Welcome Stockaholics to the trading week of June 29th! 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 10:00 a.m. Pending home sales 3:00 p.m. New York Fed President John Williams Tuesday 9:00 a.m. S&P/Case-Shiller home prices 9:45 a.m. Chicago PMI 10:00 a.m. Consumer confidence 11:00 a.m. New York Fed’s Williams 12:30 p.m. Fed Chairman Jerome Powell, Treasury Secretary Steven Mnuchin at House Financial Services Committee hearing on oversight of the Treasury Department and the Federal Reserve pandemic response 2:00 p.m. Minneapolis Fed president Neel Kashkari Wednesday Monthly vehicle sales 8:15 a.m. ADP employment 9:45 a.m. Manufacturing PMI 10:00 a.m. ISM manufacturing 10:00 a.m. Construction spending 10:00 a.m. Chicago Fed President Charles Evans 2:00 p.m. FOMC meeting minutes Thursday 8:30 a.m. Initial jobless claims 8:30 a.m. Employment report 8:30 a.m. International trade 10:00 a.m. Factory orders Friday Independence Day holiday
Stocks & Bond Yields Plunge On COVID Surge & Fed Balance Sheet Purge That felt weird eh? A down week for stocks? Bad news was not good news and dips weren't bought? Nasdaq was the least worst on the week as Dow, S&P, and Small Caps all fell in line... That's the second down week in the last three - WTF is happening!!! Three reasons stand out (yes, we know the deluge of virus resurgence and China tension headlines may have catalyzed it but it's not like that's anything the market hasn't completely shrugged off for two months): Source: Bloomberg Second, the post-June-op-ex trend was not your friend historically... Third, and most importantly, The Fed dared to allow its balance sheet to shrink for the second week in a row!!! Source: Bloomberg Do you still want to play the game? Here are the main headlines that sparked the moves today: 1000ET *TEXAS GOVERNOR ORDERS TAVERNS TO CLOSE IN RESPONSE TO VIRUS 1050ET *CHINA MESSAGES THAT U.S. PRESSURE COULD JEOPARDIZE PURCHASES OF U.S. EXPORTS 1100ET *HARRIS COUNTY, TX, TO DECLARE TOP-LEVEL EMERGENCY ON COVID-19 1120ET (Bullish) - *KEY FAA TEST FLIGHT OF BOEING'S 737 MAX JET EXPECTED NEXT WEEK 1125ET *ARIZONA VIRUS CASES JUMP 5.4%, ABOVE PRIOR 7-DAY AVE. OF 2.9% 1130ET *FLORIDA SUSPENDS CONSUMPTION OF ALCOHOL AT BARS STATEWIDE 1145ET *EU MOVES TOWARD RECOMMENDING A BAN ON ENTRY TO U.S. TRAVELERS 1220ET *SAN FRANCISCO MAYOR BREED: TO DELAY REOPENINGS PLANNED FOR MONDAY The Dow broke below 25k, testing down to its 50DMA... S&P Futs broke below 3,000 while the cash S&P tested its 200DMA all day and they even wheeled out Mnuchin and Kudlow in the last hour to try and stabilize things... 1510ET *KUDLOW SAYS EVERY NUMBER IS SHOWING V-SHAPE RECOVERY FOR U.S. 1515ET *MNUCHIN: WILL GO BACK TO CONGRESS NEXT MONTH FOR MORE TOOLS A live look at Kudlow holding 3000. pic.twitter.com/v1kg2ynyHX — Joseph S. Mauro (@jsmauro13) June 26, 2020 It didn't work at first but then came the panic bid in the last 15 minutes to close it back above the 200DMA Nasdaq’s largest companies are on the verge of completing a comeback that has taken more than 17 years to unfold. As Bloomberg reports, the turnaround is based on the ratio between the Nasdaq-100 and S&P 500 indexes, which plunged as much as 69% from a March 2000 record through September 2002. The ratio rose above the record as U.S. exchanges opened Thursday, only to come up short by the close. “This incessant demand for all things internet and tech” is behind the Nasdaq-100’s rebound, Troy Bombardia, a former hedge-fund manager, wrote Thursday in a post on the SentimenTrader blog. Interestingly, it appears institutions finally capitulated on their shorts this week (this data is as of Tuesday's close, which may explain the early week surge) Source: Bloomberg FANG Stocks had a tough week, not helped by the FB boycott... Source: Bloomberg Banks had an ugly day after the stress test restrictions last night... Source: Bloomberg The dollar managed a big roundtrip on the week to end very marginally higher... Source: Bloomberg Bitcoin was lower on the week, but found support around $9,000 once again... Source: Bloomberg Bonds were bid on the week with the long-end outperforming... Source: Bloomberg With 30Y back to its lowest since May... Source: Bloomberg Quite a gap to fill... Source: Bloomberg Oil was lower on the week as gold and silver gained. Copper outperformed (on Chilean production concerns)... Source: Bloomberg WTI ended the week below $40... Silver's late-week outperformance of gold pushed the gold/silver ratio back below 100x... Source: Bloomberg And finally, we wonder if this may be the 4th reason for recent vol? With The Fed balance sheet's growth no longer erasing every fear, the surge in probabilities of a Democrat win in November seems to have spooked the market... Source: Bloomberg
Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2020- S&P sectors for the past week-
When Will The Economy Recover? The economy is moving in the right direction, as many economic data points are coming in substantially better than what the economists expected. From May job gains coming in more than 10 million higher than expected and retail sales soaring a record 18%, how quickly the economy is bouncing back has surprised nearly everyone. “As good as the recent economic data has been, we want to make it clear, it could still take years for the economy to fully come back,” explained LPL Financial Senior Market Strategist Ryan Detrick. “Think of it like building a house. You get all the big stuff done early, then some of the small things take so much longer to finish; I’m looking at you crown molding.” Here’s the hard truth; it might take years for all of the jobs that were lost to fully recover. In fact, during the 10 recessions since 1950, it took an average of 30 months for lost jobs to finally come back. As the LPL Chart of the Day shows, recoveries have taken much longer lately. In fact, it took four years for the jobs lost during the tech bubble recession of the early 2000s to come back and more than six years for all the jobs lost to come back after the Great Recession. Given many more jobs were lost during this recession, it could takes many years before all of them indeed come back. The economy is going the right direction, and if there is no major second wave outbreak it could surprise to the upside. Importantly, this economic recovery will still be a long and bumpy road. Nasdaq - Russell Spread Pulling the Rubber Band Tight Fri, Jun 26, 2020 The Nasdaq has been outperforming every other US-based equity index over the last year, and nowhere has the disparity been wider than with small caps. The chart below compares the performance of the Nasdaq and Russell 2000 over the last 12 months. While the performance disparity is wide now, through last summer, the two indices were tracking each other nearly step for step. Then last fall, the Nasdaq started to steadily pull ahead before really separating itself in the bounce off the March lows. Just to illustrate how wide the gap between the two indices has become, over the last six months, the Nasdaq is up 11.9% compared to a decline of 15.8% for the Russell 2000. That's wide! In order to put the recent performance disparity between the two indices into perspective, the chart below shows the rolling six-month performance spread between the two indices going back to 1980. With a current spread of 27.7 percentage points, the gap between the two indices hasn't been this wide since the days of the dot-com boom. Back in February 2000, the spread between the two indices widened out to more than 50 percentage points. Not only was that period extreme, but ten months before that extreme reading, the spread also widened out to more than 51 percentage points. The current spread is wide, but with two separate periods in 1999 and 2000 where the performance gap between the two indices was nearly double the current level, that was a period where the Nasdaq REALLY outperformed small caps. To illustrate the magnitude of the Nasdaq's outperformance over the Russell 2000 from late 1998 through early 2000, the chart below shows the performance of the two indices beginning in October 1998. From that point right on through March of 2000 when the Nasdaq peaked, the Nasdaq rallied more than 200% compared to the Russell 2000 which was up a relatively meager 64%. In any other environment, a 64% gain in less than a year and a half would be excellent, but when it was under the shadow of the surging Nasdaq, it seemed like a pittance. Share Price Performance Fri, Jun 26, 2020 The US equity market made its most recent peak on June 8th. From the March 23rd low through June 8th, the average stock in the large-cap Russell 1,000 was up more than 65%! Since June 8th, the average stock in the index is down more than 11%. Below we have broken the index into deciles (10 groups of 100 stocks each) based on simple share price as of June 8th. Decile 1 (marked "Highest" in the chart) contains the 10% of stocks with the highest share prices. Decile 10 (marked "Lowest" in the chart) contains the 10% of stocks with the lowest share prices. As shown, the highest priced decile of stocks are down an average of just 4.8% since June 8th, while the lowest priced decile of stocks are down an average of 21.5%. It's pretty remarkable how performance gets weaker and weaker the lower the share price gets. Nasdaq 2% Pullbacks From Record Highs Thu, Jun 25, 2020 It's hard to believe that sentiment can change so fast in the market that one day investors and traders are bidding up stocks to record highs, but then the next day sell them so much that it takes the market down over 2%. That's exactly what happened not only in the last two days but also two weeks ago. While the 5% pullback from a record high back on June 10th took the Nasdaq back below its February high, this time around, the Nasdaq has been able to hold above those February highs. In the entire history of the Nasdaq, there have only been 12 periods prior to this week where the Nasdaq closed at an all-time high on one day but dropped more than 2% the next day. Those occurrences are highlighted in the table below along with the index's performance over the following week, month, three months, six months, and one year. We have also highlighted each occurrence that followed a prior one by less than three months in gray. What immediately stands out in the table is how much gray shading there is. In other words, these types of events tend to happen in bunches, and if you count the original occurrence in each of the bunches, the only two occurrences that didn't come within three months of another occurrence (either before or after) were July 1986 and May 2017. In terms of market performance following prior occurrences, the Nasdaq's average and median returns were generally below average, but there is a pretty big caveat. While the average one-year performance was a gain of 1.0% and a decline of 23.6% on a median basis, the six occurrences that came between December 1999 and March 2000 all essentially cover the same period (which was very bad) and skew the results. Likewise, the three occurrences in the two-month stretch from late November 1998 through January 1999 where the Nasdaq saw strong gains also involves a degree of double-counting. As a result of these performances at either end of the extreme, it's hard to draw any trends from the prior occurrences except to say that they are typically followed by big moves in either direction. The only time the Nasdaq wasn't either 20% higher or lower one year later was in 1986. Christmas in July: 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 27 of the past 35 years with an average historical gain of 2.5%. This year the rally may have begun a day early, today and could last until on or around July 14. 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 ten years, up nine times with a single mild 0.1% loss in 2015. Last year, NASDAQ advanced a solid 4.6% during the 12-day span. Tech Historically Leads Market Higher Until Q3 of Election Years As of yesterday’s close DJIA was down 8.8% year-to-date. S&P 500 was down 3.5% and NASDAQ was up 12.1%. Compared to the typical election year, DJIA and S&P 500 are below historical average performance while NASDAQ is above average. However this year has not been a typical election year. Due to the covid-19, the market suffered the damage of the shortest bear market on record and a new bull market all before the first half of the year has come to an end. In the surrounding Seasonal Patten Charts of DJIA, S&P 500 and NASDAQ, we compare 2020 (as of yesterday’s close) to All Years and Election Years. This year’s performance has been plotted on the right vertical axis in each chart. This year certainly has been unlike any other however some notable observations can be made. For DJIA and S&P 500, January, February and approximately half of March have historically been weak, on average, in election years. This year the bear market ended on March 23. Following those past weak starts, DJIA and S&P 500 historically enjoyed strength lasting into September before experiencing any significant pullback followed by a nice yearend rally. NASDAQ’s election year pattern differs somewhat with six fewer years of data, but it does hint to a possible late Q3 peak.
Here are the current major indices pullback/correction levels from ATHs as of week ending 6.26.20- 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 6.26.20-
Stock Market Analysis Video for June 26th, 2020 Video from AlphaTrends Brian Shannon ShadowTrader Video Weekly 6.28.20 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 (6/29) <-- click there to cast your daily market vote and stock pick! Stockaholics Weekly Stock Picking Contest & SPX Sentiment Poll (6/29-7/3) <-- click there to cast your weekly market vote and stock picks! Stockaholics July 2020 Stock Picking Contest & SPX Sentiment Poll <-- click there to cast your monthly market vote and stock picks! Stockaholics Q3 2020 Quarterly Stock Picking Contest & SPX Sentiment Poll <-- click there to cast your quarterly 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 6.29.20 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! NONE. Monday 6.29.20 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! Tuesday 6.30.20 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 6.30.20 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 7.1.20 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 7.1.20 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! NONE. Thursday 7.2.20 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 7.2.20 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! NONE. Friday 7.3.20 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! NONE. Friday 7.3.20 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- ($MU $GIS $FDX $CAG $STZ $CPRI $XYF $AYI $MEI $UNF $CDMO $SCHN $LNN $CULP $XELA $KFY $RTIX $JRSH) If you guys want to view the full earnings post please see this thread here- Most Anticipated Earnings Releases for the week beginning June 29th, 2020 <-- click there to view!
Usually we close early on July 3rd, but since July 4th is Saturday this year, I wonder if we will close early on July 2nd Thursday this year
Here comes the vaccine news: https://www.yahoo.com/finance/news/chinese-firm-says-coronavirus-vaccine-080922778.html
Great Info, Question: On the FTSE100 - what is the index indicator for market direction for the day?, do you know the code? In Australia for the ASX200 the SPI200 SFE SPI 200 Index Sep '20 (APU20) futures contract is used as a general indicator for market direction for the day - particularly at the open. Is there a similar indicator for the UK market? thanks in advancew.
