May 1, 2020
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While most of Europe is closed for the Mayday holiday, US investors may wish that we were closed as well. Futures are indicating a down open as investors digest the big gains of April that followed the sharp declines of March. While the market’s reaction to earnings season has been positive to this point, the real test will come in the coming weeks as we begin to hear more from retailers and other companies that have been especially hit hard by the economic shutdown.
Be sure to check out today’s Morning Lineup for a rundown of the latest major earnings reports from the US, economic data out of Korea and the UK, and the latest trends in the COVID outbreak on a global, national, and state by state basis.
As mentioned above, the new month isn’t getting off to a positive start as the S&P 500 tracking ETF (SPY) is poised to open down around 2% to start the month. That doesn’t seem like an encouraging encore to April’s big gains. Since SPY first started trading in 1993, today would be only the 17th time that it has gapped down more than 1% to start off a new month, and if current levels hold it would only be the 6th downside gap of 2% or more.
Looking back at prior 1% downside gaps to start a month, the rest of the first day’s trading is a bit of a mixed bag with SPY averaging an open to close decline of 0.2% (median: +0.12%) with gains exactly half of the time. To find the most recent example of a 1% downside gap in SPY to start a month, you have to look no further back than last month when it gapped down 3.8% (worst ever downside gap to start a month), and then dropped an additional 0.74% from the open to close. While it was a bad first start to the month, the S&P 500 then went on to gain 18.01% from the close on 4/1 through month-end.
Apr 30, 2020
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.
Futures were higher overnight but started to lose steam right around the time Europe opened for business. Technology is holding up a bit better, though, following strong earnings reports from Microsoft (MSFT) and Facebook (FB) among others. Jobless claims were just released, and while economists were expecting a reading of 3.5 million, the actual level of claims was higher at 3.839 million.
Be sure to check out today’s Morning Lineup for a rundown of the latest major earnings reports from the US and Europe, European economic data, and the latest trends in the COVID outbreak on a global, national, and state by state basis.
The trading range picture of major US indices from our Trend Analyzer tool shows a number of interesting trends. We’ll just start off at the top. Take the Nasdaq 100. After Wednesday’s gain, the QQQ ETF is actually up over 3% YTD and nearly 9% above its 50-day moving average. With that type of spread versus the 50-DMA, the Nasdaq 100 is the only major US index that is at overbought levels (>1 standard deviation above its 50-DMA). The table below is sorted by the degree to which each index is trading relative to its 50-DMA (measured in standard deviations), and it’s no surprise that the top is loaded with large caps, and generally speaking, the further down you move the list, the smaller in market cap the indices get. On a YTD basis as well, the indices that are further above their 50-DMAs are doing better YTD while the smaller market cap indices are down the most.
While large caps have been outperforming on a YTD basis, in the last five days, the complete opposite has been the case. Indices representing small and mid-cap indices are all up between 10% and 15% or more than double their large-cap peers. Small caps were hit the hardest on the way down on concerns that they wouldn’t be able to withstand the economic calamity as well large-caps, but optimism that economic activity will come back online sooner than expected has really breathed some life into the sector.
Apr 29, 2020
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Q1 GDP isn’t even going to be the ‘bad’ quarter of the COVID outbreak, but while economists were expecting GDP to drop 3.9%, the actual decline was even worse than expected at -4.8% and the worst quarter for economic growth since the depths of the recession in Q4 2008. Even worse, Consumption was even weaker, falling 7.6% for its worst quarter since Q2 1980.
While that type of news would be expected to have a negative impact on the market, at the same time that GDP was released, data regarding trials of Gilead’s (GILD) Remdesivir in the treatment of COVID showed positive results and pushed futures even higher.
Be sure to check out today’s Morning Lineup for a rundown of the latest earnings reports, Korena economic data, and the latest data on the COVID outbreak.
While the S&P 500 wasn’t able to hold onto its gains yesterday, the Russell 2000 still managed to finish the day up over 1% for the fifth straight trading day. That’s quite an impressive streak, and in the history of the Russell 2000, this has only happened three other times – October 2008, January 2000, September 2009, and now. Is it finally time for small caps to shine?
Apr 28, 2020
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.
The S&P 500 is looking to make it three in a row today. Not just three positive days in a row, but three straight days of gains of at least 1%. There’s still an entire trading day left to go, so given the positive bias at the outset, today is a day where we don’t want Tuesday to live up to its ‘turnaround name’.
On the earnings front, keep in mind that the five largest companies in the S&P 500 are set to report over the next three days. Here is a write-up we did highlighting their historical Q1 earnings trends.
Five Largest Market Caps Report This Week — AAPL, AMZN, FB, GOOG, MSFT
Be sure to check out today’s Morning Lineup for a rundown of the latest earnings reports, the latest moves in crude oil, economic data out of Japan and South Korea, and the latest data on the coronavirus outbreak.
Yesterday marked a key milestone in the equity market’s rally off the late March lows. You may have to squint to see it in the chart, but it was the first time since 2/21 that the S&P 500 opened above its 50-day moving average and stayed there the entire trading day. That’s certainly a positive, but it isn’t completely blue skies ahead. As shown in the chart, the next area of resistance for the market here is just above 2,900, and then after that the 200-DMA at just above 3,000.
The chart below is from the second page of our Morning Lineup and shows where the S&P 500 is trading relative to its trading range as measured in standard deviations. It’s been a big run in the last few weeks as the S&P 500 has recovered nearly as fast as it fell. From here, the best thing for the bulls would be for the market to hang around these levels and build a base at which it could build on later.
Apr 27, 2020
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.
Futures are kicking off the week on a positive note as a lack of bad news over the weekend has some traders who were putting off adding exposure on a “Corona Friday,” deploying that capital today. Crude oil, on the other hand, is a different story. With nowhere to put it, WTI prices are down over 20%. On the data front, it’s a relatively quiet day, but rest up because earnings season is coming in hot and heavy as the week goes on with Alphabet (GOOGL), Facebook (FB), Microsoft (MSFT), Amazon (AMZN), and Apple (AAPL) being the biggest names set to report.
Be sure to check out today’s Morning Lineup for a rundown of the latest earnings reports, the decline in crude oil, and the latest data on the coronavirus outbreak.
After the record declines and record rallies of the last two months, the S&P 500 heads into this week in a bit of a no-man’s land with the S&P 500 trading just above the middle of if its 52-week range. From a psychological perspective, the fact that the S&P 500 closed out last week slightly above its mid-range is also a positive. Going forward in the short-term, the 2,790 level is a key area to watch.
Another illustration of the S&P 500’s limbo status can be seen in the percentage of S&P 500 stocks that are overbought and oversold as both readings are extremely low. As of Friday’s close, just 2.2% of S&P 500 stocks are oversold while 12.6% are overbought. Again, even with both readings at low levels, the fact that the percentage of overbought stocks is higher is also positive.
Apr 24, 2020
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.
After trading lower overnight, US equity futures are modestly higher on the day as the market looks to escape a Corona Friday for the second week in a row. You may recall that last Friday the S&P 500 closed out the week with a gain of 2.68%, which was the second-best Friday performance for the market all year. For all of 2020, though, Fridays have been the worst day for the market with a median decline of 0.82% and gains barely even 25% of the time.
Be sure to check out today’s Morning Lineup for a rundown of the latest earnings reports, sentiment data in Germany, and the latest data on the coronavirus outbreak.
Yesterday wasn’t a great day for the biotech sector as reports that Gilead’s COVID-19 treatment remdesivir didn’t perform well in a small trial of Chinese patients. While details surrounding the data were scant, the news caused an 11.4% intraday negative reversal in GILD’s stock and also reversed what was a pretty strong market rally. GILD has over a 9% weighting in the VanEck Biotech ETF (BBH), so its reversal had an impact on that ETF as well. However, after a remarkable 31% off the March lows, which erased all of the late February/March declines, BBH still remains above its breakout point in the low $140s.
