Bespoke Market Calendar — June 2019
Please click the image below to view our June 2019 market calendar. This calendar includes the S&P 500’s average percentage change and average intraday chart pattern for each trading day during the upcoming month. It also includes market holidays and options expiration dates plus the dates of key economic indicator releases. Start a two-week free trial to one of Bespoke’s three premium research levels.
Bespoke Matrix of Economic Indicators – 5/31/19
Our Matrix of Economic Indicators is the perfect summary analysis of the US economy. We combine trends across the dozens and dozens of economic indicators in various categories like manufacturing, employment, housing, the consumer, and inflation to provide a directional overview of the economy.
To access our newest Matrix of Economic Indicators, start a two-week free trial to either Bespoke Premium or Bespoke Institutional now!
DJIA Six Week Losing Streaks
Barring a 700+ point rally into the close (hey, anything is possible), the DJIA is on pace for its first six-week losing streak since June 2011 and the 32nd such streak going back to 1900. As of this writing, the DJIA is down 6.46% over the course of this current losing streak, which would go down as the mildest six-week losing streak for the index since June 1976 and the fifth ‘mildest’ six-week losing streak on record. The chart below highlights each of the DJIA’s prior six-week losing streaks since 1900 and shows how much the index declined during each one of them. Start a two-week free trial to Bespoke Institutional to access all of our research and interactive tools.
While there have been quite a few six-week losing streaks for the DJIA in its history, it is not common for them to go on into a seventh week. As shown in the chart below, just seven of the DJIA’s 32 prior six-week losing streaks have last seven or more weeks, and a 7-week losing streak stretching to an eighth week is practically unheard of with just one way back in 1923.
Trend Analyzer – 5/31/19 – Oil Oversold, Metals Move Higher
We mentioned yesterday that half of the major index ETFs were sitting at extremely oversold levels at the start of trading yesterday. Small gains helped to at least lift some of these ETFs off of these levels, but a sizeable gap lower at today’s open brought them right back—if not to a greater degree—into oversold territory. While every major index ETF is sitting on a loss over the past week, small and mid-caps have been handily underperforming. These also are all the ones that are still extremely oversold. The Core S&P Small-Cap ETF (IJR) has seen the worst of these declines down 3.8%. This has also tanked gains for the year as it now has the lowest YTD gain of the group. Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.
Peeking at commodities, similar to equities, oil has been taking it on the chin. Yesterday alone, in spite of supply data that would have indicated stronger prices, WTI crude futures fell just under 4.5% adding to its second straight week of declines; a total decline of 12.95% in that time. On these declines, Oil ETFs (USO and DBO) and the Energy fund (DBE) have all reached extreme oversold levels whereas they were neutral last week.
Conversely, precious metals ETFs have not been shaken by headlines of China raising tariffs on these commodities. The Precious Metals ETF (DBP) in addition to each of the gold ETFs (GLD, DGL, and IAU) have been some of the best performing commodity ETFs this week. The gold ETFs are hovering just under a half of a percent gain and DBP has seen a bit weaker performance gaining 0.23%. While these have been outperforming most commodities, the Agriculture Fund (DBA) has been doing so to an even greater degree with more than quadruple the gains of the next best performer, Gold Trust (IAU). This move has brought DBA towards the upper end of its long term and persistent downtrend channel. This also means DBA is just outside of overbought territory as well.
Brazil Rallies
After a very poor start to the month, Brazilian equities have been quietly salvaging things in the second half of May as the iShares Brazil ETF (EWZ) is on pace for its second straight week of 5% gains and is even up slightly in early trading today. After trading down as much as 10.6% MTD at the recent lows, EWZ has erased all of its losses and finished the day Thursday with a slight gain on the month.
Since the EWZ ETF began trading back in 2000, the current string of back to back weekly gains marks just the eleventh time that the ETF has rallied more than 5% for two straight weeks. The most recent occurrence was back in October 2018, while the one before that was in late 2016. If you’re a bull on Brazil, the last two weeks should have you feeling good. Not only have Brazilian equities erased all of their May declines, but as shown in the chart below, prior occurrences typically haven’t marked short-term peaks. Besides the first occurrence in early 2001 and an occurrence in early 2014, prior streaks generally took place during uptrending periods for the ETF or in the case of the 2015 occurrence, very late in a decline. Start a two-week free trial to Bespoke Institutional to access all of our research and interactive tools.
Morning Lineup – “You Get a Tariff. You Get a Tariff. You Get a Tariff.”
The good news? In less than 7.5 hours it will be all over and the weak equity performance for the month of May will be nothing more than a bad memory. We can only hope that June doesn’t provide any sort of meaningful encore.
One of the catalysts for this morning’s weakness is – you guessed it – tariffs. But this time the tariffs have nothing to do with China. Instead, it’s Mexico, as the Trump Administration announced that that it will enact new tariffs on imports if the country doesn’t do anything to stem the flow of illegal immigrants into the US. At the rate things are going, it won’t be long until the list of countries we aren’t threatening with tariffs will be shorter than the list of countries who we are threatening (or maybe it already is).
Besides the tariff announcements with Mexico, other news pressuring equities this morning include a weaker than expected Manufacturing PMI in China (49.4 vs 49.9) and weaker than expected Retail Sales in Germany. The latter has pushed the yield on the 10-year German bund down to a record low of negative 0.205%. Over here in the US, the 10-year yield has sunk to 2.16%, and the yield curve has further inverted to a new low of negative 17 basis points.
Please click the link below to read today’s Bespoke Morning Lineup for more of our thoughts on the latest tariff announcements. Also, make sure to check out our latest B.I.G. Tips report for a recap of prior down opens to end the month.
With the weak economic data across the globe, markets are increasingly betting that the FOMC will be forced to cut rates at some point in the near future. Between now and January, the futures market is pricing in a 94% chance of at least one rate cut. Even more surprising is that the market is pricing in better than a 37% chance that the Fed Funds rate will be cut by at least 75 bps! At some point, push has to come to shove. Will the market bend to the FOMC’s view or will it be the other way around.
Start a two-week free trial to Bespoke Premium to see today’s full Morning Lineup report. You’ll receive it in your inbox each morning an hour before the open to get your trading day started.
B.I.G. Tips – Down Fridays to End Month
B.I.G. Tips – June, Rest of Summer Seasonality
The Closer – VIX vs Stocks, Small Caps, Pending Homes, Output Revisions – 5/30/19
Log-in here if you’re a member with access to the Closer.
Looking for deeper insight on markets? In tonight’s Closer sent to Bespoke Institutional clients, we look at the VIX and small caps which closed at extreme oversold levels. We put into perspective what this means going forward. We then turn our attention to economic data with today’s release of pending home sales and the first revision of Q1 GDP. We highlight some of the labor and capex data in this release. With oil falling sharply today, we finish with a look at this week’s EIA data.
See today’s post-market Closer and everything else Bespoke publishes by starting a 14-day free trial to Bespoke Institutional today!
Bespoke’s Sector Snapshot — 5/30/19
We’ve just released our weekly Sector Snapshot report (see a sample here) for Bespoke Premium and Bespoke Institutional members. Please log-in here to view the report if you’re already a member. If you’re not yet a subscriber and would like to see the report, please start a two-week free trial to Bespoke Premium now.
In this week’s Sector Snapshot, we discuss extreme oversold price levels for the major indices along with a pullback in defensives that had previously been rallying. While price is oversold, the S&P 500’s 10-Day Advance/Decline line has not yet reached extreme territory on the downside.
To gain access to the report, please start a two-week free trial to our Bespoke Premium package now. Here’s a breakdown of the products you’ll receive.
