Dec 1, 2021
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.
“I am a warrior, so that my son may be a merchant, so that his son may be a poet.” – John Quincy Adams
You may think that the market has been volatile over the last several trading days, but just be thankful it’s not 1824. Back in November of that year, no candidate for President received the required majority of electoral votes in the election which forced Congress, on December 1st, to turn the election over the House of Representatives and basically choose between Andrew Jackson and John Quincy Adams. The actual winner wasn’t decided for more than two months when John Quincy Adams came out on top in early February 1825. Despite coming in second in the actual election, Adams’ victory came thanks to the backing of Henry Clay in what was called the ‘Corrupt Bargain’, and because he wasn’t the most popular candidate in the election, Adams’ presidency was largely considered to be unimpactful. Can you imagine in this political climate if the House was actually deciding an election today?
Futures are higher this morning as investors can’t decide which way they want the market to go as the S&P 500 goes back and forth between 1% losses and 1% gains in a game of ‘Loves Me, Loves Me Not’. One thing to note is that just as Monday’s 1% rally was weaker in magnitude than Friday’s drop, we’re seeing the same pattern play out today where the S&P 500 is on pace to open higher by 1.4% after Tuesday’s 1.95% decline.
In yesterday’s rout, only seven stocks in the S&P 500 finished the day higher, which was the weakest breadth reading since June 11th, 2020. Breadth in small caps wasn’t nearly as weak as the S&P 500 yesterday (more than 400 stocks traded higher), but its breadth reading on Friday was also the weakest since June 11th.
On the data docket today, the ADP Private Payroll report for November was released at 8:15 AM and came in higher than expected with little impact on futures. The only two other reports on the calendar today are Construction Spending and ISM Manufacturing which will be released at 10 AM. Powell and Yellen will also be testifying in front of the House this morning, and yesterday, the S&P 500 was only down modestly while the Nasdaq was actually higher before Powell’s testimony.
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.
2021 has really been a pretty crazy year for small-cap stocks. After doubling from its COVID lows, the Russell 2000 peaked in early March and traded in a sideways range through the summer and into the fall. After several close calls at a 10% correction, including a 9.7% drop on a closing basis through mid-July, the Russell finally broke out of its trading range in early November to trade at a new record high. From its first new high on 11/2, though, the breakout for IWM didn’t last long. After rallying an additional 3.4% in the four trading days since its first new closing high since March, it’s been a one-way trip lower for small caps ever since, and through yesterday’s close, IWM closed down 10.1% from its record high earlier this month. What the Russell couldn’t do in more than six months from early March through the end of Summer, it did in just 15 trading days this month!
Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.
Nov 30, 2021
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.
“History doesn’t repeat itself, but it often rhymes.” – ???
On this day in 1835, Samuel Clemens aka Mark Twain, considered by many to be one of the greatest American writers, was born. While the quote above has often been attributed to Twain, there is no documented evidence that he ever said the last part of the quote. One variation he has written was “History never repeats itself, but the Kaleidoscopic combinations of the pictured present often seem to be constructed out of the broken fragments of antique legends.” Not quite as succinct but along the same lines.
Whoever said it, the fact that history doesn’t repeat itself, but it often rhymes is often on display in financial markets. While there’s no historical parallel to the current period of COVID and the unprecedented amount of stimulus that has been put into the system, human emotions are always a driving factor in market movements, and when faced with increased uncertainty, many investors choose to sell first and ask questions later- even if the headlines driving the market lower today (vaccines and COVID treatments potentially being less effective against the Omicron variant) were also in the market yesterday as well.
Equity futures are indicating a sizable decline at the open with the Dow leading things lower. The moves in the Energy and Treasury market have been even more notable with WTI trading under $68 a barrel, nat gas down over 6% after a 10% decline yesterday, and the yield on the 10-year down below 1.44% to its lowest level since late September.
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.
There’s been quite a bit of bifurcation in sector performance over the last several trading days. While four sectors are up over the last five trading days, they’re all among the smallest sectors in the market. At the bottom of the list, two sectors (Communication Services and Industrials) are down over 2% while another two are down more than 1.5% (Consumer Discretionary and Materials). Technology, the S&P 500’s largest sector is also down but by a more modest 0.68%.
Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.
Nov 29, 2021
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 ability to concentrate and to use time well is everything.” – Lee Iacocca
Markets are looking to recover a chunk of Friday’s losses in early trading this morning. Equity futures are up across the board, but the Nasdaq is leading the way higher erasing about 40% of Friday’s losses. Crude oil is also bouncing back above $70 with a gain of over 5%, copper is up 1.5%, and the yield on the 10-year US Treasury is up 6 basis points (bps) to 1.54%. In crypto, bitcoin is trading just below $57K gaining nearly 4% while Ethereum is trading just above $4,300.
Investors are trying to make sense of the latest Omicron Covid strain, but at this point more seems to be unknown than known. Clouding things even more, we’re unlikely to have definitive answers in the immediate future. Early reports have suggested that symptoms from this latest strain have been mild and that vaccines are still likely to provide good protection from severe illness, but that it is also more transmissible. While demographics may be a factor behind the mild symptoms (younger population in South Africa), if that did turn out to be the case overall, it would certainly be a positive. Even if the best-case scenario does play out and Friday’s panic proves to be a massive over-reaction by markets and governments around the world, the short-term impact of restrictions on activity and international travel around the world will have some economic impact. Just last night, Japan announced that it will ban the entry of foreign travelers joining Israel, which made the same announcement 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.
Whether you’re looking at small caps or large-cap equities, it’s a tale of two markets this week. In the small-cap space, the Russell 2000’s break out earlier this month looks increasingly like a fakeout, and rather than a new leg higher, the question for small-caps is whether they can hold support at the uptrend line from the summer lows and not break down. For large caps, the S&P 500 still remains well above its breakout level from the summer high before September’s sell-off. Support for the S&P 500 doesn’t come into play until the 50-day moving average which is just above the 4,500 on the index and $450 for SPY.
Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.
Nov 26, 2021
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.
“Anytime anybody tells me the trend is such and such, I go the opposite direction. I hate the idea of trends.” – Clint Eastwood
Prices are being slashed across the investment spectrum this black Friday morning as concerns over the new COVID variant detected in South Africa has investors reigning in risk. It’s important to stress that very little is known at this point about this latest strain, including whether it can evade vaccines or how severe it is relative to other mutations. Therefore, it’s hard to make any informed investment decisions at this point. Historically speaking, chasing a rally or selling into a sharp decline (especially on a very illiquid trading day) rarely ends up being profitable, but that isn’t stopping a lot of people this morning.
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.
While inflation concerns have shown no signs of abating in November, crude oil prices have been weak and broken some key support levels. Today’s decline of over 5% puts WTI on pace for its worst day since July, and in the process, it has traded below its summer high, which was a level that acted as support earlier this week. This latest break of support follows the break of the trend line that was broken earlier this month, where the subsequent bounce failed right as WTI traded back towards its trend line.
Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.
Nov 24, 2021
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.
“Those who are not grateful soon begin to complain of everything.” – Thomas Merton
If you were expecting a quiet day in the markets ahead of Thanksgiving, you may want to think again. While we got most of the earnings data out of the way yesterday (with some big losers), today we’ll be squeezing in three days worth of economic data including Jobless Claims, Wholesale Inventories, GDP, and Durable Goods at 8:30. Then, at 10 we’ll get Personal Income and Spending as well as Michigan Confidence. Don’t worry, though, there’s more! At 10:30, the DoE will release weekly oil inventory data, and then at noon, the EIA will release Natural Gas inventory data. At 1 PM, Baker Hughes will release the weekly rig count, which usually comes out on Friday. Then, to cap things off, at 2 PM, the FOMC will release the minutes from its latest meeting, and then after that ‘feast’ of data, we’ll all need a nap!
Futures are lower heading into today’s data deluge but off their overnight lows. With all the data releases, though, we’re likely to see some back and forth action with each one. Happy Thanksgiving!
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.
While it hasn’t been a positive week for the Nasdaq, if you’ve been long the index this year, you have a lot to be thankful for as the index is still up over 20% YTD. While 20% is nothing to sneeze at, going back to 1972, this year would be the 17th year in 50 where the Nasdaq was up 20%+ YTD through Thanksgiving. Looking ahead, the index’s median performance from Thanksgiving through year-end was a gain of 3.05% with positive returns three-quarters of the time. That compares to a median gain of 2.44% and positive returns 67% of the time for all years since 1972. So, while the Nasdaq has historically closed out the year on a positive note, performance in years that were already strong has been even a little bit better.
Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.
Nov 23, 2021
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 individual investor should act consistently as an investor and not as a speculator.” – Benjamin Graham
We’re seeing a mixed tone in equity futures this morning after a pretty significant negative reversal in equities yesterday. Continuing the trend from yesterday, Dow futures are indicated slightly higher, S&P 500 futures are flat, and the Nasdaq is lower, but all three indices are off their overnight lows. While earnings season unofficially ended last week, it’s been a busy morning for earnings as companies squeeze in results today ahead of the Thanksgiving holiday. In terms of investor reactions to the report, it has been mostly negative with stocks like Abercrombie (ANF), Best Buy (BBY), Urban Outfitters (URBN), and Zoom (ZM) all down between 5% and 10%.
Where the real action has been the last two days is in the Treasury market, especially the two-year where the yield is on pace for a two-day increase of 14 basis points (bps). If these levels hold through the end of the day, it would mark the biggest two-day increase in the two-year yield since March 2020.
In economic news, European flash PMI readings for the month of November were released and came in better than expected at the headline level despite the rising COVID case numbers. Internals of the reports, however, were not quite as strong. The US calendar today also includes flash PMI readings for November as well as the Richmond Fed. Next week will be an extremely packed calendar as it will be the last day of economic releases for the week.
Lastly, in what was a widely expected move this morning, the US announced that it would release some oil from the Strategic Petroleum Reserve in coordination with other countries including China, India, Japan, Korea, and the UK. Given the move was widely expected, the market reaction has been muted.
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.
As shown in the charts below, while value stocks were correcting last week (charts on left), the rally in growth stocks went on unabated, and yesterday’s reversal appears to have been a bit of catch-up trade.
Start a two-week trial to Bespoke Premium to read today’s full Morning Lineup.
