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The Stockaholics Chart of the Day Thread

Discussion in 'Stock Market Today' started by bigbear0083, Feb 8, 2017.

  1. bigbear0083

    bigbear0083 Content Manager
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    Chart of the Day: Anything But Defensive
    Tue, Apr 23, 2019

    This morning, Lockheed-Martin (LMT) smashed earnings expectations, reporting $5.99 EPS for Q1 versus $4.34 expected. The beat was driven by sales of $14.3bn, exceeding analyst estimates of $12.6bn, and also came with a dramatic upgrade to guidance for all financial metrics this fiscal year. The triple play from LMT joined strong reports from Textron (TXT) and United Technologies (UTX). Together, these three companies are seeing combined revenues grow at a staggering 18.7% YoY, the fastest since defense spending's huge ramp up following the 9/11 attacks and the invasions of Afghanistan and Iraq. Among other defense contractors, analysts are projecting revenue numbers for Q1 that would indicate a significantly lower revenue growth number, but if the results from LMT, TXT, and UTX are any indication, those forecasts are going to be handily beaten.

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  2. bigbear0083

    bigbear0083 Content Manager
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    Chart of the Day: May Seasonality + Sell in May
    Mon, Apr 29, 2019

    One of the best months of the year from a seasonal perspective (April) is quickly coming to an end, and now investors are set to enter a period of the year that usually produces sub-par returns relative to other periods. There is also a significant difference in performance during the month of May based on whether the stock market is up or down year-to-date through April.

    And what about the old saying "Sell in May and Go Away"? Is there any truth to it? Each year the "Sell in May" theory gets trotted out, but we have the data to prove whether investors really should hit the "Sell" button and then wait for six months until November rolls around.

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  3. bigbear0083

    bigbear0083 Content Manager
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    Chart of the Day - Rebalancing?
    Wed, May 29, 2019

    COTD Bullet Points
    • The S&P 500 is down over 4% while long-term US Treasuries are up over 4% MTD heading into the final three trading days of the month for only the 11th time since 1990.
    • In prior months where we saw similar scenarios, equities consistently rallied in the final three trading days of the month.
    • Similarly, in months where we saw the opposite scenario (stocks up sharply, bonds down), equities tended to decline in the final trading days of the month.
    Chart of the Day:

    If there was ever a time to "sell in May," it was this year. Heading into today, the S&P 500 was already down over 4% on the month with three trading days left to go, and with today's early weakness, we're now on pace for a 5% decline for the month. Treasuries, meanwhile, have been surging. According to the BofA/Merrill Lynch index of long-term notes (10+ year maturities), US Treasuries were up over 4% MTD heading into the last three trading days of the month. While a 4% monthly decline for equities isn't that rare (40 prior occurrences since 1990), when it's accompanied by a rally in US Treasuries of the magnitude we have seen this month, it's a lot less common. Since 1990, there have only been ten other months where the S&P 500 was down more than 4% heading into the final three trading days of the month while at the same time long-term US Treasuries were up over 4%.

    In the table below, we have highlighted each of those ten prior periods and included the performance of the S&P 500 and Long-Term Treasuries MTD leading up to the last three trading days of the month as well as their performance in the final three trading days of the month. Looking at the ten prior occurrences, the S&P 500's average gain during the final three trading days of the month was a staggering 2.96% (median: +2.75%). Treasuries, meanwhile, saw a much more muted gain of just 0.13% and an outright decline on a median basis (-0.16%). Additionally, in all but one of the prior ten periods, the S&P saw positive returns in those final three trading days. The most recent occurrence was back in December. You may recall that in the final three trading days of that month, the S&P 500 was up over 1.5% while Treasuries also rallied, rising 0.61%.

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    Just as there tends to be a rotation into equities when they are down sharply heading into the final three trading days of the month while Treasuries are up sharply, the trend also works in the other direction. The table below shows the five prior months since 1990 where the S&P 500 was up 4%+ MTD heading into the final three trading days of the month, while at the same time Treasuries were down over 4%. In the five prior months where we saw the opposite scenario as the current setup, equities saw negative returns in the final three trading days of the month all five times for an average and median decline of 0.52%. In the final three trading days of those same five months, long-term Treasuries gained an average of 1.03% (median: 1.11%).

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    Admittedly, we're already nearly halfway into the third to last trading day of the month and the S&P 500 is pointing to further MTD declines while Treasuries are rallying again. With that in mind, we are also including a table showing how the S&P 500 and Treasuries performed in the final two trading days of the month when the S&P 500 was down over 4% heading into the final two trading days while Treasuries were up over 4%. We have also shaded those periods where the S&P 500 was down 5%+ MTD heading into the last trading days of the month while long-term US Treasuries were up over 5% (as they are currently) The S&P 500's rest of month returns weren't as positive in these occurrences as the ones in the first table, but the average rest of month return was a gain of 1.28% (median: +0.73%) with positive returns nine out of eleven times.

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