B.I.G. Tips – Charts We’re Watching
Bespoke’s Morning Lineup – 6/17/21 – Post-Fed Hangover Continues
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 free trial to Bespoke Premium. CLICK HERE to learn more and start your free trial.
“Face reality as it is, not as it was or as you wish it to be.” – Jack Welch
The headache from the post-Fed hangover remains in effect this morning as US equity futures trade lower. It’s a relatively busy morning for economic data with Philly Fed and Jobless Claims at 8:30 and Leading Indicators at 10 AM. With the FOMC apparently taking a bit of a more hawkish turn, look for good economic data to start having a negative impact on equity prices.
Read today’s Morning Lineup for a recap of all the major market news and events, the latest economic news from around the world overnight, and the latest US and international COVID trends including our vaccination trackers, and much more.
It’s been a strong week for the US dollar. After hanging around and holding support, the Bloomberg US Dollar Index has attempted to turn the corner in the last few days. Yesterday, it traded and closed above its 50-day moving average (DMA) for the first time since April, and now today, it’s making an attempt to trade and close above its 200-DMA for the first time in nearly a year.
Price history for the Bloomberg Dollar Index only goes back as far as 2005, but during that time, there have only been three streaks where the index closed below its 200-DMA for a longer period of time, and only one of them was significantly longer than the current one. Whether this is just a short-term bounce for the dollar or the beginning of a longer-term trend remains to be seen, but if the dollar’s bounce does get legs from here, its impact will be felt across a broad range of asset classes.
Daily Sector Snapshot — 6/16/21
High Octane Crude
Besides the fact that crude oil is back above $70, what’s even more impressive is how it has gotten there. In the process of breaking out above its February highs a couple of weeks back, the intraday high in WTI has been higher than the prior day’s intraday high for 14 straight trading days.
That type of persistent intraday bid in crude oil has been unprecedented. Going back to 1983, the current streak ranks as the longest on record surpassing the prior record of 12 trading days that was reached in both 2003 and then again in 2011. In the near 40 years since 1983, there have only been six other periods where WTI even saw a streak of ten trading days where its intraday high was higher than the day before. Click here to view Bespoke’s premium membership options.
Best and Worst Russell 1000 Stocks So Far in June
Right at the midpoint of June, Biogen (BIIB) has been the top-performing Russell 1,000 stock month to date. BIIB has rallied 48.08% thanks to a huge move higher earlier in the month when the company received the first approval from the FDA for their Alzheimer’s treatment. With only a couple of weeks since that massive move higher, the stock has pulled back from its highs but remains extremely extended above its 50-DMA. Looking across the other top 20 best-performing stocks in the index, BIIB is far from being the only Health Care stock. In fact, most of the best performers so far in June come from the Health Care, Tech, or Energy sectors. Additionally, many of these other stocks have also soared well above their 50-day moving averages, although there are a couple of exceptions.
One of those is the second-best performer in the index: Iovance (IOVA). IOVA is another Health Care stock that has experienced huge swings on news surrounding regulatory concerns. In May, the FDA requested additional potency data from the company which was followed by an announcement that the CEO would be stepping down. That sent the stock collapsing almost 40% on May 19th. After a bit of sideways movement through the second half of May and into June, IOVA has nearly recovered those losses, but that still leaves the stock well below its 50-DMA and nearly cut in half YTD. Fastly (FLSY) and Rocket Cos (RKT), and NRG Energy (NRG) are the only other best performers that are also either below or within single-digit percentage points of their 50-DMAs even after the huge gains this month.
Looking at the other end of the performance spectrum, the 20 worst-performing stocks in the index, there are 11 that have fallen double digits in June. The worst of these is Upstart (UPST) which has fallen 17%. This month’s decline has brought UPST right back down to its 50-DMA whereas most of the other worst-performing stocks have fallen much further below their 50-DMAs. Granted, UPST is also the top-performing Russell 1,000 stock year to date having rallied over 200%, and it is up even more, 441.51%, since its first day of trading in mid-December. Most of the other worst performers are also still up on the year, but not nearly to the same extent. Click here to view Bespoke’s premium membership options.
Chart of the Day – Housing Slows
Bespoke’s Morning Lineup – 6/16/21 – The Most ‘important’ Fed Meeting Ever
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 free trial to Bespoke Premium. CLICK HERE to learn more and start your free trial.
“You simply flooded the system with money?” – Scott Pelley
Happy Fed Day! There’s been a lot of talk this week that today’s FOMC decision is the most important of Jay Powell’s career. We’re never one to diminish the importance of a Fed meeting, but most important ever? Even in this era where comments seem to mean nothing unless they make for a splashy headline the term ‘most important’ may be an overstatement. Have we already forgotten the days 15 months ago when the entire financial system was seizing? Say what you want about what some of the consequences may have been to the FOMC’s actions, but we’d bet that the economy would be in worse shape now had it not been for the steps that the FOMC took when they took them at last year’s very important meetings. Today’s rate decision may be the most important rate decision of the spring or even this year, but it’s probably not the most important of Powell’s career.
In economic data this morning, Housing Starts and Building Permits both missed expectations for the second straight month, while Import Prices rose more than expected. In reaction, futures have actually seen a modest bounce as the 10-year yield saw a slight decline in yield.
Read today’s Morning Lineup for a recap of all the major market news and events, the latest economic news from around the world overnight, economic data out of China, and the latest US and international COVID trends including our vaccination trackers, and much more.
Commodities have been on fire recently, but some areas of the space have been showing some short-term cracks. As shown in a one-year chart of copper, it has been in a steady uptrend for the last year and has repeatedly found support at its 50-day moving average. While it didn’t get a lot of attention yesterday, though, copper fell more than 4% for its second-worst day of the last 12 months and broke below its 50-DMA in the process.
Not only was Tuesday the second weakest day for copper in the last 12 months, but after closing 2.76% below its 50-day moving average, it was also the second most oversold reading for copper on this metric in the last 12 months. From a longer-term perspective, closing 2.8% below the 50-day moving average is hardly an extreme amount by any measure, but coming ahead of an FOMC meeting where the predominant view is that inflation is out of control, copper’s weakness, along with declines in some other commodities in recent weeks, warrants at least a mention.
Daily Sector Snapshot — 6/15/21
Timber!
Lumber prices have continuously been in focus over the past several months as the commodity has gone on a historic run, but over the past month, front-month lumber futures have collapsed over 40% with an 11.7% decline in the past week alone. Today the commodity is seeing a bit of a bounce after coming within 10% of its 200-DMA at the intraday lows and the bottom of the volatile uptrend of the past year.
As lumber prices have been on the decline, mortgage rates have also generally been on the decline, but that has done little to bolster homebuilder sentiment. While it is still at historically elevated levels, the NAHB’s reading on homebuilder sentiment has also been falling, dropping another 2 points in June to 81. That is still well above any pre-pandemic record, but that drop in addition to the past few months of declines have brought it to the lowest level since last August.
The indices for present and future sales and traffic all experienced identical-sized declines in June. While not to say it is a weak reading, the index for future sales is only in the 91st percentile of readings which is less elevated within its respective historical range than present sales or traffic.
Looking across each of the four regions highlighted in the report, it is more of the same story. Sentiment remains at historically strong levels although off of records set several months ago. The region that has held up the best has been the South. While also lower month over month, the index tracking this region only fell 1 point in June and remains in the 97th percentile. The Midwest saw an equal-sized decline, but that is in the context of a more consistent string of declines since late last year.
As for homebuilder stocks, as proxied by the iShares Home Construction ETF (ITB), there has also been a downtrend over the past month with the ETF dropping around 13.5% from its intraday high on May 10th. At the moment, ITB is in a bit of no man’s land between its 50 and 200-DMAs and also has further downside until it tests the past year’s uptrend line. Click here to view Bespoke’s premium membership options.
