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The Bull Thread

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

  1. bigbear0083

    bigbear0083 Content Manager
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    On Again/Off Again Tariffs & It’s a Pre-Election Year
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    Even though it has only been a handful of weeks since these charts were last updated and presented, they do put the last few weeks of trading into a broader view. As of today’s close, DJIA is up 9.9% year-to-date. S&P 500 is even better at 13.7% while NASDAQ is still best at 17.9%. Yes, this is down from late-April/early-May highs, but still solid numbers when compared to this point in past pre-election years and especially all years. The recent pullback and the nascent recovery rally could gather further steam and run until early-July (and perhaps challenge old highs again), but from around mid-July until October seasonality becomes a headwind and more backing and filling is likely again.
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  2. hitman

    hitman Active Member

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    I'm still a big fan of the bigbearoo83 even though I don.t like bears...you nailed post #281, July will be a panic month for sure in my graphing/plotting. I think the Dow will flirt with the 25200 and then the drop will take place hence the panic of July.
     
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  3. bigbear0083

    bigbear0083 Content Manager
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    lol @hitman :D

    and good to see you checking in here!

    get ready for the fireworks in july ;)
     
  4. bigbear0083

    bigbear0083 Content Manager
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    Stocks Stand Tall Against Headwinds

    Renewed trade tensions have led to this latest bout of volatility. The recent drop in the S&P 500 Index felt worse because of how quickly it happened—from new highs to down nearly 5% in less than two weeks. Keep in mind stocks have come pretty far pretty fast, beginning with the strong rally at the first of the year that put the S&P 500 back at record highs.

    Swift rallies like this have also tended to lead to drawdowns as stocks typically have lost some steam midyear—hence sparking the well-known market adage “Sell in May.” The stock market was probably due for some volatility. The S&P 500 has averaged more than three pullbacks of 5% or more each year since 1990, and we’re still waiting for our first one this year. “Even though volatility has picked up, and may be with us for a while as risk of a bigger trade war lingers, a pullback or two in the coming months would be totally normal, even with fundamentals still in solid shape,” explained LPL Senior Market Strategist Ryan Detrick.

    The U.S. economy continues to grow at a solid pace, it’s steadily creating jobs, wages are broadly rising, and some benefits of tax reform and other fiscal spending are still flowing through. We expect a pickup in business investment to help extend this economic cycle. Key risks beyond a full-blown trade war include lackluster growth in Europe, a messy U.K. divorce from the Europe Union, and rising geopolitical risk in the Mideast.

    According to the U.S. Treasury, China has cut its holding of U.S. Treasury securities to a 22-month low, potentially in retaliation as the trade dispute lingers. “What isn’t discussed as much, though, is that global demand remains strong, with foreign ownership of U.S. debt hitting a record high last month,” added Detrick.

    As our LPL Chart of the Day shows, China has been decreasing how much U.S. debt it holds, while Japan has silently increased its holdings for five consecutive months.

    [​IMG]

    Last, we remain hopeful that the United States and China will reach some kind of a trade agreement—or at least a trade truce—in the next few months. President Trump cares about the stock market and the economy, and considers both part of his path to re-election. Both sides have a lot to lose from further escalation. And the two sides already came very close to a deal, which suggests the remaining sticking points can be worked out.
     
  5. bigbear0083

    bigbear0083 Content Manager
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    Earnings Season Takeaways

    We consider earnings season a success based on the amount of upside to prior estimates generated by S&P 500 Index companies despite several headwinds. Companies handily beat expectations to get first quarter earnings up to flat, as shown in the LPL Chart of the Day.

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    When earnings season began in mid-April, consensus estimates called for a 4–5% drop in S&P 500 earnings, according to FactSet data. Beating results by this much is impressive considering persistent trade uncertainty and the drag on overseas profits from a strong U.S. dollar. Also consider that the median stock in the S&P 500 has grown earnings several percentage points faster because a few large companies are dragging down the market-cap-weighted calculation.

    Resilient estimates are also encouraging. Since April 15, the 2019 consensus estimate for S&P 500 earnings per share has risen slightly to $168 (a 4% year-over-year increase). We consider that a win given that estimates typically fall during earnings season.

    “Escalating trade uncertainty and the threat of more tariffs are huge wild cards for corporate profits,” said LPL Chief Investment Strategist John Lynch. “We are hopeful that significant progress can be made on the trade front next month, when President Trump and China’s President Xi are expected to meet at the G20 summit. A prolonged impasse that lasts through the summer would make mid-single-digit earnings growth difficult to achieve in 2019.”

    Our base case remains that we will get a trade deal with China early this summer and consensus expectations for 3–4% earnings growth may prove to be conservative. Earnings are hardly booming, but with a continued economic expansion, low inflation, and low interest rates, we see enough earnings growth ahead to push stocks up to our year-end S&P 500 fair value target of 3,000—though it probably won’t get there in a straight line.
     
  6. bigbear0083

    bigbear0083 Content Manager
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  7. bigbear0083

    bigbear0083 Content Manager
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    Another Reason For Bulls To Smile

    The S&P 500 Index has officially gained each of the first four months of the year for the first time since 2013. This comes on the heels of the best first quarter since 1998. Six straight months in green has been the best monthly win streak to start a year, and that last happened in 1996.

    Starting a year with strength like this historically has been a good sign, even though stocks in May saw a nearly 5% correction.

    “Although we wouldn’t be surprised to see continued volatility over the coming months, the good news is a great start to a year has had a funny way of eventually resolving higher,” explained LPL Senior Market Strategist Ryan Detrick. “In fact, the rest of the year has been higher an incredible 14 out of 15 times after the first four months were in the green!”

    As our LPL Chart of the Day shows, the S&P 500 returns the rest of the year (final 8 months) have been more than twice as strong as the average year returns—10% versus 4.7%—following four straight monthly gains to kick off a new year. There’s always a catch though, and in this case we’ve seen an average pullback of more than 8% the rest of the year.

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  8. bigbear0083

    bigbear0083 Content Manager
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    Jobless Claims Hold
    Thu, May 23, 2019

    Weekly jobless claims released this morning came in at 211K, which was below expectations of 215K and the 212K reading last week. The seasonally adjusted number has now spent 71 straight weeks below 250K and 220 consecutive weeks below 300K.

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    After rising to 225K last week, the four-week moving average also saw a modest decline. The moving average fell to exactly where it was at the start of the month (220.3K). This comes as one of the recent highs of 230K has rolled off of the average. Turning to next week, assuming we see a similar print to this week, another data point of 230K will fall out of the average, so we may see another drop in the four-week average as well.

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    As per usual, non-seasonally adjusted (NSA) jobless claims came in well below the average for the current week since 2000. At 191.3K, NSA claims are over 100K below this average. This week's print is also the lowest for the current week of the year of the current cycle and going back to at least 2000. With this new low for the current week of the year, the past couple of weeks' releases have been a welcome change from the YoY increases in the NSA data that has been frequently observed this year.

    Overall, the data has been somewhat mixed recently. Though initial claims more or less held steady this week, continuing claims saw the opposite result as they rose from the previous week and missed forecasts with a print of 1,676K (1,666K expected). While initial claims appear to still be chugging along just fine (YoY increases aside), continuing claims still have not made a new low since last October. That is not necessarily a horrendous thing for either considering the data has also not rocketed higher by any stretch, but it does confirm that the pace in claims falling has somewhat slowed relative to previous years.

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  9. Auri

    Auri Member

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  10. bigbear0083

    bigbear0083 Content Manager
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    Pre-election Year June: Tech and Small-caps Best
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    June has shone brighter on NASDAQ stocks over the last 48 years as a rule ranking eighth with a 0.6% average gain, up 26 of 48 years. This contributes to NASDAQ’s “Best Eight Months” which ends in June. June ranks near the bottom on the Dow Jones Industrials just above September since 1950 with an average loss of 0.3%. S&P 500 performs similarly poorly, ranking tenth, but essentially flat (–0.02% average). Small caps also tend to fare well in June. Russell 2000 has averaged 0.6% in the month since 1979.

    In pre-election years since 1950, June ranks no better than mid-pack. June is the #8 DJIA month in pre-election years averaging a 0.8% gain with a record of nine advances in seventeen years. For S&P 500, June is #5 with an average gain of 1.2% (10-7 record). Pre-election year June ranks #6 for NASDAQ and #7 for Russell 2000 with average gains of 1.9% and 1.1% respectively. Recent pre-election year Junes in 2015, 2011 and 2007 were troublesome for the market as DJIA, S&P 500 and NASDAQ all declined (Russell 2000 eked out a modest gain in 2015).
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