Welcome Stockaholics to the trading week of November 21st! This past week saw the following moves in the S&P: Major Indices End of Week: Bird's Eye view of the Major Markets on Friday: Economic Calendar for the Week Ahead: Sector Performance WTD, MTD, YTD: What to Watch in the Week Ahead: Monday 8:00 a.m. Fed Vice Chairman Stanley Fischer at CFR on challenges for economy Tuesday 10:00 a.m. Existing home sales Wednesday 8:30 a.m. Durable goods 8:30 a.m. Jobless claims 9:00 a.m. FHFA home prices 9:45 a.m. Markit Manufacturing PMI 10:00 a.m. New home sales 10:00 a.m. Consumer sentiment 2:00 p.m. Fed minutes Thursday Thanksgiving holiday US markets closed Friday 8:30 a.m. Trade deficit 9:45 a.m. Markit Services PMI
Trumpgasm Sends Stocks To Longest Win Streak In 13 Years Despite Currency, Curve, & Credit Carnage Collapsing currencies, bond bloodbaths, soaring cost of funds, and crumbling crude... Fuck that! Stock indices are at record highs!!!! Some context for the recent moves... Russell 2000 Biggest 2 week gain since July 2009 Dow Biggest 2 week gain since Dec 2011 S&P Biggest 2 week gain since Oct 2014 EURUSD Longest win streak since Lehman (Oct 2008) Dollar Index Biggest 2 week gain since Lehman (Oct 2008) US Treasury Bond Biggest 2 week loss since Jan 2009 Global Bonds Biggest 2 week loss EVER Gold Biggest 2 week loss since June 2013 Copper Biggest 2 week gain since Feb 2010 Which leaves asset classes at extremes... USD Index Most Overbought since September 2014 USDJPY Most Overbought since June 2015 USDCNH Most Overbought since Aug 2015 Dow Most Overbought since Nov 2014 Russell 2000 Most Overbought since Jan 2013 Major Financials SPDR Most Overbought since April 2010 Regional Financials Most Overbought EVER Copper Most Overbought EVER Gold Most Oversold since Nov 2015 Global Bonds Most Oversold since April 2000 EM Bonds Most Oversold since Dec 2014 Treasury Bond Most Oversold since June 2007 Spot the odd 'market' out... US Equities are the only winners... Post-Trump... The Russell 2000 is now up 11 straight days - the longest streak since 2003... The Dow scraped out a gain on the week (while Trannies and Small Caps ripped)... (Nasdaq hit its intraday record highs today and Small Caps at record highs) After 7 straight days of major short-squeeze, the last 3 days have been flatish, perhaps suggesting the squeeze ammo has run dry... Note how the VIX/S&P complex ended the week... VIX was slammed to a 12 handle BUT created no bid in stocks... Bonds had another ugly week (but the belly underperformed)... So while everyone is excited about growth, the yield curve is flattening dramatically... The entire US Treasury market is now underwater for 2016... As the USD soared, so Gold and Silver have been hit but Copper and crude are holding gains post-Trump...
Spoiler: Weekend Reading: The Trump Effect Submitted by Lance Roberts via RealInvestmentAdvice.com, After more than a week following the election, the markets, and a large chunk of the nation, remain a mixed bagged of emotions ranging from exuberance and disbelief to anger and depression. While I don’t want to get into the “left versus right” debate in this missive, it has been interesting to watch market participants swing from “Trump The Terrible” to “Trump The Great” in relation to the markets and economy and he isn’t even in office yet. It is the same as giving Obama the Nobel Peace Prize when he entered office, an action the Nobel committee has come to regret. But which is it really? While Trump certainly has an extensive list of actions for his first 100-days, there are many headwinds to actual policy implementation and ultimately their success. Also, a big part of the success of any policy comes down to one thing – “timing.” A good example of this is the “infrastructure spending” plans which will require a significant increase in the national debt to accomplish. While the market participants have already been chasing financial and infrastructure related assets, an infrastructure program should be prepared but not implemented until the next recessionary drag in the economy. The debt increase needed to fund an infrastructure program, which would likely coincide with a new QE program to buy the debt, would potentially have the greatest effect at limiting the economic drag of the recession. It is the same with trade policies, immigration reform and even tariffs. For every policy, there is a significant potential for a near-term negative impact on economic growth even though the long-run outcome will be positive. With an economy running at below 2%, consumers already heavily indebted, wage growth weak for the bulk of American’s, there is not a lot of wiggle room for policy mistakes. Combine weak economics with higher interest rates, which negatively impacts consumption, and a stronger dollar, which weighs on exports, and you have a real potential of a recession occurring sooner rather than later. However, that is a conversation for later, as the flood of liquidity to support the markets once again, as was seen post the “Brexit”vote has propelled markets higher in a short-covering feeding frenzy. The chart below notes the similarities between the two events. A sharp sell-off to oversold conditions, a reflexive rally that potentially hits new highs, and then fizzles out. Importantly, with next week being a light trading week, it would not be surprising to see markets drift higher. However, expect a decline during the first couple of weeks of December as mutual funds and hedge funds deal with distributions and redemptions. That draw down, as seen in early last December, ran right into the Fed rate hike that set up the sharp January decline. With much of the same backdrop currently in the works, some caution is advised. In the meantime, here is what I am reading this weekend. Trumped! / Fed / Economy 2-Types Of Inflation: The Good & Bad by Danielle DiMartino-Booth via Money Strong What Adds Up & Doesn’t In Trump’s Plans by Lee Ohanian via San Francisco Chronicle Trumponomics Vs. Reality by Martin Feldstein via WSJ Paul Krugman Doubles Down On Fantasy by Steil & Smith via Council On Foreign Relations Coming To Terms With Trumponomics by John Cassidy via The New Yorker Yes, Trump Will Create Growth & Jobs by Stephen Moore via IBD Trump’s Next Default Lies Ahead by Brett Arends via MarketWatch Good Chance Trumped Handed A Recession by Chris Isidore via CNN Money The Trouble With Trump’s Infrastructure Plan by Tyler Cowen via Bloomberg Economic Doctors Misdiagnosed Economy by Ray Keating via Real Clear Markets Financial Crises & Policy Responses by Robert Litan via AEI I Can’t Believe What Just Happened by Paul Krugman via NYT Trump’s Impossible Economic Mission by Robert Samuelson via RCM Fed Ready For A Reckoning by Binyamin Appelbaum via NYT Who’s Going To Pay From Trump’s Plans by Marc Joffe via The Fiscal Times Markets Is The Bull Market In Bonds Really Over? by Caroline Baum via MarketWatch 5 Reasons Investors Should Worry About Trump by Joachim Fels via MarketWatch Dividend Cuts Ramp Up by Ironman via Political Calculations Embrace Contrarian Thinking by Doug Kass via Real Clear Markets Don’t Believe The Great Great Bond Fake-Out by Jeff Reeves via MarketWatch Trumpageddon to Trumptopia! What’s Next? by Michael O’Rourke via HedgEye Market’s Two Bullish Arguments by Michael Kahn via Barron’s Trump-Rally Sits Atop A Lot Of “If’s” & “Maybe’s” by James Saft via Reuters Watch The Rise Of The Dollar by Jeffrey Snider via Alhambra Partners Trump Trade Is Getting Out Of Hand by James Mackintosh via WSJ Clear & Present Danger via Market Anthropology End Of The Year Rally? by Adam Shell via USA Today Interesting Reads Populism Takes A Wrong Turn by Bill Gross via Janus Capital 2826 Day Old Bull Market A Headache by Joseph Ciolli via Bloomberg Trump Rally – Too Far Too Fast? by Paul La Monica via CNN Money Goldman Kills The Reflation Trade by Tyler Durden via ZeroHedge Rates Will Remain Low by David Trainer via Forbes Trump vs Rates by Mohamed El-Erian via Bloomberg If You Build It (Infrastructure), They Won’t Come by Stephen Entin via IBD A CasP Model Of The Stock Market by The Bichler & Nitzan Archives Oops! Single Family Permits Fall Flat by Aaron Layman via AaronLayman.com Judging Economic Policy by John Hussman via Hussman Funds Breadth Thrust To Launch Stocks Higher? by Dana Lyons via Tumblr Just One Question For Yellen by Jesse Felder via The Felder Report “I like thinking big. If you’re going to be thinking anything, you might as well think big.” — Donald Trump
Will the Markets Pull a BRExit on Trump Election Win? Click here to view full size… Our good friend and crack market technician Alex Spiroglou emailed out this fantastic chart yesterday comparing the similar moves the market has made following the surprise BRExit vote in June and the Trump presidential election win last week. Both shocked the world, the pundits and the pollsters. Without getting into the political, geopolitical and ideological impact of either result market action looks interestingly comparable in both instances. The difference was that after BRExit the initial 6.5% selloff transpired over the two-day shock phase. The Trump win selloff occurred overnight intraday. Both recoveries were swift and both entered a sideways phase shortly after the bounce back of which were are now currently in. In his email sent to his followers, Alex writes: “Will the S&P pull a BRExit? I am not a fan of "scenario-based” investing, but I could not help but notice a few similarities, between how markets reacted with “BRExit” and “Trump”. Maybe worth keeping in mind if the market continues behaving in a similar fashion" As Alex’s chart intimates, “If history repeats and we get a similar size rally, then we may see a New High (>2191) and subsequently a False Breakout.” As Founding Chairman of the UK Chapter of the Market Technicians Association in London and Co-Chairman of the Hellenic MTA Chapter in Athens, Alex was a gracious host when he set up my visits and presentations to both chapters in April 2015. I highly recommend his email communiqués. He is a keen market observer, technician, analyst and trader. If you would like to receive his email notes contact him at [email protected]. Even when DJIA’s Daily Winning Streak Ends, Further Gains Likely Since 1950, DJIA has enjoyed 85 previous daily winning streaks of seven consecutive days or longer. When these past streaks ended, DJIA typically continued its rally just at a less brisk pace. In the following chart, the 30 trading days before and the 60 trading days after DJIA’s daily winning streak ended are graphed. The winning streak’s brisk pace of gains is readily visible. Once the streak ended, there was usually just a brief dip and then the rally resumed with DJIA climbing a further 3% or so over the next 60 trading days. Dr. Copper Prescribes Buying S&P 500 Dips Last week’s election results triggered numerous notable market events. The U.S. dollar surged to multi-month highs and is on the verge of breaking out to multi-year highs, 10- and 30-year Treasury bond yields surged as prices slumped, DJIA broke out to new all-time record highs and copper surged 10.77% last week. Today we look at the historical significance, if any, of copper’s sudden move higher. In the following table, the 15 previous weekly gains by copper in excess of 10% appear. We used continuously-linked, non-adjusted, front month futures contract prices since August 22, 1972 for all copper data. These past 15 weekly surges were followed by S&P 500 losses averaging 3.58% during the month following the weekly copper surge. At 3 months after the weekly copper surge, S&P 500 was still down on average 0.48% however, by 6 months after S&P 500 had turned the corner and by 1 year later S&P 500 was up 13.8% on average with just a single loss. Click here to view full-size… Last week’s copper surge could be signaling the end of its bear market that began in 2011. If we believe Dr. Copper does have a PhD in economics and its performance is indicative of future economic activity, then last week’s big advance could be a signal to buy stocks on any dips in the near term. Past weekly surges were followed by S&P 500 volatility in the near-term, but within 1 year, the S&P 500 was higher 93.3% of the time. Small Caps Up 10 Days in a Row—Too Late To Buy? Posted by lplresearch Small caps have been on fire, as the Russell 2000 has been up 10 consecutive days for the first time since March 2013. As we noted in our Weekly Market Commentary: “What A Week,” small caps could be one of the groups to benefit from a Trump presidency, due to easier credit standards and their greater domestic focus. This huge run brings with it many questions—most specifically, can this rally continue? Going back in history, the Russell 2000 has been higher 10 consecutive days 19 other times and the median return a month later has been 2.8%, twice the average median monthly return of 1.4%. Then going out three months, again the returns were stronger than usual. Once you get out to six months, returns normalize. In other words, the near-term returns after long win streaks on small caps tend to see an extension of the near-term strength. According to Ryan Detrick, Senior Market Strategist, “The recent strength in small caps is a nice sign for the overall market, as small cap strength tends to reflect more of an appetite for risk. Not to mention, when the Russell 2000 is up 10 days in a row, this actually leads to stronger returns going out.” Another way to look at this is the Russell 2000 is up more than 13% the past 10 days, the best 10-day rally since July 2009. You’d think big moves like this could suggest a near-term pullback, but surprisingly that may not be the case, as the Russell 2000 has been up another 6.0% on average a month later after big 10-day surges. Below we looked at the largest 10-day rallies, looking at only the initial rally when several 10-day rallies were clustered together, as often happens. Last, if you simply looked at the Russell 2000 relative to the S&P 500, small caps have delivered above-average returns going back nearly three years. This could be another clue that small caps are finally improving after lagging their large cap peers for years.
Stockaholics come join us in our weekly market poll and vote where you think the markets will end this upcoming week ahead!- Weekly SPX Poll - Sentiment (11/21-11/25) <-- click there! In addition we have our weekly stock picking contest now up and running as well!- Stockaholics Weekly Stock Picking Contest for the Week of (11/21-11/25) <-- click there! We also now have a daily stock picking & market direction guessing challenge running here!- Stockaholics Daily Stock Pick Challenge & SPX Sentiment Poll for Monday (11/21) <-- click there! And lastly we have a Fed poll...will they hike, will they stand pat? Vote!- Fed Poll: Will the FOMC raise rates to <0.75% on Wednesday December 14th @ 2:00PM ET? <-- click there! Oh and we also have a newly created Santa Claus Rally poll! Will Santa deliver a market rally this year or not? Vote!- Santa Claus Rally in 2016? Yes or Not? Vote! <-- click there! It would be pretty awesome to see some of you regulars here at Stockaholics join us and participate on these sentiment polls & challenges! Have a fantastic weekend everyone!
I already posted this over on the Cocktail Lounge earlier today but for those who seldom venture outside of this main Stock Market Today section I want to take this time out wish all of you here at Stockaholics the very best Thanksgiving holiday week ahead! I hope you all have a very safe and wonderful holiday with your family & friends! And as we celebrate Turkey Day here in the states I want to say how thankful I am for having all of you guys here on this board for this place would not be possible w/o all of the great contributions from everyone here! You guys absolutely make this place happen! Keep 'em coming! Happy early Thanksgiving everyone! If you guys want to continue chatting more about this please head over to our Thanksgiving thread here: http://www.stockaholics.net/threads/happy-thanksgiving-2016-stockaholics.3225/
Happy Thanksgiving guys Just realized that the Christmas and the New Year will be Sunday this year, anyone knows whether the market will be opened or closed on the Monday after the Christmas and the New Year?
@stock1234 I'm showing the cash & futures markets closed on both Monday's according to the CME holiday schedule
Early November Strength Does Little to Derail Thanksgivings Bullishness Trading around Thanksgiving has a bullish tendency perhaps buoyed by the “holiday spirit” that was first published in the 1987 Stock Trader’s Almanac. For 35 years prior to 1987, the Wednesday before and the Friday after Thanksgiving combined were up 34 times. The only S&P 500 decline was in 1964. Subsequently, this trend changed. In the 29 years since 1987, there have been 8 declines and 21 advances. The best short-term trade appears to be getting long into weakness on Monday or Tuesday of Thanksgiving week and selling into any subsequent rally by the end of Thanksgiving week, but remain nimble as events like Greece’s debt crisis in 2011 can cancel Thanksgiving on Wall Street. Click here to view table full size… Also of note is the change in the yearend rally. Prior to 1987, from the close of trading on the Friday after Thanksgiving to yearend, the S&P 500 rallied only 20 times in 35 years. As Thanksgiving bullishness lost steam in 1987, the rally afterwards occurred more frequently. Since 1987, S&P 500 has logged gains in 22 of 29 years from the close on Friday after Thanksgiving to yearend. Strength in advance of Thanksgiving week appears to have almost no bearing on trading around the holiday. As of today’s close S&P 500 is up 2.62% so far this November. In the following table, Thanksgiving weeks that were preceded by a 2% of greater gain in November through the close on Friday before Thanksgiving week appear. Monday and Tuesday of Thanksgiving week remain essentially mixed, but the day before and day after are little changed compared to all Thanksgivings since 1952 and the two-day combination is still a winner 23 out of 26 years.
Nov 18th Free Friday Market Wrap and Sector Watch Bulls remain in control could be a choppy week next week with some wild runners. Thanksgiving week can get a little crazy for low floaters and they are already on fire. Be careful DON"T CHASE
Earnings due out for release on this upcoming holiday-shortened week ahead: ($TSN $PANW $CSIQ $WB $DLTR $GME $JACK $IGT $DY $BURL $VIPS $BRCD $MDT $SDRL $DSW)
Weekend Review 11.20.16: VIX, TLT, BABA, IBB, SPY, IWM, QQQ, AAPL, AMZN, FB, GOOGL, NFLX, GS, CRM, O Video from Justin Pulitzer
ShadowTrader Video Weekly 11.20.16 - Beware of coming up from the bottom Video from ShadowTrader Peter Reznicek
Just in case it might get asked in here (as I'm sure it will at some point this week lol) but yes the markets are in fact CLOSED all day this Thursday for Thanksgiving Day here in the states, and have an early closing (1pm eastern time) on Friday.
