Welcome Stockaholics to the trading week of October 22nd! 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.
China's National Team Rescues Global Stocks As Yuan Tumbles, Gold Gains Quite a week where Chinese, European, and US Stocks take huge rollercoaster rides to end unchanged... (with th every visible hand of China's National Team and the magically coincident sudden short-squeeze in the US)... China was looking seriously ugly on the week but the worst GDP (bar Q1 2009) print in the country's history was just what The National Team needed to start a buying-panic in Chinese stocks... And thanks to that momentum ignition from China, European stocks scrambled back to even on the week... (Italy ended down 1%) But EU Autos were hit after Daimler... But while US equities were aided by the exuberant Chinese momo, selling pressure returned.. As Tuesday's panic-bid (biggest short-squeeze since the election) just couldn't sustain gains. In the end, stocks went nowhere... A Big Sell Order hit around 2pmET... All the major US indices are sat right at key technical levels... The midweek short-squeeze was hit hard... VIX ended the week lower but still relatively elevated at 19 - note each time we shifted to positive on the week, vol-sellers appeared... US Autos were just as ugly after Daimler's downgrade...holding just above 2016's lows. US Homebuilders continued their collapse...down 20 of the last 23 days October remains a mess for US markets... Trannies remain red for 2018, and Small Caps have almost erased all their year gains... Bonds also had a rollercoaster week - ending higher in yield led by the short-end (belly outperformed)... But commodity divergences suggest bond yield should be notably lower... The Dollar Index rallied on the week (for the 3rd week in 4) - highest weekly close since June 2017 China's offshore yuan tumbled for the 7th week of the last 8 and the lowest weekly close since Dec 2016... Cryptocurrencies were mixed on the week with Ripple best, Bitcoin and Ether with modest gains and Litecoin and Bicoin Cash lower... Despite a strong dollar, Gold and Silver managed to hold on to gains as copper and crude dropped... Crude kept sliding all week (back below $70) but gold outperformed... Finally, we note the regime shift in China's hold on Gold - something snapped...
Spoiler: Weekend Reading: Tax Cuts Saved The Economy? Authored by Lance Roberts via RealInvestmentAdvice.com, IBD recently penned an article touting the success of the recent tax cuts from the Trump administration. “The Treasury Department reported this week that individual income tax collections for FY 2018 totaled $1.7 trillion. That’s up $14 billion from fiscal 2017, and an all-time high. And that’s despite the fact that individual income tax rates got a significant cut this year as part of President Donald Trump’s tax reform plan.” Hold on a second. A $14 billion increase on $1.68 Trillion in receipts is a very paltry 0.8% increase. This is the 8th LOWEST rate of increase in the history of data and is more representative of population growth rather than the success of tax cuts bringing in more revenue. In fact, when looking at Federal Receipts on an annualized basis, growth in receipts as of the end of Q2 has fallen by more than 4% annually. Importantly, throughout history, negative growth rates in Federal receipts have been associated with recessionary periods in the economy rather than expansions. But IBD in their effort to support the Trump tax cuts continues: “Critics of the Trump tax cuts said they would blow a hole in the deficit. Yet individual income taxes climbed 6% in the just-ended fiscal year 2018, as the economy grew faster and created more jobs than expected.” Well first, as we have shown previously, the tax cuts DID INDEED blow a hole in the deficit. Currently, the deficit is rapidly approaching $1 Trillion and will exceed that level in 2019. To IBD’s point, the economy has grown faster than expected and jobs have increased (but not more than expected.) “Yes, the economy was booming in fiscal 2018. But it probably wouldn’t have been booming without the tax cuts.“ Actually, no. It wasn’t Trump’s tax cuts that led to this growth but, as we discussed recently with Danielle Dimartino-Booth, it came from a “sugar-high” created by 3-massive Hurricanes in 2017 which have required billions in monetary stimulus, created jobs in manufacturing and construction, and led to an economic lift. We saw the same following the Hurricanes in 2012 as well. However, these “sugar highs” are temporary in nature. Fortunately, for the economic bulls, a bit of reprieve has come from Hurricanes Florence and Michael which will provide some continued boost to economic growth into Q2 of 2019. The problem is the massive surge in unbridled deficit spending which provides a temporary illusion of economic growth but leads to long-term economic suppression. Eventually, the debt will come due. So, while IBD is taking a victory lap touting the success of the Trump agenda, the reality is that the pro-growth policies were launched to late within an economic cycle. This will ultimately ensure the next recessionary drag will likely be larger and last longer than most expect as both fiscal and monetary policy tools were spent during the boom, rather than saved for an eventual “rainy day.” Just something to think about as you catch up on your weekend reading list. Economy & Fed The Reason Interest Rates Remain So Low by Caroline Baum via MarketWatch FOMC Minutes Signal Move Above Neutral by Tyler Durden via ZeroHedge Austerity Hawks Are Coming For Social Security by John Nichols via The Nation McConnell: GOP Won’t Fix The Deficit by Jordan Weissmann via Slate Time To Bet On Putin by Simon Constable via Forbes Fed Minutes: More Rate Hikes Coming by Mike “Mish” Shedlock via MishTalk.com The End Of Easy Money by Charlie Bilello via Pension Partners Fed Reserve Obsessions Blinds Market From Dangerous Truthby John Tamny via RCM Stop Subsidizing Debt by Bloomberg Staff Writers Two Years Under Socialism Made Me Love Capitalism by Dov Fischer via American Spectator The Economic Cycle That Just Won’t End by John Rekenthaler via MorningStar Trump Vs. Fed: When Markets Crash, Who’s To Blame by Brandon Smith via Alt-Market Markets Guggenheim: Expect Risk Off In 2019 & A 40% Decline by Tyler Durden via Zerohedge There Are Big Changes Afoot In The Markets by Joe Calhoun via Alhambra Partners Analyst Who Predicted 2008 Crash Warns Of Next Bubble by Barbara Kollmeyer via MarketWatch Gundlach’s Best Investing Adviceby Karl Kaufman via Forbes Are Credit Spreads Still A Leading Indicator by Pater Tenebrarum via Acting Man blog Highly Unusual Breadth by Dana Lyons via The Lyons Share Why You Should Be Skeptical About Forecasts by Erik Conley via Zen Investor Market Carnage Has Investors Fleeing Bonds by Ryan Vlastelica via MarketWatch Tuesday’s Big Upside Move Was A Sucker’s Rally by Michael Markowski via BullsNBears There Are A Lot Of Stocks Down 50% From Highs by Philip Van Doorn via MarketWatch When Will Chasing Hot Stocks Stop Working by Kevin Muir via The Macro Tourist Market Corrections Aren’t Fun, But Normal by Jonathon Trugman via NY Post Markets Are Broken & Nothing Is Working by Robert Burgess via Bloomberg Most Read On RIA Is A Year-End Rally Still Possible by Lance Roberts Why The Fed’s Monetary Policy Is Still Accommodative by Michael Lebowitz VLOG: Why U.S. Household Wealth Is In A Bubble by Jesse Colombo FIRE’d Up – A Million Ain’t What It Used To Be by Lance Roberts Closed-End Fund Discounts by John Coumarianos The Market Isn’t The Economy – Snapshot From The Depression by Richard Rosso Why The U.S. Is Following The Same Path As Japan by Lance Roberts Research / Interesting Reads The US Housing Recovery Is Built On Quicksane by Keith Jurow via MarketWatch The Big Blockchain Lie by Nouriel Roubini via Project Syndicate Hello! May I Assist You With A Lifetime Of Debt? by Elena Valenzuela-Stookey via NYT GE’s Looming Dividend Cut by Political Calcuations Art, Tech Stocks & The Financial Canary’s Last Gasp by Merryn Somerset Webb via MoneyWeek China’s Great Leap Backwards by Jonathan Tepperman via Foreign Policy Is Your Bank Ready For The Next Crisis by William Bladwin via Forbes The “No Growth” Prescription For Misery by Bjorn Lomborg via Project Syndicate 5-G – The Most Disruptive Event Is Here by Stephen McBride via Risk Hedge Bad Financial Moon Rising by William White via Project Syndicate “Every once in a while, the market does something so stupid it takes your breath away.” – Jim Cramer
Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2018- S&P sectors for the past week-
Third-Quarter Earnings Preview: What to Watch Third-quarter earnings season effectively kicks off today, and it should be another good one. S&P 500 Index companies are expected to report their ninth consecutive increase in profits and third consecutive quarter with earnings growth of over 20%. We expect these strong earnings gains to be driven mostly by solid economic growth, particularly manufacturing, and tax cuts—though higher oil prices should give energy sector profits a nice boost. The interest rate environment has gotten better for financials recently, which also helps. We like looking at company pre-announcements ahead of reporting season to get a sense of where results may come in. At 2.1, the ratio of negative to positive pre-announcements for the third quarter is higher (or more negative) than the second quarter and last year’s third quarter, but lower than the long-term average of 2.8 (Thomson Reuters’ data since 1995). We interpret this as a positive indicator of upside to S&P 500 earnings estimates, but the potential upside is more modest than in recent quarters. Similarly, earnings estimate revisions can tell us something about how results will come in. Third-quarter estimates have held steady since the quarter ended on September 30, but estimates were cut by 1.6% during the quarter. The good news is that the reduction in earnings is lower than the average reduction, suggesting that results will probably exceed estimates, as they typically do. So what should investors be watching during earnings season? We highlight these three factors: Profit margin pressure. In general, companies continue to do an excellent job controlling costs and keeping their profit margins high. But tariffs, (slowly) rising borrowing costs, and budding wage pressures have put the market on notice for potential narrowing of profit margins. Profit growth peak. We will again hear about peak profit growth this quarter. A peak in earnings growth is very different from an earnings decline, something we see as a long way off. “Historically, about four years have passed, on average, between an S&P 500 earnings growth peak and the next recession, during which stocks have produced solid gains,” notes our Chief Investment Strategist John Lynch. China-U.S. trade tensions. China will be important to watch again this earnings season given tariffs, the ongoing trade dispute, and related slower growth in the Chinese economy, which has pressured its stock market. We also expect to hear a lot about how companies are preparing for additional potential tariffs on Chinese goods, and whether they are seeing business in China drop off. The Calendar Is a Bull’s Best Friend “October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” — Mark Twain After six straight months of equity gains for the S&P 500 Index and one of the least volatile quarters ever, the historically volatile October is living up to its name. However, earnings continue to be very strong, and we see very little reason to expect a recession over the next 12–18 months. By no means are investors out of the woods yet, as we wouldn’t be surprised to see more weakness and volatility before the midterm elections. Remember, the S&P 500 dropped for nine straight days ahead of the U.S. election in November 2016. Nevertheless, there may be a silver lining for the bulls. As our LPL Chart of the Day shows, the majority of stock gains in midterm years have come late in the year. “Midterm years have tended to be the most volatile out of the four-year presidential cycle, and wouldn’t you know it, nearly all the gains for the year tended to happen in the final few months,” explained LPL Research Senior Market Strategist Ryan Detrick. On average, the S&P 500 actually has been negative year to date ate in early October during a midterm year. Importantly, markets can be jittery ahead of major events like elections. Once the uncertainty is resolved in November, solid fundamentals and strong seasonals could take over for a nice year-end rally. What Happens If You Miss the 10 Worst Days of the Year? After more than three months without a single 1% change (up or down) for the S&P 500 Index, volatility came back—and in a big way—this past week. This brings up an interesting question: What would happen if you could avoid all the big down days for stocks while invested in a portfolio mimicking the makeup of the S&P 500? Of course, no one can really do this, but it’s still a very important exercise for investors to examine on the futility of market timing. If you could have avoided the 10 worst days of each year for the S&P 500 since 1990, you would have had average annual gains of close to 40%. However, saying you’ll do that—and actually being able to accomplish it—are two totally different things. What if you missed the 10 best days of the year? Well, in that case, you would have been down on average 12.8% a year since 1990. Per Ryan Detrick, Senior Market Strategist, “Let’s get one thing straight—no one can predict the 10 best or 10 worst days of the year. Although it would be fun to somehow do this, the exercise hammers home that for the average investor, being invested and not making a lot of short-term bets may be the best way to accumulate long-term wealth.” Here are some key takeaways from this exercise: Even if you missed the 10 best days of each year, you still would have been in the green six times (1991, 1995, 1996, 1997, 2013, and 2017). Market timing made the smallest difference in your portfolio last year. If you missed the 10 worst days of the year in 2017 your portfolio gained 31.1%, but if you missed the 10 best days of the year your portfolio still rose 8.6%. The most volatile days mattered more in 2009. If you missed the 10 worst days in 2009, your portfolio added 88.8% for the year, the largest gain in any year of the exercise. If you missed the 10 best days of that year, your portfolio lost 18.7%. Only a 1 in 5 Chance S&P 500 Finishes October with a Gain That is the S&P 500′s chances of turning around and finishing this October with a gain. To reach this conclusion, we went into our database and started at 1950 for DJIA and S&P 500 (NASDAQ since 1971) and retrieved all past occurrences where the market’s performance in October was negative on the thirteenth trading day of the month. This worked out to be Wednesday’s close. Prior to this year, DJIA had 28 previous losing starts, S&P 500 had 25 and NASDAQ had 21. DJIA’s worst performance through the thirteenth trading day in October was in 1987 when it plunged 33%. October 1987 was also worst for S&P 500 and NASDAQ. DJIA’s average loss was 3.9%, excluding this year, S&P 500 4.2% and NASDAQ 4.7%. Historically, recovery from these losses by the end of October did not happen that often. DJIA bounced back just 25% of the time to finish October with a gain, S&P 500 recovered just once out of every five (20%) and NASDAQ recovered only 19% of the time. However, this plays right into our Seasonal MACD Buy Signal and the “Best Months.”Valuations are coming down and bullish sentiment is softening while economic data is holding up and corporate earnings are forecast to continue to grow solidly. Recent weakness also improves the probability that this “Sweet Spot” go around could see performance approaching, or even besting, historical averages.
Stock Market Analysis Video for October 19th, 2018 Video from AlphaTrends Brian Shannon ShadowTrader Video Weekly 10.21.18 - The "h" strikes again, Earnings Week, Gold! Video from ShadowTrader Peter Reznicek
Here are the current major indices pullback/correction levels from ATHs as of week ending 10.19.18- Here is also the pullback/correction levels from current prices- ...and here are the rally levels from current prices-
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 (10/22) <-- click there to cast your daily market vote and stock pick! Stockaholics Weekly Stock Picking Contest & SPX Sentiment Poll (10/22-10/26) <-- 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 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 10.22.18 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! Monday 10.22.18 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! Tuesday 10.23.18 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 10.23.18 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 10.24.18 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 10.24.18 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 10.25.18 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 10.25.18 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 10.26.18 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! Friday 10.26.18 After Market Close: Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES! NONE.
And as promised here is the most anticipated earnings calendar for this upcoming trading week ahead- ($AMD $AMZN $MSFT $GE $SNAP $TWTR $GOOGL $T $INTC $BA $CAT $V $HAL $SHOP $F $MCD $LMT $HAS $CELG $VZ $AAL $UPS $MMM $NOK $KMB $LAGN $CMG $PETS $FCX $CY $GRUB $GILD $WDC $BIIB $PII $STM $RTN $NOW $IRBT $AMTD $SALT $TXN $UTX $SIRI) If you guys want to view the full earnings post please see this thread here- Most Anticipated Earnings Releases for the week beginning October 22nd, 2018 <-- click there to view!
Growth and tech outperforming today, small caps also up slightly Another down day for XHB HD has been so strong during this bull market but now it is negative for the year and deep into correction territory
I added in [long] at the SPX 2700. I did not expect this much of a collapse. But a good buying opportunity. Better than buying at 2750. My trades are based on my theory.
Markets well off the lows. Let’s see if the big tech earnings later this week will lift the market a little