the market suffers a separating decline that takes out the August or February lows this pattern will not be in play. But it is something to be prepared for as the current 2016 high or a slightly higher high could materialize into the third peak of this patter. The subsequent separating decline could transpire over the coming late-summer/early-fall weak season. Then a potential end-of-election year rally could top out toward the end of 2016 or early 2017 in a Domed House Top and bring the market back down to the February 2016 lows at a minimum. Too soon to call worst over since last DJIA Down Friday-Down Monday It has been one week and a day since we issued our MACD Seasonal Sell Signal for NASDAQ. Since then NASDAQ traded lower, higher and today it is essentially where it was on Monday June 13. In addition to NASDAQ’s Sell Signal, DJIA also triggered its fourth Down Friday/Down Monday (DF/DM) of the year on the thirteenth. Previous research and analysis has shown that from the high within seven calendar days of the DF/DM to the subsequent low over the next 90 calendar days, DJIA has declined an average 7.5% going back to 2000. In the following chart, the 30 trading days before and 60 trading days after a DJIA DF/DM have been plotted alongside the 5 times there was no low after the subsequent high and the 27 times there was no lower low after Monday. The 30 trading days before and the five trading days after the most recent DF/DM are also displayed. This is the same chart that appeared in the May 16 blog post where it was noted, “If DJIA recovers the losses from the DF/DM within about 4-7 trading days, then the DF/DM quite likely was an interim bottom. However, if DJIA is at about the same level or lower then additional losses are more likely.” As of today, DJIA is in the window of 4-7 trading days since the completion of the DF/DM. DJIA is also only slightly higher than its June 13 close of 17732.48. This alone would seem to suggest that last week’s low could have been an interim bottom. However, we also noted in that May 16 post that technical and sentiment indicators should also be checked for confirmation. In the above chart recent DJIA strength can be seen, but it also appears to be waning already. MACD is still negative, but Stochastic and relative strength indicators appear to have turned the corner and are gradually improving. Some additional strength would be needed to confirm that the worst is over following the most recent DF/DM. This may not occur until after the results of the Brexit vote on June 23. Considering recent strength, it would not be surprising if selling occurs regardless of the vote’s outcome. Traders have been buying the rumor and could quickly sell the fact. June performance missing this election year Historically, June is the best month of the election year for S&P 500 with a 1.4% average gain. In sixteen election years since 1952 S&P 500 has advanced thirteen times and declined just three. So far this year, the market has been tracing out the more lackluster typical June pattern in which the S&P 500 averages a 0.03% loss. Even after today’s advance, S&P 500 is still down 0.65% so far this June. Compared to the typical June pattern (next chart) and considering this week’s historically bearish bias, the S&P 500 could be in store for further declines before the month ends.
This Weeks Market Wrap and Sector Watch Video Caution Flag has been changed to Red from Orange with a short Bias
ER for the week beginning June 27th: $NKE $CCL $MU $STZ $AYI $MON $GIS $FDS $SPCB $MKC $DRI $IHS $PAYX $CAG $WOR
Fear is running rampant through financial markets, but should you begin to get greedy? As Warren Buffett says, "be greedy when others are fearful". Pick up quality stocks for swings and the long haul at bargain basement prices and of course stocks trending up for a daytrade. To add to that, tread carefully
ShadowTrader Video Weekly 6.26.16 - Everyone wrong, why lower, PCLN short Video from ShadowTrader Peter Reznicek
This weeks Stocks to watch Even though there is likely to be more volatility ahead there will still be some trading opportunities. http://ticker.tv/vegastrader66/576ff95ff72261bc053f17f1 MGM GILD FINL IQNT TAHO Just a few we go over in the video
Pretty reddish futures, but no new lows yet, so I'm just hoping my bearish stuff doesn't get destroyed before open. Preferably it's down into Tues/Wed.
Nice batch of stocks. I am with you on MGM, I added a small slice to position on Friday with my bigger funds set for a bigger drop.
Normally, the failure of the SPX to get back to old highs and push higher would really make me want to pound the table and scream, "Bear!" and get ready to go all in for the bearish scenario. But it seems like we failed because of Brexit. Because too many investors put too much emphasis on something they were sure would happen and when it didn't, it all blew up in everyone's face. So now I'm on the fence. I feel very bearish but because I think this "brexit" decline was false, I want to buy long. So for now, I'll be sitting on my hands.
We'll see... but if you were just looking at a daily chart of $SPX with whatever indicators and didn't know anything about the news, what would you think? I'd think it would at least test the 200MA if it broke the 50 so easily. News-wise... well, keep in mind, Cameron chose this date. *tinfoil hat* it also happens to be 7 years 7 months 7 days and I think 7 hours after Lehman. Weird rich people.
Early movers: CS, DB, UBS, RBS, AMZN http://www.cnbc.com/2016/06/27/early-movers-cs-db-ubs-rbs-amzn-more.html Credit Suisse, Deutsche Bank, UBS, Royal Bank of Scotland — These and other European banking stocks are under pressure this morning after taking a hit on Friday, with JPMorgan Chase cutting estimates following the Brexit vote. Medtronic — The medical device maker is buying HeartWare International for $1.1 billion in cash or $58 per share. HeartWare is a provider of technologies related to less invasive heart failure treatment. The deal represents a 93.5 percent premium to HeartWare's Friday close. Dick's Sporting Goods — Dick's has submitted a bid for 17 Sports Authority stores, according to Reuters. Dick's is said to be the only bidder to make offers for more than a single location operated by its bankrupt rival. Qualcomm — The chip maker filed a patent infringement suit against China smartphone maker Meizu, which is backed by online retail giant Alibaba. Amazon.com — Amazon will announced an expansion of its "Dash Button" ordering service, according to The Wall Street Journal. The paper said Amazon will announce dozens of new brands for the service this week. TransCanada — TransCanada has formally requested arbitration under the NAFTA trade agreement over the White House's rejection of the Keystone XL pipeline. TransCanada is seeking $15 billion in damages. SolarCity — SolarCity board members Peter Rive and JB Straubel are recusing themselves from any decisions on Tesla's offer to buy the solar equipment maker. Elon Musk, who controls both companies, has already recused himself, as has SolarCity CEO Lyndon Rive. Peter and Lyndon Rive are Musk's cousins and Straubel is chief technology officer and co-founder of Tesla. Facebook, Alphabet — Facebook and Alphabet's Google unit are using automation to remove extremist content from their sites, according to a Reuters report. Walt Disney — The Disney/Pixar film "Finding Dory" topped the weekend box office with $73.2 million in North American ticket sales. The movie is the sequel to 2003's "Finding Nemo". Intel — Intel is mulling the sale of its cybersecurity business, according to a report in the Financial Times. BHP Billiton — The mining company will increase spending on exploration by 29 percent next year to about $900 million, focusing on oil and copper. Tractor Supply — The stock got a positive mention in Barron's, owing to the surging popularity of hobbyist farming. Tractor Supply is a retailer of a wide variety of farming supplies.
