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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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    Dow Adds Another 1,000 Point Notch to Its Belt
    Mon, Nov 18, 2019

    While back below that level now, Friday's close marked the 28th 1,000-point threshold that the DJIA crossed on a closing basis for the first time, and it was the first such cross of one of these thresholds in more than four months. While the financial media used to (and to a degree still does) make a big fuss about the DJIA crossing a 1,000 point level for the first time, these days it just isn't what it used to be. The table below lists each 1,000 point threshold that the DJIA has crossed in its history. For each level, we also list the date the DJIA first crossed the 1,000 point level, how many days passed since the prior 1,000 point threshold, what percentage that threshold was of the index's total level, and then how many times the DJIA has crossed above and below that level (on a closing basis).

    When we said 1,000 points isn't what it used to be, we meant it. As shown in the table, these days 1,000 points on the DJIA is only a 3.6% move, and the path from 28K up to 29K will be less than 3.5%. With the DJIA at much higher levels now, the 127-day rally from 27,000 to 28,000 is much less impressive than the 1997 move where the DJIA rallied from 6,000 to 7,000 (a 14% rally) in just 122 days. Additionally, while it took 540 days for the DJIA to go from 26,000 up to 27,000, it only took 421 days for the index to cross the prior eight 1,000 point levels!

    Another interesting aspect of the DJIA's path through 1,000 point thresholds is how many times it crossed each one of them. 10,000 and 11,000 were especially difficult levels for the DJIA to put through the rearview mirror. The index crossed above or below 11,000 on 87 different occasions and 10,000 67 times. While those were extreme levels of congestion for the DJIA, two levels it glided right through were 5,000 and 19,000. These are the only two 1,000 point levels from which the index has never looked back after first crossing above them.

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  2. bigbear0083

    bigbear0083 Content Manager
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    Week before Thanksgiving Dow Up 19 of 26, But…
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    DJIA has a solid track record over the last 26 years, rising 19 times the week before Thanksgiving with a median gain of 0.56%. But the other major U.S. stock market benchmarks are not as strong and there has been more weakness across the board recently. Since 2003 DJIA is up only 9 out of the last 16 years with a median gain of 0.11%.

    S&P is up 16 of the last 26 years with a median gain of 0.36% and up 8 of the last 16, -0.05% median gain. NASDAQ is up 16 of the last 26 years with a median gain of 0.34% and up 8 of the last 16, 0.07% median gain. Russell 200 is up 14 of the last 26 years with a median gain of 0.54% and down 9 of the last 16, -0.20% median gain.

    This sets up well for the latter-day Thanksgiving trade of buying into weakness the week before Thanksgiving and selling into strength around the holiday and typical November end-of-month strength.
    [​IMG]
     
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  3. bigbear0083

    bigbear0083 Content Manager
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    Three Amazing Streaks
    November 19, 2019

    “We’re going streaking!” Frank The Tank in Old School

    As the bull market continues to make new highs, the past few weeks have seen some amazing market streaks. Here are three that have caught our attention.
    • The S&P 500 Index hasn’t had back to back losses for 29 consecutive days. As the LPL Chart of the Day shows, this is the longest such streak without back to back down days since March 2005. It is worth noting that the S&P 500 gained another 5.8% three months after the March 2005 streak ended.
    [​IMG]
    • The S&P 500 hasn’t closed below its 10-day moving average for 28 days in a row. In fact, this is the first year since 1979 to see two streaks at least this long during the same year. Additionally, the index has closed above its 10-day moving average an incredible 71.3% of all trading days this year. Going back 50 years, only 1995 and 2013 saw more.
    • The S&P 500 hasn’t traded in more than a 1% intraday range (from low to high) for 26 days in a row. Making this the longest streak in just over a year. In other words, volatility during this recent steady advance has been extremely low.
    “The past few weeks have been one of the least volatile, yet persistently bullish periods we’ve ever seen,” explained LPL Financial Senior Market Strategist Ryan Detrick. “29 days in a row without the S&P 500 Index down back to back days, while the majority of those moves have been quite small sums it all up. It’s been a great run, but history says don’t get too comfortable, as the pendulum always swings eventually, and bigger moves are likely coming.”
     
  4. bigbear0083

    bigbear0083 Content Manager
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    Trump vs. the Average Presidential Election Cycle
    Wed, Nov 20, 2019

    With year three of the current four-year Presidential Election Cycle coming to an end in six weeks, below is an updated look at the average performance of the S&P 500 in each year of the cycle going back to 1928. As shown, years one and two have historically been weaker than years three and four of the cycle. The S&P has been up 56.5% of the time in both year one and year two, but the index has been up 81.8% of the time in year three and 72.7% of the time in year four. Year three has been by far the best year of the cycle with an average gain of 12.81%, and the playbook has stuck to the script in year three of the current cycle with the S&P up 24.5% year-to-date. While year four has historically been consistently positive with gains 72.7% of the time, the average change for the S&P in year four (+5.71%) is just barely better than the average change in years one and two.

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    Below we show the S&P 500 under Trump so far versus a composite of the S&P four-year Presidential cycle. The S&P gained 19.4% in year one of the current cycle versus an average year-one gain of 5.7%. Year two is historically the worst year of the cycle with an average gain of just 4.54%, and in Trump's second year, the S&P actually fell 6.2%. So far this year, the S&P is up 24.5% versus the average gain of 12.8% during year three of the cycle. As shown in the chart, year four generally trends positively but experiences pullbacks shortly after Q1 and again in October leading up the Election Day before closing out the year strong.

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  5. bigbear0083

    bigbear0083 Content Manager
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    Don’t Fear Record Highs
    November 20, 2019

    “Be fearful when others are greedy, and greedy when others are fearful.” – Warren Buffett

    The S&P 500 Index has trended higher in an unusually persistent fashion recently. The benchmark has notched 10 record-high closes over the past four weeks, including four straight through November 18.

    It’s human nature to get nervous when market conditions are too calm, especially with an uncertain outlook and an aging bull market. However, we urge investors not to lose sight of their goals.

    As shown in the LPL Chart of the Day, the S&P 500 has consistently powered past record highs. Since 1950, the benchmark

    [​IMG]

    Stocks rarely move higher in a straight line, though. Since 1950, the S&P 500 has declined an average of 2% in the month after a record-high close. In 2018, the S&P 500 notched a record high September 20, only to fall nearly 20% by December 24. Volatility can be uncomfortable, and it can be difficult to stay focused on long-term prospects when prices are falling.

    Luckily, history shows that even the swiftest sell-offs don’t last forever. After the S&P 500’s nearly 20% slide in late 2018, it recouped all of its losses in the next four months. In 2011, the index dropped 19% from April to October before reaching new highs again in March 2012. The S&P 500 even found its way back to record highs after the 2008–09 financial crisis, nearly 5.5 years after its 2007 October peak.

    “Even though the path can be rocky, stocks have historically offered long-term opportunity for investors,” said LPL Financial Senior Market Strategist Ryan Detrick. “It’s important to stick to your investing plan in times of volatility and calm. We still view volatility as an opportunity for suitable long-term investors consider rebalancing portfolios or add to positions.”
     
  6. bigbear0083

    bigbear0083 Content Manager
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    Russell 2000 Q4 Best 20 Days
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    We have been tracking seasonal market behavior for over five decades and have highlighted fourth quarter strength, holiday trading patterns and monthly trading patterns among other seasonal trading strategies for years.

    There has been a little twitter chatter of late about the old Russell 2000 4th Quarter Best 20 Days Strategy. Lore has is that the Best 20 Days of the 4th quarter for the Russell 2000 are the last two trading days of October, the first two of November, the last seven of November and the last nine of December.

    For perspective I have compare the Russell 2000 to the S&P 500 over these 20 “Best” Days. Russell 2000 does beat the S&P 500 with a cumulative median gain over these 20 days since 1979 of 4.6% and an impressive record of up 38 of the last 40 years, while the S&P 500 delivered a respectable median gain of 3.1%, up 37 of the last 40 years.
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  7. bigbear0083

    bigbear0083 Content Manager
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    1.) The S&P 500 hasn't been down a pre-election year since WWII.

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    2.) Inverted yield curves are bullish for stocks.

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    3.) Under a Republican President, the best returns for stocks are when you have a split Congress.

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    4.) After a midterm election, the S&P 500 had been higher a year later 18 of the past 18 times. This year made it 19.

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    5.) The S&P 500 was higher 5 months in a row ending August 2018. A year later stocks had been higher 24 of the past 25 times. This time made it 25 of 26.

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    6.) Off the midterm year low, the S&P 500 has been higher a year later every single year since WWII. Up an avg of 32%, pretty much how much it is up since 12/24/18.

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    7.) The S&P 500 hadn't been up 20% (price only) for 5 years in a row. One of the longest streaks ever.

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    8.) When the S&P 500 is up >7% in January, the rest of the year continues to be quite strong.

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    9.) When the S&P 500 is up both Jan and Feb, the final 10 months have been higher 92.6% of the time.

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    10.) When the S&P is up in Jan, Feb, and March the final 9 months have gained 18 of 19 times.

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    11.) When the S&P 500 is up >10% in Q1, the full year has never been lower and the final 3 quarters have gained 9 of 10 times.

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    12.) When the S&P 500 doesn't break the December low during Q1, the full year has been higher 34 out of 34 times. Up 22.1% on average. This year could be 35.

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    13.) When the S&P 500 is up in Jan, Feb, Mar, and April the rest of the year gained 14 of the past 15 times.

    [​IMG]

    14.) When the S&P 500 goes at least 6 months without a new high and then makes one (like it did in April), a year later it has been higher 17 of 18 times.

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    15.) Lastly, this is the Year of the Pig and it is quite bullish for stocks.

    [​IMG]
     
  8. bigbear0083

    bigbear0083 Content Manager
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    Russell 2,000 (Small-Caps) Finally Breaking Higher
    Mon, Nov 25, 2019

    Small-caps have materially underperformed large-caps recently, but today the Russell 2,000 is having its day in the sun. The Russell is currently up 1.9% on the day versus a gain of just 0.60% for the large-cap S&P 500, and as shown below, a new 52-week high would be made on a closing basis were the index to finish the day at or above current levels. Want to see Bespoke's most actionable insights in real time?

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    Expanding the chart above from one year to two years shows that the index still has a ways to go to reach a new all-time high -- a further gain of 7.6% in fact.

    [​IMG]
     
  9. bigbear0083

    bigbear0083 Content Manager
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    Trading Thanksgiving: Long Into Any Weakness, Exit into Strength by Week’s End
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    Trading around Thanksgiving has a bullish tendency perhaps buoyed by the “holiday spirit.” First published in the 1987 Stock Trader’s Almanac, the Wednesday before and the Friday after Thanksgiving combined were up 34 times in 35 years. The only S&P 500 decline was in 1964.

    Subsequently, this trend changed. In the 32 years since 1987, there have been 9 declines and 23 advances. The best short-term trade appears to be getting long into any 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 or last year’s fourth quarter rout can cancel Thanksgiving on Wall Street.
    [​IMG]
    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 24 of 32 years from the close on Friday after Thanksgiving to yearend.
     
  10. bigbear0083

    bigbear0083 Content Manager
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    Dividend Stock Spotlight: Last Dividends of 2019
    Mon, Nov 25, 2019

    Earnings season has come and gone as the number of companies reporting will continue to taper off through the end of the year. From the calendar in our Earnings Explorer tool, the highest number of reports we will see for any given day for the rest of the year is 42 reports on December 5th. With most companies having reported, a large number will now now trade ex-dividend in the coming weeks. In the S&P 500 alone, of the 424 stocks in the S&P 500 that pay a dividend, 149 are scheduled to trade ex-dividend between now and the end of the year. As shown in the chart below, this week will actually be one of the busiest with 49 companies trading ex-dividend. Two weeks from now (the week ending 12/13) will be the second busiest with 41 before the holidays bring things to a crawl.

    [​IMG]

    Below we show the 25 highest yielding stocks that are scheduled to trade ex-dividend before the new year. Major, but beaten down, retailers like Macy's (M), Kohl's (KSS), and Nordstrom (JWN) make the list with M boasting the highest yield of 9.65%. Next down on the list is Occidental Petroleum (OXY) with a yield of 7.91%.

    Remember, to capture a dividend, you have to own shares as of the last close prior to the ex-dividend date.

    [​IMG]

    Although the high yields for some stocks like Macy's (M) and Occidental (OXY) are high due to extended downtrends, a number of these high yielders actually posses fairly attractive charts. Below we highlight a handful that have all traded in uptrends over the past few months. For some, like CenturyLink (CTL), Iron Mountain (IRM), and Las Vegas Sands (LVS), these recent uptrends have allowed the stocks to either break out or at least get close to doing so. In the case of LVS, the past few sessions have even seen a successful retest of this downtrend. LyondellBasell (LYB) is another name that has also successfully held support while Kimco (KIM), Newell Brands (NWL), and Weyerhaeuser (WY) are each in uptrends and currently have "Good" timing scores in our Trend Analyzer. For clients with access, we have also created a custom portfolio of the 25 stocks listed above so that you can easily track them.

    [​IMG]
     
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  11. bigbear0083

    bigbear0083 Content Manager
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    Health Care (XLV) Finishing the Year Strong
    Tue, Nov 26, 2019

    Time is ticking for 2019 with just 23 trading days left until the New Year. Performance has been strong this year with just about every sector seeing double-digit gains with Technology (XLK) being the strongest performer; having risen better than 40% YTD as shown below. While tech has stood out with its outperformance, two other sectors have lagged a bit this year. Energy (XLE) is perhaps the most notable underperformer but Health Care (XLV) is the second worst-performing sector in 2019. But more recently, this is by no means the case.

    [​IMG]

    Since the S&P 500 broke back out to new all-time highs on October 28th, the Health Care sector has risen 6.68%. That is 2.5 percentage points better than the next best-performing sectors: Technology and Financials. While Health Care has led the way higher as the market reaches record highs, it has also gotten pretty extended. Now at 52-week highs, it is extremely overbought at more than two standard deviations above its 50-DMA. In percentage terms, yesterday's close left the sector over 7% above its 50-DMA. No other sector is this overbought.

    [​IMG]

    While this typically defensive sector has gotten overbought, other defensives (Real Estate and Utilities) have sold off given the more positive risk appetite as the broader market has reached new highs. Since the October 28th breakout for the S&P, the average performance for defensives (Real Estate, Health Care, Utilities, and Consumer Staples) is just +0.84% while cyclicals (the other 7 sectors) have averaged a 2.58% gain. With regards to defensives, 2019 has actually been a solid year with both Real Estate (XLRE) and Utilities (XLU) having traded in solid uptrends up until recently as shown below. In fact, up until only a few months ago, Real Estate (XLRE) had the second-best performance YTD of all 11 sectors. But the recent moves have broken their uptrends and left them trading in oversold territory for much of the past month. Neither one has traded above their respective 50-DMAs since the first few days of November.

    [​IMG]
     
  12. bigbear0083

    bigbear0083 Content Manager
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    Technology Sector P/E Highest in Ten Years
    Tue, Nov 26, 2019

    As equities run to all-time highs, valuations are at a fairly interesting point. As shown in the chart below using data from our Daily Sector Snapshot included with our Morning Lineup and The Closer, most sectors' valuations are at the upper end of the past ten years' range. Four sectors, Consumer Discretionary, Communication Services, Utilities, and Technology all have trailing P/E ratios in the 90th percentile or higher of the past ten years' readings.

    Since the S&P 500 established its first all-time high since July on October 28th, Health Care and Financials have been two of the strongest performers rising 6.68% and 4.35%, respectively. Despite these runs, both of these sectors still have reasonable valuations relative to the past decade. For Financials, the current trailing price-to-earnings ratio is in the 42nd percentile of all days of the past ten years. No other sector has such a low reading although Materials and Energy are on the lower end relative to other sectors. On the other hand, Utilities and Technology have some of the highest valuations of the past ten years with the current P/E in the 97th and 99th percentiles, respectively.

    [​IMG]

    As shown in the chart below, most of the last 9-12 months has seen valuations for Utilities consistently in the uppermost range of the past ten years as investors chased yield in a low interest rate environment. But as risk-free rates have risen more recently, valuations for Utilities have pulled back a bit as price has slid. While there have been other periods in the past ten years where Utilities' P/E ratio was similarly elevated, arguably only 2016/2017 saw it remain at the upper end of the ten-year range as consistently as has been the case this year.

    For Technology it is a whole different story. The P/E for the sector got crushed this time last year and after plummeting to the 31st percentile, it is has rebounded to the highest levels of the past ten years. The only other time that the sector traded at a similar premium relative to the past decade's range was back in early 2018.

    [​IMG]
     
  13. bigbear0083

    bigbear0083 Content Manager
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    Small Caps Join the Party
    November 26, 2019

    It took nearly 15 months, but the Russell 2000 Index finally broke out to a new 52-week high. On November 25, the Russell 2000 gained an impressive 2.1% to close at its highest level since October 2018.

    Small caps have lagged their larger counterparts for much of this year, and the Russell 2000 is still nearly 7% away from new highs, but this development is a major step in the right direction.

    “Seeing small caps at 52-week highs is further confirmation to the overall health of this bull market,” explained LPL Financial Senior Market Strategist Ryan Detrick. “We’ve already seen large caps and various countries around the world break out, and now we have participation from a once-lagging group. Participation is the key to any lasting bull market, and this is another great sign as we head into 2020.”

    As the LPL Chart of the Day shows, forward returns have historically been impressive when the Russell 2000 goes more than a year without making new 52-week highs. In those instances, the Russell 2000 has risen 10 of 11 times over the next 12 months.

    [​IMG]
     
  14. bigbear0083

    bigbear0083 Content Manager
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    A Better Than Average Decade
    Mon, Dec 2, 2019

    The S&P 500 rallied 3.6% on a total-return basis in November, which was the best monthly return for the index since June but surprisingly only the fourth-best month so far in 2019. That's how strong equities have been this year! This November was also the best November for the S&P 500 since 2016 after President Trump was elected. While the S&P 500 is currently up 27.6% YTD on a total return basis, over the last 12 months, the index is 'only' up 16.1%. That's how bad last December was!

    The chart below compares the S&P 500's annualized returns over the last one, two, five, ten, and twenty years to the average annualized returns of the index for each time period since 1928. The S&P's current one-year return is already well above its historical average of 11.7%, and barring a major decline in December, this number will be even more skewed a month from now. While the one-year gain is well above average, both the two and five-year annualized returns are actually pretty much right in line with the historical averages.

    Longer-term is where the current returns relative to average are really skewed. Over the last 10 years, the S&P 500's average annualized return of 13.4% is a full three percentage points higher than average. That may not sound like an enormous difference, but over time it adds up; 13.4% compounded over 10 years works out to a cumulative gain of 252% whereas 10.4% compounds to just 169%. While 10-year returns are well above their historical average, returns over the last 20 years have been well below average at 6.2% vs 11.0%. A three percentage point difference adds up over 10 years, but a spread of five percentage points over a 20-year period is enormous. While one could expect to multiply their original investment by seven times if it compounded at 11% annually over a 20-year period, that same investment wouldn't even multiply by 2.5 times at a rate of 6.2%!

    [​IMG]

    The chart below ranks the S&P 500's current one, two, five, ten, and twenty-year returns on a percentile basis versus all other periods. Interestingly, the S&P 500's current one-year performance only ranks in the 58th percentile relative to all other 12-month periods, and the two and five-year returns are both slightly below the 50th percentile. The real extreme, though, is in the S&P 500's 20-year performance which ranks in just the 5th percentile of all other 20-year periods in the index's history. As good as the last decade has been for bulls, the decade before was truly treacherous.

    [​IMG]
     
  15. bigbear0083

    bigbear0083 Content Manager
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    Thanksgiving through Santa Claus Rally Trade
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    Everyone is talking about yearend seasonal strength this year, but it’s not news to us. 2019 has been tracking historical seasonal market patterns quite closely this year and that suggests it is likely to continue to track it.

    Our good friend Larry McMillan (@optstrategist) trades seasonal yearend strength with the Russell 2000 from the close the day before Thanksgiving through the end of our Santa Claus Rally (the last five trading days of the year and the first two trading days of the New Year).

    So here we have run the numbers from 1979 when the Russell index data begins comparing R2K to the DJIA, S&P 500 and NASDAQ. The small-cap index Russell 2000 is the best performer up an average 3.1% (median 3.2%) with an 80% win ratio up 32 of the last 40 years. Last year was the worst and it’s been down 3 of the last 5 years.
    [​IMG]
     
  16. bigbear0083

    bigbear0083 Content Manager
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    Typical December Trading: Modest Strength Early, Choppy Middle and Solid Gains Late
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    Historically, the first trading day of December, today, has a slightly bearish bias with S&P 500 advancing 34 times over the last 69 years (since 1950) with an average loss of 0.02%. Tomorrow, the second trading day of December however, has been stronger, up 52.2% of the time since 1950 with an average gain of 0.08% and the third day is better still, up 59.4% of the time.

    Over the more recent 21-year period, December has opened with strength and gains over its first seven trading days before beginning to drift. By mid-month all five indices have surrendered any early-month gains, but shortly thereafter Santa usually visits sending the market higher until the last day of the month and the year when last minute selling, most likely for tax reasons, briefly interrupts the market’s rally.
     
  17. bigbear0083

    bigbear0083 Content Manager
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    Odds Still Favor A Gain for Rest of December Despite Rough Start
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    Just when it was beginning to look like trade was heading in a positive direction, the wind changed direction again. Yesterday it was steel and aluminum tariffs on Brazil and Argentina and today a deal with China may not happen as soon as previously anticipated. The result was the worst first two trading days of December since last year and the sixth worst start since 1950 for S&P 500. DJIA and NASDAQ are eighth worst since 1950 and 1971, respectively.

    However, historically past weakness in early December (losses over the first two trading days combined) were still followed by average gains for the remainder of the month the majority of the time. DJIA has advanced 74.19% of the time following losses over the first two trading days with an average gain for the remainder of December of 1.39%. S&P 500 was up 67.65% of the time with an average rest of month gain of 0.84%. NASDAQ is modestly softer advancing 61.11% of the time during the remainder of December with an average advance of 0.30%.
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  18. bigbear0083

    bigbear0083 Content Manager
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    Reasons We Still Believe In December
    December 4, 2019

    It has been a rough start to the most wonderful month of them all, with the S&P 500 Index down each of the first two days of December. Don’t stop believing just yet, though.

    Everyone knows December has usually been a good month for stocks, but what happened last year is still fresh in the minds of many investors. The S&P 500 fell 9.1% in December 2018 for the worst December since 1931. That sounds really bad, until you realize stocks fell 30% in September 1931, but we digress.

    One major difference between now and last year is how well the global equities have been performing. Heading into December 2018, the S&P 500 was up 3.2% year to date, but markets outside of the United States were already firmly in the red, with many down double digits.

    “We don’t think stocks are on the verge of another massive December sell off,” said LPL Financial Senior Market Strategist Ryan Detrick. “If my Cincinnati Bengals can win a game, anything is possible. However, we are quite encouraged by the overall participation we are seeing from various global stock markets this year versus last year, when the United States was about the only market in the green heading into December.”

    Stocks have also overcome volatile starts to December recently. The S&P 500 was down four days in a row to start 2013 and 2017, but the gauge still managed to gain 2.4% and 1%, respectively, in those years.

    As the LPL Chart of the Day shows, December has been the second-best month of the year for stocks going back to 1950. It is worth noting that it was the best month of the year before last year’s massive drop. Stocks have historically been strong in pre-election years as well, and December has never been lower two times in a row during a pre-election year. Given stocks fell in December 2015, bulls could be smiling when this month is wrapped up.

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  19. bigbear0083

    bigbear0083 Content Manager
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    Give Thanks For The Big Drop In Claims
    Thu, Dec 5, 2019

    Initial jobless claims data of late has been all over the place. In early and mid-November, the indicator broke out of the range that had been in place over the prior several months topping out at 228K which was the highest level since June. Over the past two weeks, though, those higher prints have completely reversed themselves, and this week's report came in at the lowest level since April's multi-decade low of 193K.

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    In recent history, it hasn't been common to see this large of an improvement in claims in such a short period of time. Just two weeks ago, claims had risen by 17K over the prior two weeks. As shown in the chart below, that was the largest two-week increase since the 37K increase in April when claims were coming off of the aforementioned low of 193K. Now, the 25K drop in the past two weeks has been the largest two-week decline since September 2017 when it fell from 300K to 260K. Looking back over the past decade, there have only been a handful of other times where claims have fallen by 25K or more (red line) in the span of two weeks. In other words, claims data has become increasingly volatile in the past month.

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    Given the recent highs in early and mid-November and new lows in the past two weeks, the four-week moving average is only back to where it was at the start of November. Dropping to 217.75K from 219.75K last week, the 2K drop is only the largest decline since the first week of September. So while the past month has painted a conflicting picture, and seeing as one week does not make a trend, this week's stronger reading has not had a major impact on longer-term trends. Looking ahead to next week, assuming no major revisions and a similarly strong print next week, the moving average does have the potential to continue to improve as one of 227K readings roll off the average.

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    Non-seasonally adjusted data similarly had a strong showing this week with a decline to 216.7K from 252.4K last week. This week's decline is in the seasonal context of claims rising to their yearly highs. This week's non-seasonally adjusted claims also continued the trend of readings below the average for the current week of the year since 2000.

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    The 35.7K decline week-over-week for the non-seasonally adjusted number was the largest decline since July 19th of this year. Even more notable is the decline year over year which totaled more than 100K. While YoY changes like this were fairly common in the first years coming out of the last recession, there have been only a handful of other times in the past decade that NSA claims have fallen by such a large amount. The last time this happened was in 2013, similarly during a year when Thanksgiving week came one week later than the year before.

    While this week's data certainly showed improvement, due to seasonal factors—namely the timing of the Thanksgiving holiday coming on the 48th week of the year rather than the 47th like the past couple of years—we would be hesitant to take it entirely at face value and jump to the conclusion that labor data has dramatically and concretely improved to the degree that the data suggests. But, even if it should be taken with a grain of salt, an improvement is an improvement.

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  20. bigbear0083

    bigbear0083 Content Manager
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    December Jobs Day: Russell 2000 Average Gain 0.66%
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    Tomorrow morning the Bureau of Labor Statistics will release its Employment Situation report for November. Depending upon your preferred source, the consensus estimate is for a gain of approximately 178,000 net new nonfarm jobs. This would be much better than the 67,000 that ADP reported yesterday.

    Historically, the market has responded favorably to the jobs report released in December. S&P 500, NASDAQ, Russell 1000 and Russell 2000 have all advanced fourteen times in the last nineteen years. DJIA’s record has one more loss. Average gains range from a low of 0.31% by DJIA to 0.66% by Russell 2000. Last year’s rout does drag down historical average performance, but the overall trend spanning the last nineteen years remains bullish.
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