Bespoke’s Morning Lineup – 12/1/22 – No Time to Rest

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“To bring about change, you must not be afraid to take the first step. We will fail when we fail to try.” – Rosa Parks

Morning stock market summary

Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members.  Start a two-week trial to Bespoke Premium now to access the full report.

It was looking like a little bit of a hangover this morning as futures were modestly lower, but as yields have continued to plunge and the dollar declines, futures have been drifting higher.  It’s a busy day for economic data with Jobless Claims, PCE, Personal Income, and Personal Spending all on the docket at 8:30 and then ISM Manufacturing at 10 AM.  Outside of the US, China’s PMI was below 50 but stronger than expected.  There’s also been some additional optimism for growth prospects on reports that the country will further relax COVID restrictions.  Commodities are rallying in reaction to the news, and WTI is firmly above $81 per barrel after trading in the low $70s earlier this week.

The 8:30 data was just released and initial claims came in lower than expected while continuing claims surged above 1.6 million. Inflation data was roughly in line to slightly better than expected.  Personal Income was well above expectations (0.7% vs 0.4%) while Personal Spending came right in line with estimates (0.8%). In response to the data, futures have been ticking higher.

After August’s miserable failed attempt to break above the 200-day moving average and the double-digit percentage loss that followed, bulls had been attempting to take out that level again in the last couple of weeks.  Just when it looked as though the latest attempt was running out of steam, yesterday’s Fed-fueled rally finally got the job done.  Whether or not it holds will be the real test.
Before bulls could even start to celebrate the breakout of the 200-DMA, another resistance level looms above.  From the high in early January, you can draw a perfectly straight line connecting the dots of the subsequent lower highs we have seen this year, and yesterday’s close is the fourth point in that line.

Yesterday’s 3.1% rally was the second-best day of the year for the S&P 500 in terms of performance and the seventh-best breadth reading.  At +461 it was still a strong reading but were it not for underperformance in the Energy sector, which accounted for about a third of the 24 stocks in the index that traded lower on the day, breadth would have been even stronger.  Yesterday’s +461 reading was also the second all-or-nothing day of the week. That brings the year’s total to 45 and puts 2022 on pace for 49 all-or-nothing days.  Already 2022 ranks fourth in terms of the most all-or-nothing days for a calendar year since 1990, but anything above 48 would rank at least third behind 2008 (52) and 2011 (70). In terms of volatility, 2022 ranks right up there with the best of them.

Our Morning Lineup keeps readers on top of earnings data, economic news, global headlines, and market internals.  We’re biased (of course!), but we think it’s the best and most helpful pre-market report in existence!

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Bespoke’s Morning Lineup – 11/30/22 – One Month to Go

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“There is nothing government can give you that it hasn’t taken from you in the first place.” – Winston Churchill

Morning stock market summary

Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members.  Start a two-week trial to Bespoke Premium now to access the full report.

European stocks are trading higher this morning as inflation in the region came in at a weaker-than-expected 10% y/y. 10%!  If that doesn’t sum things up for 2022, we don’t know what does.  Economists were forecasting the headline number to come in at 10.4%, but with the m/m reading actually falling 0.1% in November, markets are rallying.

Futures here in the US are also higher on the positive inflation data out of Europe, but there’s still a lot of data on the calendar to contend with starting off with the November ADP Employment report which came in at a weaker-than-expected 127K (estimate 198K).  The second read of Q3 GDP, Core PCE, and Personal Consumption will all be released at 8:30, and then at 10 AM, we’ll get the October report on Pending Home Sales.   The 8:30 data was just released and came in mixed relative to expectations with GDP revised higher while PCE came in higher than expected.  Besides all the economic data, Powell’s speech at the Brookings Institution at 1:30 is likely to be the biggest market mover of the day.

While US stocks are set to end the month of November with modest gains, stocks in Hong Kong have been on a tear as the benchmark Hang Seng index rallied an astonishing 26.62% for its largest monthly gain since October 1998 and just its ninth monthly gain of 25% or more since 1970. As great as this month’s rally in Hong Kong stocks sounds, we would note that since the end of August, the index is still down nearly 7%, and YTD it’s down over 20%.  Again, these performance numbers are after you factor in November’s rally.  The S&P 500 may only be up 2% this month, but since the end of August, it is actually up fractionally, and YTD it’s not down as much as the Hang Seng.

You’ve likely heard the phrase that big market moves tend to occur during bear markets but in the case of the Hang Seng and monster moves, that hasn’t entirely been the case.  The chart below shows Hong Kong’s benchmark index going back to 1970 with red dots indicating every time the index moved 25% or more in a month.  Looking at the chart, more of these moves actually tended to occur in the later stages of bull market runs or early on in a rally.  What is unique about November’s move is that it is only the second time that the index rallied 25%+ but was still down over the trailing three months.  The only other time that occurred was in January 1975 when the Hang Seng rallied more than 28% but was still down nearly 2% over the last three months. It’s a sample size of one, but bulls wouldn’t mind if history repeated itself.

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Bespoke’s Morning Lineup – 11/29/22 – Confidence Game

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“What I learned is that nothing is given easy to you.” – Christian Pulisic

Morning stock market summary

Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members.  Start a two-week trial to Bespoke Premium now to access the full report.

Futures were higher earlier this morning, but those gains have been evaporating like morning dew with the sunrise.  Reports that China is on the verge of finally starting to relax some of its COVID restrictions helped to contribute to the positive tone in global markets overnight.  The catalyst for that sentiment appears to be a story that the CCP is beginning to urge older people to get vaccinated.  Reports from other sources suggest that the government will also announce that because current strains of COVID are less virulent, extreme measures to stop the spread can be relaxed.  We’ve heard a number of these rumors in recent months only to see the CCP reiterate its strict zero-Covid policy, but these stories seem to have a little bit more momentum behind them.

News of a reopening in China has commodities rallying, and WTI is back to just under $79 per barrel, although the 10-year yield is a couple of basis points lower.  The economic calendar is on the light side again today with housing price data at 9 AM Eastern and Consumer Confidence at 10.  Over in Europe, inflation data out of Spain and Germany was lower than expected.  Down south in Brazil, inflation data came in lower than expected as the y/y rate fell below 6% for the first time since 2019!

Yesterday wasn’t the type of performance that bulls were hoping for coming back from the Thanksgiving weekend holiday.  With a decline of 1.54%, it was the S&P 500’s 9th worst post-Thanksgiving Monday performance in the post-WWII period.  As disappointing of a day as it was for bulls, the Monday after Thanksgiving typically hasn’t been a very good day for the stock market.  Since 1945, the S&P 500’s median performance on the day has been a decline of 0.29% with positive returns just 39% of the time.  For comparison, on all trading days since 1945, the S&P 500’s median change has been a gain of 0.05% with positive returns 53% of the time.  As demoralizing of a day that it may have been for bulls, one silver lining to Monday’s weakness is that in the nine prior years where the S&P 500 was down 1%+ on the Monday after Thanksgiving, its median performance for the rest of the year was actually better than the median for all other years.

Our Morning Lineup keeps readers on top of earnings data, economic news, global headlines, and market internals.  We’re biased (of course!), but we think it’s the best and most helpful pre-market report in existence!

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Bespoke’s Morning Lineup – 11/28/22 – China Simmers

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“Formula for Success- Rise Early, Work Hard, Strike Oil” – J. Paul Getty

Morning stock market summary

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It was a long weekend for most, but it’s now back to the grind for the final five weeks of 2022.  After gains for US stocks last week, things are starting off on a down note as widespread protests in China weigh on sentiment and have raised concerns over supply chains for large companies like Apple (AAPL).  US futures are down about 0.8% as of this writing, and the 10-year yield is down below 3.7%. The Dallas Fed Manufacturing report is the only report on the calendar today, but it’s a busy week ahead culminating with the November Non-Farm Payrolls report on Friday.

Those protests in China over the government’s strict COVID policies and continued concerns over the prospects for the global economy have crude oil prices down nearly 3% this morning, and that now takes the price of WTI down to its lowest level of the year.  Yup, crude oil is down YTD.

Despite the weakness in crude oil, Energy stocks remain well in the black YTD with the Energy sector still up over 70%.  That’s nearly 70 percentage points above the next closest sector (Utilities: +1.21%).  The ten largest components of the sector are also all well into positive territory for the year with gains in the range of 50% for Pioneer Natural (PXD) to more than 140% for Occidental Petroleum (OXY).  When WTI was trading well over $100 per barrel, the bullish case for energy stocks was that these companies would be profitable even if crude oil prices corrected sharply.  Now that WTI has corrected by more than 40% from its closing high earlier this year, energy companies may still be profitable at these levels but not by nearly as much as they were just a few months ago.

Our Morning Lineup keeps readers on top of earnings data, economic news, global headlines, and market internals.  We’re biased (of course!), but we think it’s the best and most helpful pre-market report in existence!

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Bespoke’s Morning Lineup – 11/25/22 – Half Day

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“If you cannot get rid of the family skeleton, you may as well make it dance.” – George Bernard Shaw

Morning stock market summary

Below is a snippet of content from today’s Morning Lineup for Bespoke Premium members.  Start a two-week trial to Bespoke Premium now to access the full report.

We hope everyone had an enjoyable Thanksgiving, and if you have the day off today, we hope you enjoy the long weekend.  US equity markets are open but for a half session with trading for the week ending at 1 PM Eastern.  Futures are mixed on the session so far with the Dow indicated higher and the Nasdaq trading lower.  Shares of Apple (AAPL) are down nearly 1% in the pre-market as workers at Foxconn plants in China have been staging protests over pay and working conditions.  The company has even had to offer bonuses of up to a month’s pay to employees willing to quit and board buses to go back home.

In terms of data today, there is none to speak of on either the economic or earnings front.  European markets are little changed this morning but with a positive bias.  Over in Europe, Q3 GDP was slightly stronger than expected, but Consumer Confidence came in weaker than expected and missed expectations for the 9th time in the last ten months.

Through the first three trading days of this week, the S&P 500 was up 1.56%.  For a typically positive week, a gain of this magnitude is strong even for Thanksgiving week and ranks as the 13th best week-to-date performance through Wednesday of Thanksgiving week since 1945.  As we noted in a post earlier this week, the majority of the gains from Thanksgiving week typically come on Wednesday and Friday.  The S&P 500’s median performance on the Friday after Thanksgiving has been a gain of 0.24% with positive returns two-thirds of the time.  In years where the S&P 500 was up over 1% on the week heading into Thanksgiving, the median gain was even stronger at 0.36% compared to a gain of just 0.15% on all other Thanksgiving Fridays.  Even more notable is the consistency of positive returns.  In those weeks where the S&P 500 was up 1%+ in the first three trading days of the week, the S&P 500 traded higher on Friday 87.5% of the time.  On all other Thanksgiving Fridays, however, the S&P 500 was higher barely more than half of the time.

Our Morning Lineup keeps readers on top of earnings data, economic news, global headlines, and market internals.  We’re biased (of course!), but we think it’s the best and most helpful pre-market report in existence!

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Bespoke’s Morning Lineup – 11/23/22 – Full Plate of Data

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“Those who previously claimed they were too old or ill to work embraced the idea of private property once they could enjoy the fruits of their own labor.” – Caroline Baum, “The Story of Thanksgiving – and Proper Incentives”

Morning stock market summary

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Investors may be thinking ahead to the Thanksgiving holiday and spending time with friends and family, but there is still a full-day left of trading ahead of us.  The earnings calendar is light as Deere (DE) has been the only report on the calendar, but there’s plenty of economic data to tide you over as we try to jam three days worth of reports into one day.  Things kick off at 8:30 with Durable Goods and Initial Claims.  At 9:45, S&P will release flash PMI readings for the manufacturing and services sector, and then at 10 AM, we’ll get Michigan Sentiment and New Home Sales. Not enough for you?  OK.  Well, how about we cap it off with some FOMC Minutes at 2 PM?  Is that enough for you?

Futures are technically in the green this morning, but they’re pretty much unchanged, and we’ve seen a number of ticks this morning where they were actually unchanged.  The same is true in Europe where trading has been uneventful.  Economic data in the region, however, has been positive as flash PMI readings for both the manufacturing and services sectors came in higher than expected for the entire Eurozone as well as Germany, the UK, and France individually.

Which of these indices is not like the other?  As technicians attempt to divine whether the S&P 500 and other major US equity benchmarks will be able to break above its 200-DMA in this current leg higher, it seems out of place to be talking about the DJIA breaking out to six-month highs.  Heading into the Thanksgiving holiday, the DJIA has rallied more than 19% off its Q3 low and is already more than 5% above its 200-DMA.  The DJIA isn’t often thought of as a leading indicator for the broader market, but more than a few 401k plans have hopes that the rest of the indices play follow the leader.

Our Morning Lineup keeps readers on top of earnings data, economic news, global headlines, and market internals.  We’re biased (of course!), but we think it’s the best and most helpful pre-market report in existence!

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