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Weekly Stock Market Recap – Sep 29th 2019

Readers – Please note this is our last weekly market recap!  For more info please see this post as well as information for subscribing to future recaps if there is general interest. 

To the greater readership, thanks for following along over the years and best wishes for success in the future!

A rather quiet week on the news front as the same daily rumblings and hopes about a U.S. – China trade deal that have gripped the market for over a year, continued yet again.   A flock of Federal Reserve members came out to opine about the economy – some content with where rates are, while others wanting more cuts.   The impeachment situation was more of a sideshow as a two thirds majority in the Senate to remove is never going to happen.

While this is probably a negotiating tactic on Friday it was reported the White House is considering limiting U.S. investment into China, including a possible delisting of Chinese companies from U.S. stock exchanges.

The “wrong” sectors continue to lead the market – this utility chart looks like something out of NASDAQ year 1999!  These are “safety” sectors where money goes to hide.

Global economic news continues to worry.   Germany’s manufacturing PMI gauge fell to 41.4 in September, its worst reading in a decade.  A figure below 50 indicates contraction.

The Commerce Department estimated that consumer spending rose 0.1% in August, versus expectations of a 0.3% rise. Incomes rose 0.4%, also below forecasts of 0.5%

For the week the S&P 500 fell 1.0% while the NASDAQ sunk 2.2%.

Here is the 5 day weekly intraday chart of the S&P 500 …via Jill Mislinski.

The week ahead..

Big week ahead for economic data with ISM Manufacturing (Tuesday) and Non Manufacturing (Thursday) to be reported – recall the dark number in the manufacturing data last month.   Employment data hits Friday; the U.S. is expected to have added 145,000 jobs, above the 130,000 last month, while the unemployment rate is expected to stay steady at 3.7%.

Index charts:

Short term: the S&P 500 was not able to get to new highs, in fact it is now closer to the breakout level over a double top that occurred in July.  A move through either level will be interesting indeed.  The NASDAQ never got to the same point the S&P 500 did.

The Russell 2000 remains in its very long term range (in yellow) – the trendline connecting recent highs remains a constraint.

The NYSE McClellan Oscillator has now turned negative – those with shorter term trading outlooks should look to be cautious.

Long term: decent conditions.

Charts of interest / Big Movers:

Tuesday, Netflix (NFLX) fell 4.3% on analysts’ concern about earnings, given the competition from Disney and other streaming video platforms.

Blackberry (BB) fell 22.6% Tuesday after posting weaker-than-expected numbers for its fiscal second quarter.

Shares of Nike (NKE) were up 4.16% Wednesday as the apparel and footwear maker on Tuesday reported first-quarter earnings and sales that topped Wall Street expectations, including a jump in China.

Hard to tell in the chart as the range is so massive in the 3 month period but Beyond Meat (BYND) surged Thursday after McDonald’s (MCD) said it would trial a plant-based burger made by the company at 28 restaurants in Canada.

Micron Technology (MU) ended 11.1% lower after the memory-chip maker reported another large earnings decline and predicted a disappointing holiday season.

Stay frosty my friends!

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Weekly Stock Market Recap – Sep 22nd 2019

An incredibly non volatile week as indexes did next to nothing until Wednesday afternoon when the Federal Reserve delivered the much expected quarter rate cut.    Markets rallied into the close Wednesday, flat lined yet again Thursday and then a small pullback Friday.

While there was some worry about oil supply early in the week after an attack on Saudi facilities, much of that was washed away by mid week.

As for the central bank:

The Fed announced it would cut the benchmark federal funds rate a quarter percentage point to a range of 1.75% to 2% Wednesday afternoon, but said in an accompanying statement that “sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2% objective are the most likely outcomes.”

Three members of the Federal Reserve’s interest-rate setting committee voted against Wednesday’s decision, with Kansas City Fed President Ester George and Boston Fed President Eric Rosengren voting against a rate cut, while St. Louis Fed President James Bullard preferred to cut rates by 50 basis points, rather than 25.

Friday, markets started higher after reports that Trump was exempting hundreds of Chinese products from tariffs.  But then some Chinese officials who were set to visit Montana of all places cancelled.  And markets fell on that.  Yes I am serious.

Economic news was not market moving.

The S&P 500 fell 0.5% for the week.

Here is the 5 day weekly intraday chart of the S&P 500 …via Jill Mislinski.

The week ahead..

Not to get all wonky but for those interested there has been some dislocation in the “overnight funding market” – and the Fed has had come to the rescue multiple days in the past week.  It’s something that could or could not be interested when we look back 6 months from now.    If you want to go down the rabbit hole, here is a nice little story on the situation.  Otherwise take the blue pill and nothing happened in the past week – it’s all good!

Other than that the normal normal – the bulls will cry out (demand!) the Fed cuts rate at the October meeting.  The bulls will say the China-US trade deal is happening any second now (as it has been for a year) and the bears will say nope not so much.   We are a week away from the interesting economic data, and the start of earnings season in October.

Index charts:

Short term: the S&P 500 is still battling old highs.  The NASDAQ is a bit weaker.

The Russell 2000 remains in its very long term range (in yellow) – the trendline connecting recent highs remains a constraint.

The NYSE McClellan Oscillator remains positive but is close to the 0 level.

Long term: decent conditions.

Charts of interest / Big Movers:

Tuesday, Corning (GLW) tumbled 6.1% after the glass and ceramics manufacturer reduced its outlook for the full-year 2019.

Fedex (FDX) tumbled 12.9% Wednesday after the transport company missed profit expectations and cut its outlook, citing “increasing trade tensions,” and global economic sluggishness.

Thursday, software company Ping Identity (PING) popped nearly one-third on Thursday after its initial public offering, giving the company a valuation of more than $1 billion.

McDermott (MDR) slid 24% amid heavy trading Thursday, amid fears that the provider of engineering and construction services to the energy industry may be considering a bankruptcy after reports that it hired a turnaround consultant. The company denied that rumor.  Then on Friday morning the company soared 68% before settling at a 23% gain, after the energy-services company said it was exploring a sale of its Lummus Technology business, which has been valued at $2.5 billion.

Netflix (NFLX)  fell 5.9% Friday, putting it on track for its third consecutive loss, after falling 2.4% and 1.7% Wednesday and Thursday, respectively. CEO Reed Hastings warned investors at a conference Friday that “While we’ve been competing with many people in the last decade, it’s a whole new world starting in November . . . It’ll be tough competition.”

Roku (ROKU) slid 19.2% Friday after a research analyst distributed a note asking if the streaming-device maker was “broken.” That follows a string of bad headlines for the company, and brings its two-week decline to over one-third of its September 6 record high.

Have a great week and we’ll see you back here Sunday!

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Second to Last Recap Tonight! Please Read!

Hello readers,

As Blain mentioned in late August we will be concluding StockTrader.com’s weekly recaps at the end of this month!  I have been part of the team here since 2012 (time flies!), and blogging on my own across a few sites since 2006 — back before blogging was really much of “a thing”.  The landscape of financial media has certainly changed dramatically since then.  It’s been quite the journey and I/we appreciate the readership over the years, and the messages sent over the past month since the announcement.   It’s also been a great company and team to be a part of!

As Blain outlined it is difficult to find a similar type of recap out there, as most of the investing world is focused solely on fundamental stories – vs technical focused.   So with that said, I would like to see if there is any interest from the readership to see the recaps continue in a different delivery method.  Obviously almost the entire internet is now based on page views and hence revenue through ads.  Having done the hard work of started multiple blogs from scratch, I myself do not want to go down that path again from square one.  But if there is an interest from a moderate amount of readers to continue recaps we could go very old school (pre blog era) and do a direct to email “newsletter” type model.  So the recaps would be sent directly to your email each week.  This would be for a modest monthly subscription of say $5 aka a fancy Starbucks coffee a month.   This is obviously in complete contradiction to the current business models out there, I do understand!

If interested, I’ve created a survey through google forms – it simply asks for a name (first name is fine) and email address.  So if you have an interest, please follow this link, fill out the form and if over the next week or so there is enough interest to make it worthwhile I’ll be in contact.  Thank you! – Mark

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Weekly Stock Market Recap – Sep 15th 2019

A decent week here as the S&P 500 stopped just short of record highs; almost all the action was on Wednesday.  Quantitative easing is back on again in Europe and easy money traders across the globe rejoice.

The European Central Bank delved deep into its tool box on Thursday, cutting its deposit interest rate further into negative territory, launching a new round of monthly bond purchases and taking other steps to stimulate a flagging eurozone economy.  The ECB said it would begin buying 20 billion euros a month worth of securities beginning Nov. 1.

“Today’s decisions have anchored and enshrined the Draghi legacy in future ECB decisions. ‘Whatever it takes’ has just been extended by ‘as long as it takes,’ said Carsten Brzeski, chief economist at ING Germany, referring to Draghi’s famous 2012 pronouncement at the height of the eurozone debt crisis that the ECB would do “whatever it takes” to preserve the euro.

Some vague nation of trade talks resuming between China and the U.S. in October appeased many as did some blinking on both sides.

China has reportedly offered to buy more American agricultural products in exchange for a delay in upcoming tariffs and the easing of a ban against doing business with Chinese telecommunications giant Huawei Technologies, according to the South China Morning Post.

Retail sales grew faster than expected in August, up 0.4%, and were up 4.1% year-on-year, the U.S. Commerce Department said on Friday. The rise was driven entirely by purchases of new cars and trucks though, as retail sales ex-autos were flat.

“This morning’s number was above expectations but more importantly it’s the sixth straight month of positive growth for retail sales which is a really encouraging,” wrote Mike Loewengart, vice president of investment strategy at E-Trade Financial in an email. “With holiday spending on the horizon and inflation at bay, we could continue to see momentum in the retail sector. A healthy consumer can help inject some energy into other sectors of the economy.”

“It’s been good news all around for the markets this week. You have thawing of trade tensions. You have more central bank easing, and you have Goldilocks economic data. Investors are thrilled…and that’s why you have markets just fractionally below all-time highs,” said Michael Arone, chief investment strategist at State Street Global Advisors.

Interesting spike in Treasury yields last this past week; this was the largest weekly move since 2013!

“The bond market may have been a bit overbought on the long-end last month, but this sudden shift into optimism on the prospect of a trade deal getting struck and the ability of the Fed to create a steeper curve — I don’t think that’s sustainable. It’s got to take much better data for long-end Treasury yields to break out of this range,” said Karissa McDonough, chief fixed income strategist at People’s United Advisors.

… also this is an interesting sector to see a rally in.  Part of that could be rotation as momentum stocks seem to be on the outs with traders right now.

For the week, the S&P 500 added 1% and the NASDAQ advanced 0.9%.

Here is the 5 day weekly intraday chart of the S&P 500 …not via Jill Mislinski.

The week ahead..

All that will matter to markets is the rate cut coming this week!

“The question is will the Fed signal a willingness to keep going with rate cuts, or will they suggest this mid-cycle adjustment is nearing its end. My view is they’re not going to back themselves into a corner, and they’re going to give themselves plenty of room to cut again at some point,” Arone said. “That’s going to be the biggest risk right now. The markets are pricing in a number of rate cuts in the next few quarters and will the Fed deliver on that…That will be a friction point.”

And again… and again… and again.  Would not be surprised to see the U.S. quantitative easing in 18 months if the market dares to drop 15% one of these days!

Index charts:

Short term: the S&P 500 rallied to right below it’s old highs.

The Russell 2000 had a huge Wednesday but was stopped at week highs by this resistance line created by connecting the highs of May and August.

The NYSE McClellan Oscillator was positive all week, so we seem to be in a good place in the near term!

Long term: decent conditions.

Charts of interest / Big Movers:

Monday, both Fannie Mae (FNMA) and Freddie Mac (FMCC) rallied by more than 43%, after U.S. Treasury Secretary Steven Mnuchin said on Fox Business that an agreement between the Treasury and the Federal Housing Finance Agency soon ends the Fannie and Freddie profit sweep. Mnuchin said the deal would allow the government-sponsored enterprises to begin retaining earnings.

Wendy’s (WEN) fell 10.2% Tuesday after announcing a $20 million plan to serve breakfast nationwide from 2020.  The fast-food chain said it will update its 2019 guidance to take the one-time investment into account though “all other elements of the company’s 2019 outlook remain unchanged.”  Wendy’s expects 2019 adjusted earnings per share to be down 3.5% to 6.5%.

SmileDirectClub (SDC) tumbled nearly 28% in its debut at as public company Thursday. The company, which sells clear teeth aligners, finished at $16.67 after pricing its initial public offering Wednesday afternoon at $23 apiece.

Have a great week and we’ll see you back here Sunday!

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Weekly Stock Market Recap – Sep 8th 2019

A short trading week led to a positive outcome as trade war fears ebbed and a weak employment report gave traders what they want with more Federal Reserve cuts assured.  A quite weak manufacturing reading Tuesday was a 1 day annoyance.  Technical conditions in the S&P 500 chart especially improved; the NASDAQ to a degree – the Russell 2000 still looks poor.

We watch the ISM numbers quite closely in these parts – and the manufacturing number went below 50 Tuesday.   The reading was 49.1 which is the lowest since early 2016, and 2.1 lower than the prior month.  Economists expected a reading of 51.  So of course the market didn’t fall apart in mid 2016 but we are in a different spot of the economic cycle with tariffs hampering manufacturers.  This is now a number people should be watching like a hawk each month in the coming 12-18 months.

The ISM data was “weaker than expected, with the market impact of the 2.1 point drop likely magnified by the level dropping below the 50 mark,” wrote Jim O’Sullivan chief U.S. economists with High Frequency Economics, in a note to clients. Though the reading isn’t enough to signal a coming recession, as manufacturing PMIs usually hit the low 40s during an economic contraction, “the report will undoubtedly add to fears that more weakness is ahead.”

“Grim. No sign of hitting bottom despite better regional surveys,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

ISM Services – a much larger part of the economy – also fell dramatically from 53.0 to 50.7 (!!) but the market ignored it – that was interesting.

While people clap like seals each time Trump says “things are going great” on the trade talks – Bloomberg reports the U.S. and China are finding difficulty in even scheduling any talks.  But no worries – the phone calls are going splendid.

Chinese and U.S. officials are struggling to agree on the schedule for a planned meeting this month to continue trade talks after Washington rejected Beijing’s request to delay tariffs that took effect over the weekend, according to people familiar with the discussions.  Despite efforts by President Donald Trump to soothe financial markets and portray the talks as making progress, the world’s two biggest economic powers have yet to agree on basic terms of re-engagement, with mistrust on both sides.

In conversations over the past week, the two sides have failed to agree on at least two requests — an American appeal to set some parameters for the next round of talks and a Chinese call to delay new tariffs, two of the people said.

That said markets were cheered on by more stimulus apparently coming this time in China.

Reports indicated the People’s Bank of China will soon implement cuts in the reserve requirement ratio for Chinese banks, in a move that analysts predict will boost growth and signals willingness by the government to take steps necessary to combat the effects of higher U.S. tariffs on Chinese imports.

The employment data for August showed a gain of 130,000 jobs.  Quite a few of those jobs were due to the hiring of census takers. The unemployment rate remained at 3.7%.   Employment gains for July and June, meanwhile, were revised down by a combined 20,000.

But what really matters:

“I think this report will be positive for investors in that its going to continue to strengthen the case that the Fed should cut rates at the next meeting” said Michael Arone, chief investment strategist for State Street Global Advisors.

While some overall prospects improved bulls have the “wrong” sectors leading – utilities and consumer staples should not be leaders in a bull move; those are cautionary sectors.

For the week, both the S&P 500 and NASDAQ gained 1.8%.

Here is the 5 day weekly intraday chart of the S&P 500 …via Jill Mislinski.

The week ahead..

The European Central Bank is expected to cut rates this week, and the Federal Reserve is expected to follow the week after that!  Not sure if much more matters to markets nowadays.

Index charts:

Short term: the S&P 500 and NASDAQ both jumped over key resistance Thursday – with the S&P 500 in a bit of a stronger position.

The Russell 2000 is back in the range it has been for mos of the year.  That said the chart looks poor.

The NYSE McClellan Oscillator was positive all week, so we seem to be in a good place in the near term!

Long term: a pullback here on the weekly chart but big picture bulls can only be happy. 

Charts of interest / Big Movers:

Tyson Foods (TSN)  fell 7.8% Wednesday after the processed foods manufacturer lowered its earnings-per-share guidance for the full-year 2019 after the markets closed Tuesday.  That said — heck of a move up the past few months!

Coupa Software (COUP)  announced second-quarter earnings results that beat analyst expectations Tuesday evening. The business software provider’s stock rose 8.7% Wednesday.

Michaels (MIK) rallied nearly 12% Wednesday after the arts-and-crafts retailer topped estimates for its fiscal second quarter and offered upbeat guidance.

Signet Jewelry (SIG) rallied 26.7% Thursday, after the jewelry retailer reported second-quarter earnings that beat expectations while raising its full-year outlook. The company’s stock had hit a 10-year low Wednesday.

DocuSign (DOCU) reported earnings after the close of trade Thursday, beating analysts revenue forecasts for the second-quarter providing bullish third-quarter guidance. Shares rose 22% early Friday.

Have a great week and we’ll see you back here Sunday!

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Weekly Stock Market Recap – Sep 1st 2019

A rebound this past week on relatively light pre holiday volume, as the U.S. both did its best to tamp down worries about the trade war.  How much of this is real vs “talk” is debatable but the market was in a mood to listen.

Monday:

Trump said negotiations would begin again in the wake of the U.S. receiving two “very good calls” from Beijing, even though the Chinese played down the significance of the calls.

That sounds great!!! Except for well this whole issue of there were no calls…

 China’s foreign ministry has said though that it is “not aware of” any phone call between China and the U.S.

But no worries it got the market up over 1%.

More real… on Thursday:

A spokesman for China’s commerce ministry was quoted in news reports as saying the country wouldn’t immediately respond to the latest round of tariff increases announced by President Donald Trump on Friday. Those increases came after Beijing announced a round of retaliatory tariffs.   The spokesman, Gao Feng, said “the question that should be discussed now is about removing the new tariffs to prevent escalation.” He also said both sides were discussing a planned meeting next month of trade negotiators.

The global economy continues to slow/shrink:

Data on Tuesday affirmed that Germany’s economy shrank in the second quarter as weaker exports dragged on growth.

Reportedly, Trump called the German economy (twice) and told it to grow…

We pointed out the emergence of the consumer staples (XLP) and utility (XLE) sector ETFs a few weeks ago.  They continue to lead the market – not what you want to see in a “risk on” market.

This 9700 level on the transports is also an interesting spot as that was the low in late May – and we’ve seen a bounce there a few times.  This looks a LOT like the Russell 2000 chart we post weekly.

This is not to say any imminent doom is happening – as we have posted markets can rally for 6-12-18 months post “danger signals” – heck there may be new highs in 2 weeks for all we know.  All it takes is a few more ummm… “stories” about phone calls to certain countries to get this market up 1%.  But every so often we see these shifts which require more caution, and with the bond market inversion thrown on top of it, you generally need to be thinking of something more serious than the typical pullback that happens every few years.   If it’s the bottom of the 8th inning after a 10+ year run, the risk/reward starts tilting away for those who are concerned about getting a lot more runs in the final inning or so.

In economic news, personal income in July rose 0.1% from June, below the 0.3% rise expected by economists. Personal spending rose 0.6%, in line with the consensus.

For the week, the S&P 500 gained 2.8% and the NASDAQ 2.7%.  For the month the S&P 500 fell 1.8% and the NASDAQ 2.6%.

Here is the 5 day weekly intraday chart of the S&P 500 …via Jill Mislinski.

The week ahead..

We have a 4 day week here with the Labor Day holiday in the U.S.  Wall Street should be getting back from Martha’s Vineyard in the coming 5-10 days so volumes should pick up.  We come back to ISM Manufacturing Tuesday (last month 51.2, anything below 50 = bad), and the employment data Friday (expectation +155K).

We are a few weeks away from the next Federal Reserve meeting so the drumbeat of “WE MUST GET RATE CUTS” should start to infiltrate all financial media.

This means absolutely nothing in the short term but it’s fun data:

Since World War II, the average move for the S&P for all months is a gain of 0.69%, but the average September move is negative 0.54%. The market has been down 55% of the time in September, making it the worst month of the year, but October, which is up 61% of the time, is a more volatile month with historically steeper losses.

Index charts:

Short term: the S&P 500 had broken out over a “double top” in July.  That level has now served as a resistance area for the fourth week in a row!  So bulls want to see the S&P 500 slash through it.

The Russell 2000 bounced again off the low of late May/early June.  When “the correction” comes the “experts” will point to the Russell 2000 underperformance as a canary in the coal mine.  It’s been like that for much of the past 18 months.

The NYSE McClellan Oscillator went back positive late in the week.

Long term: a pullback here on the weekly chart but big picture bulls can only be happy.  That said… keep a watch on this long term.

Charts of interest / Big Movers:

J.M. Smucker (SJM) fell 9.2% Tuesday, after the food-products manufacturer reported second-quarter results that fell short of expectations, while lowering its outlook for fiscal 2020.

Autodesk (ADSK) reported second-quarter earnings; the design software company’s stock fell 10.4% Wednesday after its outlook for third-quarter profits and sales fell short of analyst expectations.

Thursday, Best Buy (BBY) tumbled 8% after the retailer reported second-quarter revenue that fell short of analyst expectations, though it beat earnings-per-share forecasts.

Dollar General Corp (DG) added 10.7% Thursday after the discount retailer handily beat analyst estimates for sales and profits in the second quarter, while raising its outlook for the full-year 2019.  The long march to the solely Amazon, Walmart, Target, dollar store, and TJ Maxx/Marshalls retail environment continues afoot.

Speaking of… Ulta Beauty (ULTA) swooned 29.6%, after the cosmetics retailer reported disappointing second-quarter results Thursday evening.  Who is going to be buying this beauty product stuff in stores when your favorite Instagram influencer is making $78K a post to sell it to you direct!

Friday, Dell (DELL) rose 10.2%. After Thursday’s closing bell, it reported second-quarter results that topped Wall Street estimates.

Silver was making some moves this week!

Have a great week (stay safe those of you down in the Atlantic coast) and we’ll see you back here Sunday!

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Concluding the Weekly Stock Market Recaps

Since 2003, across three different domains, we have been providing free stock market recaps. It’s been an incredible journey.

Since 2012, Mark Hanna has been writing the reports, and like all of you, I’ve been a regular reader. Mark’s writing style is terrific. He has a unique ability for making the complexities of the stock market easily digestible by the layperson.

Unfortunately, a shift in the world of Google over the past year has forced me to rethink the strategy and ongoing costs of the site. As a result of this analysis, I will be concluding the Weekly Market Recaps, with September being the final month (Sunday, September 29th as the final recap). For obvious reasons, this was a tough decision to make.

I am so grateful for the opportunity to have worked with Mark for the past seven years. Today, the weekly recaps boast a subscriber count of over 26,000. I can’t thank you all enough for reading and visiting the site over the years.

I don’t have any set plans at the moment for what’s to come next. My schedule is so busy running Reink Media Group, which includes StockBrokers.com, ForexBrokers.com, and most recently investor.com. My goal is to try to write at least a few times per year, but we’ll see what time permits.

That said, the educational articles continue to be read by the thousands on a monthly basis, and the free stock trading journal is still humming along.

If you have any feedback or memories to share from the weekly stock market recaps, or want to send Mark a quick thanks, please feel free to send me an email.

While the void will never truly be filled, I can recommend two replacement market recaps to check out. The first would be Robinhood Snacks, they do great, easy to read daily market recaps. Alongside Robinhood Snacks, I would recommend Investor’s Business Daily.

In conclusion, the weekly Sunday recaps will continue as scheduled until the end of September: 9/1, 9/8, 9/15, 9/22, 9/29 (final market recap).

On behalf of all our writers over the past 16 years, thank you for reading.

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Weekly Stock Market Recap – Aug 25th 2019

Quite a bit more volatility this week, and it looked like the worm was finally turning for this selloff until President Trump logged into twitter Friday.   Most of the week was the normal give and take between hope (more global central bank stimulus coming) and worry (economic data).

The minutes of the Federal Reserve’s last meeting were released Wednesday:

The minutes of the Fed’s July meeting showed policy makers believed that “it was important to maintain optionality in setting policy.”  Most Fed members who supported the rate cut agreed with Fed Chairman Jerome Powell’s assessment that it was a “mid-cycle adjustment” and thus not the start of an aggressive monetary easing campaign.

“With hopes for Fed stimulus as the biggest driver of stocks’ buoyancy in the face of trade tensions and weakening global growth, today’s relatively dovish Fed minutes were about in line with investors’ high expectations,” said Alec Young, managing director of global markets research at FTSE Russell, in a note after minutes were released.

More quantitative easing is headed our way via Europe:

The European Central Bank hinted at a significant new stimulus package after the release of minutes from its July 25 meeting, which suggested that policy makers are contemplating a package that would includes cutting policy rates further into negative territory and new purchases of financial assets.

Fed head Powell gave a pretty dovish speech Friday morning out in Jackson Hole, Wyoming.

In the speech, Powell was seen leaving the door open for another interest rate cut at the central bank’s next meeting Sept. 17-18, saying, “We have seen further evidence of a global slowdown,” since the Fed’s last meeting in July.

Before the speech, the market was pricing a 95.8% chance of one rate cut and a 4.2% chance of no cut. After the speech, the probability of at least a 25 basis-point cut rose to 100%, with the market showing a 5% chance of a 50 basis-point cut.

Also Friday, China announcing new tariffs of 5% and 10% on $75 billion in U.S. imports, set to go into effect in two tranches, on Sept. 1 and Dec. 15, respectively. The Chinese government said that the move was in response to the Trump administration’s plans to institute 10% tariffs on $300 billion in Chinese imports, also in two stages and on the same dates, announced earlier in August.

Things looked fine in the market and then…

President Donald Trump tweeted that he had “hereby ordered” U.S. companies “to immediately start looking for an alternative to China.”

“We always see a selloff when we escalate tensions,” said Art Hogan, chief market strategist for National Securities. “I would argue that this recent escalation is a different flavor of retaliation when you ‘hereby order’ companies to stop doing business.”

”The latest Trump tweets, directing businesses to get out of China, though it’s not something he can actually do, won’t be received well by the Chinese,” Bart Oosterveld, director of global business and economics at the Atlantic Council, told MarketWatch. “It’s something that corporate boards and executives are going to be talking about. If I were an American company thinking of where to expand, I’d probably press the pause button.”

Economic news was not market moving.

For the week, the S&P 500 fell 1.4% and the NASDAQ 1.8%.

Here is the 5 day weekly intraday chart of the S&P 500 …not via Jill Mislinski.

Central bankers have gone wild the last decade — we are now in an era of negative rates.  A Danish bank if offering negative rate mortgages.  German government bonds have gone negative.  And we are just getting started on this global slowdown, should be entertaining how convoluted bond markets look in 2 years the world over.

“The bottom line here is that markets fear the U.S. is being sucked into the very low/negative rate vortex that is consuming European sovereign debt,” said Nicholas Colas, co-founder of DataTrek Research, on Thursday. “The signal that sends: Japan-style deflation and eurozone-like economic stagnancy. Not good.”

The week ahead..

Trade wars, the drumbeat for more easing, and tweets are on the plate again.

Index charts:

Short term: the S&P 500 had broken out over a “double top” in July.  That level is now serving as a key resistance area for the third week in a row as intraweek highs have been at that prior breakout level.

The Russell 2000 range is testing low of late May/early June.

The NYSE McClellan Oscillator had turned positive but then Friday… Trump.

Long term: a pullback here on the weekly chart but big picture bulls can only be happy.  That said… keep a watch on this long term.

Charts of interest / Big Movers:

Estee Lauder (EL) rose 12.5% Monday, after releasing fiscal fourth-quarter earnings.

Target (TGT) shares set a record Wednesday following the discount retailer’s report of fiscal second-quarter earnings and sales that beat expectations. Target’s stock soared 20.4% after its earnings provided analysts with further evidence that a combination of store and online sales is valuable.

Target said digital channels sales grew 34% in the second quarter. In addition to ordering online and having items delivered to a customer’s home, Target also offers options like Order Pickup that leverage the stores to get items to shoppers same-day.

Lowe’s (LOW) likewise jumped over 10% on the back of its earnings report.

Nordstrom (JWN) issued second-quarter financial results Wednesday after the close, beating Wall Street expectations for sales and earnings, though it slightly lowered its outlook for the full year.   The stock jumped 15.9%.

Friday, Foot Locker (FL) tumbled 18.9%, after the retailer reported second-quarter sales and profits that missed Wall Street expectations.

Have a great week and we’ll see you back here Sunday!

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Weekly Stock Market Recap – Aug 18th 2019

All our recaps here at StockTrader.com are of course critical to all our lives.  But this week's is extremely critical.  Please read on... This was yet another volatile week for the market - four of the five sessions saw the major indexes move >1%.  Monday and Tuesday saw somewhat offseting moves in opposite directions (Tuesday's move was due to Trump backing off tariffs to China until the Christmas season is over), while markets swooned Wednesday to the tune of about 3% down.   A rally Friday saw the markets claw back about half those losses. Until volatility dies down, it is not really too "safe to get back into the water" for those with shorter term horizons. About that tariff delay:

Products that will not be subject tariffs from September include “cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing,” according to the statement.   The delays mean that goods worth $152 billion, or more than half of the original $300 billion list, will now not be hit with tariffs until mid-December. “The three-month delay to the imposition of tariffs on more than half of the $300bn of Chinese imports, originally scheduled to take effect next month, is obviously designed to avoid a politically-damaging rise in consumer prices ahead of the holiday season,” said Andrew Hunter, senior U.S. economist, at Capital Economics. Fun fact:  Goldman Sachs said it now expects a 0.6% drag on the U.S. economy due to trade-war developments, up from its earlier estimate of 0.2%.

Yield curve inversion strikes!  Earlier it was 10 year rate below the 3 month yield which is quite bearish. That caused hand wringing for a bit before "THE FED WILL SAVE US ALL" thinking returned to the market.  This time it was the 10 year yield falling below the 2 year yield.   THIS ONE IS BIG.   "Borrowed time" axiom now is in effect.   NONE of us know what this means for markets because there are so many animal spirits and central bank interventions, but it's a bad sign for the future economy.  That said the market usually still rises for quite a while before the you know what hits the wall.  But as a participant in the economy it needs to be a part of your financial plan to prepare for a slowdown in the coming 1-2 years.  The Russell 2000 (domestic company heavy) has been showcasing this for a while, as has the housing market which began turning down a year ago as we have outlined.  Global international companies have thus far bucked the trend but the average person is not a global S&P 500 company.

An inverted yield curve often serves as a prelude to a recession because it indicates when monetary policy and financial conditions are too tight for the broader economy. A yield curve inversion along the 2-year/10-year spread has come before the last seven recessions.

Interesting data points: Even as the 2-year/10-year spread inverts, equities do still have room to run higher.

“After an initial post-inversion dip, the S&P 500 index can rally meaningfully prior to a bigger US recession related drawdown,” BAML strategists said.  When they crunched the numbers, they found that the S&P 500 tended to mount a last-gasp rally, peaking on average 7.3 months after an inversion along the 2-year/10-year spread. (That would be February 2020 ON AVERAGE) “Research from Credit Suisse says a recession occurs 22 months after an inversion in the two-year/10-year rate curve, on average,”  (That would be June 2021 ON AVERAGE) says Arielle O'Shea, investing and retirement specialist at NerdWallet in Charlottesville, Virginia.   The S&P 500 is up, on average, 12% one year after a 2-10 inversion.  But when a recession did eventually hit, the S&P 500 on average lost around 32% of its value.

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Weekly Stock Market Recap – Aug 11th 2019

While the indexes posted modest losses for the weeks, it was a quite volatile week, especially in relation to most of 2019.  Indexes plummeted Monday on trade fears to their worst single day performance of 2019, captured back about half those losses Tuesday, then sunk again at Wednesday's open before bulls posted a furious comeback during the day to get the market back to near even.  Thursday saw a surge, while Friday morning saw another significant selloff, followed by some buying in the afternoon to reduce losses.  That felt a lot like a typical day in 2008. Monday, China allowed its currency to fall to a more than 10 year low versus the dollar.  Tuesday, China’s central bank moved to restrain the fall in its currency with a fix Tuesday at 6.9683 yuan. A breach of the 7-to-the dollar level on Monday, interpreted by some as an intentional weakening of its currency, helped to ignite a global stock market selloff and slump in bond yields.  By Friday it was back up to 7.01. Trump continued to tweet about the Fed being too tight:

"Our problem is a Federal Reserve that is too… proud to admit their mistake of acting too fast and tightening too much (and that I was right!)."  The president said, the central bank “must cut rates bigger and faster, and stop their ridiculous quantitative tightening NOW"

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Weekly Stock Market Recap – Aug 4th 2019

We mentioned a few weeks in last week's recap that came to bear this week:

(A) it is interesting how the U.S. - China trade dispute has completely disappeared from the market's conscious (B) Sometimes markets buy the rumor, sell the news but since MORE rate cuts are coming because the market demands them we will see what happens.

So in the former situation, Trump dropped a bit of a bombshell on the market Thursday.  In the latter situation, Powell was a bit less dovish than the market wanted.  He seemed to indicate this is more of a 1 off move then the beginning of a series of moves.  THAT SAID, if the market sells off and DEMANDS a series of cuts, the Federal Reserve time and again has shown it will bow to pressure.  Because it's all about keeping asset values inflated.  In fact, the market began doing that not 24 hrs after Powell's testimony....  breaking! markets demand September rate cut!

Expectations for at least a quarter point cut for the September 18 Fed meeting based on trading in fed fund futures market have climbed to 98% on Friday, from 51% on Wednesday. Before Powell’s news conference, the odds stood at 67%.

Monday and Tuesday were mild down days; most of the damage was done Wednesday through Friday when Powell didn't jump high enough for the market's liking, and Trump came out with a new set of tariffs on China. On the Fed:

At his press conference, Fed chair Jerome Powell added that “the Fed has moved to a somewhat more accommodative stance” as part of a “mid-cycle adjustment” as “trade tensions seem to be having a significant effect on the economy” and the “global manufacturing slowdown is a bigger factor than expected last year”.   But Powell’s comment that Wednesday’s rate cut was part of a mid-cycle adjustment and not necessarily the start of a monetary easing cycle disappointed investors who had priced in further rate cuts later this year. “I think the biggest surprise here is what is not being said: There is nothing in the statement about growth cooling here at home, and there is not a whole lot to suggest another rate cut is coming down the pike,” said Mike Loewengart, vice president of investment strategy at E*Trade.

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Weekly Stock Market Recap – Jul 28th 2019

After a week of rest, bulls were back at it this past week….with our relentless push up.  Other than a modest pullback Thursday it was 4 days up! The Federal Reserve will cut rates this week and champagne bottles will be uncorked while others will eat some meatless meat.  Speaking of!

As much as I liked that stock about a month ago it is now trading at NASDAQ 1999 type levels.  It will be interesting to see how it reacts to earnings this week.  But I digress!

Earnings season was in full throttle mode – it is interesting how the U.S. – China trade dispute has completely disappeared from the market’s conscious, as it’s all about EASING.   Speaking of…

The European Central Bank laid the groundwork for further cuts to interest rates, announcing Thursday morning that it intends to leave official rates at “present or lower levels,” at least through the first half of 2020.

Earnings growth is pretty muted but no worries – more cheap money to throw at stocks means multiple expansion!

“P/E expansion is responsible for almost all the price appreciation this year, and stocks are starting to look a little pricey. Not yet to scary levels, but something to watch,” wrote Ed Keon, chief investment strategist at QMA.

“Price-to-earnings ratios have gone from 13 to 17.4, and earnings estimates are still too high for next year,” says Bob Doll, chief equity strategist and senior portfolio manager at Nuveen.

No market moving economic data this week.

For the week, the S&P 500 gained 1.65% and is up 20.7% for the year!

Here is the 5 day weekly intraday chart of the S&P 500 … via Jill Mislinski.

Just amazing data on “theFacebook” via Statista:

By the end of 2004, Thefacebook had more than 1 million registered users and the newly-founded company behind it had not only moved to Silicon Valley but also secured a $500,000 investment from PayPal co-founder Peter Thiel. After changing its name to just “Facebook” in 2005, the social network was opened to the general public in the fall of 2006, marking the start of one of the most remarkable growth stories in corporate history.

Within three years, the social network added 350 million users and in the summer of 2012 it became the first online service of its kind to reach 1 billion monthly active users. Until today, despite being shrouded in controversy over its (mis)handling of user privacy, Facebook just keeps on growing. In the past quarter alone, Facebook added 39 million monthly active users, bringing its total user base to an astonishing 2.41 billion.

The week ahead..

The rate cut is coming! The rate cut is coming!  Sometimes markets buy the rumor, sell the news but since MORE rate cuts are coming because the market demands them we will see what happens.

Thursday will be ISM Manufacturing and Friday will come the July jobs report.  Apple reports Tuesday.

Index charts:

Short term: back to rallying.

The Russell 2000 which reflects smaller companies vs the international focus of the larger two indexes remains stalled.

The NYSE McClellan Oscillator was choppy this past week even as the markets keep rallying.

Long term: can’t complain.

Charts of interest / Big Movers:

Oldie but goodie Coco Cola (KO) hit an all time high Tuesday after reporting better-than-expected earnings and raising its revenue forecast.

Caterpillar (CAT)  fell 4.5%, Wednesday after the manufacturer of construction and mining equipment reported quarterly profit that fell below analyst expectations, continuing a trend of subdued performance in industrial stocks during the second-quarter earnings season.   But that’s the old economy!  On to the new which centers around cat pictures:

Facebook (FB) produced better-than-expected results.  Related, the FTC formally announced a $5 billion settlement for deceiving users about its privacy practices. Facebook is also settling with the SEC for $100 mln over a probe into handling of user data.   These dollars are rounding errors to a company this size – back to business as usual.

Railroad CSX (CSX) struggled last week (old economy) but UPS (UPS) ended sharply higher Wednesday after the company reported better-than-expected earnings and profit for the second quarter.  Thanks Amazon! (new economy)

Snapchat (SNAP) – NEW ECONOMY! – rallied Wednesday after the social media giant reported better-than-expected earnings Tuesday evening.

Thursday, Tesla (TSLA) fell 13.6% after the Silicon Valley car maker late Wednesday reported second-quarter results that missed Wall Street expectations. Tesla said it lost $408 million, or $2.31 a share, compared with a loss of $718 million, or $4.22 a share, in the year-ago quarter. Sales rose to $6.3 billion, compared with $4 billion a year ago.  (new economy but not involved enough in the critical mission of cat photo sharing)

Massive day for the “new economy” Friday:

Google (GOOG) soared 10% after reporting second-quarter results that topped Wall Street profit and revenue expectations and announcing a $25 billion share buyback program.

Twitter (TWTR) jumped 9% after the company posted better-than-expected user and revenue growth.

Starbucks (SBUX) ended up 9% after it bested forecasts for profit and sales late Thursday and raised its guidance for the year.

Amazon was a bit of a downer but remains on a path to eliminate 80% of store front retail in the next 2 decades.

Have a great week and we’ll see you back here Sunday!

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Weekly Stock Market Recap – Jul 21st 2019

After weeks of unrelenting rallies on Federal Reserve easing anticipation the market had some consolidation this week as earning season kicked off.   A bevy of mega financial companies reported this week and they mostly beat low expectations.

“…the broad theme we’re seeing is slowing loan growth, somewhat muted trading revenues and shrinking margins,” said Stephen Biggar, director of financial institution research at Argus Research in an interview. “Lower manufacturing activity, lower housing activity and business-investment slowing are all manifesting themselves” in bank performance, he said.

Tuesday, president Trump said an agreement with China on trade tariffs had “a long way to go,” in a briefing with reporters.

Interesting to note:

China’s gross domestic product in the second quarter slowed to 6.2%, marking its slowest pace since 1992 — though mostly matching expectations — from a reading of 6.4% in the first quarter.

The only major economic report of the week was retail sales which jumped 0.4%, ahead of expectations of 0.1%.  Internet retailers led the way again with a 1.7% increase in sales.  Sales fell a sharp 1.1% at department stores, which been losing out to internet rivals for years.

For the week, the S&P 500 fell 1.1%

One company we have not talked about enough this year but has quietly had a massive run is Microsoft (MSFT).  While most of us think of it as a seller of Excel and Word, it apparently has transformed itself into a massive “cloud” company and this week passed the trillion dollar valuation mark.  It also owns LinkedIn. The chart this year is quite amazing!

Here is the 5 day weekly intraday chart of the S&P 500 … via Jill Mislinski.

The week ahead..

The market has demanded a quarter rate hike and the Federal Reserve will deliver in a week and a half.  Now it’s all about the language go forward as the market wants more than one.  The European Central Bank is on tap this week so let’s see if they come out with something new and exciting to please the easy money addicts.

Aside from that it’s going to be a heavy earnings tsunami the next few weeks with 144 S&P 500 companies reporting this week alone.  While everyone will be watching the “new economy” i.e. Facebook, companies like Caterpillar will be interesting coming off the back of the CSX miss as these are global industrial stocks and often are canaries in the coal mine.

Index charts:

Short term: some rest after a near vertical move since early June.

The Russell 2000 which reflects smaller companies vs the international focus of the larger two indexes remains stalled.

The NYSE McClellan Oscillator turned red late in the week so let’s keep an eye there – if that continues it calls for some caution.

Long term: can’t complain.

Charts of interest / Big Movers:

Symantec (SYMC) sunk 10.7% Monday after CNBC reported that it has ceased negotiations to be acquired by Broadcom (BRCM).

Domino’s Pizza (DPZ) fell 8.7% Tuesday, after the fast-food retailer reported second-quarter revenue and same-store sales growth that fell short of analyst estimates.

Also Tuesday, Blue Apron (APRN) surged 35.6% after the meal-kit company announced seasonal recipes that will include plant-based proteins from Beyond Meat!  Much of that was given back in the next few days though.

Railroad company CSX (CSX) posted weaker-than-forecast quarterly results, after the close Tuesday, sending its stock down more than 10.3% Wednesday.

Thursday, Netflix (NFLX) fell as the streaming video giant said it lost 126,000 subscribers in the U.S. in the second quarter, the first such loss since 2011. Shares declined 10.3% representing its worst daily percentage loss since July of 2016.

Have a great week and we’ll see you back here Sunday!

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Weekly Stock Market Recap – Jul 14th 2019

Fed Chairman delivered dovish commentary in front of Congress – and the market went up.  If you want to simplify the week that was what it was all about.  At some point something other than the Federal Reserve is going to ease will matter but it hasn’t for a few weeks now, and until then – that is really all the market cares about.  Keep in mind other central banks are joining the party and investors have been trained to get out of the way of betting against the central bankers.

Stocks broadly rallied Wednesday after the publication of Powell’s remarks before the House Financial Services Committed in which the Fed Chairman emphasized rising risks to the U.S. economy from trade policy and slowing global growth, as well as falling price inflation.  Powell noted that while the U.S. jobs market remains robust and consumer spending appears set to rebound, business investment has slowed considerably, along with housing investment and manufacturing output.

“Our baseline outlook is for economic growth to remain solid, labor markets to stay strong, and inflation to move back up over time to the Committee’s 2 percent objective,” Powell said in prepared remarks. “However, uncertainties about the outlook have increased in recent months. In particular, economic momentum appears to have slowed in some major foreign economies, and that weakness could affect the U.S. economy.”

The Fed, for its part, is prepared to “act as appropriate to sustain the expansion,” Powell reiterated, using a phrase that economists say points strongly to a rate cut at the bank’s next meeting at the end of July.

“A rate cut in July is now all but certain,” Aberdeen Standard Investments senior global economist, James McCann, wrote.

Economic news was sparse.

This via Bespoke:

The third year of US Presidential election cycles (that is, the calendar year before the election year) tends to be the best time of the four-year presidential cycle to own US equities. Since 1928, years before Presidential elections have delivered a price return of more than 12% on average, versus an average return of 5.7% for all other years. As shown below, the current year is definitely the sweet spot for equities, though election years also tend to show above average returns.

There is a cautionary note here, though. As shown in the chart below, the average performance in year three of the election cycle mostly comes in the first half, with stocks flat for most of Q3 and Q4 before a solid rally into year-end. As shown in the chart below, there tend to be two pullbacks in the first half of the year. We’ve already seen one this year, coinciding with the May selloff. The second pattern of selling tends to come around the part of the calendar we’re currently in, before sideways movement until a Santa Claus rally. While the pattern of the presidential election cycle suggests further gains from now into year-end, the second half of third years is typically not as strong as the first half.

For the week, the S&P 500 gained 0.8%.

Here is the 5 day weekly intraday chart of the S&P 500 … via Jill Mislinski.

The week ahead..

It’s all about the Fed until it isn’t!  Some are also calling for a 50 basis point rate cut rather than just 25.  This as market’s are at record highs and unemployment near record lows.

On Tuesday, U.S. retail sales figures for June will be released.  Second quarter earnings season also begins.

Index charts:

Short term: the NASDAQ joined the S&P 500 at new highs upon Powell’s musings.

The Russell 2000 which reflects smaller companies vs the international focus of the larger two indexes remains stalled.

The NYSE McClellan Oscillator is back where bulls want it.

Long term: can’t complain.

Charts of interest / Big Movers:

Cisco Systems agreed to buy Acacia Communications (ACIA) for about $2.6 billion, the technology giant’s latest acquisition as it seeks technologies to meet customer demand for more robust networks.  The company will pay $70 a share, a 46% premium to Acacia’s closing price on Monday.  Acacia’s stock surged 35% to $64.91 Tuesday.

Overstock.com (OSTK) was also in the news Tuesday – keep in mind this is now a “cryptocurrency” play.  The e-commerce retail specialist’s cryptocurrency unit, tZERO, said that it will work to develop a token in connection with a major motion picture release. Atari: Fistful of Quarters will use what tZERO is calling the Bushnell token. Token owners will receive shares of movie earnings and also play a role in the development of the film by voting on the movie trailer and choosing the cast of the film.

Friday, Illumina (ILMN)  updated its second-quarter guidance Thursday after the close, saying it expects revenue to be $50 million lower than previously thought and below analyst forecasts. Shares in the genetics company slumped 16.12%.

Also Friday, Milacron Holdings (MCRN) surged 23.8%, after the plastics manufacturer announced that Hillenbrand would acquire the firm in a $2 billion cash and stock deal, which valued Milacron at a 33.5% premium to Thursday’s closing price.

Have a great week and we’ll see you back here Sunday!

Original article: Weekly Stock Market Recap – Jul 14th 2019.

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Weekly Stock Market Recap – Jul 7th 2019

A big gap up Monday due to the Chinese – U.S. “trade truce” began the week, and then some disappointment of “good news” on the employment report Friday were the bookends of the week.  Remember we are in the “bad news is good news” stage of the market, so positive news is seen as a negative in terms of the Federal Reserve cutting rates.

Monday’s rally:

Stocks initially jolted higher Monday after Saturday’s meeting between China’s President Xi Jinping and President Donald Trump at the G-20 meeting in Japan, mainly because Trump said the U.S. would maintain current tariffs but hold off on new ones. Trump also said he would ease up on a ban on Huawei, allowing U.S. companies to sell their products to the Chinese tech giant, though the company will remain on a trade blacklist.

This was also great news for bulls:

Current International Monetary Fund Managing Director Christine Lagarde was nominated to replace Mario Draghi as the head of the European Central Bank. Lagarde’s past rhetoric suggests that she may be more inclined to advocate for easier monetary policy, which could continue to fuel risk-taking here and abroad.

A busy week on the economic front.  First ISM Manufacturing which fell from 52.1 in May to 51.7 in June.  That reading is getting precariously close to the 50 line which delineates growth from retraction.  (But the stock market liked that news as it means Fed easing!).  Also Monday, construction spending fell by 0.8% in May, the largest decline since November and below economists’ expectations of 0.3% growth.   Wednesday, ISM Services fell from 56.9 to 55.1 but still well above the 50 line – factory orders fell 0.7%.

Friday Wall Street was treated to the employment number.  Futures plunged initially on the good news but by end of days bulls had gotten most of those losses reversed.

The U.S. economy created 224,000 new jobs in June, above economists expectations of 170,000 jobs, while the unemployment rate ticked up slightly to 3.7% from 3.6%.

“I don’t see the Fed changing what they’ll do based on one jobs report,” said JJ Kinahan, chief market strategist at TD Ameritrade.  “The market says the probabilities of a rate cut are 100%. The Fed has been backed into a corner because expectations are so high.”

For the week, the S&P 500 gained 1.7%.

Here is the 5 day weekly intraday chart of the S&P 500 … not via Jill Mislinski.

The week ahead..

The Fed has been backed in a corner!  Powell is going to testify in front of Congress Wed / Thu as well.

Fun fact:  The Federal Reserve Bank of New York currently forecasts a 29.6% chance of a U.S. recession in the next twelve months. The bank’s model, based upon the spread between 10-year and three-month Treasury yields, has reliably predicted recessions once it has hit the 30% threshold, said Lisa Shalett, chief investment officer of Morgan Stanley Wealth Management.

Index charts:

Short term: the S&P 500 finally broke through old highs.  Now we are waiting for the NASDAQ.

The Russell 2000 has been stuck in this range for a long time – other than a few months in latter 2018 and early 2019 it has been the laggard of the major indexes.

The NYSE McClellan Oscillator is back where bulls want it.

Long term: can’t complain.

Charts of interest / Big Movers:

Monday, Boeing (BA) dropped 7.5%. The company has been struggling with the grounding of its 737 Max jets, but also more broadly is vulnerable to tariff negotiations.

Coty (COTY) fell 13.5% Monday, after the beauty-products company announced a turnaround plan that will add $160 million in extra costs and involve a $3 billion impairment of its intangible assets.

Tuesday, Amarin (AMRN) gained 16%, after the pharmaceutical company raised its full-year outlook, while announcing plans to double its U.S. sales force to better market its Vascepa treatment for cardiovascular disease.

Symantec (SYMC) surged 14.6% Wednesday after a report of a potential buyout by chip maker Broadcom (BRCM).

Have a great week and we’ll see you back here Sunday!

Original article: Weekly Stock Market Recap – Jul 7th 2019.

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Weekly Stock Market Recap – Jun 30th 2019

It was a relatively quiet week of consolidation as Fed head Powell janked the market’s chain with “wait and see” – as we know by now what the market wants, the market gets.  It wants a rate cut – and come July it will be delivered or a massive selloff will ensue …..which will just mean the Fed will run in and cut rates anyhow.  That said it was entertaining to watch the word smithing this week.

Fake news:

(Tuesday) Federal Reserve Chairman Jerome Powell, speaking at the Council on Foreign Relations in New York, said the Fed still in ‘wait-and-see’ mode on potential rate cuts.

Reality:

(Tuesday) Wall Street currently has the odds of a rate cut in July at 100%, according to the CME Group’s FedWatch tool.

Economic news this week was not market moving but mostly poor…. which Wall Street wants.  Bad news = Fed rate cuts = woo hoo.

The housing slowdown we’ve been pointing to for nearly a year has been evident in the data for a few months now.  That continued this week:

U.S. home sales fell 7.8% in May versus April, even as median home prices have dipped compared with a year ago, new Commerce Department data showed.

As of this writing U.S. futures are up significantly ahead of Monday’s open as China and the U.S. agreed to not impose more tariffs on each other.

No market moving economic news.

For the month of June, the S&P 500 gained 6.9% (best June since 1955) and the NASDAQ 7.4%.  Through 6 months the former is up 17.4% and the latter 21%!

Here is the 5 day weekly intraday chart of the S&P 500 … via Jill Mislinski.

The week ahead…

While we are being a bit tongue in cheek that the only thing that matters to markets is a flood of central bank money, that factor has dominated markets for a very long time.  At one point in the future – near or distant – the market may implode despite a fire hose from central banks.  But until we see it happen it’s been a loser’s bet to go against what central banks want.

Things are not cheap as it is – but if central banks are intent to inflate bubbles, it will happen….

The S&P 500 price-to-earnings — a popular way of valuing stocks — on a trailing 12-month basis is at 21.83, compared with a 10-year average of 17.87, according to Dow Jones Market Data.

Markets will be closed Thursday for Independence Day.  Employment data hits Friday – remember markets want BAD news!  170K jobs is the current expectation after the horrid data the prior month.  ISM Data hits Monday and Wednesday.  The worse the better.

Index charts:

Short term: S&P 500 is still at old highs.  Prior Federal Reserve heads must be completely dismayed by Powell – when they waved their magic wands, markets ran to new highs immediately.  Cmon Jerome!

The Russell 2000 has been stuck in this range for a long time – other than a few months in latter 2018 and early 2019 it has been the laggard of the major indexes.

The NYSE McClellan Oscillator is back where bulls want it.

Long term: can’t complain.

Charts of interest / Big Movers:

Monday, Caesars Entertainment (CZR)  jumped 14.5% after the casino operator agreed to be bought out by Eldorado Resorts Inc. in a deal that values the casino operator at $8.6 billion.

Tuesday, Allergan (AGN) soared almost 25% after AbbVie Inc aid it agreed to buy the pharmaceutical company in a deal valued at $63 billion.

Wednesday, Micron Technology (MU) soared  as much as 14% after the company reported stronger-than-expected earnings.

Despite disappointing quarterly earnings results, shares of Rite Aid (RAD) surged 24% Thursday on news of a deal with Amazon that gave investors hope for a turnaround. Rite Aid’s stock had slid more than 8% in premarket trading before rebounding after the markets opened. The company announced a partnership with Amazon on Thursday, saying it would open Amazon pickup counters in 1,500 of Rite Aid’s stores by the end of the year.

Have a great week and we’ll see you back here Sunday!

Original article: Weekly Stock Market Recap – Jun 30th 2019.

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Weekly Stock Market Recap – Jun 23rd 2019

As mentioned in last week’s recap this entire week was all about the word “patience” and having it disappear.  Fed head Powell did the market’s bidding – rejoicing happened.  All systems go for the Fed to put gasoline back into the market!  New records for the S&P 500 Thursday!

“The FOMC will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion,” the Fed said in a statement, dropping its recent buzzword about being “patient.”

“The case for somewhat more accommodative policy has strengthened,” Powell said at a news conference to discuss the rate-setting Federal Open Market Committee’s highly anticipated decision

“My initial thoughts are that the Fed did what the market thought they would do today, and offered to give them what they really want in the near future. That could be as early as July, and that could be as much as 50 basis points,” said Kevin Giddis, head of fixed-income capital markets at Raymond James.

And here comes Europe to the party!

ECB President Mario Draghi at an annual central bank conference in Sintra, Portugal Tuesday said policy makers would consider “in the coming weeks” how to adapt its policy tools “commensurate to the severity of the risk” to the economic outlook, a signal that the central bank may be willing to lower rates.

All this coming easy money about to flood the globe has gold in a tizzy!

And the ETF for gold:

Per Bespoke Thursday:

Earlier this week we published a Chart of the Day suggesting that gold (in the form of the GLD ETF) was looking strong but needed to get above the $130/share level to experience a breakout and potentially leg nicely higher.  We’re seeing that break above $130 today as the yellow metal makes a new 5+ year high.  Below are updated charts showing the move.  You can really see in the longer-term chart (second below) how $130 has acted as stiff resistance over the last few years.  A solid clearing above this level in the coming days opens up a move towards $150 in our view.

No market moving economic news.

For the week, the S&P 500 gained 2.2% and the NASDAQ 3.0%.

Here is the 5 day weekly intraday chart of the S&P 500 … via Jill Mislinski.

The week ahead…

We have been in a “bad news is good news” environment in the market for weeks – that will only intensify.  The worse the news the next 5 weeks the louder the drumbeat will be for the much wanted Fed rate cut at the end of July.  In fact some are already calling for 50 basis points rather than 25.  And if the past decade has shown us anything, once one central bank gives easy money out – they will all follow suit.

Index charts:

Short term: Powell defeated the bearish double top in the S&P 500 this week – although his predecessors probably could have done it quicker!  The NASDAQ is next on his target list!

The Russell 2000 has been stuck in this range for a long time – other than a few months in latter 2018 and early 2019 it has been the laggard of the major indexes.

The NYSE McClellan Oscillator is back where bulls want it.

Long term: can’t complain.

Charts of interest / Big Movers:

Facebook (FB) has entered the cryptocurrency foray with the launch of Libra!

Monday, Array BioPharma (ARRY) soared 57% after the biopharmaceutical company focused on developing cancer treatments agreed to be acquired by Pfizer in a deal valued at $11.4 billion.

Also Monday, Sotheby’s (BID) announced a deal to be acquired by BidFair U.S.A., which is owned by telecom and media entrepreneur and art collector Patrick Drahi, in a deal valued at $3.7 billion. Shares of the company skyrocketed 59%.

Thursday Slack Technologies (WORK) surged 49% to $38.62 a share on the enterprise software company’s debut on the New York Stock Exchange, significantly above its reference price of $26. Slack opted for a direct listing of its shares instead of an initial public offering.

Oracle (ORCL) rallied 8.2% after the software company reported better-than-expected earnings and an upbeat outlook.

If you like to trade reversals, there was a big one Wednesday in pot stock Tilray (TLRY).

Have a great week and we’ll see you back here Sunday!

Original article: Weekly Stock Market Recap – Jun 23rd 2019.

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