May 28, 2024
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“When everybody thinks alike, nobody thinks.” – Bill Walton
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 the US observed Memorial Day yesterday, trading in the rest of the world was uneventful but generally positive. This morning in the US, futures are very modestly higher as the S&P 500 and Nasdaq look to make it six weeks in a row of gains. The Nasdaq is leading the way higher this morning as shares of Apple (AAPL) are higher on news of strong sales in China while Nvidia (NVDA) is also up following news that xAI has raised $6 billion in funding, and much of that will likely get plowed right into NVDA chips.
There’s a lot of economic data on the calendar this morning and this week, so check out this morning’s report for a full rundown.
Recent market action has been much less uniform despite year-to-date gains across most sectors. Last week, the S&P 500 eked out a small gain, but nine out of eleven sectors fell. Seven sectors dropped at least 1%, with Energy and Real Estate plummeting over 3.5%. Conversely, Technology and Communication Services were the lone bright spots, finishing the week in positive territory. The spread between the best and worst performers (Technology and Energy, respectively) exceeded five percentage points, highlighting the underlying volatility beneath the seemingly placid surface.
The performance of the Technology (XLK) and Energy (XLE) sector ETFs since last October’s low further illustrates divergences in sector performance. Just as tech started to rally late last year, energy stalled and moved sideways through January. Then, in late January, as momentum in the tech sector stalled, energy stocks picked up steam until April when the two sectors started to reverse course again. With sectors moving in their independent ways lately, Bill Walton would approve!
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May 24, 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 legacy of heroes is the memory of a great name and the inheritance of a great example.” – Benjamin Disraeli
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
If you commuted to work today, you already noticed that you’re one of the few, as many people decided to use the Friday before Memorial Day as a work-from-home day or even better, a day off. The data calendar is light to close the week with Durable Goods at 8:30 (stronger than expected) and the University of Michigan Sentiment survey at 10 AM. The preliminary release of this report on 5/10 came in much weaker than expected while one-year inflation expectations surged from 3.2% up to 3.5%. For today’s report, economists expect the one-year reading to recede modestly down to 3.4%.
Heading into the opening bell, equity futures are trading little changed but with a positive bias while treasury yields are little changed. In Asia, equities were lower, even as Core CPI in Japan slowed to a y/y rate of 2.2%. In Europe, stocks are trading lower to close out the week as they catch up to yesterday’s decline in the US.
This morning’s action follows a disappointing session on Thursday where the S&P 500 opened at record highs and what turned out to be the day’s high. It then traded steadily lower throughout the session, and by the time the closing bell rang, the S&P 500 SPDR ETF (SPY) finished down 0.73% and more than 1.3% from its intraday high.
In today’s Morning Lineup, we looked at prior reversals similar to yesterday’s to see where in the market cycle they tended to occur and how the S&P 500 tended to perform going forward. Were prior occurrences an ominous warning? Sign up for Bespoke Premium to find out!
To continue reading the rest of today’s morning note, where you’ll find much more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.
May 23, 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 single most important thing for any processor is getting adoption by software developers.” – Jensen Huang
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Positive earnings from Nvidia (NVDA) have US futures firmly higher this morning, and lower-than-expected jobless claims have also helped to keep things green. Later we’ll get flash PMI readings from S&P at 9:45, New Home Sales at 10, and the KC Fed Manufacturing report at 11 AM.
If there’s anyone who would know about the accuracy of the quote above from NVDA CEO Jensen Huang, it would be Jensen Huang who is riding the wave of AI using his company’s chips to heights that could never have been imagined. A big reason why is because of the Cuda software platform that accompanies those chips, and that was on full display in last night’s earnings report which blew the doors off expectations across just about every possible metric.
Given the magnitude of its beat relative to expectations in its reports last night, traders seemed surprised that Nvidia (NVDA) is up ‘only’ 7% in the pre-market. Whether that’s the ‘right’ reaction to the report, we’ll leave it to others to decide, but a 7% move is anything but small. First, let’s look at NVDA’s price chart. With the stock trading over $1,000 this morning, the stock is up 164% over the last year and 105% on a year-to-date basis. Nothing small about that.
Now let’s compare the change in NVDA’s market cap today to the market cap of individual S&P 500 companies. As of yesterday’s close, the average market cap of S&P 500 components was just under $95 billion while the median market cap was just $35.1 billion. The fact that the average market cap is 169% larger than the median shows how top-heavy the index is, but that’s a discussion for another time. Based on pre-market trading, NVDA is poised to increase its market cap by $175.2 billion. That’s over $80 billion more than the average market cap and $140 billion more than the median market cap. Not only that but that $175 billion in market cap would also rank as the 46th largest company in the entire S&P 500. That’s larger than the market caps of companies like Caterpillar (CAT), American Express (AXP), Pfizer (PFE), and Morgan Stanley (MS). Again, nothing small about that.
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May 22, 2024
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“Volatility is a welcome creator of opportunity.” – Seth Klarman
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Futures are modestly lower this morning as Asian and European stocks trade lower for the second day in a row. One of the main drivers of weaker sentiment has been a hotter-than-expected inflation report in the UK. That has lowered the odds of a June rate cut from the BoE, and treasury yields are increasing in response. We’ll finally get an economic report this week with Existing Home Sales at 10 AM, but the main event everyone has been waiting for all week is Nvidia’s (NVDA) earnings report after the close.
Last Friday’s close of 11.99 in the VIX ended a streak of 1,137 trading days where the index closed above 12. As the index closed just a penny below 12, it was hardly a convincing end to that streak, but yesterday it closed below 12 more convincingly (11.84), so we wanted to highlight it. As shown in the chart below, while the VIX traded at lower levels on an intraday basis last December, it hasn’t closed below yesterday’s level since late November 2019.
The just-ended 1,137-day streak of closes above 12 ranks as the third longest of all time and just the fifth time the index went more than a year without closing below 12. The most recent streak before the just-ended streak was also the shortest of the five lasting just 287 trading days and ending in late November 2019 not long before Covid. The longest streak was coming out of the dot-com bubble burst and lasted 2,257 trading days or the equivalent of just about 5 years.
With the VIX now so low, does the lack of volatility equal less opportunity going forward? In today’s Morning Lineup, we looked into that question and provided a summary of how markets performed going forward. To read that analysis, login or signup today
To continue reading the rest of today’s morning note, where you’ll find much more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.
May 21, 2024
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“The most difficult thing is the decision to act, the rest is merely tenacity.” – Amelia Earhart
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 another quiet morning in terms of economic data this morning with no scheduled reports on the calendar, but a few earnings reports are driving the direction of futures, including reports from Lowe’s (LOW), Macy’s (M), and Palo Alto Networks (PANW). Overnight and this morning, the general tone of equities in Asia and Europe has been to the downside, and oil and gold are trading lower as well. The only real asset class that is moving notably higher is crypto where Bitcoin and Ethereum are both sharply higher. Equity futures are essentially flat, although slightly higher.
While there are no economic reports on the calendar, there’s a ton of Fed speak to contend with this morning, so keep on your toes in terms of any potential tape bombs throughout the morning.
The S&P 500 closed just two cents shy of its closing 52-week high from last week yesterday, but Communications Services and Technology managed to close at their respective highs. As shown in the chart below, the only other sectors that have traded at 52-week highs in the last week were Financials, Consumer Staples, and Utilities. Meanwhile, more than half of the S&P 500’s sectors haven’t traded at a 52-week high in at least a month, and for two sectors – Consumer Discretionary and Real Estate – their respective closing 52-week highs were more than two months ago.
Most sectors may have gone more than a month without a 52-week high, but that doesn’t mean they aren’t knocking on the door. As shown below, Real Estate is the only sector that’s more than 5% from a 52-week high, and only two other sectors (Energy and Consumer Discretionary) are more than 1.5% from a 52-week high. In other words, it won’t take much to put most sectors over the hump.
Below we show the charts for the six sector ETFs whose 52-week highs were at least a month ago. Here again, these charts illustrate just how close most sectors are to 52-week highs with the only exceptions being Energy (XLE), Real Estate (XLRE), and Consumer Discretionary (XLY).
To continue reading the rest of today’s morning note, where you’ll find much more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.
May 20, 2024
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“If I had my career over again? Maybe I’d say to myself, speed it up a little.” – Jimmy Stewart
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
There’s no economic news on the calendar this morning and earnings season is mostly (but not completely) behind us, which means there’s little news to kick off the week. Things will pick up in the days ahead as we have a ton of Fed speakers on the calendar, but that won’t start until tomorrow. For now, the path of least resistance appears higher, and futures are modestly positive as we approach the opening bell for the week.
Despite initial gains above $80 per barrel in overnight trading following news of Iranian President Raisi’s death in a weekend helicopter crash, WTI crude oil prices have fallen back below that level as we approach the opening bell. The drop comes after WTI also briefly surpassed its 200-day moving average, but then fell back down. The inability to hold these higher levels now calls into question whether WTI can hold above its uptrend from the 2023 lows.
Although the crude oil chart appears concerning, energy stocks look more attractive from a technical perspective. The Energy Select Sector SPDR (XLE) has indeed pulled back, but on Friday it found support at its 50-day moving average (DMA) and even broke the downtrend that has been in place since April 12th. Despite this month-long pullback, XLE remains the second-best performing sector ETF year-to-date, trailing only the 15.2% gain in Utilities (XLU).
To continue reading the rest of today’s morning note, where you’ll find much more analysis of global equities and economic readings released this morning, read today’s full Morning Lineup with a two-week Bespoke Premium trial.
