Welcome Stockaholics to the trading week of May 21st! 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.
Emerging Markets Monkeyhammered Amid Dollar's Longest Win-Streak Since 2015 Quick guide for all the peasants watching the Royal Wedding tomorrow... Italy and Emerging Market dominated the market headlines this week. Italian stocks, bonds, banks, and credit all cratered this week after Five-Star and The League agreed a notably anti-establishment plan... Emerging Market stocks fell modestly on the week (the 3rd drop in 4 weeks) but EM FX and EM Debt collapsed... Small Caps were the week's best performer (all squeezed), Trannies managed gains, but The Dow, S&P, and Nasdaq all ended red The Dow tumbled to perfectly unchanged today at the close with Small Caps the only winners... In the US, Small Caps managed a 3rd record high day in a row... "Most Shorted" Stocks saw a massive short squeeze into the close last night... It appears Bank stocks don't like higher yields or steeper curves... FANG stocks stumbled... worst week in two months (FANG also failed to take out the Fed highs before rolling over) And Tesla tumbled... VIX was up on the week but with some notable volatility intraweek... As Specs swung back to anet short vol position for the first time since the end of Jan... With Stocks and Bonds down this week, it was the worst aggregate loss in two months... Treasury yields ripped lower today, ruining all the "record" move headlines for the week (biggest yield jump in 3 weeks doesn't sound so impressive) - was this week's melt-up really all about rate-locks on massive IG issuance? Over $30 billion - Monday $17.38b, Tuesday $6.725b. Wednesday $800m, Thursday $5.200b, Friday $750m 30Y Yields stalled at the 3.20% level once again... With 30Y down over 6bps from yesterday's highs... The yield curve steepened the most in over 3 months this week with 2s30s up 10bps... (though we do note that 2s30s rolled over after tagging its pre-FOMC Minutes level... And while Russell 2000 outperformed notably, Small Cap banks hugely underperformed, catching down to the flattening yield curve... Emerging Market Debt tumbled for the 7th week in a row - back to Pre-Trump levels... The Dollar rose for the 5th week in a row - the longest win streak since 2015 - and the biggest weekly gain since Dec 2016... BBDXY We do note that The Dollar remains below pre-Trump-election levels still... Emerging market currencies bloodbath'd - not one Emerging Market saw its currency strengthen this week with Argentine Peso, South African Rand, and Turkish Lira suffering the most... EM FX is down 7 weeks in a row and this week was the worst week since Nov 11th 2016 (Trump election)... And while Ethereum ended the week unchanged, Bitcoin Cash crashed 15%... No wonder really, since Meghan Markle appears to be bigger than bitcoin now... View image on Twitter In commodity land, dollar strength weighed heavily on PMs and copper but crude managed gains... Finally, is The Fed about to make a big policy mistake?...
Spoiler: Weekend Reading: Bear Market Repo’s Authored by Lance Roberts via RealInvestmentAdvice.com, An interesting email hit my desk this morning: “The stock market goes up 80% of the time, so why worry about the declines?” Like a “bull” – rising markets tend to be steady, strong and durable. Conversely, “bear” markets are fast “mauling”events that leave you deeply wounded at best and dead at worst. Yes, the majority of the time the markets are “bullish.” It’s the “math” that ultimately gets you during a “bear” market. The real devastation caused by “bear market” declines are generally misunderstood because they tend to be related in terms of percentages. For example: “Over the last 36-months, the market rose by 100%, but has recently dropped by 50%.” See, nothing to worry as an investor would still be ahead by 50%, right? Nope. A 50% decline wipes out 100% of the previous gain. This is why looking at things in terms of percentages is so misleading. A better way to examine bull and bear markets is in terms of points gained or lost. Notice that in many cases going back to 1900, a large chunk of the previous gains were wiped out by the subsequent decline. (A function of valuations and mean reversions.) Recently Upfina posted a great chart on “Bear Market Repo’s” which illustrates this point very well. To wit: “Many confuse bear markets with being black swan events that cannot be predicted, however, this is a faulty approach to investing. The economy, market, and nature itself move in cycles. Neither a bear market nor a bull market last forever and are actually the result of one another. That is to say, a bear market is the author of a bull market and a bull market is an author of a bear market. Low valuations lead to increased demand, and high valuations lead to less demand.” The only point I am attempting to make today is don’t “confuse the math.” A 30-50% decline from any level in the market is destructive not only to your current principal value both also your financial goals particularly as it relates to you investing time horizon. Time is the only thing we can’t get back. As Upfina concludes: “The critical discipline to protect your portfolio through bull and bear markets is hedging. Hedging is when you start a position to avoid the risk of another position. The keyword when it comes to investing with the goal of minimizing risk is correlation. You want to buy assets with a low correlation to diversify against bear markets. A few investments which typically do well in bear markets are cash, long-term U.S. treasuries, the volatility index, gold, shorting the stock market, shorting high yield bonds, and buying safe sectors such as telecommunications and utilities.” With everyone seemingly bearish on bonds and the dollar, and bullish on equities and oil, the contrarian in me thinks “hedging” against the “crowd” might be something worth considering. Such “hedges” could well be the ticket to minimizing the next “bear market repo.” Just something to think about as you catch up on your weekend reading list. Economy & Fed Legalizing Gambling Won’t Fix Budgets by Steven Malanga via City Journal Will The Fed Know When To Quit? by Caroline Baum via MarketWatch 3-Reasons To Expect A Recession Soon by Pierre Lemieux via Econlog Fed About To Look At Boosting Economy In A Radical Way by Pedro Da Costa via BI When Companies Supersize, Paychecks Shrink by Bryce Covert via NYT Is “Goldilocks” Back? by Brian Maher via The Daily Reckoning Wealth Causes Homelessness? by Alex Berezow via American Council On Health & Science Managing Risks Of Rising Dollar by Mohamed El-Erian via Project Syndicate Economic Numbers Less Than Meets The Eye by James Rickards via The Daily Reckoning Is 1.8% Economic Growth All We Should Expect by Alan Reynolds via IBD Markets What Is Magic Number For Yields? by Tyler Durden via ZeroHedge Fed Tightening Cycles Coincide With Crashes by Mike “Mish” Shedlock via MishTalk.com Morgan Stanley Knows When Bull Ends by Matt Egan via CNN Money Spoiled Rotten: Too Many Funds & ETF’s? by Simon Constable via Forbes Dan Niles: Stocks Could Lose 50% Next Year by Stephanie Landsman via CNBC Stocks Down 20% By Time Yield Hits 4% by Brian Sozzi via TheStreet.com Why The Market Has Its Swagger Back by Mark DeCambre via MarketWatch Prepare Your Portfolio For Recession by Edward Harrison via Credit Writedowns Making Money In Stocks Is Going To Get Difficult by Ryan Vlastelica via MarketWatch No, The Market Isn’t Overvalued by Ed Yardeni via Yardeni Research Trump Wants To Roll Back Regulations Meant To Prevent A Crisis by Joe Ciolli via BI A Record Number Of People Think Home Prices Will Rise by Akin Oyedele via BI Most Read On RIA Retiree’s Face A Pension Crisis Of Their Own by Lance Roberts Don’t Be A Victim Of Recency Bias by John Coumarionos The Inconsistencies Lurking In ETF’s by Michael Lebowitz No Strategy Works All The Time, 10-Rules That Do by Lance Roberts The Greatest Financial Mismatches In History by Richard Rosso Kass: The Madness Of Investing Crowds by Doug Kass Research / Interesting Reads Stock Buybacks Soar To Record by Wolf Richter via Wolf Street Subprime Chaos & It’s Worse Than 2008 by Adem Tumerkan via Palisade Research Stupidity And Greed Will Keep Financial Journalist Employed by Steve Sedgwick via CNBC Want To Make Millennials Mad, Talk About Retirement Saving by Alessandra Malito via MarketWatch Is The U.S. Becoming Japan 2.0 by Upfina U.S. Health Care Is Finally Fixed by Charles Hugh Smith of Two Minds Debt Service Is A Function Of Rates & Amount Owed by Danielle Park via JugglingDynamite.com Subscriptions For The 1% by Danny Crichton via Tech Crunch GDP Linked Bonds? by Robert Shiller via NYT The Great Recession vs. The Great Depression by Alex Pollock via Real Clear Markets “Love risk when making money. Hate risk when investing money.” ― Robert Rolih
Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2018- S&P sectors for the past week-
Midterm Seasonal Pattern Update: Years Ending in 8 Possibly in Play Today’s modest 0.25% DJIA gain was sufficient to return DJIA to positive year-to-date performance. S&P 500 is currently up 1.82% year-to-date. Based upon historical performance in past midterm years, DJIA is currently slightly below average and S&P 500 is modestly above average. Although May started off poorly, DJIA and S&P 500 have been in rally mode for most of the month which is similar to the average performance recorded by past years ending in 8. If DJIA and S&P 500 are breaking away from typical midterm-year performance, the second half of May could be weaker than the first half followed by a stronger June. Small-cap rally could falter For the second day in a row, the Russell 2000 index of small-cap stocks closed at a new all-time high. However DJIA, S&P 500 and NASDAQ still have some ground to cover before doing the same. NASDAQ is closest followed by S&P 500 and then DJIA. Small-cap strength is encouraging, but absent the support and participation of the other indices the run could be short-lived. DJIA and S&P 500 both found support at their respective 200-day moving averages (solid red lines in upper portion of above charts) earlier in the month before bouncing higher. That bounce ended when DJIA and S&P 500 ran into projected monthly resistance (red dashed line) last Friday. Both have been churning essentially sideways since then. Both will need to break through this level before making any run towards old highs. NASDAQ’s chart is somewhat healthier than DJIA and S&P 500. This does not come as much of a surprise as NASDAQ typically enjoys a “Best Eight Months” that run November through June. As earnings season winds down and the three-day Memorial Day weekend nears, catalysts for the market to continue higher in the near-term are fading increasing the possibility of more sideways to lower trading. Eurozone Data Disappoint Posted by lplresearch As our LPL Chart of the Day shows, European economic data reached a noteworthy low on May 7, after Citi’s Economic Surprise Index for the Eurozone dipped beneath -100 for the first time since 2011. (Citi’s surprise indexes average economic surprises compared with consensus expectations over time, with above zero indicating the average surprise has been positive.) Flashback to mid-May 2017, the same surprise index achieved one of its best positive runs since 2010 and the MSCI Europe Index had just completed one of its best six-month stretches compared with the S&P 500 Index in years. 2018 is certainly not 2011, and Eurozone growth remains fairly steady, but expectations had gotten ahead of themselves. Populist politics, which seemed to be on the wane with France’s election of Emmanuel Macron in May 2017, reappeared in March 2018 after the anti-establishment Five Star Movement led the popular vote in Italy. The Brexit process, which impacts the Eurozone too, has started to look less orderly. And lingering demographic and structural challenges may be limiting the durability of accelerating growth. According to LPL Research Chief Investment Strategist John Lynch, “European equities may still provide diversification benefits and valuations look relatively attractive, but the region continues to depend on extremely accommodative monetary policy and structural challenges linger. With data disappointments lowering expectations, future data should start to fall more in line, but we continue to emphasize exposure to the U.S. and emerging market equities over Europe in our portfolios.” A High Energy Rally May 18, 2018 Sentiment in the market has a way of changing on a dime. A case in point is the Energy sector. In addition to hitting a 52-week high on Thursday, a number of internal measures for the sector have been pointing higher. For starters, check out the sector’s relative strength versus the S&P 500. In the span of two months, the sector went from underperforming the S&P 500 by its widest margin in over a year to outperforming by its widest margin in a year. Breadth in the sector has also been strong. As highlighted in our Sector Snapshots report on Thursday, 97% of the stocks in the sector are currently above their 50-day moving averages. That compares to a level of 57% for the entire S&P 500 and 76% for the next closest sector (Technology). Not only are nearly all of the stocks in the sector above their 50-DMAs, but a good chunk of them are also hitting 52-week highs. In yesterday’s session alone, over 40% of the stocks in the sector hit 52-week highs. That was the highest one-day percentage for the sector since late 2016. Suddenly, investors can’t get their hands on enough energy stocks. Crude oil at over $70 a barrel as a way of doing that! Top Performing Energy Sector Stocks Since March Low May 18, 2018 Even when you look just at the market cap weighted performance of the Energy sector, its 18% rally off the late March closing low has been impressive. However, when you consider that over 35% of the index is made up of Exxon Mobil (XOM) and Chevron (CVX), which are each up less than 15%, the sector has been even stronger. In fact, within the S&P 1500 Energy sector (made up of large, mid, and small cap stocks), the average performance of the 88 stocks has been a gain of over 29% since 3/28! The table below lists the best and worst performing stocks in the S&P 1500 Energy sector since 3/28. During that span, a quarter of the stocks are up over 40%. Leading the way higher, Pioneer Energy (PES) has more than doubled, while Carrizo (CRZO) is up over 70%. Along with these two names, some of the more well-known names on the list of biggest winners include HollyFrontier (+53.5%), Andeavor (+47.1%), Chesapeake (+46.2%), and Marathon Oil (+40.4%). While a lot of energy stocks are up big since the sector’s recent closing low in late March, just three stocks are down (listed at bottom of table). Given the strength we have seen in the overall sector, things have to be pretty bad at Cabot, Cloud Peak, and World Fuel if they can’t even rally in this environment.
Stock Market Analysis Video for May 18th 2018 Video from AlphaTrends Brian Shannon (VIDEO NOT YET UP!) ShadowTrader Video Weekly 5.20.18 Video from ShadowTrader Peter Reznicek (VIDEO NOT YET UP!)
Here are the current major indices pullback/correction levels from ATHs as of week ending 5.18.18- 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 5.21.18 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! Monday 5.21.18 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! Tuesday 5.22.18 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 5.22.18 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 5.23.18 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 5.23.18 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 5.24.18 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 5.24.18 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 5.25.18 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! Friday 5.25.18 After Market Close: Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES! NONE.
Stockaholics come join us on our stock market challenge threads for this upcoming trading week ahead!- ======================================================================================================== Stockaholics Daily Stock Pick Challenge & SPX Sentiment Poll for Monday (5/21) <-- click there to cast your daily market vote and stock pick! Stockaholics Weekly Stock Picking Contest & SPX Sentiment Poll (5/21-5/25) <-- click there to cast your weekly 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!
And as promised here is the most anticipated earnings calendar for this upcoming trading week ahead- ($LOW $TGT $BBY $KSS $AZO $NTNX $TJX $SPLK $TOLL $QD $PSTG $DPW $NTAP $HPE $MNRO $FL $AAP $MDT $TIF $INTU $LB $ADSK$MCK $IGT $URBN $CBRL $RL $TD $CTRP $VEEV $ROST $RY $NDSN $WUBA $LX $HRL $PLAB $GPS $EV $DY $DXC $GSM $TTC $RDCM) If you guys want to view the full earnings post please see this thread here- Most Anticipated Earnings Releases for the week beginning May 21st, 2018 <-- click there to view!
Big retail earnings week ahead. I'm thinking where goes retail goes SPX this week. I bet mixed results -- good earnings, but flat guidance rest of year. Markets will gyrate but end the week flat.
Yeah I was looking at @bigbear0083 earnings calendar and just took a look at URBN, never knew this stock was so strong (probably I'm too old, but who shops there?). Chart is not clean, lots of volatility in the monthly, but it's near ATH with ~12% short float; in the daily (ie not looking too far back) it looks pretty much straight up heh. TIF and TJX look good too, without as much volatility. Retailers kept making profits even when their stocks were out of favor over the last year or two.
China agrees to bolster purchases of US goods, in move to 'substantially reduce' trade gap https://www.cnbc.com/2018/05/19/chi...n-move-to-substantially-reduce-trade-gap.html
