Bespoke’s Morning Lineup – 1/22/21 – Chips Fall

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“Complacency often afflicts precisely those who have been the most successful.” – Andrew Grove

With a gain of over 12% already, the Philadelphia Semiconductor Index (SOX) is off to a good start in 2021.  The chips are going to be giving some of those gains back this morning, though, as stocks like Intel (INTC) and Seagate (STX) are both trading lower in reaction to earnings.  The weakness in those stocks is dragging down the entire sector, but it’s hard to get too upset about the weakness when the SOX will still be hanging on to double-digit YTD percentage gains at the open.

For the broader market, it’s also looking like a weaker open as S&P 500 and Nasdaq futures are both lower while Treasury yields move lower. The main driver is weak economic data out of Europe stemming from virus restrictions in the region.  Elsewhere, the week can’t end soon enough for bitcoin which is down more than 13% from last Friday’s levels.

Be sure to check out today’s Morning Lineup for updates on the latest market news and events, flash Markit Manufacturing and Services data for January, an update on the latest national and international COVID trends, and much more.

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While the magnitude of the gains varies, the picture for major US indices looks the same across the board.  Markets are short-term overbought.  From the S&P 100 and Nasdaq 100, which are both at extreme overbought levels following big rallies in the mega-cap stocks, all the way down the market cap spectrum, every index ETF heads into Friday with gains over the last week putting them all at least one standard deviation above its 50-DMA.  While the big picture at the index level looks pretty uniform, underneath the surface, the gains haven’t been near as uniform.  Within the S&P 500, YTD returns for individual sectors range from a gain of 11.6% for the Energy sector to a decline of 3.3% for Consumer Staples. So, depending on your level of success, stock-picking has either really helped or hurt performance so far this year.

Bespoke’s Morning Lineup – 1/21/21 – Strong Economic Data

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 free trial to Bespoke Premium.  CLICK HERE to learn more and start your free trial.

“A plan without action isn’t a plan, it’s a speech.” – T. Boone Pickens

Futures are trading higher heading into the opening bell this morning on what is still another relatively light morning for earnings data.  The economic calendar was on the busy side this morning as Jobless Claims, Housing Starts, and the Philly Fed Manufacturing report were all just released and they ALL came in better than expected.

Be sure to check out today’s Morning Lineup for updates on the latest market news and events, Korean export data, an update on the latest national and international COVID trends, and much more.

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Equities had a big day yesterday with the S&P 500 up over 1% and the Nasdaq higher by close to 2%.  One notable area of weakness, though, was in semiconductors.  In a divergence you don’t see very often, despite the broader market gains, the Philadelphia Semiconductor Index (SOX) finished the day down marginally. This type of divergence is so uncommon in fact that you have to go all the way back to October 2007 to find the last time the SOX was down on a day when the Nasdaq was up over 1.5%.

Bespoke’s Morning Lineup – 1/20/21 – Transition

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“But every difference of opinion is not a difference of principle. We have called by different names brethren of the same principle. We are all Republicans, we are all Federalists.” – Thomas Jefferson

After reporting better than expected subscriber growth and announcing it would consider stock buybacks, Netflix (NFLX) looks like it will fittingly be the first blockbuster earnings report of the Q4 reporting season as the stock is trading up over 13%.  That gain has Nasdaq futures trading up nearly 1% while the S&P 500 and Dow futures are positive but not by nearly as much.  In other earnings news this morning, all nine of the companies reporting have topped EPS forecasts while seven out of nine have also topped revenue forecasts.  Two companies (ASML and Procter & Gamble) even raised guidance.

Economic data this morning is relatively light as the only notable report on the calendar is homebuilder sentiment at 10 AM.  Economists are forecasting the headline index to remain unchanged at last month’s reading of 86.  The big event of the day will obviously be the inauguration of Joe Biden as the 46th President of the United States at noon eastern time and the flurry of Executive Orders concerning student loans, eviction moratoriums, the Keystone Pipeline, the travel ban, and mask-wearing on Federal property that are expected to immediately follow.

Be sure to check out today’s Morning Lineup for updates on the latest market news and events, Chinese Industrial Production, an update on the latest national and international COVID trends (which were positive again), and much more.

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Today makes it official for Joe Biden as he will be sworn in as the 46th President of the United States.  With that in mind, the table below summarizes the performance of the DJIA for every US President since 1900.  In terms of gross percentages, the DJIA’s 56.0% gain under Donald Trump’s tenure ranks as the 8th best out of the 20 shown.  While that performance seems pretty middle of the road, all seven of the Presidents that oversaw larger gains did so over more than one full-term. To account for each President’s time in office, in the rightmost column, we show the DJIA’s performance on an annualized basis, and on this basis, the 11.8% gain during the Trump Administration ranks as the fourth-best behind Coolidge (25.5%), Clinton (15.9%), and Obama (12.1%).

We all remember the big market rally we saw after the 2016 election with Trump’s election when the S&P 500 rallied more than 6%.  As impressive as that gain was, it pales in comparison to the current period where the S&P 500 is up nearly 12% since the election.

Turning our attention back to Netflix (NFLX), with the stock set to gap up over 13%, today will be the largest upside gap for the stock since October 2016 and the 14th upside gap of 10%+ for the stock since 2010.  In the table below, we summarize each of the prior instances along with how the stock performed from the open to close.  NFLX has continued higher over three-quarters of the time with an average gain of 1.05% (median: 1.84%).  Also notable is the fact that all but one of the stock’s prior upside gaps was an earnings-related move.  The only exception was in August 2015 during the volatility of the China yuan devaluation.  That was also the time the stock saw the largest downside move from the open to close.

Bespoke’s Morning Lineup – 1/19/21 – Turnaround Tuesday

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 free trial to Bespoke Premium.  CLICK HERE to learn more and start your free trial.

“Most entrepreneurial ideas will sound crazy, stupid and uneconomic, and then they’ll turn out to be right.” – Reed Hastings

It may be the first trading day of the week, but given the declines to close out last week and the fact that futures are higher, it still qualifies as a Turnaround Tuesday for now.  There’s nothing in the way of economic data on the calendar, but the pace of earnings is picking up steam.  Of the seven companies reporting so far this morning, six have topped EPS and revenue forecasts, and Netflix (NFLX) will report after the close.

Be sure to check out today’s Morning Lineup for updates on the latest market news and events, Chinese Industrial Production, an update on the latest national and international COVID trends (which were positive again), and much more.

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Below we have provided a snapshot from our Trend Analyzer of each of the S&P 500 sectors showing their performance and where they’re trading relative to their short-term trading ranges heading into this week.  Last week was a negative for most sectors, but Energy, Real Estate, Utilities, and Financials all managed to buck the trend and post varying levels of gains.  Energy was the strongest sector of the week and it is now up over 12% YTD, and more than 13% above its 50-DMA.  As a result of the recent surge, the sector’s timing score is ‘Poor’.  On the other end of the spectrum, four sectors currently have ‘Good’ timing scores.  Those sectors are Communication Services, Industrials, Technology, and Consumer Staples.  Of those four sector ETFs, only Industrials is up YTD while the other three have all dropped 2% or more. While the broader market is up modestly YTD, on a sector by sector basis, it has been an uneven year.

Bespoke’s Morning Lineup – 1/15/21 – Big Banks Beat, But…

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 free trial to Bespoke Premium.  CLICK HERE to learn more and start your free trial.

We may have all come on different ships, but we’re in the same boat now.” – Martin Luther King Jr.

Even after an ambitious $1.9 trillion stimulus plan unveiled by President-Elect Biden last night and promises for more in the future, US futures are lower this morning while US treasury yields are lower.  There’s a ton of economic data coming up this morning beginning with producer prices, Empire Manufacturing, and retail sales at 8:30.  Later, we’ll get reports on industrial production, and University of Michigan consumer sentiment.

It’s a three-day weekend as US financial markets will be closed on Monday in observance of the birthday of Martin Luther King Jr (his actual birthday would have been today).  Enjoy the three-day weekend, because earnings season will kick into a higher gear starting next week.

Be sure to check out today’s Morning Lineup for updates on the latest market news and events, a discussion of Biden’s stimulus plan, an update on the latest national and international COVID trends (which were all positive), and much more.

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Between this morning and Tuesday morning, seven of the largest US banks and brokerage firms will be reporting results.  As of this writing, the four reports to cross the wires have been Citigroup (C), JPMorgan (JPM), PNC, and Wells Fargo (WFC).  Of these four, all of them beat EPS forecasts while both C and WFC missed revenue estimates.  In reaction, all four stocks are currently trading lower with declines of up to 3%.  On Tuesday (Monday is a holiday), we’ll get reports from Bank of America (BAC), Charles Schwab (SCHW), and Goldman Sachs (GS).

Below we have provided a snapshot from our Trend Analyzer of each of the large banks reporting today and Tuesday morning showing where they are trading relative to their trading ranges.  While we’re just barely halfway into the first month of the year, all seven of these stocks have posted gains that many would have been happy with for an entire year.  With the exception of PNC, every other stock in the snapshot is already up over 10% YTD with GS and WFC both up over 15%!

With these strong gains in such a short period of time, though, all of these stocks are trading at short-term overbought levels, while BAC, GS, and JPM are all more than two standard deviations above their 50-day moving average heading into today’s trading.  This could be one reason all four of the banks reporting this morning are trading lower even though they all topped EPS forecasts.  With high stock prices also comes high expectations, so that’s something to watch in these companies as they report.

Bespoke’s Morning Lineup – 1/14/21 – Earnings Season Begins

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 free trial to Bespoke Premium.  CLICK HERE to learn more and start your free trial.

“The ability to recognize that the winds have shifted and to take appropriate action before you wreck your boat is crucial to the future of an enterprise” – Andrew Grove

The President was impeached by the House for the second time in just over a year yesterday, and like the first time, financial markets were unfazed.  While the President’s first impeachment in the House in December 2019 was completely on a partisan basis and dead on arrival in the Senate, this time around, the fate of the impeachment in the Senate is more uncertain.  What seems certain at this point, though, is that the completion (or maybe even the start of a trial) would not take place until after the inauguration, so from a market perspective, it really doesn’t matter much.

The only economic data of note today was Jobless Claims, and both initial and continuing claims came in much higher than expected.  Initial Claims spiked up to 965K versus forecasts of 786K, and Continuing Claims rose to 5.271 million compared to forecasts for 5.0 million.  In terms of the market reaction to these much weaker than expected reports, there really hasn’t been any.

In terms of individual companies, although earnings season kicks off today with reports from BlackRock (BLK) and Delta (DAL), the pace of reports will remain slow today and tomorrow.  Regarding today’s reports, both BLK and DAL are trading modestly higher in reaction to their reports.  Also notable, although not a US company, Taiwan Semi (TSM) also reported strong results and is trading up over 2.5%.

Be sure to check out today’s Morning Lineup for updates on the latest market news and events, a discussion of the latest import and export orders from China, an update on the latest national and international COVID trends, and much more.

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With yesterday’s big move in Intel (INTC), the stock is now over three standard deviations above its 50-DMA.  In the last nearly 40 years, there have only been 22 other days in which the stock was as overbought or more overbought than it is today.