Sep 13, 2024
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“If you can make it through the night, there’s a brighter day.” – Tupac Shakur
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
After the worst week in months to start September, the S&P 500 has already rallied more than 3% this week, and if it can finish the day in the green today, it will have had its second ‘perfect’ week in a month (and second five -day perfect week this year). At this point, futures are cooperating with modest gains as declines in Adobe (ADBE) and Boeing (BA) have been offset by rallies in Oracle (ORCL) and RH. To hold on to those gains, though, they’ll have to get through Import Prices at 8:30 and Michigan Sentiment at 10:00.
Even after the gains this week, the S&P 500 remains down close to 1% this month, so September has already lived up to its reputation for being the weakest month of the year. If the month continues to follow the seasonal trend, bulls should remain on guard. The snapshot below from our Seasonality Tool shows that based on the last ten years, the upcoming one-month period has historically been one of the weakest periods for the S&P 500. Over the last ten years, the S&P 500’s median performance over the next month has been a decline of 1.79% which ranks in just the first percentile relative to all other one-month periods throughout the month.
That’s the bad news. The good news is that despite the next month being so weak, the next three months have historically been among the best periods of the year for the S&P 500. With a median gain of 4.65%, the SP&P 500’s performance over the next three months ranks in the 87th percentile relative to all other periods.
The composite chart below illustrates the pattern. While the back half of September typically experiences sharp declines, the last three months have been strong. To borrow a phrase from Tupac Shakur, who died 28 years ago today, “If you can make it through the night, there’s a brighter day.”
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Sep 12, 2024
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“My business is hurting people.” – Sugar Ray Robinson
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
For much of the last three years now in a week with both CPI and PPI, these would easily be the most important reports of the week. Now that the Fed has shifted focus from inflation to employment, though, yesterday’s CPI report had much less than normal fanfare, and most traders probably didn’t even know there was a PPI report today. The flavor of the week now is weekly jobless claims. After trending higher for most of the year and hitting the highest levels in nearly a year in late July, the market (and the Fed) became concerned about jobless claims, so any additional increases raise concern about the economic outlook causing a sell-off in equities and buying in the treasury market.
Leading up to today’s PPI and jobless claims report, equity futures were trading modestly higher and holding on to Wednesday’s gains while treasury yields moved slightly higher. These equity gains follow a positive overnight session in Asia and morning gains in Europe where the ECB just announced a 25 bps cut in the benchmark rate to 3.5% which was in line with expectations.
Getting back to the economic data, PPI came in higher than expected on both a headline (0.2% vs 0.1%) and core basis (0.3% vs 0.2%), but the y/y readings were both in line with forecasts as July’s report was revised lower. Jobless claims, meanwhile, were largely in line with forecasts. Initial claims came in 4K higher than expected (230K vs 226K) while continuing claims were right in line.
What looked like a potentially gruesome day in the morning yesterday took a turn for the better as the day progressed. After trading down 1.6%, the S&P 500 finished the day up by 1.1%. Not only that, but the reversal also took what looked like a downside break of the 50-day moving average (DMA) and turned it into a successful test of that level. In terms of just days where the S&P 500 finished the day higher by over 1% after trading down over 1% earlier in the session, it was the first such positive reversal since 10/13/2022. For you market historians, 10/13/22 was the day after the 2022 bear market closing low.
For these types of 1% positive reversals in general, yesterday was the 52nd such day since 1990, and in the chart below we indicate each prior occurrence with a red dot. While most of these occurrences took place during periods of an upwardly trending market, they weren’t exclusive to that type of environment, and there were more than a handful of them during the bear markets associated with the dot-com crash and the Financial Crisis.
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Sep 11, 2024
It’s anyone’s guess where the S&P 500 finishes the day. What we do know is that the S&P 500 once again found itself trading down more than 1% on the day this morning. Today’s move continues an emerging trend from the last two months where the market increasingly finds itself in a 1% hole early in the trading session. To illustrate, the chart below shows the 50-day moving average of the number of trading days when the S&P 500 was down at least 1% relative to the prior day’s close at some point before noon ET. After dropping as low as zero in mid-July just as the S&P 500 was hitting record highs, the frequency of 1%+ declines in the morning has quickly shot up to eight. That’s the highest level since April 2023 coming out of the stress in the regional banks.
From a longer-term perspective, the current frequency of 1%+ declines in the morning is nowhere near extreme levels. During the 2022 bear market, the 50-day moving average spiked as high as 22, and during Covid, it exceeded 24. During both the Financial Crisis and the bursting of the Dot-Com Bubble, there were periods where the S&P 500 was down at least 1% in the morning on over 60% of all trading days! Despite these periods of extreme readings, the long-term average number of days that the S&P 500 was down 1%+ in the morning over 50 days is much lower at just 6.2.
What is notable about the current period, however, is that up until a few days ago, the recent period (338 trading days) was the seventh longest on record of below-average readings in the number of 1%+ morning declines. It was also the longest since the 471 trading day streak ending in March 2018. With the yield curve uninverting, the Fed set to cut rates, and an election on the horizon, the relative calm of the last 16 months has faded like a summer fling.
Sep 11, 2024
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“America was targeted for attack because we’re the brightest beacon for freedom and opportunity in the world. And no one will keep that light from shining.” – George W. Bush
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
After two positive days to start the week, futures took a breather today ahead of August CPI. The numbers were just released and were practically all right in line with expectations. Headline CPI increased 0.2% compared to forecasts for a gain of 0.2%, but core CPI was slightly hotter coming in at 0.3% versus a forecast for 0.2%. On a y/y basis, the readings of 2.5% and 3.2% were in line with forecasts.
While the numbers were mostly inline (except for Core), futures have not responded kindly with equity futures adding to their pre-market weakness while treasury yields reversed higher.
Yesterday wasn’t a good day for the banks, and it hasn’t been much of a week either. Below we show a snapshot from our Trend Analyzer of the ten largest components of the KBW Bank Index. All of them are down over the last five trading days and are all down at least 2.5%. Not only that but besides PNC and USB, the eight other stocks listed have all broken down through their 50-day moving averages.
The worst of the losers have been Wells Fargo (WFC), JP Morgan (JPM), Citi (C), Capital One (COF), and Trust (TFC) which are all down over 5%. 5% may not sound like much when you talk about tech or growth stocks, but it’s more than nothing when you’re talking about the largest banks in the country.
For the KBW Bank Index itself, the index has now failed just above 115 for the second time in two months, and like most of the components, it is also back below its 50-day moving average (DMA).
The 115 level hasn’t just been resistance in the last several weeks. If we take a further look back, the index has seen rallies fail at this level multiple times. The chart below shows the performance of the index since mid-2022, and in addition to the two most recent tests of resistance, it also rallied up to that level in the summer of 2022 and early 2023 before pulling back.
Then finally on a longer-term basis, while there was a period during the post-Covid madness from early 2021 through early 2022 where the BKX rallied above 115 and got as high as the high 140s, before that, it also tested and failed levels in the low to mid 110s twice.
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Sep 10, 2024
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