Aug 26, 2021
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“Nothing great was ever achieved without enthusiasm – Ralph Waldo Emerson
Futures are mixed heading into the second to last trading session of the week, and there has been little change even after initial claims and the revision to GDP. Generally speaking, the reports came in close to expectations with little in the way of surprises. For the rest of today, markets will be watching for commentary from Fed officials ahead of tomorrow’s Jackson Hole speech from Fed Chair Powell. This morning, KC Fed President Esther George, who is a non-voter, suggested that it’s time for the Fed to start removing stimulus, and right now St. Louis Fed President Jim Bullard (another non-voter this year) is striking the same tone, although he has had these views for some time now. All week long, the market has been betting that Powell would take a dovish tone in tomorrow’s speech, but after the rally of the last five days, maybe that has become too priced in at this point.
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.
After underperforming the market-cap-weighted index for months, the equal-weighted S&P 500 has recently started to get back on track and has been reaching new highs itself as well. After bumping up against resistance multiple times in the spring and early summer, the equal-weighted index briefly broke out to new highs in late July and early August before pulling back last week on concerns over Afghanistan and a Fed taper. The index pulled back to its 50-DMA, but like the market-cap-weighted index, it has bounced back nicely and finally hit a new high again in yesterday’s trading.
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Aug 25, 2021
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“I have always believed that it’s important to show a new look periodically. Predictability can lead to failure.” – T. Boone Pickens
You can’t get much flatter than where equity futures are at the given moment, but then again, you can’t get a more quiet time of year than a Wednesday in late August. In COVID related news, China has reportedly started to re-open its Ningbo port after a two-week shutdown, Japan is set to spend an additional 1.4 trillion yen on additional COVID vaccines with two-thirds of the directed towards the purchase of boosters, while JNJ announced that an early study shows a boost in the body’s immune response to a booster of its COVID vaccine.
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.
It’s been quite a wild ride for small caps over the last few days. After failing to retake its 50-day moving average (DMA) in early August, bulls gave up in the middle of the month, and the Russell 2000 experienced a quick sell-off that not only tested the lows from mid-July but also broke below the 200-DMA for the first time in nearly a year. The break of the 200-DMA didn’t last long, though. Last Friday, the Russell 2000 bounced 1.6%, and that was followed by a 1.9% follow-through on Monday and then another 1% rally on Tuesday.
In the span of just three trading days, the Russell 2000 went from testing the 10% threshold for a technical correction to the point now where it is actually in the upper half (barely) of the trading range it has been stuck in nearly all year. Despite that bounce, though, the Russell heads into today still just below its 50-DMA. With it already rallying 1% in each of the last three trading days, does it still have gas left in the tank to get back above that level? That will be the big short-term test.
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Aug 24, 2021
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“They always say time changes things, but you actually have to change them yourself.“ – Andy Warhol
US equities are still indicated to open higher today, but futures are off their overnight highs. Following a strong session in Asia, European markets opened higher but have been trending lower since the open. The only economic reports on the calendar today are the Richmond Fed and New Home Sales which will both be released at 10 AM.
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.
The S&P 500 came close but finished just shy of closing at a record high yesterday. The Nasdaq, meanwhile, managed to close at its 28th record high of the year. At the current pace so far this year, the Nasdaq would finish the year with 43 record closing highs. So, where would that rank relative to history? Dating back to 1971, there have actually been nine other years where the Nasdaq finished the year with 43 or more record closing highs. The most recent was last year when there were 55 and before that, you only have to go back to 2017 when there were a record 72. That’s one every three to four days!
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Aug 23, 2021
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“Creating success is tough. But keeping it is tougher. You have to keep producing, you can’t ever stop.” – Pete Rose, who was permanently banned from Major League Baseball on this day in 1989.
US equity futures opened modestly higher Sunday evening and have been building on those gains ever since. Along with higher equities, crypto-markets are also rallying as bitcoin tops $50K. While there hasn’t been much improvement in the situation over in Afghanistan over the weekend, it hasn’t gotten any worse either. The focus going forward this week will be on the Fed’s (now virtual) Jackson Hole conference later this 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.
A look at the major averages to kick off the week shows the current dichotomy between small and large caps. In the small-cap space, the Russell 2000 remains right near the low end of its YTD range, and after closing below its 200-day moving average (DMA) for a day, it bounced back on Friday to close out the week on a positive note. Large-cap stocks, as proxied by the Nasdaq 100 and S&P 500 didn’t even test their 50-day moving averages last week, but like the Russell 2000, they also bounced Friday helping to erase much of the declines from earlier in the week.
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Aug 20, 2021
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“I always believe that prices move first and fundamentals come second.” – Paul Tudor Jones
US equity futures are in the red again this morning with SPY down 40 basis points in pre-market trading. We’re beginning to sense a pattern here…
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.
Also, make sure to check out our Daily Sector Snapshot.
As shown below, large-cap index ETFs like DIA, QQQ, and SPY are quickly nearing their 50-day moving averages after declines from record highs this week. The Russell Mid-Cap ETF (IWR) already broke below its 50-DMA earlier in the week, and of course, the Russell 2,000 Small-Cap ETF (IWM) has been below its 50-DMA for the last month or so.
Small-caps have been incredibly weak this summer relative to the rest of the market. After yesterday’s drop, the Russell 2,000 is now down 9.65% from its record high made on the Ides of March. It will only take another slight move lower to leave the index in official “correction” territory (a 10% drop).
Yesterday’s weakness also caused the Russell 2,000 to break below support at its long-term 200-day moving average.
The close below the 200-DMA ended a streak of 226 consecutive closes above the 200-DMA for the Russell. The just-ended streak is the 11th longest on record dating back to 1978 when the index began.
So what’s next now that this technical breakdown has occurred for small-caps? Find out by reading today’s Morning Lineup. Start a two-week trial to Bespoke Premium and read today’s full Morning Lineup.
Aug 19, 2021
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“A trader, in addition to studying basic conditions, remembering market precedents and keeping in mind the psychology of the outside public as well as the limitations of his brokers, must also know himself and provide against his own weaknesses.” – Edwin Lefèvre, Reminiscences of a Stock Operator
US equity futures are currently down pretty significantly (-0.80%) after major indices fell more than 1% yesterday. The declines are being led by the Energy sector, which has already fallen more than 6% over the 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.
Also, make sure to check out our Daily Sector Snapshot.
Breadth had made a bit of a turnaround earlier this month, but the last week has been brutal with investors really selling the cyclical sectors that are dependent on a strong economy. While the cap-weighted S&P 500 is less than 2% from all-time highs, the average stock in the S&P 1500 index (made up of large-caps, mid-caps, and small-caps) is 15.8% from its 52-week high. As shown below, the average Energy stock in the S&P 1500 is more than 30% from its 52-week high, while Communication Services stocks are down an average of 21.4% from their highs. The defensive Utilities sector has held up the best with the average stock just 6.1% from its 52-week high.
It’s been a choppy summer for stocks even though things look positive at the index level. As shown below, over the last three months, the cap-weighted S&P 1500 is up 5.9%, but the average stock in the index is actually down 0.65% over the same time frame.
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