Mar 9, 2022
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.
“Your reality is as you perceive it to be. So, it is true, that by altering this perception we can alter our reality.” – William Constantine
Equities are experiencing a monster rally this morning with S&P 500 futures up over 1.5% and the Nasdaq indicated to open higher by more than 2%. European stocks have rallied even more with Germany’s DAX up nearly 5%! As we have pointed out several times over the last several weeks, though, futures are only telling us where the market is now, and where we finish the day can easily look a lot different than it does now. Take the current level of futures, for example. At the open today, the S&P 500 will still be trading below yesterday’s afternoon high. We’ll take what we can get, though.
There’s seemingly not much in the way of a catalyst that can be cited for this morning’s move, but comments from a Russian spokesperson saying that Russia isn’t looking to overthrow the Ukrainian government have been cited by some as contributing to the move. These types of comments have been common over the last two weeks, though, and they differ from what has actually been taking place on the ground in Ukraine.
The only economic report on the calendar this morning is the JOLTS report, but it’s a January report, so it won’t be telling us anything we don’t already know.
Lastly, today marks the 13-year anniversary of the Financial Crisis low in March 2009, ending what was one of the worst bear markets in US history, and if you remember that day, there wasn’t a lot of hope for investors as it looked like there was no way out for the market. The thing to remember regarding bear markets and market corrections, though, is that at the lows, the way out is never obvious.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
Energy stocks have had a rally this year that can only be described as insane. Over the last 50 trading days, the Energy sector ETF (XLE) is up over 40% while the S&P 500 ETF (SPY) is down more than 11%. That works out to a spread of nearly 53 percentage points! Since XLE started trading in 1999, there has never been a 50-trading day period where the XLE outperformed SPY by as wide or wider of a margin.
Looking at the above chart, it’s hard not to argue that the Energy sector has massively gotten ahead of itself. 50 percentage points of outperformance in 50 days? Changing perspective a bit, though, shows just how depressed the Energy sector was relative to the rest of the market. The chart below shows the long-term relative strength of XLE versus SPY since the start of 1999. What a ride it’s been!
Basically from the time XLE started trading to mid-2008, it handily outperformed SPY, but in the 12 years that followed, XLE gave up all of its outperformance and more, only just recently getting back to even. Since the start of 1999, both ETFs have essentially experienced the same returns (+232% for XLE and +238% for SPY). So even after the recent surge in XLE, it is still slightly underperforming SPY over the last 23 years, and if you measure performance since the lows of the Financial crisis, SPY’s performance is more than five times the return of XLE!
Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.
Mar 8, 2022
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.
“No fact begins with if” – Nicholas II
With the entire world focused on the Russia-Ukraine war and possible scenarios under which President Putin can either ratchet up or dial back the tensions, it’s ironic that today marks the 105th anniversary of the start of the ‘February Revolution’ which essentially ended the reign of czarist rule in Russia when Nicholas II abdicated his throne. Historians cite a number of factors for the February Revolution including frustration with government corruption, a poor economy, and autocratic rule, but the Russian military’s poor performance in World War I was the primary catalyst for the Revolution. Russians came out in droves to protest the conditions and despite an attempted crackdown Russian police and ultimately the military, the protestors refused to back down. Within less than a week, Nicholas II abdicated the throne ending the era of czarist rule in the country.
Not long after Nicholas abdicated, Vladamir Lenin returned from exile in Switzerland to lead the Russian Revolution, and as he is often credited with saying, “There are decades where nothing happens, and there are weeks where decades happen.” During the February Revolution, it took less than a week for protests to lead to the abdication of the throne by Nicholas II and usher in the communist era. The current Russia-Ukraine war hasn’t even been two weeks yet, and several years from now, with the benefit of hindsight will we be looking back on this period as another one of those moments where ‘decades’ occurred within a matter of weeks?
Futures are looking pretty boring at current levels as we type this with little change in any of the major averages, but since the close yesterday, we have seen them trade down more than 1% and trade up by close to 1%. One thing we can pretty much bank on here is that equity indices will not finish the day where futures are currently trading.
In the commodity space, we’re still seeing some intense moves as nickel prices more than doubled to over $100,000 per metric ton resulting in a halt of trading for the remainder of the day. Given that move, the 2% rally in crude oil looks downright pedestrian.
Lastly, on the economic calendar, the NFIB Small Business Optimism Index came in lower than expected falling from 97.1 last month to 95.7.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
With all of the volatility we’ve seen so far this year, the average daily change of the S&P 500 and Nasdaq has been ticking higher, and over the last 50-trading days, both indices have seen average daily moves of at least 1%. For the S&P 500, the current rate of daily volatility is still below the highs from December 2020, but the Nasdaq’s average daily move of 1.51% is on the verge of eclipsing that peak from the same period. For some perspective, though, the current pace of volatility in stocks is nowhere near the levels experienced during the COVID crash when both indices were experiencing average daily moves of more than 3%.
Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.
Mar 7, 2022
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.
“Facts do not cease to exist because they are ignored.” – Aldous Huxley
It hasn’t been a fun morning for equity investors around the world this morning as futures have been in the red everywhere you look. German stocks, while currently off their morning lows are currently on pace to close in bear market territory. Here in the US, futures are also lower, but well off their overnight lows.
The Russia-Ukraine war continues to drive headlines, and the place it is being felt the most is in crude oil prices. While prices of WTI still remain elevated at a price of more than $118, they actually briefly traded as high as $130 in overnight trading. How desperate is the market for additional barrels of oil given the disruption of Russian supplies? This weekend, US government officials actually visited with the Venezuelan government in an effort to boost ties with a country we cut off diplomatic relations with back in 2019.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
Mondays (or the first trading day of the week when Monday was a holiday) have not been friendly to bulls this year. In the nine weeks so far this year, the S&P 500 has opened the day lower seven times by an average of 0.54%, and today looks like it will be the eighth). The rest of the week has also been negative, but with an average gap lower of 0.03% for all other days of the week, Mondays have been notably weak.
While stocks have opened the day lower to kick the week off, selling hasn’t necessarily followed through to the rest of the trading day. After opening down by an average of 0.54% to start the week, SPY has averaged an intraday gain of 0.42% with positive returns just over half of the time. That compares to an average intraday decline of 0.20% for all other days of the week.
Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.
Mar 4, 2022
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’re changing the world, you’re working on important things, you’re excited to get up in the morning.” – Larry Page
Every month at about this time, the financial world stops everything to focus on what is often considered the most important jobs report in years. Today’s employment report looks like an exception, though. With Fed Chair Powell already telling the markets that March’s meeting will come with a 25 bps rate hike, the Russia Ukraine war intensifying, and commodity prices spiraling out of control, today’s report could be the least important jobs report in years.
Futures are sharply lower this morning following a big sell-off in Europe as war tensions escalate. The big headline last night was news of Russia attacking and seizing control of Europe’s largest nuclear power plant. While initial concerns of a nuclear accident have subsided, investors are coming to a realization that the longer this all drags on, the more damaging to the global economy it all becomes. European benchmark indices are currently down over 3%, while US futures are down about 1%.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
Rising commodity prices have been the most direct impact of the Russia-Ukraine war, and crude oil is the most concrete example. Through this morning, WTI crude oil is up just over 20% on the week, and if these gains hold through the end of the day, it would be just one of five periods where crude rallied more than 20% in a week. In 1998, it got close to 20% but came up just short. As shown in the chart below, we’d also note that three of the prior four periods where prices spiked occurred during recessions. We’re at the point now where prices at the pump are higher on the way home from work than on the way in.
Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.
Mar 3, 2022
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.
“He who knows when he can fight and when he cannot will be victorious.” – Sun Tzu
After a seemingly endless run of days where the futures indicated big moves at the opening bell, this morning, futures on all of the major averages are very little changed fluctuating on either side of unchanged. Even bitcoin is flat on the day! It’s not like there is a lack of potential catalysts, though. We have weekly jobless claims at 8:30, and then at 10, we’ll get the latest reads on Services PMI, Factory Orders, and Durables Goods. Also, don’t forget about Powell’s testimony at 10 AM, and continued developments out of Ukraine..
Jobless claims were just released, and while initial claims were expected to come in at a level of about 230K, the actual reading came in at 215K. Continuing claims were forecast to drop to around 1.44 million, and that reading came in higher than expected rising to 1.476 million which was unchanged from last week.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
With little change in the futures this morning, we thought this would be a good time to take a look at the technical picture for the major US indices. While yesterday’s bounce was welcome, it did little to improve the downtrends in the major averages.
The S&P 500 tracking ETF (SPY) hit a two-week high yesterday, which is less common this year than hitting record highs was last year. Despite the gains, though, the index has yet to even test its downtrend or 200-DMA which doesn’t come into play until around 4,450 on the index and about 445 for the ETF.
Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.
Mar 2, 2022
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.
“The lesson of history is that you do not get a sustained economic recovery as long as the financial system is in crisis.” – Ben Bernanke
Futures are looking to bounce back from yesterday’s weakness, but it’s still early and there are a lot of events on the horizon for today. St. Louis Fed President James Bullard will be speaking right at the open and then a half-hour later, Fed Chair Powell will be testifying in front of a House Panel. Then at 2 PM, we’ll get the release of the Fed’s Beige Book. The only economic indicator of note today was the ADP Private Payrolls report which came in higher than expected. More noteworthy, though, was the 800K positive revision to last month’s report.
News on the Russia-Ukraine front has been relatively quiet. Nothing much new to speak of, but the Russian shelling of Ukrainian targets has continued.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
Yesterday, we highlighted the fact that the Nasdaq 100 has traded in an intraday range of over 1% every day this year. Yesterday, another shorter but pretty incredible streak also came to an end as it was the first time since 2/18 that QQQ was not up and down at least 0.5% in the same trading session. Swings from intraday gains of at least 0.5% to intraday losses of 0.5% (or in the opposite order) on an intraday basis indicate a volatile session, and five trading days in a row indicates extreme volatility and uncertainty.
The chart below shows historical streaks where QQQ saw intraday gains and losses of 0.5% in the same trading session. At five trading days, the streak that just ended is tied for the longest since February 2008 (six trading days), but it was well off the record of 18 trading days back in October 2000 – a period where there were multiple streaks with 0.5% intraday swings between gains and losses.
Looking at all the dates shown, though, the thing that stands out is that these types of streaks aren’t common, and they have only been seen during periods where the market was in a period of varying degrees of crisis.
Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.
