Here we go again.  For what could possibly be the 100th time in the last two years now, futures are rallying on positive news regarding trade negotiations with China.  The President tweeted last night that the US would be delaying planned increases on Chinese goods that were set to take effect on 3/1.  Chinese stocks also had a monster night rallying over 5%.  Now that China is out of the penalty box for the time being, though, it looks like the President is moving on to OPEC and telling the cartel that oil prices are too high and that they should “relax and take it easy.”  Read all about overnight events around the world and this morning’s news in today’s Morning Lineup.

Bespoke Morning Lineup – 2/25/19

While Chinese equities rallied overnight for reasons related to trade and other developments (see the commentary section of our Morning Lineup), the long-term chart of the Shanghai Composite is currently at an interesting juncture.  Looking at a chart of the index going back to 2015, last night’s rally sets the stage for a test fo the long-term downtrend starting at the 2015 highs.  If bulls can take the Shanghai above this downtrend line, Chinese stocks could be off to the races.

We realize that it has been a holiday-shortened week and everything, but you can’t get much more boring than the last three days of trading.  Heading into the final trading day of the week, the S&P 500 is within one point of where it closed out last week.  That could change today, though, as the S&P 500 is indicated to open higher by about 10 points.  That won’t be enough to bring potential resistance levels into play near 2,800, but it’s a move in the right direction.  Today’s catalyst for higher prices?  Optimism on a trade deal with China on news that President Trump will meet with Chinese Premier Lui today at 2:30 PM.  What else is new?

There’s no economic news on the calendar today, but Fed speakers will make up for the void as nine members of the FOMC are scheduled to speak throughout the day.  Nine!  Read all about overnight events around the world and this morning’s news in today’s Morning Lineup.

Bespoke Morning Lineup – 2/22/19

As mentioned above, the opening gap won’t be enough to bring potential resistance at 2,800 into play.  Below are updated S&P 500 and Nasdaq composite charts that we highlighted in last week’s Bespoke Report.  Even with more than 90% of S&P 500 stocks above their 50-day moving averages, it still has yet to make that higher high that we have been waiting for.  The Nasdaq, meanwhile, briefly made a higher high and peeked above its 200-DMA earlier this week, but fell back down below that level yesterday.

In these emails, when we use the term blow out it is usually in reference to yields, spreads, or earnings, but today traders on Wall Street are focused on the blow out in Duke star Zion Williamson’s sneakers and specifically how it will impact the stock of Nike this morning.  Thankfully for Mr. Williamson, the injury doesn’t appear to be too serious, but Nike overnight has been in full-blown damage control.  Even former President Obama immediately noticed the cause of the fall as being due to the fact that “his shoe broke.”

In broader news this morning, US equity futures are lower after some mixed economic data.  Although Jobless Claims came in better than expected, the Philly Fed report missed by a mile and actually went negative for the first time since May 2016.  Read all about overnight events around the world and this morning’s news in today’s Morning Lineup.

Bespoke Morning Lineup – 2/21/19

In last night’s Closer, we discussed, among other things, the recent strength in the Russell 2000 and its 8 straight days of gains.  Along those lines, we wanted to highlight not only how strong small caps have been overall, but also relative to the S&P 500.  Just recently, the 30-day performance spread between the Russell 2000 and the S&P 500 topped 5 percentage points.  As shown in the chart below, although this was common in the early days of the bull market, ever since the FOMC started hiking rates, occurrences have been fewer and far between.  The last time the spread topped 5 percentage points was in late 2017 and before that late 2016.

The chart below shows the relative strength of the Russell 2000 versus the S&P 500 since the start of 2009, and the red dots indicate each time the performance spread above topped 5 percentage points.  What’s notable about this is that in each of the last two periods where the spread reached similar levels, small caps underperformed going forward.

Earnings season just ended yesterday, but things are already pretty quiet in terms of news today, and the futures reflect that with levels suggesting just a slightly negative open.  Besides weekly mortgage applications which were released earlier, the only release of importance today is the FOMC Minutes from the January meeting.  Read all about overnight events around the world and this morning’s news in today’s Morning Lineup.

Bespoke Morning Lineup – 2/20/19

On the subject of today’s FOMC Minutes, it will be interesting to read about the Committee’s discussion and the ultimate decision to pivot on rate policy.  In terms of the market’s expectations for future rate policy this year, it is hard to believe that market pricing for a rate cut between now and the December meeting is still significantly higher than the odds of a hike.  At just a 1% probability, market expectations for a rate hike are pretty much non-existent.

We’ve always considered Walmart’s (WMT) earnings report to mark to unofficial end to earnings season.  While there are still plenty of other reports left to get through, the vast majority of companies have already reported their performance metrics for the prior quarter.  This morning WMT reported and ended earnings season on a positive note.  The company handily exceeded EPS forecasts, revenues were inline with forecasts, and the company reaffirmed guidance.  In reaction to the news, shares rallied over 3.5%, and after closing at $99.99 on Friday jumped back above the triple-digit mark this morning.  Read all about overnight events around the world and this morning’s news in today’s Morning Lineup.

Bespoke Morning Lineup – 2/19/19

Today’s rally in WMT will mark the fourth straight quarter that the company has had a positive reaction to earnings, but one thing to keep in mind is that following each of those three prior reports it didn’t pay to chase the strength.  As our Earnings Explorer tool illustrates, following each of those three prior positive opens, the stock gave up at least some of those initial gains during the trading day.

Let the record show that we are getting just as tired about typing subject lines related to Chinese trade talks as you are reading about them, but that’s the story once again this morning as trade officials from both China and the US have agreed to resume trade talks in DC next week. That has turned what was a modestly negative tone to a modestly positive one as we close out the week and head into the long holiday weekend.  In economic data for the US, Import and Export Prices were both weaker than expected, but the Empire Manufacturing report slightly exceeded expectations.  Read all about overnight events around the world and this morning’s news in today’s Morning Lineup.

Bespoke Morning Lineup – 2/15/19

Along with the strong gains so far in 2019, we have also seen very strong breadth.  The chart below shows the 10-day A/D line for the S&P 500 over the last year, and while it has typically oscillated between gains and losses, it has been consistently positive now since early January.  In fact, for 28 straight days now the 10-Day A/D line has been above +500, which is the longest streak in nearly three years (March 2016).