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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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    US Continues to Gain Share of World Market Cap
    Wed, Feb 12, 2020

    The United States dominates the rest of the world in terms of its share of total equity market capitalization. Currently, US stocks make up over 40% of global equities' total market cap. No other country comes even close to this size with the next largest country being China with just 8.47% and then Japan with 7.09%. Hong Kong is the only other individual county with a share larger than 5%. While France is the largest European Union country stock market in terms of the percentage of world market cap at only 3%, the total share of all EU countries shown sits at over 10%. Former EU member, the United Kingdon, is also one of the larger countries but has consistently lost share over the past decade. So far this year it has lost another 0.2%.

    One interesting change that we noted at the end of last year has been the massive increase in Saudi Arabia's share thanks to one of the world's largest companies, Saudi Aramco, hitting public markets. Although it has led to a massive jump over the long run, since the start of the year Saudi Arabia's share of market cap has fallen 14 bps likely due to Saudi Aramco being a one-way trade lower off of its highs that were put in place only a few days after its IPO. Meanwhile, the US has taken another 1.17% of the world's market cap in 2020 alone.

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    While there are several individual countries that are actually outperforming the US so far in 2020, generally speaking, the US has outperformed the rest of the world which is why the US has taken more market cap this year. Whereas the S&P 500 was up 3.93% YTD as of yesterday's close, MSCI's World Index excluding the US is just about flat. That trend of US outperformance has been in place for much of the past year well before the coronavirus hit Asia in December.

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    Another interesting country to note is China. 2020 has been off to a rocky start thanks to the coronavirus. This had sent the country's share of global market cap plummeting down to ~8% on February 3rd. That was its lowest level since February of last year. But as this month has progressed and the situation surrounding the virus has improved, China has regained some of those losses and is now sitting with a larger share of world market cap than it ended 2019 with.

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  2. bigbear0083

    bigbear0083 Content Manager
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    A Record Pace of Records
    Wed, Feb 12, 2020

    Le'ts preface this with the fact that it's still early in the year and the rest of the year is unlikely to closely follow the path we have seen so far, but the S&P 500 is currently on pace for its 11th record closing high this year. While we're just 29 trading days into the year, in the post-WWII period, 2020 already ranks as the 33rd highest number of record closing highs for the S&P 500 in a given year (out of 76). What's even more notable, though, is that at the current pace the S&P 500 would have 96 record closes this year, which would dwarf the total from every other year. For reference, the highest number of record closing highs in a given year was 77 in 1995, and there are only four other years (1961, 1964, 2014, and 2017) where there were more than 50 record closes.

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  3. bigbear0083

    bigbear0083 Content Manager
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    Closer Look At February

    A late month selloff in January saw the S&P 500 Index close marginally lower for the month. But stocks have taken off in February, with the S&P 500 up nearly 4% this month, as US economic data remains strong and fears over the worst-case scenarios for the coronavirus appear overblown.

    Historically, February has been a month when stocks tend to take a bit of a break. As shown in the LPL Chart of the Day, the S&P 500 has been flat, on average, during the second month of an election year. What is most interesting, though, is how weak October has been historically leading up to presidential elections, yet how strong stocks have been in November and December as political uncertainty clears following elections.

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    Maybe the big gains so far this month shouldn’t be a total surprise? “Yes, February historically has been a troublesome month for stocks,” said LPL Financial Senior Market Strategist Ryan Detrick. “Yet over the past decade, no month has seen better returns.” In fact, the S&P 500 has gained 2.34% on average in February over the past decade, compared with the second best month of October’s gain of 2.29%.

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  4. bigbear0083

    bigbear0083 Content Manager
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    Trading Before Presidents’ Day Weekend Mixed, But Big Improvement Last 10 Years
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    From last week’s post, we know the week before Presidents’ Day weekend has a bullish history going back to 1990. More recently, since 2011, the Thursday and Friday before Presidents’ Day also have been bullish (shaded in light grey in table below). DJIA on Friday has the best record over the last ten years, up ten times with an average gain of 0.65%.

    However the longer-term track record of the market has not been as strong. From 1990 through 2010, DJIA, S&P 500 and NASDAQ suffered numerous and sizable declines especially on Friday. When all 30 years are considered Thursday has enjoyed the most gains and modest average gains. Friday ranges from mixed for DJIA to outright bearish for NASDAQ and average losses prevail.
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  5. bigbear0083

    bigbear0083 Content Manager
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    Claims Up But Still Low
    Thu, Feb 13, 2020

    Initial jobless claims this week rose slightly up to 205K from 203K last week which was the lowest reading this indicator had reached since its lows from last spring. While this week marked the first uptick in nearly a month, the actual reading was still well below estimates for an increase to 210K. This leaves jobless claims at the bottom of the past year's range and still only 12K above its recent low of 193K from April of last year. In other words, this week's increase was overall not that bad as claims still remain at very healthy levels.

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    The moving average, which helps to smooth out the week to week fluctuations of the high-frequency data, went unchanged this week at 212K. This is a result of this week's 205K number replacing an equivalent reading from five weeks ago. That marks the first time that the moving average did not move up or down week-over-week since November of 2017. As with the unmanipulated data, although it is not quite there yet, the moving average is sitting at some of its lowest levels since April's multi-decade lows.

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    Non-seasonally adjusted jobless claims continue to experience their seasonal decline following the peak that was put in place in the first weeks of the new year. Claims fell to 219K this week from 224.7K last week. That is the lowest level for non-adjusted claims for the current week of the year of the current cycle.

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    Continuing jobless claims, which are lagged one week from initial claims data, have also begun to tick lower recently after rising sharply in the past few months. This week's reading fell from 1751K to 1698K which was larger than the expected reading of 1734K. This week's drop also marked the first time since November that continuing claims fell below 1700K. Additionally, we recently have highlighted how continuing claims have begun to show persistent YoY increases over the past few months for the first time of the current cycle. Now, this is not a massively negative sign as such readings have been observed outside of recessionary periods in the past (like the early 2000s shown below), but it is something that raises a flag. The past few weeks have given some relief to this as continuing claims are beginning to tick lower year-over-year again as shown in the second chart below.

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  6. bigbear0083

    bigbear0083 Content Manager
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    Can Congress Get Along For Valentine’s Day?

    We continue to receive many questions about stock and economic performance during election years, which we’ve tackled in our recent blogs, “Another Look at Election Years” and ”A Closer Look at Election Years.”

    What about Congress? We have divided government in Washington. Do we think they will be able to kiss and make up in time for Valentine’s Day? Odds are slim that will happen, but there is a silver lining. A split Congress historically has seen better stock market performance and economic growth, measured by gross domestic product (GDP). Remember, the Republicans currently have control of the Senate, while the Democrats control the House.

    “Washington appears as divided as it has ever been,” explained LPL Financial Senior Market Strategist Ryan Detrick. “But don’t forget the best stock market returns actually take place under a split Congress. Maybe the best Washington is the one that can’t get much done?”

    As shown in the LPL Chart of the Day, the S&P 500 Index has gained nearly 18% per year on average under a Republican president and a split Congress. Additionally, GDP growth has been strongest under a split Congress. Our country’s founders designed the US government with checks and balances to limit the power of any one party and prevent policies from swaying too far in one direction. Isn’t it something that nearly 250 years later, their original design is as relevant today as it was then?

    We don’t know which party will occupy the White House in 2021, nor will we offer a prediction. However, the odds look good that Congress remains split after the November 2020 elections, and that may not be so bad for the stock market.

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  7. bigbear0083

    bigbear0083 Content Manager
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    New All-Time Highs for S&P 500 and NASDAQ – Well Above Average Gains in Election Year
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    As of today’s close, DJIA is up 2.84%, S&P 500 +4.81% and NASDAQ is up a whopping 9.41% year-to-date. All three indexes are well above their respective historical averages for this time of an election year. NASDAQ has in fact already exceeded its average full election year performance going back to 1972. Bullish sentiment and momentum appear to be firmly in place and historical election year patterns suggests strength could easily continue for DJIA and S&P 500 into May. NASDAQ’s surge higher could be vulnerable to a retreat sooner, in March.
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  8. bigbear0083

    bigbear0083 Content Manager
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    Jobless Claims Match Expectations
    Thu, Feb 20, 2020

    Initial jobless claims totaled 210K this week, matching expectations but rising slightly from an upwardly revised 206K last week. Despite the increase, claims remain low no matter how you measure it.

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    The past few weeks have seen claims come in at some of their strongest levels since the cycle low of 193K that was put in place back in April. Without a continued move to the downside though, that April low is still firmly in place. That means it has now been 44 weeks without a new cycle low in seasonally adjusted jobless claims. Looking back since the end of the Financial Crisis, that ties another 44-week long streak that came to an end in July of 2014. Given claims remain at healthy levels just off of those cycle lows, this seems to point more towards the indicator having plateaued rather than deteriorating.

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    Even though claims rose this week, a higher reading of 223K rolled off of the four-week moving average which led the average to drop 3.25K. That leaves the four-week average at 209K which is the lowest reading since mid-April when it reached 206K. That was also only one week after the moving average put in its cycle low of 201.5K

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    On a non-seasonally adjusted basis, jobless claims continued to decline as is seasonally normal for this time of year, falling to 208.3K. That is 2.4K lower than the comparable week last year and the lowest reading for the current week of the year for all years of the current cycle. Given this, it is also well over 100K below the average for the current week of the year since 2000.

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  9. bigbear0083

    bigbear0083 Content Manager
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    Philly Pops
    Thu, Feb 20, 2020

    After a strong report on manufacturing in the New York area earlier this week, the Philly Fed Manufacturing report one-upped its neighbor with a blowout report. While economists were expecting a modest decline in the headline reading from 17.0 to 11.0, the actual reading came in at 36.7, more than triple expectations! This was the strongest reading for the headline index since February 2017, but before that, you have to go all the way back to December 1993 to find a stronger reading. Not only that, but relative to expectations, this month's report was the biggest beat on record (going back to 1998).

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    Not only was this month's report strong, but it also followed the January report which also increased 14.6 points on a m/m basis. Combining the back to back increases together, it was the strongest two-month increase in the Philly Fed headline index since September 1995 and the third strongest two-month gain in the history of the report going back to 1980!

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    Breadth in this month's report was also very positive as just two components -- Prices Paid and Number of Employees -- declined. Meanwhile, a number of components saw double-digit increases including New Orders, Unfilled Orders, and Inventories. When it comes to the Philly Fed Manufacturing report, they don't get much stronger than this!

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  10. bigbear0083

    bigbear0083 Content Manager
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    Sentiment Stable
    Thu, Feb 20, 2020

    With the major indices little changed over the past week, sentiment readings from AAII's weekly investor survey likewise moved only slightly. The percentage of respondents reporting as bullish remains above 40% but pulled back slightly from 41.33% last week. The 0.73 percentage point drop was the smallest move in bullish sentiment (either positive or negative) since November 28th of last year when bullish sentiment fell only 0.6 percentage points.

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    With bullish sentiment declining, respondents reporting as bearish picked up the difference rising 2.3 percentage points to 28.7%. Although up versus last week, bearish sentiment remains fairly subdued at 1.63 percentage points below the past year's average of 30.33% and around the low end of the past several years' range.

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    Neutral sentiment was also little changed, dropping 1.47 percentage points to 30.8%. Similar to bearish sentiment, neutral sentiment continues to come in at the low end of its range as it has averaged readings of 35.9% over the past year. This was the sixth week in a row that neutral sentiment has come in below its 52-week average; the longest such streak since a 15-week long streak ending in January of last year.

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    Gwauncharito likes this.
  11. bigbear0083

    bigbear0083 Content Manager
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    The Coronavirus Outbreak Is Spreading

    News that the coronavirus—known as COVID-19—has spread to South Korea, Italy, Japan, and Iran, has led to massive selling around the globe, with many European markets closing down more than 4%. U.S. stock markets are selling off hard as well, with the S&P 500 Index down nearly 3% in early trading on Monday.

    “Although the fear over the pandemic is real, and the potential slowdown in the global economy could hurt 2020 corporate profits, let’s not forget that big down days are part of what long-term investors have had to accept,” said LPL Financial Senior Market Strategist Ryan Detrick.

    As shown in the LPL Chart of the Day, an average year has more than five separate days with at least a 2% correction for the S&P 500 Index. Even last year, with stocks up 30%, there were five separate days that saw the S&P 500 close down at least 2%.

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    The United States had held up relatively well in the face of the growing COVID-19 crisis. In fact, according to LPL Research’s friend Sam Stovall of CFRA, the S&P 500 actually gained 1.6% a month after the first reported coronavirus case in the United States on January 21. As the chart below shows, stock market gains historically have been normal after the initial outbreak of various health crises have reached the United States.

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    Now, could the coronavirus impact the global economy more than previous epidemics and pandemics? That’s clearly a strong possibility, as global supply chains have come to a halt in the world’s second largest economy (China). The good news, though, is corporate America just reported a very impressive earnings season, so the chances of an impending U.S. earnings season recession appear quite low. Read more about the recent earnings season in Corporate America Impresses.

    Lastly, we’d like to stress that pullbacks and market corrections happen and are part of long-term investing. In fact, since 1980 the average year has experienced a pullback from peak to trough of 13.7%. Even more impressive: Looking at the 29 years that stocks have been green since 1980, we see the average year had a correction of 10.9%!

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    We will continue to monitor the impact of the coronavirus situation very closely. In the meantime, we would suggest that long-term equity investors consider staying the course and contacting their finanical professionals for specific recommendations.
     
  12. bigbear0083

    bigbear0083 Content Manager
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    Typical March Trading: Slow Start, Mid-Month Surge & Uninspiring Finish
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    Over the recent 21 years March has been a solid performing month for the market. Average gains over the period range from a low of 1.2% by NASDAQ to a respectable 1.7% by S&P 500, Russell 1000 and Russell 2000. March has also been the #2 performing month by average performance for S&P 500 and Russell 1000 over the last 21 years. First trading day of March gains typically kick of the month, followed by choppy to slightly higher trading until around the tenth or eleventh trading day when the market tends to surge higher until around the fifteenth or sixteenth trading day. At this point the market tends to cool and can succumb to some end-of-quarter selling pressure.
     
  13. bigbear0083

    bigbear0083 Content Manager
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    Just Four S&P 500 Stocks Up This Week
    Thu, Feb 27, 2020

    There's still another day left in the week, but unless things improve on Friday this will go down as one of the worst weeks for US equities in history. Since WWII, there have only been four other weeks where the S&P 500 was down more than 10% in a given week. On a related note, there are also only four stocks in the entire S&P 500 that are positive for the week! Leading the way higher, Regeneron (REGN) is up a healthy 7.1% while Gilead (GILD) is up just over 4%. Behind these two, the only other stocks that are higher now than they were at last Friday's close are Clorox (CLX) and CME Group (CME).

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    On the downside, there are a lot more losers, but in the interest of space, below we have only listed the 17 stocks in the S&P 500 that are down over 20% this week alone. Looking through the names on the list, the cruise lines are well represented with Royal Caribbean (RCL), Norwegian Cruise Lines (NCLH), and Carnival (CCL). Besides these names, American Airlines (AAL) is down 26%, while Live Nation (LYV) is down 22.2%.

    One thing we've heard a number of people argue the last few days is that some of the weakness this week is related to the increasing likelihood that Bernie Sanders wins the Democratic nomination. If that's the case, why is not a single one of the worst-performing stocks from the Health Care sector, and why is the Health Care sector the third best performing sector this week and one of just four that is not down 10% so far this week?

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