The pace of earnings reports continues to pick up steam, and what we’ve seen in many instances so far is an ability by the market to shake off weakness.  The latest example today is 3M (MMM), which reported weaker than expected EPS and revenues and also lowered guidance.  So, how much is MMM trading down in the pre-market?  It’s actually up 2.5%. Overall, this earnings season we have also seen a trend where companies beating EPS forecasts are being rewarded considerably more in magnitude than companies who are missing EPS forecasts are being punished.  In the last two weeks, the 129 companies that have reported better than expected EPS are up an average of 2.5% on their earnings reaction days, while the 60 companies that have missed EPS forecasts have declined just 1.6%   Read today’s Bespoke Morning Lineup for more on what’s driving the markets this morning.

Bespoke Morning Lineup – 1/29/19

After yesterday’s warnings from Nvidia (NVDA), there’s been some dueling analyst commentary in the stock this morning.  While UBS upgraded the stock to a buy rating, both Morgan Stanley and Needham downgraded the stock.  Needham even thinks the stock could drop below $100.  While the analysts disagree on NVDA, the semis held up reasonably well yesterday given the warning. As shown in the chart below, while the group opened weaker on the day yesterday, it held support at the short-term uptrend off the December lows and finished the day up nearly 2% from its early lows.

Equities aren’t kicking off the week on a positive note, and if this morning’s earnings report from Caterpillar (CAT) is any indication, the busiest week of earnings season could be a long one.  CAT had its biggest earnings miss in ten years this morning.  It was also the first time that the company missed EPS and revenue forecasts as well as lowered guidance in the same report for the first time since October 2013. Read today’s Bespoke Morning Lineup for more on what’s driving the markets this morning.

Bespoke Morning Lineup – 1/28/19

While equities are poised to open the week on a negative note, this year it all comes down to the actual trading day.  As shown in our updated chart comparing the S&P 500’s intraday pattern in the period from 9/20 through 12/24 to the days since then, the last 21 trading days have been characterized by steady buying throughout the trading day, especially during the last hour of trading.  Can the last hour bail out the bulls again today?

Despite a 6% decline from Intel (INTC) in reaction to its Q4 earnings report, US equity futures are looking to close out the week on a positive note.  These gains follow strong showings in both Asia overnight and Europe this morning. Read today’s Bespoke Morning Lineup below for major macro and stock-specific news events, updated market internals, and commentary.

Bespoke Morning Lineup – 1/25/19

Breaking downtrends.  That seems to be the theme of this week as a number of charts we go through show similar patterns of breaking the short-term downtrends of the fourth quarter.  Granted, longer-term downtrends remain in place, but you have to start somewhere!  The example we wanted to highlight this morning is Europe’s STOXX 600.  As shown in the chart below, after a brief consolidation following the upside break of the 50-DMA, today’s rally has pushed the STOXX 600 above the short-term downtrend that has been in place since last Fall.

Semis were supposed to be out of favor, weren’t they?  That’s not the case this morning, though, as positive earnings reports from Texas Instruments (TXN), Lam Research (LRCX), Xilinx (XLNX), and Teradyne (TER) are pushing the semiconductor group higher by over 2.5%. Read today’s Bespoke Morning Lineup below for major macro and stock-specific news events, updated market internals, and commentary.

Bespoke Morning Lineup – 1/24/19

The rally in US equities has taken a bit of a breather in the last couple of days as investors try to digest the gains off of the Christmas Eve lows.  With the rally on pause for the time being, we wanted to take a quick moment to compare the performance of S&P 500 industries so far in 2019 (x-axis) to their performance in Q4 of 2018 (y-axis).  While there are most certainly exceptions, there is a pretty clear trend where the areas of the market that worked in Q4 haven’t really worked all that well in 2019, whereas the industries that were the hardest hit in Q4 have outperformed so far in 2019.

A perfect example is the Energy Equipment Industry, which was the worst performing S&P 500 industry in Q4 (-38%) but has been the best performer so far this year (+16%).  One exception?  Technology Hardware.  In Q4, the industry was down 29.5%, but this year it has also declined, falling 2%.  You can thank Apple (AAPL) for that.

Solid earnings news from companies like IBM, UTX, and PG are putting traders in a buying mood this morning sending futures up by about 0.40%. Read today’s Bespoke Morning Lineup below for major macro and stock-specific news events, updated market internals, and commentary.

Bespoke Morning Lineup – 1/23/19

Even after yesterday’s last hour rally of 0.60%, the S&P 500 still managed to finish down over 1% on the day.  What makes yesterday’s decline unique, though, is that it came as volume was below average.  In other words, there was hardly a rush for the exits.  For example, volume in SPY was 13% below its 50-day average, coming in at under 110 million shares.  The last time the S&P 500 was down 1%+ and volume was more than 10% below average was almost a year ago in late February 2018.  Between then and now, there have been 28 other days where the S&P 500 was down over 1% where volume was higher relative to its 50-day average.

The chart below shows the performance of SPY over the last 15 years, and the red dots indicate each time where the S&P 500 dropped more than 1% on volume that was at least 10% below average.  As shown, there haven’t been many of them in recent history.  Before the last occurrence in February 2018, you have to go all the way back to early 2016 to find the next most recent occurrences.  Before that, there were many occurrences during the financial crisis and the first several years of the bull market, but they were a lot more frequent as the market was rallying than they were during the downturn.

After an extended weekend, bulls are coming into the shortened trading week feeling a little sluggish as futures are indicating a moderately lower open.  Weak data out of China, lower global growth forecasts from the IMF and a continued stalemate in DC are all factors contributing to the weakness. Read today’s Bespoke Morning Lineup below for major macro and stock-specific news events, updated market internals, and commentary.

Bespoke Morning Lineup – 1/22/19

The pace of earnings news is going to really pick up this week and one thing investors will be looking at closely is the revenue beat rate. It’s still early in the reporting period, but so far more than half of the companies reporting have missed estimates on their top line readings.  If this pace doesn’t pick up in the weeks ahead, it could be a long February.