Feb 26, 2024
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“I Walk the Line” – Johnny Cash
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
After a short and extremely limited week of economic data last week, I hope you’re ready for a full week of trading and a busy week of data. Kicking off the week, futures have been little changed as traders await the release of New Home Sales and the Dallas Fed report. Overnight, most Asian equity indices were lower to kick off the week even as Japan bucked the trend to trade at another record high. Europe has also been sluggish in early trading, but overall, the pace of news has been quiet.
Taking a long-term look at the chart of the S&P 500, we’ve essentially seen a textbook breakout. After trading at new highs in late 2023, the S&P 500 successfully tested its breakout level early this year and hasn’t given investors much of an opportunity to get in ever since.
Looking more closely at a shorter-term chart of the S&P 500, it has been “walking the line” of a steep uptrend of higher highs since mid-November, and while the steepness of the trend hasn’t accelerated it has retained its steady ascent.
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Feb 23, 2024
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“I don’t look to jump over seven-foot bars; I look around for one-foot bars that I can step over.” – Warren Buffett
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 rose more than 2% yesterday to close at a new all-time high, and as shown below, yesterday’s move pushed most areas of the US equity market up into extreme overbought territory.
Similar to the Nasdaq 100, yesterday was also the first time the S&P 500 had a one-day gain of at least 2% to close at a new all-time high since March 21st, 2000!
The green dots below show the 21 prior times the S&P had a 2%+ gain and closed at an all-time high since 1952. Yep, there have only been 21 prior occurrences over the last 70+ years.
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Feb 22, 2024
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“We should not look back unless it is to derive useful lessons from past errors, and for the purpose of profiting by dearly bought experience.” – George Washington
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 and Nasdaq are both set to open at all-time highs this morning, but most notable is Japan’s Nikkei 225, which finally made a new all-time high after 34+ years!
After the Great Depression in the US, the S&P went 25 years without making a new all-time high, and Japan’s equity market beat that streak by nearly 10 years. As shown below, once the S&P finally did make that all-time high in the mid-1950s, it would go on to double in rather short order.
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Feb 21, 2024
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“Individuals who cannot master their emotions are ill-suited to profit from the investment process.” – Benjamin Graham
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Interestingly, yesterday was the fifth year in a row that the S&P fell on the day after President’s Day, and as shown below, the next month on the calendar has generally been one of the weaker periods of the year:
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Feb 20, 2024
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“Software is eating the world, but AI is going to eat software.” – Jensen Huang, May 2017
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
US equity futures are trading slightly lower this morning, while Treasury yields are mostly flat from where they closed last Friday. Walmart (WMT) beat estimates and is trading up a little more than 2%, while Home Depot (HD) beat as well but is trading down about 2%.
While Walmart (WMT) has historically marked the unofficial end of earnings season each quarter, the fact that NVIDIA (NVDA) reports tomorrow means we should probably push that back a day.
NVIDIA (NVDA) has a lot to live up to when it comes to earnings. The stock is up 50% YTD already and now has a market cap of $1.8 trillion. As shown below, the stock has reported an earnings triple play on its Q4 earnings report for four years in a row and seven out of the last eight years coming into its Q4 2023 report tomorrow. Will anything less than another strong triple play be enough to satisfy investors?
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Feb 16, 2024
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“The older I get, the better I used to be.” – John McEnroe
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 had a positive bias heading into this morning’s PPI and housing data. With Housing Starts and Building Permits both coming in weaker than expected and PPI coming in higher than expected, they have given up all those gains and are now in the red. Treasury yields are higher, and the 10-year is back above 4.3%. For anyone on the rate cuts sooner rather than later bandwagon, this is a week they’d prefer to forget.
The phrase “somebody call 9-1-1” is a well-worn part of the vernacular these days, but it was only 56 years ago today that the first call on the system was made in Alabama. While it is an invaluable number in an emergency, there have been some “interesting” emergencies in its 50+ years of existence. Someone in Georgia once called to report her car stolen, only to later realize that the grass had grown so tall that she couldn’t see it anymore. Or how about the woman in California who called 911 to report that the special sauce on her Western Whopper at Burger King was left off? While the Whopper wasn’t up to her standards, the stoned guy who called 911 with the munchies would have taken it in a heartbeat. Even more surprising was the guy in Oregon who broke into a house to shower. When the owner got home and heard him, they called 911… but so did the intruder who feared he would be shot. We could go on, but again, these stories are the exception to what has been an invaluable resource over the last several decades.
While there aren’t many emergencies in the market these days (although this week’s inflation data has raised some concern), natural gas traders may be looking for a phone. The commodity has been in absolute free fall over the last several weeks. After prices gapped sharply lower in the last week of January, they have been in a free fall ever since. In the last week of January, futures prices fell below $2 MMBtu, and then yesterday, they fell below $1.60 to the lowest level since June 2020. There’s no inflation here!
Prices are slightly higher today, but heading into the session, natural gas prices were down for eight straight days. While there was a similar losing streak in October, the only streak that has been longer in the last decade was a 12-day streak in October 2019. Going back to 1990, there have been only 12 streaks of eight or more besides the current one.
The losing streak for natural gas has been bad enough, but the magnitude of the decline has been crushing. From its five-week high of 3.313 MMBtu on January 12th, front-month natural gas futures were down 52.3% through Thursday’s close. In the entire history of natural gas futures trading since 1990, the only other time that it traded down more than 50% in the span of five weeks or less was in January of last year, and before that, the record decline in five weeks or less was 47% in March 2003. Whether you want to blame it on weather, regulatory policy, or something else, natural gas has rarely been more out of favor than it is today.
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