Sep 16, 2020
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“The first one gets the oyster, the second gets the shell.” – Andrew Carnegie
US markets are looking to make it four days in a row of gains, but we still have to get through the FOMC later today. We just got the release of August Retail Sales, and the headline number came in weaker than forecasts (+0.6% vs 1.0%) as the impact of expiring $600 UI benefits works its way into the system.
Be sure to check out today’s Morning Lineup for a rundown of the latest stock-specific news of note, market performance in the US and Europe, trends related to the COVID-19 outbreak, and much more.
The snapshot below is from our Trend Analyzer screen of international regional ETFs. Looking through the various ETFs listed, you may be asking yourself, what correction? Of the nearly 20 ETFs listed, all but one is up over 2% in the last five trading days, and all but four are at overbought levels. The only ETF currently not above its 50-DMA is Latin America (ILF).
Sep 15, 2020
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The light at the end of the tunnel is just the light of an oncoming train.” – Robert Lowell
After a nice rally to start the week, US stocks are looking to rally again today. There’s a decent amount of economic data on the calendar today, and it kicked off with a stronger than expected Empire Manufacturing report for September (17.0 vs 5.5). Besides a reading of 17.2 from July, the was the highest level in the index since the start of 2019.
Be sure to check out today’s Morning Lineup for a rundown of the latest stock-specific news of note, market performance in the US and Europe, economic data in China, trends related to the COVID-19 outbreak, and much more.
While much of the market has been experiencing a bit of a pullback this month, the Dow Transports have bucked the trend and remain right near 52-week highs after a rally of over 75% from the index’s March lows. An example of the index’s strength is the fact that of the eleven S&P 500 stocks that hit 52-week highs on Monday, five of them were from the Transports. A continued move above its recent highs would likely mark the beginning of a longer-term breakout.
On a relative strength basis, the recent strength in the Transports has also broken a downtrend that has been in place for upwards of two years now. What makes the relative strength of the index even more impressive is the fact that of the 20 stocks in the index, six are airlines, and they haven’t contributed much of anything to the index’s rally…yet.
Sep 14, 2020
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“Teachers Open The Doors, But You Must Enter By Yourself.” – Chinese Proverb
The only things many teachers are opening this school year are Zoom sessions as a number of physical schools around the country remain closed. In these situations, there is an even added responsibility for students to take the initiative to ‘enter’ the learning process. If nothing else, it promises to be a major social experiment in the country’s education process as well as in the lives of parents who can’t return to work because their children remain stuck at home.
Equities are in a decent mood to kick off the week as futures are higher on deal news in the tech and health care space. Over in Europe, major benchmarks are on either side of the flatline this morning as ECB officials say they are at the ready to use all means available to increase inflation which in their estimation remains stubbornly low. In Germany, economic forecasters also noted that they don’t expect to see growth return to pre-crisis levels until 2022.
Be sure to check out today’s Morning Lineup for a rundown of the latest stock-specific news of note, market performance in the US and Europe, industrial production in Europe, trends related to the COVID-19 outbreak, and much more.
After a strong first two days to start off the month, September has been pretty much of a straight line lower as the S&P 500 is down over 4% month to date. Weakness in September shouldn’t come as a surprise given the month’s historical record as the worst of the year. What is a bit surprising, though, is that the weakness has come in the first half of the month.
The charts below show the S&P 500’s historical intraday pattern throughout September both going back to 1983 and over the last ten years. In both time periods, the first half of September typically sees gains. Going back to 1983, the S&P 500 has been up marginally through the first half of September while in just the last ten years, the first half of the month has seen an average gain of over 1.5%. It isn’t until the second half when September usually lives up to its reputation. Hopefully, in 2020 September is getting it all out of its system early.
Sep 11, 2020
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“The report continues to be that a plane hit the World Trade Center.” – Mark Haines, CNBC 9/11/01
While there’s now an increasing number of people who have no recollection of the 9/11 attacks, there’s still an even larger percentage of us who can’t believe it has already been 19 years. We can all still remember exactly where we were and what we were doing at the time.
It was a crisp and sunny fall day, and futures were trading higher after what had been an inexplicably weak number of days where the market did nothing by trade lower with little in the way of any bounces. On the morning of 9/11, stocks were looking up for a change. Then, someone in the office turned the volume up on the TV as Mark Haines broke away from an interview to show the billowing smoke coming out of the North Tower. In the minutes that followed, the details became clear, and the last thing that anyone cared about was what they were just doing or the plunging futures.
Futures are higher this morning too as the market attempts to recover from a much more explicable decline in the markets over the last week as growth stocks attempt to work off extremely overbought conditions. The economic calendar is relatively quiet with CPI the only release on the calendar
Be sure to check out today’s Morning Lineup for a rundown of the latest stock-specific news of note, market performance in the US and Europe, trends related to the COVID-19 outbreak, and much more.
Yesterday, we showed the intraday chart of the S&P 500 since the high on 9/2. Today, we are updating it to show yesterday’s action as well. After opening higher, the S&P 500 once again ran into resistance at last Friday’s closing level (as it also did on Wednesday afternoon) and then traded lower all day. By the closing bell, Friday’s highs were a distant memory, and traders were breathing a sigh of relief that Tuesday’s lows held.
As things stand this morning, the S&P 500 will open right in the middle of yesterday’s range. Given the moves we’ve seen of late, it’s highly likely that at some point in the day we will encounter yesterday’s high or low and maybe even both. How the market reacts to either of these levels will then likely dictate the tone going into next week.
Sep 10, 2020
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“Seek advice on risk from the wealthy who still take risks, not friends who dare nothing more than a football bet.” – J. Paul Getty
It’s that time of year again as the NFL is set to kick off its season this evening as it typically does every year on the first Thursday after Labor Day. The season will go off as usual with a full season, playoffs, and the Super Bowl LV on February 7, 2021. Why are we even talking about this? Because after six months of abbreviated seasons and canceled events in the world of sports, the return to a normal season for a major league is a step in the right direction. Some degree of normality in just a small part of their lives is what just about everyone could use right now. The Chiefs even plan to allow fans to the stadium for tonight’s game against the Texans. While ticket sales were capped at 16,000, for some teams these days, that’s a perfectly normal crowd.
In economic data this morning, jobless claims were higher than expected on both an initial and continuing basis, while revisions to last week’s report were minimal. On the inflation front, PPI came in slightly higher than expected. Futures were modestly lower on the S&P 500 and higher for the Nasdaq heading into the release and basically remained there after the report as well.
Be sure to check out today’s Morning Lineup for a rundown of the latest stock-specific news of note, market performance in the US and Europe, trends related to the COVID-19 outbreak, and much more.
Where the market goes from here in the short-term is basically a coin-flip, and the S&P 500 intraday chart from the last week has something for both the bulls and bears. On the bullish side, yesterday’s open broke what was starting to look like a downtrend from the high on 9/2. As the market rallied throughout the day yesterday, though, it ran out of steam right at Friday’s close. So until that level from Friday can be broken to the upside, the bears are on top.
Sep 9, 2020
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“We’re not retreating, we’re advancing in reverse” –Skulduggery Pleasant, Playing with Fire by Derek Landy
After three tough days for US stocks where the Nasdaq has declined 10%, it has quickly turned into a tough September for US equity markets. This morning the picture for futures looks brighter, but the move has little in the way of a catalyst behind it, so traders aren’t exactly trusting the move at this point.
On the economic front, the only US report on the calendar is the July JOLTS report, but given it’s looking back at July, it shouldn’t have too much of a market impact.
Be sure to check out today’s Morning Lineup for a rundown of the latest stock-specific news of note, an analysis of Japanese Machine Tool Orders (a positive report), market performance in the US and Europe, trends related to the COVID-19 outbreak, and much more.
Back at the end of August, we noted that a lot of equity indices and sectors were showing returns for the month of August that would normally be considered good years. September is now just five trading days old and returns this month have already in many cases been the equivalent of an entire bad month or in some cases even a bad year.
The Nasdaq 100’s 8%+ decline in just five trading days so far this September includes two trading days with gains to start the month off. To put this move in perspective, for an entire calendar year, the last time the Nasdaq 100 dropped over 8% was in 2008. Other indices covering the US equity markets have ranged from a 5% decline for the Russell 1000 to a loss of 3.12% for the Dow.
In the growth versus value matchup, value, for a change, has had the upper hand as ‘cheaper’ stocks outperform growth across all three market cap ranges.
Among individual sectors, Tech has led the way lower (-8.7%) followed by Energy, which is the only other sector down 5%.
In international markets, most countries have outperformed the US month to date so far, and Brazil has actually managed a gain of 1.7%.
One trend to note about performance so far in September is that it has essentially been the opposite of what we have seen since the March lows. In other words, the best performing ETFs from 3/23 through now have also been among the worst-performing ETFs since the start of September.
