Apr 21, 2021
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“The desire to perform all the time is usually a barrier to performing over time.” – Robert Olstein
Well, it’s just not looking like it’s going to be a week for the bulls as US stocks are poised for their third straight day of declines in what would be the longest losing streak since early March. There’s still practically no economic data to speak of this week as the only report today was mortgage applications. Don’t worry, though, the pace of reports will really pick up tomorrow, and earnings season has already kicked into gear.
So far this week, the trend of reports has been positive as more than 85% of S&P 500 companies reporting have topped EPS forecasts, and more than three-quarters have topped revenue estimates. Those are strong results, although stock price reactions have been somewhat uninspiring with stocks reporting on Monday and Tuesday morning falling an average of 0.79% in reaction to their reports.
Read today’s Morning Lineup for a recap of all the major market news and events including a recap of the biggest overnight events including some key earnings reports, economic data from around the world, some surprising political polls in Germany, as well as the latest US and international COVID trends including our vaccination trackers, and much more.
Stocks haven’t only been down in the US this week. Japan’s Nikkei fell 2% for the second straight day overnight as a new COVID wave there continues to accelerate. At current levels, the Nikkei is trading right at levels that have acted as support multiple times in the last couple of months as the index continues to trade in a somewhat narrow range.
From the perspective of a US investor, the chart below shows the Nikkei’s performance in dollar-adjusted terms. From this view, the chart doesn’t look all that different as the Nikkei remains right at the bottom of its recent range, although the drawdown from its February high has been a bit steeper.
Apr 20, 2021
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“If a man didn’t make mistakes he’d own the world in a month. But if he didn’t profit by his mistakes he wouldn’t own a blessed thing.” – Edwin Lefevre
What had been a sideways market overnight in the US equity futures market turned into a steady grind lower right with the opening bell in Europe. S&P 500 futures are now indicated to open down about half of one percent. While that would only bring the two-day decline to about 1%, after the one-way higher market we have seen since late March, it seems a lot more painful. It’s all about perspective.
The economic calendar is quiet again today with no reports on the calendar. In earnings news, after the close, the key companies reporting include Intuitive Surgical (ISRG) and Netflix (NFLX).
Read today’s Morning Lineup for a recap of all the major market news and events including a recap of the biggest overnight events including some key earnings reports, economic data out of Asia, as well as the latest US and international COVID trends including our vaccination trackers, and much more.
Within the US equity market, two of the hottest areas in Q4 and earlier this year were small caps and Energy, but like the Technology sector late last summer, both of these have now run into some serious consolidation.
Starting with small caps, besides the Russell Micro-Cap ETF (IWC), the Russell 2000 (IWM) is the only other index ETF currently below its 50-DMA. Sure, it’s less than 1% below that level but when just about every other index ETF is 4% or more above that level, it’s a pretty wide performance gap. As shown in the chart below, the Russell 2000 is in a bit of limbo as it is smack dab in the middle of the range it has traded in since the start of the year.
Like small caps at the index level, Energy (XLE) is the only sector currently below its 50-DMA. Here again, it’s less than 1% below that level, but when the other ten sectors are trading anywhere from 3.3% to 7.4% above their 50-DMAs, Energy’s underperformance really stands out. The chart picture for Energy looks similar to small caps, although we would note that it is currently trading right at levels that have provided support multiple times since late February.
Apr 19, 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 free trial to Bespoke Premium. CLICK HERE to learn more and start your free trial.
“I look at a streak as I don’t lose – literally.” – Tiger Woods
Futures are lower to start the week, and the economic and earnings calendars are both extremely quiet to start the week. Things will pick up intensely as the week goes on, though, so enjoy the calm while it lasts. After the close today, we’ll get earnings reports from IBM and United Air (UAL).
Read today’s Morning Lineup for a recap of all the major market news and events including a recap of the biggest overnight events including some key earnings reports, German elections, as well as the latest US and international COVID trends including our vaccination trackers, and much more.
Last week we were talking about the market’s ‘can’t lose’ pattern where SPY traded higher from the open to close for thirteen straight days. While that streak ended (for a day) another notable streak we’re tracking is the S&P 500’s consecutive streak of closes in ‘extreme overbought’ territory. Heading into today’s trading, the S&P 500 has closed more than two standard deviations above its 50-DMA for eleven straight days. That ranks as the longest streak of ‘extreme overbought’ readings for the S&P 500 since 2013 and just the 23rd such streak in the post-WWII period. While futures are down this morning, as long as the S&P 500 finishes the day down less than 0.55% the current streak will stretch to a cool dozen.
Apr 16, 2021
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“It all comes down to interest rates. As an investor, all you’re doing is putting up a lump-sum payment for a future cash flow.” – Ray Dalio
The anti-gravitational pull higher in equities has continued this morning as some modest weakness in futures overnight has reversed with all of the major averages now looking to open in the green. Housing data has the spotlight this morning, and both Housing Starts and Building Permits topped consensus expectations. The latter saw only a small beat relative to expectations, while the former exceeded forecasts by more than 100K (1739K vs 1611K). The only other indicator on the calendar between now and the weekend is Michigan Confidence.
Read today’s Morning Lineup for a recap of all the major market news and events including a recap of the biggest overnight events including some key earnings reports, international economic data, as well as the latest US and international COVID trends including our vaccination trackers, and much more.
We’re already hard at work on this week’s Bespoke Report, but this morning we wanted to provide a quick update to a chart from last week’s report. The annotated chart below shows the yield on the 10-year US Treasury on an intraday basis over the last 15 trading days. Along with the move in yields, we’ve also annotated the chart with the releases of some key economic indicators over that time period. So, let’s recap them for you.
On 3/30, Consumer Confidence saw its biggest beat relative to expectations since at least 2000 and the third largest m/m gain on record. On 3/31, the Chicago PMI was the strongest since July 2018. The next day (4/1), the ISM Manufacturing report came in at the highest level in decades. The equity market was closed for Good Friday on 4/2, but Non-Farm Payrolls came in more than a quarter of a million above forecasts. The following Monday on 4/5, the ISM Services report, which goes back to the mid-1990s, came in at the highest level on record. After 4/5, there was a bit of a lull in the data, but last Friday (4/9), PPI saw its largest y/y increase since 2011 while this week’s CPI saw the largest m/m increase since 2009. Finally, in yesterday’s data dump, Jobless Claims dropped to their lowest level of the pandemic, Retail Sales came in at nearly twice consensus expectations with the second-largest m/m increase on record, and both the Philly and NY Fed Manufacturing indices surged.
With all of this great data following a period where the market was freaking out over interest rates, you could have expected to see a big jump in rates, but instead, we’ve seen the complete opposite with the yield on the 10-year at its lowest level since February. As Peter Lynch once said, “Nobody can predict interest rates”, or for that matter, “the future direction of the economy or the stock market.”
Apr 15, 2021
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“Money is made by sitting, not trading.” – Jesse Livermore
Futures have been higher all morning driven by solid earnings results from some of the largest banks. In addition to the earnings results, we just got a slug of economic data in the form of Jobless Claims, Retail Sales, Empire Manufacturing, and Philly Fed Manufacturing. As “Crazy Eddie” would say, the results were “Insane”. With the exception of Continuing Claims, which still came in right near their post-pandemic lows, every other report came in much stronger than expected. It’s still early, but what could be more impressive than the results themselves is the fact that the yield on the 10-year is actually lower now than it was before the releases.
Read today’s Morning Lineup for a recap of all the major market news and events including a recap of the biggest overnight events including some key earnings reports, international inflation data, as well as the latest US and international COVID trends including our vaccination trackers, and much more.
As shown on page two of our Morning Lineup, the S&P 500 has been consistently trading in ‘extreme’ overbought territory in recent days (2+ standard deviations above its 50-DMA). Yesterday marked the 9th straight trading day that the S&P 500 finished the day in this area marking the longest streak since January 2018 and just the 7th streak of nine or more trading days.
Apr 14, 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 free trial to Bespoke Premium. CLICK HERE to learn more and start your free trial.
“No price is too great for a work of unquestioned beauty and known authenticity.” – J.P. Morgan
We’re still far from the peak of earnings season, but today has been the busiest day of the season so far. Of the six companies that have reported this morning, all six of them topped EPS forecasts while five out of six beat revenue expectations. Some of the largest banks and brokerages have been the headline reports this morning with Goldman Sachs (GS), JP Morgan (JPM), and Wells Fargo (WFC) all blowing away forecasts. Of the three, GS is the only one trading meaningfully higher while JPM is actually lower. As is typically the case with these big beats from the financials, there’s usually a ‘yeah but’.
Besides earnings, the economic calendar is light today with Import Prices the only report on the calendar. That will leave plenty of time for investors to watch the debut of Coinbase (COIN) to the public markets. The listing couldn’t come at a better time for the company as crypto-currencies have been on absolute fire with both bitcoin and ether trading at record highs and riding what looks to be their seventh straight day of gains. In the words of J.P. Morgan, no price these days seems to be too great for crypto assets. They may not have ‘unquestioned beauty’ but they do have ‘known authenticity’.
Read today’s Morning Lineup for a recap of all the major market news and events including a recap of the biggest overnight events including some key earnings reports, European Industrial Production, as well as the latest US and international COVID trends including our vaccination trackers, and much more.
We’ve been talking a lot lately about the market’s consistent gains during the trading day. One index which hasn’t been nearly as strong is small caps. The Rusell 2000 is currently more than 5% from its record high as a number of stocks in the index work off some of the big gains and overbought conditions from earlier this year. The chart below compares the Russell 2000’s price to its cumulative A/D line over the last year. Along with lower prices, breadth in the Russell 2000 has also been on the weak side. Would we prefer to see stronger breadth? Of course. On the flip side, though, there’s no indication in breadth that suggests material additional weakness underneath the surface.
