Oct 24, 2024
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“If you want to increase your success rate, double your failure rate”. – Thomas Watson, IBM CEO 1914 – 1956
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
It’s a mixed morning for US equities as Dow futures trade slightly lower, the S&P 500 is up 0.5%, and the Nasdaq looks like it will open up nearly 1%. Jobless claims were just released and initial claims came in about 15K lower than expected at 227K while continuing claims were modestly higher. European stocks are also higher this morning as rates reverse some of the gains of recent days. There’s been a ton of earnings news since the close yesterday, and we go through the most high-profile ones in today’s report.
Yesterday, the S&P 500 opened modestly lower but then drifted lower throughout most of the trading day before a modest rally into the close which kept the damage contained to a decline of less than 1%. The weakness throughout the trading day was counter to the trend we have seen in recent weeks where the S&P 500 tended to trade higher throughout the trading day. As recently as last week, the S&P 500, measured by SPY, had traded higher from the open to close on 17 of the prior 25 trading days. The fact that the market has been rallying throughout the trading day signals healthy underlying demand.
While last week’s reading of 17 is not a historical extreme, it was tied for the highest frequency of days that SPY traded higher from the open to close in a 25-trading day period this year. In 2023, there were multiple periods when the 25-day rolling toll reached as high as 19 or 20. The best this reading has been able to get in 2024, though, has been 17.
Regarding individual stocks, T-Mobile (TMUS) reported after the close last night, and if you’re looking for an extreme example of stocks consistently rallying from the open to close, we can’t think of a better one. Heading into last night’s earnings report, shares of TMUS traded higher from the open to close on 24 of the last 25 trading days. Talk about a stock that investors can’t enough of!
Looking back over the stock’s history, the current rate of days where TMUS traded higher from the open to close over the last 25 trading days is easily the highest ever. Before the last five weeks, it never got above 21.
We can’t think of another example when a stock traded higher from the open to close with such consistency, and if we look back at the history of Apple (AAPL) and Nvidia (NVDA), the two largest and most successful companies in the US market, neither one ever experienced a run where the stock traded higher from the open to close on more than 21 out of 25 trading days.
Oct 23, 2024
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“If you are first you are first. If you are second, you are nothing.” – Pele
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
We’re looking at another negative equity market open today, and once again, the Dow is leading the way lower. The E. coli outbreak tied to McDonald’s (MCD) has that stock down 7%, which works out to more than half of the Dow’s pre-market losses. Along with the negative news from MCD, Starbucks (SBUX) lowered guidance, so it’s not shaping up to be much of a good morning for companies tied to the fast food sector.
The only economic report on the calendar this morning is Existing Home Sales at 10 AM, but there have been plenty of earnings reports in the pre-market with more to come after the close.
The last week has been mixed for equities on a global scale. As shown in the snapshot from our Trend Analyzer, emerging market equities have been the top performer narrowly edging out US stocks with a gain of 0.69%. These are also the only two regions with positive returns as European, Latin American, and Asia Pacific stocks are all lower. With most regions trading lower, the Developed World ex-US ETF is also down 0.71%.
It hasn’t just been the last week where these regions have underperformed. On a YTD basis, the US has rallied 23.5% while emerging markets are up just under 14%. All four of the other ETFs, meanwhile, are up less than 10%, or in the case of Latin America (ILF) down over 10%.
Looking at the charts of all six ETFs over the last year, EEM and SPY have maintained their rallies and trade above their 50-day moving averages. The four other ETFs, however, look less promising from a technical perspective. ILF has been below both its 50 and 200 DMAs for several days now while SPDW, VGK, and VPL all broke below their 50-DMAs in the last few days.
Oct 22, 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.
“aggressive conduct, if allowed to go unchecked and unchallenged ultimately leads to war” – John F Kennedy, 10/22/1962
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Just when it seemed nothing could go wrong for the market, yesterday we had a weak day underneath the surface in terms of breadth. That weakness has continued into this morning as US futures are firmly lower following a decline of over 1% in the Nikkei. In Europe, despite positive earnings from SAP and Logitech, the STOXX 600 is down close to 1%.
Treasury yields remain the culprit as the relentless rise in longer-term interest rates continues since the Fed cut rates in September. The 10-year yield has risen above 4.2% for the first time since the summer as the market continues to experience one of the sharpest increases in yields following a rate cut in at least the last 30 years.
The S&P 500 was only down 0.18% yesterday, but breadth was terrible with a net advance/decline reading of negative 338. The weak breadth was also evident in the equal-weighted S&P 500 which was down 0.85%. The 4% rally in NVIDIA (NVDA), which is now within 2% of Apple’s (AAPL) market cap, was a big factor behind the big performance spread between the cap and equal-weighted indices. The scatter chart below compares the S&P 500’s daily percent change versus the net A/D reading, and the shaded area highlights days when the net A/D reading was between -350 and -300 (yesterday was -338). On those days, the S&P 500’s average decline has been 1.23%. To put yesterday into perspective (red dot in lower chart), it is one of just two days since 1997 that the net A/D reading was between -350 and -300 and the S&P 500 was down less than 0.25%!
Can you believe it? The day is almost here. Two weeks from today is the last day we can vote in the 2024 Presidential Election, and then we’ll finally get a break from all the politics. Right?
Like what we did two weeks ago, the chart below shows the performance of the S&P 500 in the two weeks leading up to Election Day for all years since 1948, and we have noted Presidential Election years in dark blue. While you might expect volatility leading up to Election Day, the S&P 500 has historically performed better in the two weeks leading up to Presidential elections (1.62%) than it has in non-presidential election years (0.87%), but it has been slightly less consistent to the upside at 68.4% during Presidential election years versus vs 73.3% in non-election years. The biggest gains and losses for the S&P 500 during these two weeks have also been during non-presidential election years (9.1% in 1962 and a decline of 4.4% in 1973). During Presidential election years, the largest gain was 5.4% in 1960 and the largest decline was 2.6% in 1988.
The table below lists the performance of the S&P 500 during the two weeks leading up to each Presidential election since 1948. Along with that, we have also included the number of days that had transpired between the last all-time closing high (ATH) and each Election Day, the number of ATHs in the 50 trading days leading up to Election Day, and whether the part of the incumbent or non-incumbent party won the election.
This year isn’t listed on the table since it’s not Election Day yet but with nine all-time highs already in the 50 trading day window (with ten to go) this year is already tied with 1964 and 1968 for the second most. With the most recent all-time high occurring last Friday, even if there isn’t another closing all-time high between now and then it will rank at least as the fourth fewest number of days between the last ATH and Election Day. The only ones with a shorter gap were 1996 (0 days), 1972 (1 day), and 1968 (8 days).
We also found it interesting that strong markets don’t necessarily help the incumbent party, but short-term weakness in the two weeks before may hurt the incumbent party. In the nine prior periods when the S&P 500 hit an all-time high within 100 trading days of Election Day, the incumbent party only won the Presidency four out of five times. There have been five prior periods when the S&P 500 was down in the two weeks leading up to the election, and in four of those periods, the non-incumbent party won. These are all small sample sizes, and there were other factors at play in each election, but any excuse to talk politics, right?
Oct 21, 2024
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“Unlike the mediocre, intrepid spirits seek victory over those things that seem impossible.” – Ferdinand Magellan
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Last week marked the sixth straight week of gains for the S&P 500, but the tone to kick off this week has been subdued. Pre-market equity futures have been lower all morning and picking up steam to the downside. European shares are down close to 1% with Germany leading the way as PPI fell 0.5% or more than twice the consensus forecast for a decline of 0.2%. Treasury yields and crude oil, which are also both higher, aren’t helping the sentiment backdrop for equities either.
The only economic report on the calendar this morning is Leading Indicators at 10 AM, but it will be a busy week of data in terms of both earnings and economic reports.
Gold is trading up nearly 1% this morning and on pace for its fifth straight daily gain and fourth record closing high in a row. It’s been an amazing year for gold, and one example of that strength is that this current streak of record-closing highs is the longest since a six-day streak at the end of…late September.
If today’s gains hold, it would be the 43rd time this year that the stock closed at a record high. As shown in the chart below, that would rank as the second most record closing highs for a calendar year, trailing only the 57 record closing highs in 1979. With 49 trading days left in the year, that record in 1979 may not necessarily be destined, but it’s certainly within reach.
Along with the surging price of gold, gold miner stocks have been on a nice run this year. While gold is up just under 33% for the year, the S&P 1500 Gold Industry index has rallied even more with a gain of 37.3%.
Logically, it would make sense that gold stocks have been rallying by similar amounts as the commodity, but that has hardly been the case over the long term. Since the start of 1995, the S&P 1500 Gol Industry has rallied 57.1%, but gold is up more than ten times that at 615.3%!
Oct 18, 2024
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“If machines are going to take jobs away from the worker, then he will need to find something else to do. Perhaps he’ll get back to the soil. But we must care for him during the period of change. We must keep him away from red literature, red ruses; we must see that his mind remains healthy.” – Al Capone
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
The S&P 500 is up a half a percent, the Nasdaq 100 is down a half a percent, and the small-cap Russell 2,000 is up 2.2% on the week as we get set for Friday trading. But S&P 500 and Nasdaq futures are trading up about a half a percent ahead of today’s open on the back of strong earnings results from Netflix (NFLX) after the close yesterday.
As shown below, the S&P remains elevated relative to its normal trading range and its 10-day advance/decline line has just ticked slightly back into overbought territory as well.
Oct 17, 2024
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“Nothing’s worse than a guy who loses fair and square and then whines about it.” – Evel Knievel
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Retail sales, jobless claims, and the Philly Fed report all came in better than expected a few minutes ago at 8:30 AM ET, and we’ll have more coverage of these indicators later today.
After major chip-equipment manufacturer ASML spooked the Tech world earlier this week with a weaker than expected earnings report, Taiwan Semi (TSM) has helped to right the ship this morning with an earnings triple play (beat EPS, beat sales, raised guidance). The stock is reacting to the news extremely positively in pre-market trading. Shares are currently set to open higher by 9.1%, which would mark a new all-time high for the stock. As shown below, a 9.1% gap higher for TSM this morning would also be its most positive open following an earnings report since at least 2012.
Small-cap indices have been charging higher over the last week with the Russell 2,000 (IWM) up nearly 4% and the Micro-Cap ETF (IWC) up 6%. As shown below, small-cap index ETFs are currently the most overbought, then mid-caps, then large-caps. The Nasdaq 100 ETF (QQQ) is actually down over the last week, but its price is still slightly overbought.
