Bespoke’s Morning Lineup – 9/27/23 – Can We Get a Bounce?

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.

“For those who believe, no proof is necessary. For those who disbelieve, no amount of proof is sufficient.” – Ignatius of Loyola

Morning stock market summary

Start a two-week trial to Bespoke Premium now to get full access to the Morning Lineup.

As the market declines this month, the number of ‘believers’ is starting to shrink, and while they haven’t necessarily turned bearish yet, former bulls are looking over their shoulders.  The prospect of a government shutdown is just one of many concerns weighing on investors this week, and based on the intransigence of both parties, making a deal before the deadline looks increasingly difficult.  The quote above from Ignatius of Loyola may be over 500 years old, but it’s just as applicable today as it was back then.  With each side of the aisle increasingly locked into their tribal ideology, no amount of ‘proof’ is enough to get the other to see ‘the light’.

Futures have been trending higher all morning as the market looks to regroup from yesterday’s beating.  The only data on the economic calendar this morning was Durable Goods orders which came in higher than expected for August (+0.2% vs. -0.5%), but July’s reading was revised down to -5.6% from -5.2%.

With the S&P 500 falling to its most extreme oversold levels of the year yesterday, it should come as no surprise that most of them are also at what we would classify as ‘extreme’ oversold levels.  The only sector even above its 50-day moving average is Energy.  Declines have been broad-based during the sell-off of the last week. Real Estate and Consumer Discretionary are both down 5.81% followed by Technology, Utilities, and Financials which are all down over 4%.  Just to illustrate how bad a week it has been, the two best-performing sectors – Health Care and Energy – are down well over 1%.

Sign up for a two-week trial to Bespoke Premium to continue reading more of today’s macro analysis.

The Closer – Nasdaq New Low, New Home Sales, Five Fed Rebounds – 9/26/23

Log-in here if you’re a member with access to the Closer.

Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we start with a look at the Nasdaq 100’s 3 month low (page 1) followed by a dive into the latest Consumer Confidence numbers (page 2). We then show the details of today’s new home sales report (pages 3 and 4) then show an update of our Five Fed Manufacturing composite with the addition of the Richmond Fed (page 5). We finish with a recap of the 2 year note auction held this afternoon (page 6).

See today’s full post-market Closer and everything else Bespoke publishes by starting a 14-day trial to Bespoke Institutional today!

Bespoke’s Morning Lineup – 9/26/23 – Getting Real

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.

“Humankind cannot bear very much reality.” – T.S. Eliot

Morning stock market summary

Start a two-week trial to Bespoke Premium now to get full access to the Morning Lineup.

Rising yields and oil prices have been two major headwinds to equity prices over the last two months, but this morning both are lower, and equity futures still don’t care.  After some sizable losses overnight in Asia and Europe this morning, investors see little incentive to step up and buy.  Especially when the CEO of the country’s largest bank says that the market may not be ready for 7% interest rates. Other drivers of the weakness in Asia were news that Chinese real estate developer Evergrande missed an interest payment, higher-than-expected inflation data out of Japan, and a much weaker-than-expected report on Industrial Production out of Singapore.  On the docket this morning in the US, we’ll get July home price data at 9 AM and then New Home Sales and Consumer Confidence at 10 AM.

We’ve talked about the weakening breadth of the US equity market frequently since the summer peak, but things have also been weakening on an international level as the declines from the summer highs start to get real.  For example, we’ve seen a winnowing of the number of major international equity benchmarks trading above the 200-day moving averages.  The chart below shows the current price versus the 200-DMA spread of the benchmark equity indices of the world’s 25 largest economies.  At 3.4% above its 200-DMA, the US ranks relatively well trailing only Brazil, India, Japan, Russia, Turkey, and Argentina.  While the double-digit percentage spreads of Argentina and Turkey look impressive, keep in mind that inflation in these two countries is in the range of 60% to 130% on a y/y basis.  On the downside, China is the only country trading more than 5% below its 200-DMA, but Belgium and the Netherlands are getting close.

Overall, just over half of the 25 countries shown above are trading above their 200-DMAs which is down from over 100% in late July.  Interestingly, while there have been plenty of times when every index was trading above its 200-DMA, there hasn’t been a period since 2000 when all of them were trading below their respective 200-DMAs.  Again, though, that’s partially a reflection of the fact that when you have some countries dealing with near triple-digit inflation, it’s hard not to have a rising stock market, unless the country is completely imploding.

What’s notable about the current level of indices trading above their 200-DMAs is that we have now gone 218 trading days with more than half of all indices above each of theirs.  As shown in the chart below, since 2000, there have only been seven other periods where the percentage was above 50% for even longer.  Unless global markets turn higher in the next couple of days, it’s highly likely that we’ll drop below 50% at some point soon.  That probably wouldn’t be looked at as a positive development, but sometimes you need the market to break a little bit before it can get back on track.

Sign up for a two-week trial to Bespoke Premium to continue reading more of today’s macro analysis.

The Closer – ECB Chatter, Duration Collapse, 5 Fed, Treasury Auction Previews – 9/25/23

Log-in here if you’re a member with access to the Closer.

Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we begin with some commentary from ECB officials regarding the path of rates (page 1). We then move to duration pressure and historical drawdowns in long-term treasuries (page 2) followed by a discussion of the move in term premiums and how it has affected real yields and risk assets (page 3). Next, we updated the Five Fed Manufacturing Index based on three of the five September reports that have been released so far (page 4). As shown in the chart below, manufacturing activity is starting to show signs of bottoming.  In tonight’s report, we also previewed this week’s Treasury auctions (page 5) and provided updates on the latest Commitments of Traders report (page 6).

See today’s full post-market Closer and everything else Bespoke publishes by starting a 14-day trial to Bespoke Institutional today!

Buy Yom Kippur?

When it comes to seasonal patterns in the market, one less widely known pattern is related to the Jewish calendar regarding Rosh Hashanah (the Jewish New Year) and Yom Kippur (Judaism’s holiest day of the year). The old saying says to sell Rosh Hashanah and buy Yom Kippur as, often, it tends to be a weak time of year for the market. We’ll leave it to others to try and explain the reasons behind the axiom, but the actual results don’t refute the pattern.

The table below shows the performance of the S&P 500 from the close before the start of Rosh Hashanah to the closing price on the day Yom Kippur ends from 2000 through 2022. During that span, the S&P 500’s median performance during this period has been a decline of 0.50% (average: -0.79%) with positive returns less than half of the time (43%).

While equity market returns have been weak during the period between these high holy days of the Jewish calendar, market returns for the rest of the year have been positive. In the twenty-two prior years shown, the S&P 500’s median rest-of-year performance has been a gain of 6.07% with gains 74% of the time. In the table, we have also shaded those years where the S&P 500 bucked the market headwinds and posted positive returns during this period, but it tended to have no impact on performance for the remainder of the year

One word of caution behind the possible explanations for the equity market’s weakness in the period between Rosh Hashanah and Yom Kippur is that they also occur during September which is already a weak time of year for the market to begin with.

Featured Tools

Bespoke Chart Scanner Bespoke Trend Analyzer Earnings Report Screener Seasonality Database Economic Monitors

Additional Features

Wealth Management Free Charting Bespoke Podcast Death by Amazon

Categories