Nov 1, 2024
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 trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“The liabilities are always 100 percent good. It’s the assets you have to worry about.” – Charlie Munger
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
While yesterday ended up being the worst Halloween trading day since 2011, the S&P 500 still ended the month with a year-to-date gain of 19.6%. That’s good enough for 2024 to be the best Election Year through October since 1936!
The S&P has pulled back from overbought levels this week and now sits just above its 50-day moving average. The S&P’s 10-day advance/decline line is now oversold, however, so market internals suggest a market that’s a bit weaker underneath the surface. If the 10-day A/D line falls a little further, we’ll start looking for an oversold bounce.
Oct 31, 2024
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 trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“Reality is an undefeated champion.” – Jeff Bezos
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
As of 7:45 AM ET this morning, S&P 500 futures were trading down roughly 0.75% as both of the mega-caps that reported after the close yesterday trade lower. Below is a snapshot of SPY trading on Halloween (10/31) since the ETF began trading back in 1993. An opening gap lower of more than 0.66% would be SPY’s biggest open lower on Halloween since 2011.
A few sectors have really taken it on the chin over the last week: Health Care, Consumer Staples, and Utilities. As shown in the snapshot below from our Trend Analyzer tool, Health Care and Consumer Staples are currently trading in extreme oversold territory, while the Utilities sector is down 3.7% since last Thursday and nearing its 50-day moving average. At the same time, we’ve seen both Consumer Discretionary and Communication Services go in the other direction and trade at or near overbought territory.
Oct 30, 2024
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 trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“People never lie so much as after a hunt, during a war or before an election.” – Otto von Bismarck
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Election Day is now less than a week away, and for those trying to keep up, below is a snapshot of where the Real Clear Politics (RCP) average of polls stand nationally and in key battleground states this morning compared to how they looked on this same day during the 2020 and 2016 Election Cycles.
As you can see, both Biden and Clinton were up significantly in most battleground states at this point in 2020 and 2016, while Trump is currently slightly ahead in all of the key states except for Michigan, which flipped back to Harris in the last day.
There are any number of ways that either side can analyze or spin the current polling numbers, prediction tools, and betting markets at this point, so we’re simply providing the numbers from RCP and leaving it at that. Anyone that feels confident that they know how things will turn out should probably just sit back and eat a slice of humble pie.
As shown below, the S&P 500 (SPY) has been mostly trending sideways over the last couple of weeks after a strong start to the month.
The sideways action has allowed the S&P’s 10-day advance/decline line to cool down and move back into negative territory.
Oct 29, 2024
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 trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“Prudent investors are now buying stocks in huge quantities and will profit handsomely when this hysteria is over.” – John J. Raskob, 10/29/1929
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
S&P 500 and Nasdaq futures are little changed on either side of unchanged this morning ahead of the 10 AM releases of JOLTS and Consumer Confidence. After the close, we’ll also get several earnings reports including Alphabet (GOOGL), AMD, and Visa (V). This morning, we’ve already gotten reports from companies like McDonald’s (MCD), Pfizer (PFE), and Royal Caribbean (RCL) to name a few.
In Asia, it was a mostly positive night as China was the only major benchmark down on the day, but there were reports that the country is considering issuing $1.4 trillion in new debt over the next few years to stimulate the economy. In Europe, the tone is also modestly positive even as Germany lowered its growth forecast to 2024 from 0.0% down to a decline of 0.2%.
Markets are right near all-time highs as we close out October, but 95 years ago today, the picture looked a lot different as the Dow Jones Industrial Average fell over 12% on Black Tuesday in what was, according to The New York Times, the “most disastrous trading day in the stock market’s history.” Thankfully, no one reading this remembers the day, but selling was so extreme that “prices crumbled under the pressure of liquidation of securities which had to be sold at any price.” The peak of the roaring 20s bull market occurred a little over a month earlier, but the selling on Black Tuesday was the worst to date; fortunes were wiped out in hours. White knuckles lined the bars of bars across the Financial District as wiped-out traders, both mentally and in some cases financially, looked to dull the pain of the crash.
In response to the selling, market officials mobilized and took measures to restore market stability. Margin requirements were cut to 25% from as high as 60 to 70%, and the Federal Reserve Board held an all-day session from 10 AM to 4 PM with most not even leaving “the board room for luncheon.” Despite the weakness, The New York Times noted that the day ended on a ‘cheerful’ note for two reasons. “The first was a late day rally towards the close on tremendous buying by those who believe that prices have sunk too low. The other was that the liquidation has been so violent, as well as widespread, that many bankers, brokers and industrial leaders expressed the belief last night that it has now run its course.”
John J. Raskob, a “leading industrial and political leader” and the man responsible for building the Empire State Building in 1930 in just one year, put a stake in the ground after the close on the 29th declaring that “The present decline in the stock markets of this country has carried prices, in many instances, to levels ridiculously low, with the result that nearly all of the standard railroad stocks are cheap and the industrial list is filled with stocks selling at real bargain prices.” He added that “Prudent investors are now buying stocks in huge quantities and will profit handsomely when this hysteria is over…the pendulum has swung too far.” Think David Tepper going on CNBC to say he was “buying everything” or Jamie Dimon buying 500,000 shares of JP Morgan for his personal account.
While Wall Street’s army of high-powered financiers may have bought the dip, another potentially more important group was throwing in the towel. The headline on page three of The Times summed it up with the headline “Women Traders Going back to Bridge Games; Say They Are Through With Stocks Forever”. The writer described one situation where “a stout woman with chins asked a harassed manager for a quotation, heard it and then remarked: ‘You might at least be a gentleman.’ She went away crying.” In Rhode Island, a man dropped dead in his broker’s office as each tick of the tape took another bite out of his net worth. In Kansas City, a man at the Kansas City Club told his friends, “Tell the boys I can’t pay them what I owe them,” and proceeded to shoot himself. The Main Street ducks had stopped quacking.
With the ducks no longer eating Wall Street’s cooking, whatever bounce materialized in the market was short-lived. While the Dow managed a 25%+ gain over the following six months, the ultimate bottom wouldn’t be for nearly three more years and 80%+ later in the summer of 1932.
The three-year period from late 1929 through the 1932 lows comprised the dark ages of the US equity market, and for the entire decade of the 1930s, the Dow’s annualized performance not including dividends was a decline of 4.9% (including dividends, the return would have been closer to breakeven). As shown in the chart below, the 1930s was easily the weakest of any decade, but there have been several decades where returns were nothing to get excited about. In the 2000s, the Dow’s annualized performance was negative 1.0%, and in three other decades (1940s, 1960s, and 1970s), annualized returns were less than 3%. The bulk of the market’s gains occurred during the 1950s, 1980s, 1990s, 2010s, and current decade (so far). Overall, for the entire period from the end of 1929 through now, the Dow’s annualized performance was a gain of 5.6%.
Even in the two worst decades of stock market history, the Dow had just as many positive years as negative years, and in every other decade there have been more up years than down years, During the 1950s, 1980s, 2010s, and this decade (so far), 80% of years have been positive, and in the 1990s, the only down year was 1990 (-4.3%). Stocks go up over time, but the climb has been far from a straight line throughout history.
Oct 28, 2024
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 trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“Well it’s kind of the last great American adventure, you know what I mean? Human beings need a little danger, a little uncertainty, a little adventure in their lives and our society frowns upon that.” – Phil Lesh
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Equity futures are higher this morning as we head into the homestretch of the election season but in some ways the year as well. By the end of this week, the calendar will say November, and there will be less than two months left in 2024. Between now and then, though, this week will be jam-packed with earnings (one-third of the S&P 500) and several major economic reports, including Q3 GDP, October Non-Farm Payrolls, and the ISM Manufacturing report.
Crude oil is sharply lower this morning after Israel retaliated against Iran this weekend and did not target energy assets in the country. Crude has been under selling pressure for a few months now. Earlier this month, it tried to rally back above the 200-DMA but was firmly rejected. Then, last week, it closed Friday slightly back above the 50-DMA, but that didn’t hold for very long.
Lower crude oil prices will likely start to show up in prices at the pump in the coming days, and depending on how much weaker it gets, we could see the national average price of a gallon of gas fall below $3, a level it hasn’t traded at in more than three years!
The weakness in oil prices doesn’t do much good for energy stocks, and while it’s the worst-performing sector so far this year, the technical picture for crude oil wasn’t looking as bad as it does for crude oil…yet. As shown in the chart below, the Energy sector broke its downtrend in early October, and while the sector has pulled back 5% from its recent high, it had managed to hold its 50 and 200-day moving averages and has remained above its former downtrend. However, if you look at this morning’s biggest losers, they’re all from the Energy sector, and at least at the open this morning, the Energy sector will trade below those key support levels.
Oct 25, 2024
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 trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“Wanting alone doesn’t get anything done.” – Bobby Knight
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
S&P 500 futures are indicated about 0.30% higher, but it’s going to take a gain of more than 1% for the market to extend its six-week streak to seven. It’s an especially painful morning for shares of Capri Holding (CPRI) where shares are down close to 50% after a judge blocked the proposed merger with Coach parent Tapestry (TPR), siding with the FTC’s argument that it would reduce competition in the ‘accessible luxury-handbag category’. Talk about a vital sector of the US economy!
Speaking of the US economy, Durable Goods Orders declined 0.8% while August’s report was also revised down to 0.8%. Ex Transportation, September’s report came in at 0.4% versus expectations for a decline of 0.1%. Last month’s report was also revised up to 0.6% from 0.5%.
In Europe, it’s been a mostly negative morning for stocks as major markets over there look on pace to finish the week off with gains of just over 1%. Various measures of business sentiment came in mixed relative to expectations, but PPI in Spain cratered 5.2% y/y compared to a decline of 1.3% in August.
In yesterday’s email, we noted the consistent strength in shares of T-Mobile during the trading day as the stock has closed higher than it opened on 24 of the last 25 trading days. We’ve seen a similar level of persistent buying for the US Dollar Index over the last four weeks.
On 10/17, the index had a streak of 14 straight trading days where it closed higher than it opened. Dating back to 1990, that was the longest streak on record. The next longest streak was 13 trading days ending in August 1997 just ahead of the Asian currency crisis.
Through yesterday, the Dollar Index had closed higher than it opened on 18 of the prior 20 trading days which was tied with the August 1997 period for the most in a 20 trading day period since at least 1990.
Despite the consistent strength in the Dollar Index, its performance over the last 20 trading days, while impressive, hasn’t been anywhere near a record. As shown in the chart below, there have been several periods since 1990 when the index rallied more than the current 3.7% over four weeks with the most recent occurrence just over two years ago near the lows of the bear market in September 2022.
When it comes to the dollar’s impact on the stock market, over the last 20 trading days, the S&P 500 has rallied just over 1.25%. Leading the way higher, Financials have rallied 4.3% which makes sense given the sector has a high level of domestic exposure. The next two best-performing sectors, however, Technology and Energy, both have high levels of international exposure, so all else equal, a strong dollar would be negative for those sectors.
At the other end of the spectrum, Health Care is another sector with a high share of domestic exposure, but it is still the worst-performing sector over the last four weeks. Materials and Consumer Staples, however, both have high levels of international exposure, so their weakness as the dollar has rallied makes sense.
