Welcome Stockaholics!

We are a new and fast growing financial forum! Sign up for free and let's talk stocks!

  1. Do you want to help develop this community? We are looking for contributions from investors and traders like you! What stocks do you follow? What is hot right now? Sign up and get in on the ground floor of the newest, fastest growing financial forum!
    Dismiss Notice
  2. You will notice a live chat widget on the right. Click in to join us and lets hear about how you nailed that last UWTI trade!
    Dismiss Notice

The Bear Thread

Discussion in 'Stock Market Today' started by bigbear0083, Apr 1, 2016.

  1. bigbear0083

    bigbear0083 Content Manager
    Staff Member

    Joined:
    Mar 29, 2016
    Messages:
    19,816
    Likes Received:
    7,015
    No New Low in Sight For Jobless Claims
    Thu, Dec 19, 2019

    Initial jobless claims remained elevated relative to recent history this week as the seasonally adjusted number came in at 234K compared to expectations of a decline to 225K. As shown below, the four-week moving average—which offers a better look at the overall trend by smoothing out this type of week to week volatility—has been grinding higher even before the past couple of weeks' swings. In other words, regardless of the more recent surge, claims have been trending higher in the past year.

    [​IMG]

    Given this, it has been some time since the four week moving average has made a new cycle low. In fact, the moving average is now 24K above the April low of 201.5K. As shown in the chart below, this is the widest spread between a weekly reading and the cycle low in more than a year, but there have also been prior times that the spread has been far wider such as in 2011, 2012, 2013, and 2017. Despite this, outside of April, most of the past year has seen claims fairly elevated above its lows.

    [​IMG]

    Expanding on this, while the distance between the last low and the current level could be worse, the current streak without a new low is now the second longest of the current cycle at 35 weeks long, passing the 34 week long streak ending in May 2014. If this continues for another seven weeks, it will take out the streak lasting 42 consecutive weeks ending in December 2012.

    [​IMG]

    Seeing as it has been so long since we have seen a new low in the 4-week moving average for claims, it shouldn't come as a surprise that 2019 has been relatively quiet on the new low front. In fact, there were only two weeks that saw a new low get put in place this year, both occurring in April. As shown in the chart below, no other year of the current cycle has seen so few of such weeks.

    [​IMG]
     
    Onepoint272 likes this.
  2. bigbear0083

    bigbear0083 Content Manager
    Staff Member

    Joined:
    Mar 29, 2016
    Messages:
    19,816
    Likes Received:
    7,015
    Last Trading Day of the Year: NASDAQ Down 15 of Last 19
    [​IMG]
    Last-minute tax-loss sales, old sayings such as “year ends make great exits,” a desire to start with a clean slate; who knows exactly the answer, but the last trading day of the year has turned bearish over the last nineteen years. Since 2000, NASDAQ has the worst record, down 15 of 19 after advancing every last trading day of the year from 1971 to 1999. Russell 2000 has one additional gain for a record of 14 losses in 19 years. S&P 500 and DJIA are only slightly better. Average declines on the day range from 0.43% to 0.19%
     
    Onepoint272 likes this.
  3. bigbear0083

    bigbear0083 Content Manager
    Staff Member

    Joined:
    Mar 29, 2016
    Messages:
    19,816
    Likes Received:
    7,015
    January Almanac: Average Performance Slips in Presidential Election Years
    [​IMG]
    January has quite a reputation on Wall Street as an influx of cash from yearend bonuses and annual allocations typically propels stocks higher. January ranks #1 for NASDAQ (since 1971), but fifth on the S&P 500 and sixth for DJIA since 1950. It is the end of the best three-month span and holds a full docket of indicators and seasonalities.

    DJIA and S&P rankings did slip from 2000 to 2016 as both indices suffered losses in ten of those seventeen Januarys with three in a row, 2008, 2009 and 2010 and then again in 2014 to 2016. January 2009 has the dubious honor of being the worst January on record for DJIA (-8.8%) and S&P 500 (-8.6%) since 1901 and 1931 respectively. Last year, January was downright stellar after the worst December since 1931 for DJIA and S&P 500.

    In election years, Januarys have been weaker. DJIA and S&P 500 slip to number #8 while DJIA average performance dips negative. NASDAQ slips to #3, but average performance remains respectable at 1.7%.
    [​IMG]
     
    Onepoint272 likes this.
  4. bigbear0083

    bigbear0083 Content Manager
    Staff Member

    Joined:
    Mar 29, 2016
    Messages:
    19,816
    Likes Received:
    7,015
    Manufacturing Sector Sinks Further Into Contraction
    Fri, Jan 3, 2020

    What's the bright side to the market weakness from news overnight that a US drone strike in Iraq killed Iranian General Qassim Soleimani? It took all the focus off of the December ISM Manufacturing report which came in weaker than expected and was all around bad just about any way you look at it! At the headline level, economists were expecting the ISM Manufacturing index to rebound from 48.1 up to 49.0, but instead of a bounce, we actually saw a decline to 47.2, which was the lowest level since June 2009.

    [​IMG]

    Commentary in this month's report was also weak. Outside of Textile Mills, where the outlook is positive, commentary around every other sector highlighted was negative with descriptions like shrinking, sluggish, and on the defensive dominating the commentary.

    [​IMG]

    Below we break down this month's report by each of the individual sub-indices. The biggest decliners relative to November were Production and Employment while Prices Paid saw the largest decline. Weak activity with rising prices? That's not an optimal combination!

    [​IMG]

    As mentioned above, Production saw the largest decline in December, falling to 43.2 from 49.1. That's the largest m/m decline since January 2012 and the lowest overall reading since April 2009.

    [​IMG]

    New Orders were also weak this month, and while the m/m decline wasn't large (less than a point), activity hasn't been shrinking at this rate since April 2009.

    [​IMG]

    On the employment front, activity also contracted from 46.6 down to 45.1. Employment in the manufacturing sector hasn't been this weak since January 2016.

    [​IMG]

    As if the weak activity in the Manufacturing sector wasn't bad enough, it was accompanied by rising prices. As shown in the chart below, the Prices Paid component increased five full points to 51.7 in what was the largest m/m increase in over two years (September 2017). All in all, this was just a lousy report!

    [​IMG]
     
    Onepoint272 likes this.
  5. bigbear0083

    bigbear0083 Content Manager
    Staff Member

    Joined:
    Mar 29, 2016
    Messages:
    19,816
    Likes Received:
    7,015
    U.S. Manufacturing Continues to Slide

    U.S. manufacturing health continued to slide, despite the United States and China moving closer to a limited trade agreement.

    The Institute for Supply Management’s (ISM) manufacturing Purchasing Managers’ Index (PMI) fell to 47.2 in December 2019. As shown in the LPL Chart of the Day, December’s reading was the lowest of the economic cycle, and its fifth straight month in contractionary territory (below 50).

    [​IMG]

    Underlying details of the PMI report were also discouraging. ISM’s forward-looking gauge of new orders fell to a 10-year low, signaling weak demand may continue to weigh on manufacturing over the next few months.

    “We had hoped to see some stabilization in domestic manufacturing with trade progress in sight, but Friday’s report showed the sector may take a while to bounce back,” said LPL Financial Chief Investment Strategist John Lynch. “However, we’re still hopeful that the manufacturing decline will bottom out at these levels, even if it takes some time.”

    We’re still constructive on economic fundamentals, even amid manufacturing’s malaise. Manufacturing has historically been a bellwether for the economic outlook, but its role in output has shrunk. Manufacturing accounts for about 11% of gross domestic product, according to Bureau of Economic Analysis data, so it’s unlikely the sector alone will drag the rest of the economy down. ISM’s PMI has dropped below 50 three other times this cycle without a recession materializing, and other key segments of the economy still look solid.

    There are also unusually circumstances to consider. Boeing Co. suspended its 737 Max airplane production on December 17, so there could have been a temporary weight on new orders and the overall PMI in December.

    Manufacturing’s decline is concerning, and bouts of weakness matter for corporate profits and capital investment. We’ll be watching to see if the ISM PMI falls to the low 40s, the PMI level that has historically been associated with recessions.
     
    Onepoint272 likes this.
  6. bigbear0083

    bigbear0083 Content Manager
    Staff Member

    Joined:
    Mar 29, 2016
    Messages:
    19,816
    Likes Received:
    7,015
    January Jobs Day: Historically Not a Pretty Sight
    [​IMG]
    Tomorrow morning the Bureau of Labor Statistics will release its Employment Situation report for December. Depending upon your preferred source, the consensus estimate is for a gain of approximately 160,000 net new nonfarm jobs. This is quite a bit lower than the 202,000 that ADP reported yesterday. Historically, the market has responded less than sanguinely to the jobs report released in January.

    S&P 500, NASDAQ, Russell 1000 and Russell 2000 have all posted average losses on the day in the last twenty years. S&P 500 and Russell 2000 both logged eleven losing years. DJIA and Russell 1000 have been up half the time while NASDAQ is the sole major index with more years up than down with an average loss of -0.12% but a median gain of 0.10%. Russell 2000 is the biggest loser down -0.34% on average and median.
    [​IMG]
     
    Onepoint272 likes this.
  7. bigbear0083

    bigbear0083 Content Manager
    Staff Member

    Joined:
    Mar 29, 2016
    Messages:
    19,816
    Likes Received:
    7,015
    January Off To Stronger Than Usual Start – But 2nd Half Is Weaker
    [​IMG]
    Stocks are off to a stronger that usual so far in January 2020 when compared in the chart above to the average performance over the most recent 21-year period. As of today’s close DJIA is up 1.41%, S&P 500 +1.61%, NASDAQ leads the pack +3.11% and the Russell 2000 was in the red until the past two day and is now up 0.44%. This is well above historical average performance in recent Januarys.

    The market was up nicely today until reports hit the newswires at about 1:30 pm ET creating uncertainty that the Phase 1 trade deal expected to be signed tomorrow between the US and China may be pabulum. The realization that the tariffs on Chinese goods may remain in place until after the election as the review process runs its course drove stocks lower this afternoon. The market gave back most of its early gains with only the Dow and Russell 200 eking out gains today.

    However, as you can see in the dotted lines so far in 2020 the indices are tracking the last 21-years rather closely. If the pattern continues to pan out this year, look for a little strength over the next two days. Then weakness has been prone to appear just after mid-month after the eleventh trading day with mild average losses from on or around the eleventh trading day to the fourteenth trading day.
     

Share This Page