Jan 26, 2021
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“Every once in a while, the market does something so stupid it takes your breath away.” – Jim Cramer
We’re continuing to see some crazy moves in the market once again this morning. Take a recent tweet from Elon Musk where he said that he ‘kinda’ loves Etsy. In reaction, the stock is up over 8% in the pre-market. Etsy has a market cap of about $25 billion, so that tweet alone was worth about $2 billion.
Elsewhere in the markets, US futures are higher on the heels of a rally in Europe. The overnight pattern heading into this morning is the complete opposite of yesterday. Whereas yesterday it was Europe that was trading lower after a strong session in Asia, today its Europe rallying after a so-so Asia session.
Be sure to check out today’s Morning Lineup for updates on the latest market news and events, earnings reports in Asia and Europe, Economic data out of Asia, an update on the latest national and international COVID trends, and much more.
Shares of GameStop (GME) are up another 19% in the pre-market this morning, and while a move like that in what just a few weeks ago was considered a washed-up company would normally raise eyebrows, but after the insanity we’ve witnessed in the stock over the last few days, today’s move is nothing. While this year’s moves in GME have been the biggest outlier, it’s part of a broader trend where traders have been targetting stocks with the highest short interest.
The chart below is from Monday’s Closer and shows the performance of Russell 3000 stocks so far this year grouped into deciles based on short interest. There has been a clear trend where stocks with higher short interest have outperformed their peers with lower short interest, but the most heavily shorted stocks stand in a league of their own gaining 22%! The deciles of stocks with the second and third highest average short interest levels are also both up over 10%, but they’re only up half as much as the most heavily shorted stocks.
So, which stocks make up this basket of most heavily shorted stocks? We don’t have enough space to list all of them, but in the table below we show the 16 stocks in the Russell 3000 that had more than 40% of their float sold short as of year-end. Topping the list is GameStop (GME) which had more than 100% of its float sold short as of year-end. Year to date, that stock is up an incredible 307%. The other stocks, however, haven’t been slouches either. Every single one of them is up at least 10% YTD, and half of them are up at least 50%. 50%!!!!
Jan 25, 2021
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“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” – Robert Kiyosaki
It’s a mixed picture in futures markets this morning as the S&P 500 is set to open marginally higher while the Nasdaq is indicated up about 1%. At the individual stock level, the crazy moves of last week are continuing today as GameStop (GME) is up over 50% again, and a number of other high short interest and story stocks are trading up sharply in the pre-market. Economic data is on the light side this morning with just the Chicago Fed National Activity Index and the Dallas Fed Manufacturing Index.
Be sure to check out today’s Morning Lineup for updates on the latest market news and events, German sentiment data, an update on the latest national and international COVID trends, and much more.
The year is just three weeks old, but already we’ve seen some big moves in individual sectors. With its gain of 11%, the Energy sector has stolen the show, but the 5% gain in the Consumer Discretionary sector is nothing to sneeze at either. On the other end of the spectrum, Consumer Staples has already given up 3.8% this year while Industrials is down just marginally (-0.2%). The broader S&P 500 as a whole is up a respectable 2.3% on the year, and four other sectors – Materials, Financials, Technology, and Telecom Services – all have YTD gains within half of one percent of the overall market.
The gap of nearly 15 percentage points between the best and worst-performing sectors so far this year is one of the larger ones we have seen through the first 14 trading days of a year dating back to 1990. As shown in the chart below, just three years (2009, 2001, and 2000) have seen larger disparities to start the year while a number of other years have seen disparities nearly but not quite as wide as the one this year (1992, 1999, and 2006).
Jan 22, 2021
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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.
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.
Jan 21, 2021
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“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.
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%.
Jan 20, 2021
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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.
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.
Jan 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.
“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.
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.
