Stock Market Today: May 7th - 11th, 2018

Welcome Stockaholics to the trading week of May 7th!

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:

• Monday

Earnings: Tyson Foods, Sysco, Sempra Energy, Zillow, Hertz Global,International Flavors and Fragrances, Cognizant Technologies, Gannett,AMC Entertainment, Mosaic

2:00 p.m. Senior loan officer survey

3:00 p.m. Consumer credit

3:30 p.m. Atlanta Fed conference

• Tuesday

Earnings: Disney, Marriott, Monster Beverage, Petrobras, Electronic Arts, Wendy's, Etsy, Sturm Roger, TripAdvisor, Valeant Pharma, Discovery, Dean Foods, Camping World, Occidental Petroleum, Dish Network, Martin Marietta Materials

6:00 a.m. NFIB survey

10:00 a.m. JOLTS

• Wednesday

Earnings: A-B InBev, Toyota, Cinemark, Liberty Media, Hostess Brands, 21st Century Fox, Delphi Automotive, Softbank, Pershing Square, Siemens, Roku, Sunrun, ZTO Express, Booking Holdings, Party City, Office Depot, Liberty Broadband

8:30 a.m. PPI

10:00 a.m. Wholesale trade

1:15 p.m. Atlanta Fed President Raphael Bostic

• Thursday

Earnings: Nvidia, News Corp, Symantec, Dropbox, Best Inc, BT Group, AMC, Owens and Minor, Brookfield Asset Management, Duke Energy,Triumph Group, Redfin

8:30 a.m. Initial jobless claims

8:30 a.m. CPI

2:00 p.m. Federal budget

• Friday

Earnings: Arcelor Mittal, Thomson Reuters, Nippon Telegraph

8:15 a.m. St. Louis Fed President James Bullard

8:30 a.m. Import prices

10:00 a.m. Consumer sentiment

 

Stocks Bounce On Biggest Short-Squeeze Since Brexit, But Banks & Bullion Bruised
Today's miss for payrolls, drop in unemployment, weaker wage growth, and drop in participation rate was proclaimed by Bob Pisani and his like as "goldilocks"... David Rosenberg disagreed:


David Rosenberg@EconguyRosie

My grade for today’s payroll report is a big fat C-. Harsh, yes, given the apparent good news in the 3.9% u-rate, but this does not reflect job market strength as much as the symptom of an ever-depleted pool of labor (11-year low).


But for now, stocks ended the week unchanged thanks to the biggest short squeeze since Brexit to reassure everyone that...


On the week, stocks mixed (Nasdaq up, Dow down); Dollar, Oil, and Bitcoin up; Gold down, bonds unch...



Friday saw Thursday's momo reversal extend with Nasdaq and Small Caps squeezed into the green for the week and then S&P and The Dow pumped to green for the week after Fed's Williams comments that he's ok overshooting 2% inflation for a while... but by the close only Nasdaq and Small Caps held gains on the week...



Futures show this was not related to payrolls - this was pure cash market short squeeze that began as Europe closed yesterday...





Of course the yuuge bounce is all technical - Dow and S&P bouncing off their 200DMA





Today was a huge 3.3% "Most Shorted Stock" short-squeeze day...



The biggest single short-squeeze day sine 6/29/16 (the post-Brexit buying panic bounce)





VIX flash-crashed to a 10-handle as payrolls printed...



and closed with a 14-handle for the first time since March 9th (payrolls day!)... and look what happened right before that low?!





Big Bank stocks ended the week red despite today's effort to ramp... (SocGen, BNP, and HSBC all missed this week)





AAPL shares ripped to a new record high (after Buffett was buying in Q1)...





And FANG Stocks surged...





Elon had a tough week but through the magic of machines, his stocks managed to get back to even (after his short-squeeze threat)... despite TSLA bond's collapse...





Tech strength and financial weakness sent the S&P Tech/Banks ratio to its highest since the peak of the dotcom debacle...





Stocks and Bonds decoupled this afternoon as the machines pushed the former up to unch on the week...





Mixed picture in Treasuries this week with the belly outperforming (7Y -2bps) while the tails lagged (2Y +1bp or so and 30Y lagged until the last hour or so)...





It has now been six days since the 10Y Yield traded above 3.00%...





The yield curve flattened once again





The Dollar Index rallied for the 3rd week in a row - the biggest jump since 11/25/16...





Argentine Peso was the week's worst currency - plunging over 6%...despite a 1275bps rate-hike!!





Cable broke below its 200DMA





Cryptocurrencies surged this week with Bitcoin testing up towards $10,000 and Ethereum over $800...





WTI dominated the commodity space this week... with PMs in the red...





WTI traded within 3c of $70 today at its highest since Nov 2014...





Finally we offer this from Fed's Kaplan: "My guess is we will eventually start to see wage pressures "

But he added "The flatness in the yield curve tells me we're late in the cycle.. the yield curve is telling us that outyear growth looks sluggish."



Are you reassured now?

SMART Money remains a big seller...

 

Spoiler: Weekend Reading: Are You Not Entertained?

Authored by Lance Roberts via RealInvestmentAdvice.com,

Over the last several weeks, a majority of U.S. companies have divulged their earnings. The vast majority have been their downwardly revised estimates for the first quarter with bottom line earnings per share growing at more than 18% on an annualized basis.

Yet, the market has failed to respond. Even stocks that have crushed earnings by a wide margin have failed to hold onto their gains in many cases like Boeing (BA).



While there are certainly bright spots to be had, the overall trend and direction of the market remains lacking. As Doug Kass noted yesterday:

“My expectation is of a clearly defined trading range (over the near term) of the S&P Index of between 2550 and 2725. While I believe that it’s increasingly likely that we will breach the lower side of the range in the second half of this year – for now I see a continued trading range (of about 175 S&P points).”

Just a reminder…the “second half of the year” begins next month.

Stepping back we can see this direction-less trading range more clearly.



Yesterday’s “dump and pump” was led by “pretty positive comments” coming out of China relative to trade talks. The good news is the late day surge kept the markets above critical 200-day moving average support keeping bulls alive for now.

While buyers, or should I say “robots,” have repeatedly showed up to “buy the 200-dma dip,” the question is will they be able to maintain it?

The hope is that since earnings have been beating expectations the market will begin to gain some traction. However, speaking of earnings, they may not be as “organic” as they seem.

According to S&P more than $1 Trillion has gone to dividends and buybacks (exactly where we said it would go) and with Apple’s announcement of another $100 Billion the total numbers will continue to rise.

“Given the environment … and the ‘desire’ of companies to show shareholder return, the return to a double-digit actual cash payment gain (year-over-year) seems feasible, along with the first trillion-dollar year of dividends and buybacks for the S&P 500.

So far, 169 S&P 500 members have hiked their dividends in the first four months of the year, while no company in the index cut their dividend. Those buyback have produced an outrageous 72% gain.” – Howard Silverblatt.

But therein lies the problem, and something I noted earlier this week:

“Our experience tells us that these leaderless periods typically occur during important transitions in the market. So what is that transition today and how can we harness it to make money? Sticking with our original thesis for 2018, we think the market is digesting the fact that the tax cut last year has created a lower quality increase in US earnings growth that almost guarantees a peak rate of change by 3Q. Furthermore, the second order effects of said tax cuts are not all positive.”

With estimates through the end of 2019 still at astronomically high levels, the “Herculean task” of actually achieving those lofty levels will be quite challenging. In just the past month (between April 1st and April 30th) the estimated earnings per share for 2019 has risen by more than $8 per share.



Of course, estimates will be revised lower, which will raise forward valuations, and investors will have to start adjusting overly optimistic expectations for reality. Furthermore, as we head into 2019, the year-over-year growth rates comparisons are going to fall markedly.

In other words, with companies rushing to issue dividends and buy back shares the current environment is just about as “good as it can get.” As Sam Zell just recently noted:

“The stock market, despite all of the gyrations, is still at an all-time high. Real estate is priced to perfection.”

Which is problematic for things getting “gooder.”

Which leaves a whole lot of room for disappointment.

Are you not entertained?

Just something to think about as you catch up on your weekend reading list.

Economy & Fed

• Economy In Better Shape Than You Think by Jonathon Trugman via NY Post
• Trump Is Taking Economics Back To The 1800’s by Simon Constable via Forbes
• Economic Factors Causing Millennials To Swing Right by IBD
• Democrat’s Economic Populism by Reihan Salam via The Atlantic
• As Fed Grows More Hawkish, Yield Curve Flattens by Edward Harrison via Credit Writedowns
• 7-Indicators Hint Recession Nowhere To Be Found by Brian Sozzi via TheStreet.com
• How Is That Tax Cut Working Out? by Paul Krugman via NYT
• Tax Cut Investment Boom Yet To Appear by Matt Phillips & Jim Tankersley via NYT
• “Vanderpump Rules” & The State Of The Economy by Maureen Callahan via NY Post
• What Trump Gets Right About China & Trade by Simon Lester via CNBC
• What Previously Sustained The Economy Is Melting Away by David Lynch via Washington Post
• 10-Years After 2008, The Problems Still Remain by Nicole Gelinas via City Journal

Markets

• Goldman: Economic Momentum Slows Most Since 2011 by Tyler Durden via ZeroHedge
• As Good As It Gets For Market Rally by Caroline Baum via MarketWatch
• Wall Street Is Sleeping Walking Past 3-Big Risks by Pedro Da Costa via Business Insider
• What Could Threaten The Bull Market by Jed Graham via IBD
• The Data Has Spoken – Buy Stocks by J C Parets via All-Star Charts
• Markets Unimpressed By Best Earnings In 24-Years by Mark DeCambre via MarketWatch
• The Bull And Bear Case For Stocks by Upfina
• Change In Bond Yields, Not Levels Is What Matters by Sunny Oh via MarketWatch
• Midterm Mays Have Been Bad For Stocks by Ryan Vlastelica via MarketWatch
• Time To Buy Long-Term Treasuries by Erik Swarts via Market Anthropology
• Fears Of Bond Bears Are Misplaced by Joe Calhoun via RCM
• Is Value About To Start Outperforming Again? by Barron’s
• Not All Value Is Created Equal by Nick Maggiulli via Dollars and Data
• Sell In…May Be Sound Advice by Dana Lyons via Tumblr

Most Read On RIA

• Bull Markets Actually Do Die Of Old Age by Lance Roberts
• Bullish Hopes Vs. Bearish Signals by Lance Roberts
• Employment Without Rose Colored Glasses by Michael Lebowitz
• Everyone Is On The Same Side Of The Boat by Lance Roberts
• How’s Your Bond Fund Doing by John Coumarianos
• A Market Without Leadership by Doug Kass

Research / Interesting Reads

• Mortgage Rates Jump To Highest Levels Since 2011 by Wolf Richter via Wolf Street
• The “Handmaid’s Tale” In Reverse by Chelsea Follett via Foundation For Economic Education
• Tesla’s Financial Shenanigans Comes Home To Roost by Jerry Bowyer via Vident Financial
• Debt-Enabled Bubble Crashing Into Demographics by Danielle Park via JugglingDynamite.com
• Cash Is Once Again King by Dan Weil via Wealth Management
• Jenrette’s 24-Rules For Success by Katia Porzecanski via Bloomberg
• 10 Lessons From The Weimer Republic by Harold James via Project Syndicate
• The Last Man Who Knew Everything by Matthew Walther via The Week
• Peak Quality? by Albert Bridge Capital
• Debt, Loans & Credit Quality: Devil In The Details by Frank Martin, CFA
• Gender Pay Gap? Not In The Corner Office by Andrew Ross Sorkin via NYT

““Three simple rules – pay less, diversify more and be contrarian – will serve almost everyone well.” ― John Kay

 

Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2018-



S&P sectors for the past week-

 

Industrials, Technology Beating Earnings at the Highest Rate
May 2, 2018

As highlighted in our prior post, the percentage of companies that have beaten consensus analyst EPS estimates this season stands at 71.6%. Any reading over 70% is very strong relative to past earnings seasons.

Below we take the beat rate analysis a step further and look at sector beat rates this season. As shown, five sectors have beat rates that are stronger than the overall market, while six sectors have weaker beat rates.

The Industrials sector is the standout with a beat rate of 79.5% this season. Technology ranks second at 75%, followed by Health Care and Consumer Staples at 73.1%.

On the weak side, Telecom and Energy both have earnings beat rates below 60%, while Utilities and Real Estate are below 65%.

We’ll be back to post an update on these readings at the end of earnings season in mid-May.



Q1 Beat Rates Remain Strong
May 2, 2018

More than 1,000 companies have now reported Q1 2018 earnings, and at this point, earnings and revenue beat rates remain very strong for a second consecutive quarter. (For further clarity, the “beat rate” is the percentage of companies over a given time period that report actual numbers that are stronger than consensus analyst estimates.)

So far this earnings season, 71.6% of companies have beaten consensus analyst EPS estimates, while 72.1% of companies have beaten top-line revenue estimates. Below is a chart showing historical earnings and revenue beat rates for each quarterly earnings season since 1999. If the 71.6% earnings beat rate holds through the end of this season in mid-May, it would be the strongest reading since Q3 2006. For the top-line revenue beat rate, last season actually saw a stronger reading at 73.17%, but this would be the first time we’ve seen back-to-back readings above 70% since Q4 ’03 and Q1 ’04.

We’re just over halfway done with the Q1 2018 reporting period, and so far, companies have had no problem beating what were already hefty analyst expectations.



Almost a Year in the Making: Dollar Closes Above 200-DMA
May 1, 2018

It’s been awhile, but the US Dollar Index did something today that it hasn’t done in nearly a year. As shown in the chart below, today’s rally in the greenback put the index above its 200-DMA for the first time since May 12, 2017. While the gains of over 3% in the last two weeks have been impressive, the dollar still has a lot of ground to make up before working its way out of the current downtrend. Will a hawkish Fed on Wednesday help to continue the rally or will a dovish sounding Fed stop the rally in its tracks?



At a length of 252 trading days, the US Dollar Index’s streak of closes below the 200-DMA was the seventh longest in the history of the index dating back to 1971 and the longest since 2011 (257 trading days). The longest streak occurred back in the mid-1980s and stretched 546 trading days from May 1985 through August 1987. What was even more impressive about that streak is just two weeks after it ended another streak of 209 days started.



Slow and Steady Wins the Race
Apr 30, 2018

It all began 106 months ago today. After a devastating recession and financial crisis, the US economy finally hit rock bottom in June 2009, and “green shoots” began to emerge. While the recovery has been anything but strong, it has been pretty darn consistent. At 106 months now, beginning tomorrow, the current period will move into second place all by itself in terms of longest US economic expansions. Not to get ahead of ourselves, but in order to match the record long expansion for the 1990s/early 2000s, the expansion would have to extend into the second half of 2019.



Should You Sell In May?
Posted by lplresearch

One of the most popular investment sayings is about to take over the airwaves: “Sell in May and Go Away.” The reason for the concern is that the upcoming six months (from May until the end of October) has historically been the weakest six-month stretch of the year, as our LPL Chart of the Day shows:



It doesn’t end there though, as midterm years tend to exacerbate the weak performance during these six months. In fact, out of the four-year presidential cycle, the next six months have been typically up only slightly on average and higher about a coin flip of the time (53%).



But should you sell in May this year? Maybe not, and here’s why: “If you subscribe to the old axiom, you should also note that the next six months (November 2018 through April 2019) have been the best performing six-month stretch of the presidential cycle. In fact, during five of the past six years, the S&P 500 Index actually gained during the ‘Sell in May’ period—not to mention May has been higher in each of the past five years,” explained Ryan Detrick, Senior Market Strategist. Detrick also noted that “we should not ignore the weak seasonal period ahead, but we should be aware that this investment mantra to sell stocks isn’t gospel. Focusing on modest valuations, impressive earnings, and a very positive technical and sentiment backdrop may be more helpful, as all suggest using any pullbacks as an opportunity for suitable investors to add to equity positions during this potentially tricky period.”

 

Stock Market Analysis Video for May 4th 2018
Video from AlphaTrends Brian Shannon


ShadowTrader Video Weekly 5.6.18 - Did the Innovators just change the tone?
Video from ShadowTrader Peter Reznicek

 

Here are the current major indices pullback/correction levels from ATHs as of week ending 5.4.18-


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 5.7.18 Before Market Open:

Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES!

Monday 5.7.18 After Market Close:

Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES!

Tuesday 5.8.18 Before Market Open:

Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES!

Tuesday 5.8.18 After Market Close:

Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES!

Wednesday 5.9.18 Before Market Open:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES!

Wednesday 5.9.18 After Market Close:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES!

Thursday 5.10.18 Before Market Open:

Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES!

Thursday 5.10.18 After Market Close:

Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES!

Friday 5.11.18 Before Market Open:

Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES!

Friday 5.11.18 After Market Close:

Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES!

NONE.

Here are the scheduled earnings before the market open on Monday morning (5/7/18)-
($CTSH $TSN $PETS $SYY $SRE $LPX $TSEM $WLTW $CRNT $DFRG $KOS $ARQL $TA $NOG $GPRE $MYE $SPNS $WBT $SSP $NCMI $GCI $CAPL $CCLP $CMRX $CUI $GPP $AGEN $PLYA $REIS)

 

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 (5/7) <-- click there to cast your daily market vote and stock pick!

• Stockaholics Weekly Stock Picking Contest & SPX Sentiment Poll (5/7-5/11) <-- 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!

 

Here is a look at this upcoming week's Global Economic & Policy Calendar:

 

And as promised here is the most anticipated earnings calendar for this upcoming trading week ahead-
($NVDA $DIS $JD $VRX $ROKU $CTSH $PETS $TSN $SYY $WB $AMC $EA $GRPN $ETSY $MTCH $BKNG $MCHP $AAOI $ICPT $TWLO $SRE $LPX $ENB $SN $ETP $TSEM $ALB $KOS $MNK $TTD $ICHR $DNR $OAS $MNST $MELI $SINA $MAR $TEUM $BUD $DISCA $ARQL $CTL)


If you guys want to view the full earnings post please see this thread here-

• Most Anticipated Earnings Releases for the week beginning May 7th, 2018 <-- click there to view!

 

when is that deadline on the iran nuke deal suppose to be? it's this month isn't it?

not sure how much more /cl has got left in the tank from here ... i gotta believe the news is now all mostly factored in with /cl $70 handle?

unless we see some typical mid east shenanigans ... which wouldn't surprise me

pump prices closing in on the $3 handle around here

 

thx oldie! i haven't really been keeping up with the news of late but just saw this and was thinking of @stock1234 i have no idea where in Hawaiʻi he is but hopefully he is nowhere near where this is going on!