Call it deja vu, but Cisco (CSCO) is seeing a repeat of its August earnings report.  Back in the summer, CSCO beat on the top and bottom line but lowered guidance leading the stock to fall 8.61% the following day. Fast-forwarding to today, CSCO reported after yesterday’s close with the same results.  The company once again lowered guidance while beating EPS by 3 cents and revenues by $69.4 million. Although the stock’s performance in response has not been quite as bad as last time around, CSCO fell over 7% on Thursday. That is the worst single-day performance for the stock since its last earnings report. Two quarters in a row now, CSCO has fallen substantially on earnings. That is quite the difference from the previous four quarters when the stock rose each time.

Last Monday, we highlighted Cisco (CSCO) in a Dividend Stock Spotlight noting that although it has an attractive dividend, the technical picture was mixed with the stock at a bit of a crossroads at the bottom of a longer-term uptrend thanks to a rough-looking shorter term. The past few months’ declines have come following the aforementioned earnings report in August and a weak quarter from competitor Arista Networks (ANET) further dampening the outlook for CSCO. These catalysts since the summer in conjunction with today’s declines have brought the stock under support between $45-46 and also broken the longer-term uptrend that had been in place over the past few years.  Since it’s high on July 15th, CSCO has declines more than 22% and shed $42.8 billion in market cap.  To put that into perspective, that decline is within $1 bn of the current market caps of Advanced Micro Devices (AMD), Humana (HUM), Progressive (PGR), and Marriott Hotels (MAR). Start a two-week free trial to Bespoke Institutional to gain full access to our research and interactive tools.

In the S&P 500’s run to new highs over the last few weeks, overall volatility has really become subdued.  For example, the S&P 500 hasn’t had an intraday swing of even 1% in more than a month now.  The chart below shows streaks over the last ten years where the S&P 500 didn’t see a 1% spread between its intraday high and low and allows us to compare how the current streak stacks up to prior periods.

While the current 24 trading day streak without a 1% intraday move is far from the longest over the last ten years, there haven’t been a lot of streaks that were longer.  Ironically enough, the three streaks that were the longest of the last ten years all occurred in the two years after the 2016 election.  For all the turmoil that seems to surround this Administration, market turmoil hasn’t been one of them. Sign up for Bespoke’s “2020” special and get our upcoming Bespoke Report 2020 Market Outlook and Investor Toolkit.

Despite a couple closes at all-time highs in the past week, the S&P 500 is currently right around the same levels as last Wednesday’s close.  With little in the way of price changes, sentiment has likewise seen little change.  Per AAII’s weekly survey, bullish sentiment rose just 0.42 percentage points to 40.72% from 40.30% last week. That small increase is in the bottom 5% of all week-over-week changes in bullish sentiment in the history of the data.

While little changed, the bulk of investors are still optimistic. Another sentiment survey from Investors Intelligence also echoed these results.  In that survey released yesterday, 57.6% reported as bullish. While that is the highest reading since July, it is up only around half of one percent from last week.

Bearish sentiment was also little changed. The percentage of investors reporting as pessimistic rose 0.89 percentage points to 24.82%.  Like bullish sentiment, the one week change in bearish sentiment was small relative to history with this week’s change sitting in the 7th percentile of all readings.  This week also marked the fourth in a row that bearish sentiment has been below its historical average. That is the longest such streak since a seven-week run from the end of March to early May of this year.

Neutral sentiment moved the most this week falling 1.31 percentage points.  Now at 34.46%, neutral sentiment is the lowest since early September and back in the middle of the past few years’ range.  Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.

As we have mentioned over the past couple of weeks (see here and here), initial jobless claims have not done much over the past year as the indicator has been rangebound with an increasingly tighter range.  That dynamic shifted a bit this week as claims came in worse than expected, rising to 225K from 211K last week versus forecasts of 215K.

While the record streaks at or below 300K and 250K are still in place by a healthy margin (those streaks now reaching 245 and 110 consecutive weeks long, respectively), this week marked a considerable break out from the upper end of the past several months’ range.  This week was also the sixth highest reading for claims of 2019 and the highest since June 21st when claims were 4K higher.  The 14K increase from last week was also the joint thirteenth largest one week increase of the past five years and the largest since April when claims rose by 37K right around the Easter holiday (the second-largest such increase of the past five years).

Given the new high in the seasonally adjusted data, the four-week moving average ticked higher to 217K from the previous reading of 215.25K.  At 217K, the moving average is now the highest since July 12th when it was 218.75K.  Despite this move higher, unlike the seasonally adjusted number, this increase did not break the moving average out of its recent range.

On a non-seasonally adjusted basis, claims rose by 31.1K to 236.7K. That is a slightly smaller change than the average change (+36K) for the current week of the year (45th) over the past ten years.  Given these seasonal factors, it was also the largest one week increase to the non-seasonally adjusted data of 2019 and marked a 0.7K increase from the same week last year.

As we have mentioned in the past, 2019 has seen a big increase in the number of weeks with a year-over-year increase in the non-seasonally adjusted data.  So far this year there have been a total of 19 weeks were claims have risen YoY.  Given there are only 7 weeks left in 2019, it won’t be possible to reach similar levels to the financial crisis, but 2019 has seen the highest frequency these weeks for all years of the current cycle.  One interesting point to note though is that weeks with these types of changes in claims have also been subdued in the years following the last recession.  As shown in the chart below, of the past 20 years, the years prior to 2009 would typically see a high number of weeks with an increase versus the prior year, but that has simply not been the case from 2010 on. That is, until this year. Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.