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The Bear Thread

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

  1. bigbear0083

    bigbear0083 Content Manager
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    Resistance Is Not Futile
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    Now that the market has clawed its way back above the 2018 lows and encroaches on the 50-day moving averages, new overhead resistance that was once support is putting up a little fight. The market will need to hold and clear current levels to sustain momentum or regain it if we pull back from here.

    Caught the venerable Art Cashin on CNBC this afternoon and he pointed out a key level of DJIA 23900, which is just above the February 8, 2018 low and runs right through big gap from November 28-30, 2017 that preceded the near vertical rise to the January 2018 high. As you can see in the chart above that has been a line in the sand the past several days.

    Below are charts of the S&P 500 and NASDAQ Composite with similar resistance levels as well as the August 2017 lows that proved to be support on Christmas though S&P traded below that.
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    Onepoint272 likes this.
  2. bigbear0083

    bigbear0083 Content Manager
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    Marin Luther King Jr. Holiday Week Trading Bearish since 1998
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    Although Martin Luther King Jr. Day was a holiday in many states and cities throughout the U.S. beginning in 1971, it did not become a federal holiday until 1986. Even then it was not observed by the NYSE until 1998. In the 21 years since, the market’s performance during this four-trading-day week has been rather lackluster with average weekly performance negative for DJIA, S&P 500, NASDAQ, Russell 1000 and Russell 2000. Average losses range from 0.83% by DJIA to 0.15% by NASDAQ. All five indexes have declined more times than they have risen. Today’s declines are consistent with the recent history of the week.
     
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  3. bigbear0083

    bigbear0083 Content Manager
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    Typical February Trading: Lukewarm Month, Greatest Strength Ahead Mid-Month
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    After one of the best January market performances in decades, expectations could be running high for continued gains in February. However, February historically been a rather tepid month. Since 1950, S&P 500 has averaged a measly 0.04%. Over the last 21-year period S&P 500 average performance has declined to a loss of 0.2% in February. February’s first trading day has historically been good and trading days eight, nine, ten and eleven have been solid long opportunities. Outside of these five days, the balance of February has been lacking
     
  4. bigbear0083

    bigbear0083 Content Manager
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    Now What?

    What a year it has been. After the worst December for stocks in 87 years that contributed to the worst fourth quarter since the 2008–09 financial crisis, stocks have bounced back in spectacular fashion. In fact, with a day to go, stocks are looking at their best first month of the year in 30 years.

    What could happen next? “We like to say that the easy 10% has been made off the lows and the next 10% will be much tougher,” explained LPL Senior Market Strategist Ryan Detrick. “Things like Fed policy, China uncertainty, and overall global growth concerns all will play a part in where equity markets go from here.”

    With the S&P 500 Index about 10% away from new highs, we do think new highs are quite possible at some point this year. Positive news from the Federal Reserve (Fed) and China trade talks, as well as the realization by investors that the odds of a recession in 2019 are quite low could spark potential new highs. Remember, fiscal spending as a percentage of overall gross domestic product (GDP) is higher this year than it was last year. Many think the tax cut and fiscal policies in play last year were a one-time sugar high. We don’t see it that way and expect the benefits from fiscal policy to help extend this economic cycle at least another year—likely more.

    As we head into February, note that it hasn’t been one of the best months for stocks. In fact, as our LPL Chart of the Day shows, since 1950, February has been virtually flat, and over the past 20 years only June and September have shown worse returns. Overall, the market gains have been quite impressive since the December 24 lows, but we wouldn’t be surprised at all to see a near-term consolidation or pullback.

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  5. bigbear0083

    bigbear0083 Content Manager
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    Small Business Confidence Takes Another Fall
    Feb 12, 2019

    Small business confidence as measured by the NFIB saw it’s fifth straight monthly decline in January, falling from 104.4 down to 101.2 and below consensus expectations of 103.0. Uncertainty was definitely the main issue driving the drop in confidence, though, as the NFIB’s Uncertainty Index rose seven points to the fifth highest monthly reading (86) in the survey’s history. As shown in the chart below, the NFIB’s headline index of Small Business Optimism has now declined from a multi-decade high of 108.8 in August to 101.2 with declines in each month in between. What is notable about this decline is that the current reading of 101.2 is the lowest level since November 2016, indicating that the bulk of gains we saw in confidence since the 2016 election have been erased.

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    With five straight months of declines, the NFIB Small Business Optimism Index in the midst of its longest monthly losing streak since 1998 and tied for its third-longest losing streak on record. While those stats may sound ominous, as the chart above and below indicate, both peaks in NFIB and long streaks of monthly declines in NFIB haven’t necessarily been the best predictors of a recession (gray shaded areas).

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    While small businesses grew increasingly concerned over the uncertainty regarding the government shutdown and trade, when it comes to their biggest problems, Washington still isn’t at the top of the list. Quality of Labor continues to be the biggest problem for small business as it was cited by 23% of those surveyed. Taxes clocked in at 15%, while Government/Red Tape came in at 12%, which was actually down from 14%. Maybe with the government shutdown, there was less bureaucracy to deal with??

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    Not only are Taxes and Government/Red Tape not at the top of the list anymore but on a combined basis, they haven’t been this small of a problem since the last recession.

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  6. bigbear0083

    bigbear0083 Content Manager
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    Day Before Presidents’ Day Trading: Long-Term Record Bearish, But Improving
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    Page 88 of the Stock Trader’s Almanac 2019 points out Presidents’ Day as the poorest performing holiday of the eight holidays that are tracked. Unlike the others, the trading day before and the trading day after this three-day holiday weekend are both down on average over the past 39 years.

    Depending on how February lays out in a monthly calendar, the Tuesday after Presidents’ Day is either the first trading day of option expiration week or the week after options expiration week. In the tables below, the years when Presidents’ Day occurs in the week after option expiration are bolded. This year, Presidents’ Day falls in the week after options expiration.

    Since 2011, the market’s performance before the long holiday weekend has improved, most notably during the last eight years with DJIA positive in each year. Some of this recent improvement could have been the result of sizable losses in January and the ensuing rebound rally.
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  7. bigbear0083

    bigbear0083 Content Manager
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    Day After Presidents’ Day: Improving, But Record Still Bearish
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    Yesterday we pointed out the day before Presidents’ Day was amongst the poorest performing holiday over the long run. The day after is even weaker over the long run. However since 2012, the market’s performance after the long holiday weekend has improved, most notably during the last seven years with S&P 500 positive in six of these years.
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  8. bigbear0083

    bigbear0083 Content Manager
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    Trimming Our 2019 GDP Forecast

    Economic data have consistently missed expectations recently as investors and Wall Street have struggled to quantify the impact of global trade and political risks.

    As shown in the LPL Chart of the Day, the Bloomberg U.S. Economic Surprise Index has dropped sharply over the past few months, showing the degree to which consensus estimates have been overestimating economic trends.

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    December’s retail sales report was just the latest instance in a string of whiffs for consensus predictions. Retail sales unexpectedly fell 1.2% in the month, missing consensus estimates for a 0.1% gain by the widest margin since March 2009 and sparking questions about the report’s accuracy.

    In response, over the past few months economists have cut their fourth quarter 2018 gross domestic product (GDP) forecasts to a range of 1.5–2.5%. If fourth-quarter GDP growth ends up at the lower end of that range, it would be the slowest pace of GDP growth since the fourth quarter of 2015.

    We’ve also seen enough evidence to think 2019 GDP growth is likely to be closer to the lower end of our original 2019 forecast (2.5–2.75%), with risks balanced to the upside and downside. Even though we’ve slightly lowered our growth expectations, we still expect the core Consumer Price Index (CPI) to grow 2.25–2.5% in 2019.

    “Heightened trade and political uncertainty have clearly weighed on corporate and consumer sentiment, which we think may weigh on U.S. output growth this year,” said LPL Research Chief Investment Strategist John Lynch. “Still, we think a slight increase in inflation would make sense given the firm U.S. labor market and the possibility that economic activity could stabilize after trade headwinds subside.”

    As we mentioned in our Outlook 2019, we still believe stronger growth in business spending may drive this leg of the economic expansion, as higher investment leads to greater worker productivity and profit growth. However, investment may be muted until the trade dispute with China is resolved.
     

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