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“What good is the warmth of summer, without the cold of winter to give it sweetness.” – John Steinbeck

Morning stock market summary

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 finally starting to get colder here in the northeast, and that coupled with the shorter days quickly makes us miss the warmer weather and longer days of the summer.  While the temperature is likely to only get colder from here in the coming weeks, if there’s any consolation, tomorrow is the shortest day of the year which means that the days only get longer from there.  Applying the forward-looking nature of the market, winter is over!

Traders are coming in today to the warmth of red on their screens as equity futures and treasury yields are both lower. On the economic calendar, we’ll get Existing Home Sales and Consumer Confidence at 10 AM. On the earnings front, the notable reports since yesterday’s close were FedEx (FDX) and General Mills (GIS).  Both stocks are trading lower in reaction to their results after management from each company lowered guidance.  FDX is getting hit the hardest, though, as the stock is down over 10% and GIS is down 4%. If the declines in FDX hold through the close, it will be the stock’s worst earnings reaction day performance since December 2019.

Like the warmth of summer, it’s hard to fully appreciate a rally without first going through some weakness, and that made the late summer/early fall correction the perfect prelude to the current year-end rally.  Heading into today, the Nasdaq has seen nine straight days of gains which is the longest winning streak since – wait for it – November 8th.  That’s right. Since the October lows, the Nasdaq has now had two separate nine-day winning streaks. To find a time when there were two winning streaks of nine or more days in closer proximity to each other, you have to go back to 1979!

In the history of the Nasdaq dating back to 1971, it has had 48 different winning streaks of at least nine days.  While they aren’t particularly uncommon, what makes the current streak a little more unique is that it has also come as the Nasdaq closed at overbought levels (1+ standard deviation above 50-DMA) on each day of the winning streak. Of the 48 prior streaks, only 16 shared that same trait with the current streak. In today’s Morning Lineup, we provided an analysis of the Nasdaq’s performance following prior nine-day winning streaks along with nine-day winning streaks that occurred when the index closed at overbought levels on each day of the streak. Sign up to read the entire report.

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