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Stocks Slip as Investors Weigh Earnings, GDP Data, Geopolitical Drama
28-Feb-19 16:25 ET
Dow -69.16 at 25916.00, Nasdaq -21.98 at 7532.56, S&P -7.89 at 2784.45
https://www.briefing.com/investor/markets/stock-market-update/2019/2/28/stocks-slip-as-investors-weigh-earnings-gdp-data-geopolitical-drama.htm
[BRIEFING.COM] The S&P 500 lost 0.3% on Thursday in another tight-ranged session, which included the underperformance of cyclical sectors and the outperformance of defensive-oriented sectors. Investors also weighed better-than-expected GDP data, the latest batch of earnings reports, and some geopolitical drama.
The Dow Jones Industrial Average lost 0.3%, the Nasdaq Composite lost 0.3%, and the Russell 2000 lost 0.4%. The major averages traded with modest losses for most of the session, but all of them finished higher for the month.
The S&P 500 materials (-1.3%), energy (-1.0%), and consumer discretionary (-0.6%) sectors underperformed the broader market. Conversely, the utilities (+0.4%), consumer staples (+0.3%), and real estate (+0.3%) sectors outperformed.
The U.S. economy slowed less than expected in the fourth quarter of 2018 despite the stock market volatility. Data out of China, meanwhile, showed its manufacturing sector remained in contraction in February.
The advance estimate of Q4 GDP showed an annualized increase of 2.6% (Briefing.com consensus 2.3%). That number, however, was below the growth registered in the second and third quarters of last year, and with China still showing signs of weakness, investors remained cautious.
Separately, media attention was placed on President Trump abruptly ending a two-day summit with North Korean leader Kim Jong-un. President Trump hoped to curb Pyongyang’s nuclear-weapons program, but communication broke down when North Korea wanted the U.S. to lift all sanctions in exchange for closing some, but not all, of its nuclear sites. North Korea later refuted this account.
A mixed, but mostly underwhelming batch of earnings reports kept many buyers sidelined.
Booking Holdings (BKNG 1697.04, -208.90, -11.0%), HP Inc. (HPQ 19.73, -4.12, -17.3%), Box (BOX 20.24, -4.64, -18.7%), and Crocs (CROX 25.68, -2.84, -10.0%) dropped considerably following their reports. Anheuser-Busch InBev (BUD 78.16, +3.44, +4.6%) and Monster Beverage (MNST 63.83, +5.09, +8.7%), however, pleased investors with their results.
U.S. Treasuries finished lower following the release of the better-than-expected advance Q4 GDP reading. The 2-yr yield increased one basis point to 2.50%, and the 10-yr yield increased two basis points to 2.71%. The U.S. Dollar Index increased 0.1% to 96.22. WTI crude rose 0.5% to $57.22/bbl.
Reviewing Thursday's economic data, which included the advance fourth quarter GDP estimate, the weekly Initial and Continuing Claims report, and the Chicago PMI for February:
The Advance Q4 GDP estimate showed economic output increased at an annualized rate of 2.6% (Briefing.com consensus 2.3%). The GDP Deflator increased 1.8% (Briefing.com consensus 1.7%). With the fourth quarter numbers, it is estimated that real GDP increased 2.9% in 2018 versus 2.2% in 2017. From the fourth quarter of 2017 to the fourth quarter of 2018, though, real GDP increased 3.1%.
The key takeaway from the report is that it supported the notion that the U.S. economy held up relatively well in the fourth quarter despite the stock market volatility. In turn, it will help rebut any notions that the economy is on the cusp of a recession.
Initial claims for the week ending February 23 increased by 8,000 to a still-low 225,000 (Briefing.com consensus 221,000). Continuing claims for the week ending February 16 increased by 79,000 to 1.805 million.
The key takeaway from this report is that the low level of initial claims, which have held below 300,000 for 208 consecutive weeks, continues to support the view that the labor market remains tight and that employers are reluctant to let go of employees.
The MNI Chicago Business Barometer, also known as the Chicago PMI, increased to 64.7 in February (Briefing.com consensus 57.5) from 56.7 in January. The dividing line between expansion and contraction is 50.0.
The key takeaway from the report is that the New Orders Index rebounded swiftly from a two-year low to its highest level since November.
Looking ahead, investors will receive several more economic reports on Friday: Personal Income for December and January, Personal Spending for January, the ISM Manufacturing Index for February, and the final reading for the University of Michigan Index of Consumer Sentiment for February.
Russell 2000 +16.8% YTD
Nasdaq Composite +13.5% YTD
Dow Jones Industrial Average +11.1% YTD
S&P 500 +11.1% YTD
Wall Street Mixed as Investors Weigh Testimonies, Geopolitics, and Earnings
27-Feb-19 16:25 ET
Dow -72.82 at 25985.16, Nasdaq +5.21 at 7554.54, S&P -1.52 at 2792.34
https://www.briefing.com/investor/markets/stock-market-update/2019/2/27/wall-street-mixed-as-investors-weigh-testimonies-geopolitics-and-earnings-.htm
[BRIEFING.COM] The S&P 500 lost 0.1% on Wednesday as investors weighed a handful of headlines on the political, monetary, and geopolitical fronts, as well as the latest batch of earnings reports. The benchmark index was down as much as 0.7% in early trading action but climbed back to its flat line in the afternoon, where it faced some continued resistance near the 2800 level.
The Dow Jones Industrial Average lost 0.3%. The Nasdaq Composite (+0.1%) and the Russell 2000 (+0.2%), however, finished higher.
The S&P 500 health care (-0.5%), real estate (-0.4%), and communication services (-0.4%) sectors underperformed the broader market. Conversely, the energy (+0.4%), financials (+0.4%), and industrial (+0.4%) sectors outperformed.
Particular attention this morning was placed on congressional testimony from Fed Chair Jerome Powell, U.S. Trade Representative Robert Lighthizer, and President Trump's former personal lawyer, Michael Cohen.
Fed Chair Powell in his semi-annual monetary policy acknowledged the Fed is close to agreeing on a plan to end the balance sheet runoff. USTR Lighthizer said that it is too early to predict the outcome of the U.S.-China trade negotiations. The views expressed by Mr. Cohen before the House Committee on Oversight and Reform ultimately had little, if any, impact on the market.
There were also some geopolitical events to consider. President Trump began a two-day meeting with North Korean leader Kim Jong Un in Vietnam, hoping to take steps toward denuclearizing North Korea. Separately, Pakistan shot down two Indian fighter jets over their contested border, escalating tensions between the two countries.
There was a lot of news for the market to digest Wednesday, including a Medicare-for-All proposal put forth by a Democratic congresswoman that weighed on the health care space. In the end, neither buyers nor sellers showed much conviction in a market where it was easy to over-analyze things.
The outperformance from retail stocks supported an intraday rebound. Better-than-expected results from Lowe's (LOW 107.62, +2.59, +2.5%), TJX (TJX 51.56, +1.84, +3.7%), and Best Buy (BBY 68.82, +8.51, +14.1%) sparked a retail rally, evidenced by the SPDR S&P Retail ETF (XRT 46.08, +0.46) gaining 1.0%.
On the other hand, disappointing earnings and/or guidance from several companies, including Weight Watchers (WTW 19.37, -10.20, -35.5%) and Mylan N.V. (MYL 26.01, -4.61, -15.1%), helped keep a lid on the broader market.
U.S. Treasuries were also under pressure, driving yields higher in a curve-steepening trade. The 2-yr yield increased three basis points to 2.51%, and the 10-yr yield increased six basis points to 2.69%. The U.S. Dollar Index increased 0.2% to 96.15. WTI crude rose 2.4% to $56.94/bbl following some bullish inventory data.
Reviewing Wednesday's economic data, which included Pending Home Sales for January, Factory Orders for December, the Advance Reports for International Trade in Goods, Retail Inventories, and Wholesale Inventories for December, and the weekly MBA Mortgage Applications Index:
Pending Home Sales increased 4.6% in January (Briefing.com consensus -0.4%). Today's reading follows a revised reading of -2.3% in December (from -2.2%).
Factory orders increased 0.1% in December (Briefing.com consensus +1.0%) following an upwardly revised 0.5% decline (from -0.6%) in November.
The key takeaway from the report was the understanding that business investment was weak, evidenced by the 1.0% decline in nondefense capital goods orders, excluding aircraft, that followed a 1.1% decline in November. That will compute as a negative input for Q4 GDP forecasts.
Advance report for International Trade in Goods for December showed a deficit of $79.5 billion, the Advance report for Wholesale Inventories for December showed an increase of 1.1%, and the Advance report for Retail Inventories for December showed an increase of 0.9%.
The weekly MBA Mortgage Applications Index increased 5.3% following a 3.6% increase in the prior week.
Looking ahead, investors will receive the Advance report for fourth quarter GDP, the weekly Initial and Continuing Claims report, and the Chicago PMI for February on Thursday.
Russell 2000 +17.2% YTD
Nasdaq Composite +13.9% YTD
Dow Jones Industrial Average +11.4% YTD
S&P 500 +11.4% YTD
Stocks Eke Out Gains as Trump Extends Trade Deadline
25-Feb-19 16:10 ET
Dow +60.14 at 26091.95, Nasdaq +26.92 at 7554.49, S&P +3.44 at 2796.07
https://www.briefing.com/investor/markets/stock-market-update/2019/2/25/stocks-eke-out-gains-as-trump-extends-trade-deadline.htm
[BRIEFING.COM] The S&P 500 advanced as much as 0.8% on Monday after President Trump said he will delay the March 1 trade deadline as negotiations with China have progressed favorably. The benchmark index, however, steadily retreated throughout the session, ultimately finishing higher by 0.1%.
The Dow Jones Industrial Average (+0.2%), the Nasdaq Composite (+0.4%), and the Russell 2000 (-0.1%) also finished near their session lows.
President Trump followed up with a tweet during late trading action that U.S.-China talks are in advanced stages, but he did not provide a new deadline or any further details. Still, growing expectations for a trade deal underpinned the leadership from the S&P 500 cyclical sectors.
The S&P 500 materials (+0.7%), information technology (+0.5%), financials (+0.4%), and industrial (+0.4%) sectors outperformed the broader market.
Shares of semiconductor companies, many of which have revenue exposure to China, also outperformed and helped lift the heavily-weighted tech sector. The Philadelphia Semiconductor Index increased 0.8%.
General Electric (GE 10.82, +0.65, +6.4%) gave the industrial sector a boost after it agreed to sell its biopharma business to Danaher (DHR 123.15, +9.67, +8.5%) for $21.4 billion, which includes $21 billion in cash. General Electric had surged 15.5% in the opening minutes of trading but, like the broader market, finished near its session low.
Conversely, the real estate (-0.8%), utilities (-0.6%), consumer staples (-0.5%), and consumer discretionary (-0.3%) sectors finished the session with losses. The underperformance from the consumer discretionary sector was a drag on the broader market considering it was up as much as 0.7% in the opening minutes of trading.
U.S. Treasuries closed on a lower note, pushing yields higher across the curve. The 2-yr yield increased three basis points to 2.51%, and the 10-yr yield increased two basis points to 2.67%. The U.S. Dollar Index declined 0.1% to 96.42. WTI crude lost 3.1% to $55.45/bbl.
Separately, Wholesale Inventories for December increased 1.1% (Briefing.com consensus +0.4%). The November reading was revised up to 0.4% from 0.3%.
Looking ahead, investors will receive Housing Starts and Building Permits for December, the Conference Board's Consumer Confidence Index for February, the S&P Case-Shiller Home Price Index for December, and the FHFA Housing Price Index for December on Tuesday.
Russell 2000 +17.8% YTD
Nasdaq Composite +13.9% YTD
Dow Jones Industrial Average +11.9% YTD
S&P 500 +11.5% YTD
InvestmentHouse - Trade Deal 'More Likely Than Not' (Weekend Newsletter)
https://news.investmenthouse.com/2019/02/the-daily-part-1-of-3-2-23-19.html
- Stocks start stronger, fade after no trade deal, recover after President, China say trade deal likely.
- Indices moving up to test the top of the range, SP400 is through the range, others trying to follow.
- Plenty of different groups vying for investment dollars, using some decent patterns as lures.
- Chips start higher again, software setting up again.
- Indices are certainly at resistance, but this far showing no signs of rolling over. As more solid stock patterns appear, they only reinforce an attempt to break through resistance.
No trade deal announced, but the President and top Chinese negotiator in DC concurred there would likely be one. The President stated a deal was 'more likely than not,' while the top Chinese negotiator opined an agreement would occur. Trump further said he and Xi would meet a Mar-A-Lago in March, again stating that only they could hammer out the final details of a deal.
Stock futures were higher and stocks opened higher, rallying into midday. After that, a slump into mid-afternoon took the indices back to the early session lows; still positive but well off the highs.
Then the announcements regarding trade. The word leaked that no deal was firmed up and that helped the selling. The President held a press conference and as the news percolated out, the comments from Trump and the Chinese lead negotiator hit. That news helped turn a midmorning to midafternoon slump into a rally back upside in the last 1.5 hours. The indices closed at or near session highs with the indices putting more moves on the October/December resistance.
SP500 17.79, 0.64%
NASDAQ 67.83, 0.91%
DJ30 191.18, 0.70%
SP400 0.80%
RUTX 0.92%
SOX 1.08%
NASDAQ 100 0.79%
VOLUME: NYSE -7%, NASDAQ +14%. NYSE trade languished below average again while NASDAQ trade moved above average for the first time in three weeks as some key stocks started higher again.
ADVANCE/DECLINE: NYSE 2.7:1, NASDAQ 2.5:1. Small and midcaps helping push higher.
SP400 moved on through as the midcaps continue leading. The others are moving up through the that range as well. After slowing the move Tuesday to Thursday, the indices bounced nicely to end the week.
The 'old guard' was moving, i.e. many of the initial leaders in the entire recovery: software, tech, drugs, chips as well. Then there are others stepping up, e.g. some Chinese stocks such as BABA, JD, TME.
Some of the recent movers took a pause as the older leaders bounced -- energy was off on the session and machinery and manufacturing still look good, but still looking for a new solid upside break.
With the resurgence of the initial leaders -- sans FAANG for the most part -- there are plenty of stocks to support a move higher. Friday that is what they were doing. Very pleased to let the move upside continue, let some positions continue working higher, pick up a few more good movers, and bank a bit more gain.
That does not mean we are now convinced the indices will break through the range and move on to new highs. After all, SP500 is still below 2800 and DJ30 is still dancing at 26,000, the first rungs of the October/December range. Some serious resistance from the top of this range, and even then the old highs after that.
The run from the December low is now 9 weeks old and in some cases has topped the December high and even the November high where the selloff started. A long time with no significant test, moving into key resistance. At some point the indices are going to test this move either with an ordinary pullback to test resistance broken, a deeper test to perhaps the trading range lows, and in the extreme, back toward the December low.
Of course that means the upside probabilities are less and less, but the indices and stocks are not showing any signs of running out of steam at this point. Indeed, more stocks are joining in and the initial leaders, after a rest, are coming back around. Sure does not look and act as a rollover.
Thus, looks as if there is more upside for now, and we will continue to play that until breakouts and breaks upside start reversing in numbers.
THE CHARTS
SP400: You have to lead with the SP400 midcaps again as late week they broke higher through the 200 day SMA as well as the top of the October/December range. With that move they are making good on the inverted head and shoulders pattern from early November to early February. Not a massive new move upside, but as has been the case for four weeks now, a solid, steady move. Domestic implications are the economy is not as frail and fraught with potential recession as many fear.
RUTX: Cleared the 200 day SMA Friday as well as the November peak. Now just the October recovery peak remains in its range. RUTX has already recovered 100% of the December and November selloffs but is a long way from the 2018 peak. As with midcaps, the success and relative strength from small caps of late shows confidence in the US economy.
DJ30: Over the 26K level on the week, but hardly impressively so. The Dow rallied well two Fridays back then slid laterally this week just below resistance from the Oct/Dec range. Thus far not trying to break through the top of the range, but if stocks such as CAT, MMM continue higher and AAPL breaks higher once more, the Dow will have some potential to break through. As of yet, a low volume bumping at the top of the range.
SP500: Over the 200 day SMA on the week but still below the peaks of the trading range. 2800 was tested but remained unbroken. As noted last week, everyone and his brother is watching the 2800 - 2830 level as resistance.
NASDAQ: NASDAQ moved through the 200 day SMA as well with a more definitive Friday move, showing a solid price gain and a shot of very solid above average volume. Cleared the December peak on the move but is still below November and October at the top of the range. It is working and some big name techs that are not FAANG are working, e.g. MSFT, INTC, ORCL, CSCO.
SOX: Steady week, continuing to trend higher over the 10 day EMA. Several groups of chips started back upside Friday. Not a bad move at all.
LEADERSHIP
Software: Setting up well as noted previously. TEAM, NOW, NEWR, WDAY are all leaders that tested, held gains, and look strong once more.
FAANG: Still a laggard group. FB, GOOG, AMZN, AAPL all in lateral moves. NFLX is not bad at all.
Energy: Back and forth on the week but finished the week still holding good patterns. DVN, TELL, PTEN, CVX, COP -- many have promising patterns.
Machinery: CAT in a nice test of the move over the 200 day SMA. CMI worked mostly laterally on the week but still trended up the 10 day EMA. DE recovered very well off a 50 day MA drop on earnings.
Manufacturing: MMM, UTX still setting up quite nicely.
Home-related: HD is in a great flat flag test. LOW has enjoyed a super 2 weeks. DHI moved to a higher recovery high Friday. TOL working. TREX faded on the week but still a solid pattern.
Financials: V broke nicely higher Friday. Regional banks decent, e.g. STT, TCBI. C was upgraded but that didn't do anything for it or any of the other bank stocks for that matter.
Chips: Came back to life on the week. RMBS, SIMO, SMTC, INTC. Still like how NVDA is setting up.
Metals: Industrial metals still look decent, e.g. CLF, MUX. Steel making some good moves, e.g. SID.
MARKET STATS
DJ30
Stats: +181.18 points (+0.70%) to close at 26031.81
Nasdaq
Stats: +67.84 points (+0.91%) to close at 7527.54
Volume: 2.42B (+14.15%)
Up Volume: 1.67B (+829.88M)
Down Volume: 718.14M (-531.86M)
A/D and Hi/Lo: Advancers led 2.45 to 1
Previous Session: Decliners led 1.39 to 1
New Highs: 126 (+51)
New Lows: 20 (+3)
S&P
Stats: +17.79 points (+0.64%) to close at 2792.67
NYSE Volume: 796.076M (-6.56%)
Up Volume: 516.496M (+246.563M)
Down Volume: 252.163M (-320.713M)
A/D and Hi/Lo: Advancers led 2.66 to 1
Previous Session: Decliners led 1.57 to 1
New Highs: 162 (+72)
New Lows: 9 (+1)
SENTIMENT
VIX: 13.51; -0.95
VXN: 16.95; -1.24
VXO: 13.87; -0.99
Put/Call Ratio (CBOE): 0.79; -0.14
Bulls and Bears:
Getting a bit bullish with a move over 50 while bears dropped right back below 21 after the short break higher. Fear continues to subside.
Bulls up again, but bears moved up a bit as some discomfort with the long recovery rally.
Bulls: 51.9 versus 49.5
Bears: 20.7 versus 21.5
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
Bulls: 51.9 versus 49.5
49.5 versus 48.6 versus 45.8 versus 45.4 versus 34.8 versus 29.9 versus 39.3 versus 45.4 versus 46.7 versus 38.3 versus 39.6 versus 42.9 versus 42.5 versus 50.5 versus 51.9 versus 56.3 versus 61.8 versus 60.6 versus 59.0 versus 57.7 versus 60.1 versus 59.6 versus 57.7 versus 57.3 versus 54.9 versus 54.5 versus 54.9 versus 55.3 versus 52.4 versus 47.1 versus 47.6 versus 52.0 versus 55.5 versus 52.9 versus 50.0 versus 49.1 versus 46.6 versus 43.1 versus 43.6 versus 48.0 versus 43.6 versus 42.2 versus 49.5 versus 55.5 versus 54.9 versus 48.6 versus 48.1 versus 48.5 versus 41.9 versus 54.4 versus 66.00
Bears: 20.7 versus 21.5
21.5 versus 20.6 versus 20.6 versus 21.3 versus 29.4 versus 34.6 versus 21.4 versus 20.4 versus 21.50 versus 20.6 versus 19.8 versus 19.0 versus 19.8 versus 19.8 versus 19.0 versus 18.3 versus 18.5 versus 18.6 versus 18.3 versus 18.1 versus 18.3 versus 18.1 versus 18.3 versus 18.3 versus 18.6 versus 18.8 versus 18.6 versus 18.5 versus 18.5 versus 18.6 versus 18.4 versus 17.6 versus 17.8 versus 17.7 versus 19.2 versus 19.2 versus 19.4 versus 19.4 versus 20.6 versus 20.8 versus 19.6 versus 19.8 versus 18.6 versus 17.5 versus 16.8 versus 15.7 versus 15.5 versus 14.4 versus 14.6 versus 14.4 versus 15.5 versus 12.6 versus 12.8 versus 12.7 versus 13.5 versus 15.2 versus 15.1 versus 15.2 versus 15.1 versus 15.1 versus 15.4 versus 15.4 versus 14.4 versus 14.4 versus 15.1 versus 15.2 versus 15.1 versus 17.0 versus 17.1 versus 19.0 versus 20.2
OTHER MARKETS
Bonds: 2.654% versus 2.695%. TLT is working up and down in a four week range from 120.50 to 122.50.
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018.
2.695% versus 2.641% versus 2.641% versus 2.664% versus 2.654% versus 2.706% versus 2.686% versus 2.672% versus 2.634% versus 2.657% versus 2.695% versus 2.702% versus 2.725% versus 2.684% versus 2.64% versus 2.679% versus 2.710.5 versus
EUR/USD: 1.13332 versus 1.13363. Euro rebounded to the 20 day EMA on the week, stalled there for now.
Historical: 1.13363 versus 1.14490 versus 1.13544 versus 1.12922 versus 1.12955 versus 1.12616 versus 1.3323 versus 1.12816 versus 1.13218 versus 1.13396 versus 1.13645 versus 1.1396 versus 1.14350 versus 1.14554 versus 1.14478 versus 1.14924 versus 1.14351 versus 1.14285 versus 1.1407 versus 1.13134 versus 1.13830 versus 1.13652 versus 1.13636 versus 1.13919 versus 1.13993 versus 1.14802 versus 1.14734 versus 1.14699 versus 1.15075 versus 1.15532 versus 1.14547 versus 1.14834 versus 1.13980 versus 1.13957 versus 1.13343 versus 1.14450 versus 1.14425 versus 1.1432 versus 1.13588 versus 1.14015 versus 1.13708 versus 1.13828 versus 1.13755 versus 1.13533 versus 1.13049
USD/JPY: 110.670 versus 110.664
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
110.664 versus 110.786 versus 110.848 versus 110.469 versus 110.462 versus 110.945 versus 110.523 versus 110.488 versus 109.754 versus 109.793 versus 109.803 versus 109.777 versus 109.987 versus 109.53 versus 108.85 versus 108.96 versus 109.364 versus 109.180 versus 109.545 versus 109.757 versus 109.58 versus 109.651 versus 109.773 versus 109.133 versus 108.912 versus 108.551 versus 108.340 versus 108.563 versus 108.332 versus 107.959
Oil: 57.26, +0.30. Oil moved up well the past two weeks from a 50 day SMA test. Moved past the late January recovery high and to the mid-November consolidation price -- where it failed.
Gold: 1332.80, +5.00. Gold broke to a higher high Tuesday then gave it up. Held at the 10 day and rebounded from there. Still looks in position to continue higher.
Wall Street Climbs as Trade Talks Yield Progress
22-Feb-19 16:15 ET
Dow +181.18 at 26031.81, Nasdaq +67.84 at 7527.57, S&P +17.79 at 2792.63
https://www.briefing.com/investor/markets/stock-market-update/2019/2/22/wall-street-climbs-as-trade-talks-yield-progress.htm
[BRIEFING.COM] The S&P 500 gained 0.6% on Friday in a broad-based rally while U.S.-China trade talks showed signs of progress. The benchmark index also increased 0.6% this week.
The Dow Jones Industrial Average (+0.7%), the Nasdaq Composite (+0.9%), and the Russell 2000 (+0.9%) extended their weekly gains to 0.6%, 0.7%, and 1.3%, respectively.
Nine of the 11 S&P 500 sectors finished higher with information technology (+1.3%), communication services (+1.1%), and health care (+0.9%) leading the advance. Conversely, the financials (-0.2%) and consumer staples (-0.3%) sectors finished in the red.
Stocks traded for most of the session with modest gains, as technology stocks led the advance. Stocks, however, came off their session highs in late afternoon trading following some U.S.-China trade updates.
The Chinese delegation will stay in Washington an extra two days to continue negotiating, but the two sides have reportedly agreed on two things: (1) an unspecified agreement regarding currency manipulation and (2) a commitment from China to purchase $1.2 trillion of U.S. goods. President Trump said he will likely meet with China's President Xi at Mar-a-Lago in March.
The market climbed right back to where it was before the trade news, finishing near its best levels of the day.
Separately, remarks from Federal Reserve officials on Friday provided little surprises and were not market-moving. The Fed speakers maintained a dovish-minded stance on the central bank's monetary policy and balance sheet normalization efforts.
Kraft Heinz (KHC 34.95, -13.23) was a story stock, plunging 27.5%, after the company missed earnings expectations, slashed its dividend, and announced that it has received a subpoena from the SEC, inquiring about the company's accounting practices.
U.S. Treasuries closed on a higher note, pushing yields lower across the curve. The 2-yr yield decreased five basis points to 2.48%, and the 10-yr yield decreased three basis points to 2.66%. The U.S. Dollar Index declined 0.1% to 96.55. WTI crude rose 0.5% to $57.25/bbl.
Investors did not receive any economic data on Friday.
Looking ahead, investors will receive Wholesale Inventories for December on Monday. In addition, Warren Buffet will release his widely-read annual letter Saturday morning, along with Berkshire Hathaway's earnings report.
Russell 2000 +17.9% YTD
Nasdaq Composite +13.5% YTD
Dow Jones Industrial Average +11.6% YTD
S&P 500 +11.4% YTD
Stocks Cool Off on Disappointing Economic Data
21-Feb-19 16:25 ET
Dow -103.81 at 25850.63, Nasdaq -29.36 at 7459.73, S&P -9.82 at 2774.84
https://www.briefing.com/investor/markets/stock-market-update/2019/2/21/stocks-cool-off-on-disappointing-economic-data.htm
[BRIEFING.COM] The S&P 500 lost 0.4% on Thursday, as disappointing economic data helped simmer the market's lengthy rally. The Dow Jones Industrial Average, the Nasdaq Composite, and the Russell 2000 also lost 0.4% apiece.
The S&P 500 energy (-1.6%), health care (-0.9%), and communication services (-0.6%) sectors underperformed the broader market. Conversely, the utilities (+0.8%) and consumer staples (+0.3%) sectors showed relative strength.
The stock market began the day slightly lower as weaker-than-expected economic data tempered buying interest. U.S. business investment declined for the second consecutive month in December, and the eurozone manufacturing sector experienced its first contraction since 2013.
Investors have generally forgiven negative data this year, but some of the reports released today covered January and February--two months that featured a strong rally in the market amid hopes that the economic picture would improve.
Separately, the U.S. and China began working on six memorandums of understanding on structural issues that would outline the path to a trade deal, according to Reuters. Specific details on talks have been sparse, though, with China's Ministry of Commerce spokesperson saying that there was nothing new to report.
The market's negative disposition despite the reported progress possibly suggested the market's patience for hopeful-sounding headlines may be wearing thin, especially when taking into account the number of rallies that took place amid upbeat headlines, but little concrete progress.
With earnings season winding down, some other corporate-specific news captured the market's attention.
Nike (NKE 83.95, -0.89, -1.1%) was under pressure following some on-the-court drama. College basketball sensation Zion Williamson sustained an injury when his Nike sneakers broke apart during a highly-anticipated game. Nike issued a statement that they were working to identify the issue.
Tesla (TSLA 291.23, -11.33) for its part lost 3.7% after Consumer Reports dropped its Model 3 recommendation due to the car's reliability issues. On a related note, Tesla has been under scrutiny for its untimely handling of returns and refunds.
U.S. Treasuries finished on a lower note, pushing yields higher across the curve. The 2-yr yield and the 10-yr yield increased three basis points each to 2.53% and 2.69%, respectively. The U.S. Dollar Index increased 0.2% to 96.62. WTI crude declined 0.3% to $57.00/bbl.
Reviewing Thursday's economic data, which included Existing Homes Sales for January, Durable Orders for December, the Philadelphia Fed Index for February, the Conference Board's Leading Economic Indicators Index for January, and the weekly Initial and Continuing Claims report.
Existing home sales decreased 1.2% month-over-month in January to a seasonally-adjusted annual rate of 4.99 million (Briefing.com consensus 5.05 million) from an upwardly revised 5.00 million (from 4.99 million) in December. Total sales were 8.5% lower than the same period a year ago.
The key takeaway from the report is that existing home sales activity has not improved much since December even when taking into account the upward revision to the December reading.
Durable goods orders increased 1.2% in December (Briefing.com consensus 1.3%) after an upwardly revised 1.0% increase (from 0.8%) in November. Excluding transportation, orders increased 0.1% (Briefing.com consensus 0.2%) after decreasing a revised 0.2% (from -0.4%) in November.
The key takeaway from the report is that business investment remained weak, evidenced by the 0.7% decline in nondefense capital goods orders excluding aircraft. Furthermore, the November reading was revised down to -1.0% from -0.6%.
The Philadelphia Fed Index for February fell to -4.1 (Briefing.com consensus 12.0) from 17.0 in January.
The key takeaway from the report is that the headline decrease was driven by declines in most components with the Prices Paid Index returning to its low from 2017.
The Conference Board's Leading Economic Indicators Index decreased 0.1% in December (Briefing.com consensus -0.1%) after increasing 0.2% in November.
The key takeaway from the report is that the Conference Board sees a path to GDP growth slowing to 2.0% by the end of 2019.
Initial claims for the week ending February 16 decreased by 23,000 to 216,000 (Briefing.com consensus 225,000). Continuing claims for the week ending February 9 decreased by 55,000 to 1.780 million.
The key takeaway from the report is that the decline returned the initial claims level into a sideways range that has been in place over the past year; however, the four-week moving average for initial claims remains at its highest level since January 2018.
Investors will not receive any economic data on Friday.
Russell 2000 +16.8% YTD
Nasdaq Composite +12.4% YTD
Dow Jones Industrial Average +10.8% YTD
S&P 500 +10.7% YTD
Wall Street Edges Higher Following FOMC Minutes
20-Feb-19 16:25 ET
Dow +63.12 at 25954.44, Nasdaq +2.30 at 7489.09, S&P +4.94 at 2784.66
https://www.briefing.com/investor/markets/stock-market-update/2019/2/20/wall-street-edges-higher-following-fomc-minutes.htm
[BRIEFING.COM] The S&P 500 increased 0.2% on Wednesday, as the minutes from the Federal Reserve's January meeting came in mostly in-line with expectations. Price action, overall, was kept in check with earnings reports driving the notable movers in the stock market.
The Dow Jones Industrial Average gained 0.2%, and the Russell 2000 gained 0.5%. The Nasdaq Composite, however, finished flat.
The S&P 500 materials (+1.7%), financials (+0.6%), and industrials (+0.5%) sectors outperformed the broader market. Conversely, the real estate (-0.7%), health care (-0.1%), consumer staples (-0.1%), and communication services (-0.1%) sectors finished in the red.
The main takeaway from the FOMC Minutes was that the Fed is going to be patient in raising rates and is likely to stop reducing the assets on its balance sheet later this year. The surprise - or maybe the important revelation - for the market to consider was the implication that the Fed could turn away from a "patient" mindset with raising interest rates if market uncertainty abates.
Separately, there was little news on the current U.S-China trade talks, but investors did get an update on trade negotiations with the EU. President Trump expressed his displeasure with talks, telling reporters that if the U.S. cannot make a deal with EU, the White House will impose auto tariffs.
The minutes, along with the EU trade update, contributed to some volatility that yielded modest losses for the major averages. Investors regrouped, however, lifting the averages back into the green to extend the stock market's lengthy rally.
Semiconductor stocks outperformed, driven in part by an upbeat earnings report from Analog Devices (ADI 106.82, +2.60, +2.5%). Their outperformance helped keep the Philadelphia Semiconductor Index (+0.9%) rally going and provided some support for the information technology sector (unch).
On the other hand, CVS Health (CVS 64.22, -5.66, -8.1%) and Southwest Airlines (LUV 54.41, -3.26, -5.7%) disappointed investors with some downside guidance. Specifically, CVS guided earnings for Q1 and fiscal 2019 below estimates, and Southwest Airlines cut its first quarter unit revenue guidance to 3-4% growth, year-over-year, from 4-5% growth.
The outsized loss from CVS weighed on the health care sector (-0.1%). Airline stocks also underperformed on concern other carriers could follow suit with unit revenue revisions of their own.
U.S. Treasuries were little changed during Wednesday's session. The 2-yr yield and the 10-yr yield finished flat at 2.50% and 2.65%, respectively. The U.S. Dollar Index was unchanged at 96.55. WTI crude rose 1.2% to $57.15/bbl.
Reviewing Wednesday's economic data, which included the weekly MBA Mortgage Applications Index:
The weekly MBA Mortgage Applications Index increased 3.6% following a revised 6.9% decline (from -3.7%) in the prior week.
Looking ahead, investors will receive several economic reports on Thursday: Durable Orders for December, the weekly Initial and Continuing Claims report, the Philadelphia Fed Index for February, Existing Homes Sales for January, and the Conference Board's Leading Economic Indicators Index for January.
Russell 2000 +17.3% YTD
Nasdaq Composite +12.9% YTD
Dow Jones Industrial Average +11.3% YTD
S&P 500 +11.1% YTD
Strong Earnings from Wal-Mart Helps Lift Wall Street
19-Feb-19 16:25 ET
Dow +8.07 at 25891.32, Nasdaq +14.36 at 7486.79, S&P +4.16 at 2779.72
https://www.briefing.com/investor/markets/stock-market-update/2019/2/19/strong-earnings-from-walmart-helps-lift-wall-street.htm
[BRIEFING.COM] The S&P 500 increased 0.2% on Tuesday, as strong earnings results from Wal-Mart (WMT 102.20, +2.21, +2.2%) helped ease some concerns about consumer spending. Investors also remained optimistic about U.S.-China trade talks and a market-friendly Federal Reserve.
The Nasdaq Composite gained 0.2%, and the Russell 2000 gained 0.3%. The Dow Jones Industrial Average, however, finished flat.
Nine of the 11 S&P 500 sectors finished higher with materials (+0.6%), utilities (+0.5%), consumer staples (+0.5%), and consumer discretionary (+0.5%) outperforming. Conversely, the health care (-0.3%) and industrial (-0.1%) sectors were the lone groups to finish in the red.
The U.S. and China resumed trade negotiations in Washington. President Trump said he believes China is intent on working quickly toward a deal to avoid a tariff hike on March 2. President Trump reiterated a possible extension to the trade deadline, telling reporters that the March 1 deadline was "not a magical date."
There was also some Fedspeak ahead of the FOMC's Minutes from the January meeting, which will be released on Wednesday.
New York Fed President Williams (FOMC voter) said mixed economic data has been a strong argument for a pause for further rate hikes, although he added that he expects to be drawing down the balance sheet for some time. Cleveland Fed President Mester (non-FOMC voter) for her part reportedly said she favors slowing the Fed's balance sheet normalization effort, but said the fed funds rate may need to move a bit higher than current levels if the economy evolves as she expects.
The market took the good and ignored the bad, which is all it has done so far in 2019.
Wal-Mart's earnings report was definitely good news for investors. An earnings beat and healthy same-store sales growth from the Dow component helped spur gains in the consumer staples (+0.5%) and consumer discretionary (+0.5%) sectors.
Its strong earnings report helped temper concerns about a slowdown in consumer spending that were fueled by the lousy Retail Sales report for December released last week. The SPDR S&P Retail ETF (XRT 45.58, +0.24) increased 0.5%.
U.S. Treasuries saw continued buying interest, driving yields lower across the curve. The 2-yr yield and 10-yr yield decreased two basis points each to 2.50% and 2.65%, respectively. The U.S. Dollar Index declined 0.4% to 96.52 amid strength in the euro. WTI crude rose 1.6% to $56.45/bbl.
Reviewing Tuesday's lone economic report, the NAHB Housing Market Index for February:
The NAHB Housing Market Index for February increased to 62 (Briefing.com consensus 59) from 58 in January.
Looking ahead, investors will receive the FOMC Minutes for the January meeting and the weekly MBA Mortgage Applications Index on Wednesday.
Russell 2000 +16.8% YTD
Nasdaq Composite +12.8% YTD
Dow Jones Industrial Average +11.0% YTD
S&P 500 +10.9% YTD
InvestmentHouse - Can There BE Any More Upside Catalysts? (Weekend Newsletter)
https://news.investmenthouse.com/2019/02/the-daily-part-1-of-3-2-16-19.html
MARKET SUMMARY
- Can there BE any more upside catalysts?
- Friday DJ30 and the small caps break sharply upside.
- Money flows to new areas, perhaps spawning new leaders.
- Market leaders up to the fourth leg taking a breather, letting others do some work.
- SP400 moves to the top of the Oct/Dec range as other indices continue their climb to the same level.
- Still no signs of sellers, and with new leadership the indices can take on the resistance, perhaps break through.
Expiration Friday, weak-ish economic data, three-day weekend, trade talks to continue in DC next week, ECB talking new QE, the notion the Fed is done hiking rates and reducing the balance sheet. Pretty much market nirvana, particularly for those areas that lagged for fear of trade and a slowing global economy. Heck, even for stocks tied to the domestic economy.
Futures posted a slow steady burn upside all pre-market, and stocks started upside, rallying for the first hour. A 4+ hour lateral stagnation (but no selling) then a sprint to the close the last half hour. That action fueled some strong gains and some not so strong gains. The spotlight focused on industrial stocks, financials, small caps. Even energy is showing signs of stirring. It was not techs or semiconductors, but those were hardly chopped liver.
SP500 29.87, +1.09%
NASDAQ 45.46, 0.61%
DJ30 443.86, 1.74%
SP400 1.18%
RUTX 1.56%
SOX 0.53%
NASDAQ 100 0.47%
VOLUME: NYSE -1%, NASDAQ +7%. Both exchanges posted average trade -- not blowout but solid enough ahead of a 3-day weekend.
ADVANCE/DECLINE: NYSE +3.5:1, NASDAQ +2.6:1.
THE MARKET
On expiration it appears there was some reallocation. Not that any sector was annihilated, but the large techs and chips took a back seat and FAANG was mostly lower. The money was pushed to more the 'old economy,' e.g. industrials, machinery, financial, both large caps and smaller caps.
I discuss frequently the need for generating new leadership to keep a rally moving. Chips, software and a few others provided the backbone of the upside in the first three legs higher. This attempt, as the indices clear the 200 day SMA, is showing new groups coming forward. MMM was an early leader in the group, of course BA as well with its takeoff on earnings. Friday others that were attempting moves put in some good work with stocks such as UTX breaking up through the 200 day MA. HON is over and tested. CMI is breaking out.
With these stocks moving higher it appears money is moving their way, trying to turn some of these groups into leaders. More leadership the merrier. These moves hold some promise and we will see how they fare this coming week.
CHARTS
Working higher, but the key is there are not new breakouts. The indices are moving upside in their fourth leg toward the tops of the OCT/DEC range. SP400 is indeed bumping that resistance as of Friday's close. New leadership provides some promise that perhaps the indices can do more than just bump that resistance.
SP400: And the children shall lead. Why not? The midcaps quietly rally, clearing the 200 day SMA on the Friday close (joining DJ30, SOX). They also cleared the early December peak, the lowest high in the range. They closed out the week at the November peak and October recovery peak marking the top of the range. A weeklong move to the top of the range so they may not be in the best position to go ahead and breakout from here, but definitely not rolling over.
RUTX: Small caps posted a strong gain, a market leading gain with DJ30. They have now more than fully retraced the selloff from early December. Still below the 200 day SMA, still below the other two highs in the OCT/DEC range, but as with the other indices, the recovery continues, and indeed for the small caps, increases.
DJ30: The Dow waffled some after clearing the 200 day SMA, spending about a week working laterally. Up early week, then put in a more definitive move Friday. What did Tin Cup say? When a defining moment comes, you define it or it defines you. Whatever the heck that means though I believe Cup used it as an excuse for his many failures. Anyway, the Dow received quite a bit of backing from its component stocks (outside AAPL), particularly industrials, financial.
NASDAQ: NASDAQ gapped higher, just clearing the 200 day SMA, but then fading to close just below. It was not the larger techs' session. They have led and are now, in some cases, taking a breather.
SOX: A solid week, and while SOX was not in the lead Friday it still put in a gap upside for a gain. Higher recovery high on the week, still in the middle of the summertime base range, steadily working higher.
LEADERSHIP
Financials: After so much promise, a good move Friday. Another head fake or something real? BAC broke over the 200 day SMA while JPM and C posted good moves higher out of 5 week lateral moves. V has been slow, but Friday it cleared the February highs. GS showed decent action off the 50 day MA, though it did not convert us. STT looks interesting as a regional bank, but TCBI is still in its 3-week sleepwalk.
Machinery: CMI cleared the early December high. TEX moving up though not as good a pattern; still, not a bad inverted head and shoulders. Ditto CAT -- still below the 200 day SMA. DE complained of the tariffs with its earnings report, but it shows a nice hammer doji just over the 50 day MA.
Manufacturing: MMM started up again after a quick test of its break over the 200 day SMA. UTX cleared the 200 day SMA. BA moving up after a 1.5 week consolidation of its earnings gap and run. Interesting.
Healthcare: ABT clearing a 4+ month base. ISRG gapped higher, clearing key 4-month resistance. MRK broke higher early week, coasted upside to a higher high Friday. LLY breaking just past recent highs.
Semiconductors: Slowed the 3 week move late week, not dropping, just working laterally after a good move, e.g. MLNX, LRCX, RMBS, UCTT. INTC just kept gapping higher on low volume, leading the group. AMD trying to break higher, not really doing it yet. MU posted a decent move last week, hitting our initial target. NVDA gapped up on earnings; we bought in the night before, took a decent 30+% gain on the initial gap higher.
Software: A bit tired overall after some very good moves higher: COUP, TEAM, NOW. VMW just kept moving higher as did SPLK. ADBE is making a nifty little test of a move higher; it could present a good entry finally this week.
POT: CRON tested the 10 day EMA for two weeks, trying to move up. CGC fell below the 20 day EMA early week but edged back up and finished Friday with a solid move.
RETAIL: WMT is clearing some resistance. TJX, ROST show some promise but in a 6 week lateral consolidation and not surging just yet. LULU was strong but disappointed on the Friday close.
FOOD: CMG continues to drift higher after the earnings gap higher. KO reported results that were flat (get it?) and suffered a wicked gap lower and Friday sold more. PEP on the other hand gapped higher out of its 2 week range.
Energy: Showing some signs of life but not wholly convincing. NBL is one that looks very interesting. SLB, HAL continue looking good. CHK, JAG and others show a similar long lateral consolidation.
Homebuilders/Home related: HD breaking higher over the 200 day SMA, LOW already moving well. DHI looks solid still. TOL is trying to set a base to move higher.
MARKET STATS
DJ30
Stats: +443.86 points (+1.74%) to close at 25883.25
Nasdaq
Stats: +45.46 points (+0.61%) to close at 7472.41
Volume: 2.26B (+7.11%)
Up Volume: 1.52B (+210M)
Down Volume: 728.67M (-18.18M)
A/D and Hi/Lo: Advancers led 2.58 to 1
Previous Session: Advancers led 1.02 to 1
New Highs: 96 (+22)
New Lows: 19 (-9)
S&P
Stats: +29.87 points (+1.09%) to close at 2775.60
NYSE Volume: 944.491M (-0.30%)
Up Volume: 781.164M (+284.248M)
Down Volume: 142.122M (-297.149M)
A/D and Hi/Lo: Advancers led 3.5 to 1
Previous Session: Advancers led 1.16 to 1
New Highs: 110 (+39)
New Lows: 2 (-6)
SENTIMENT
VIX: 14.91; -1.31
VXN: 17.70; -1.32
VXO: 15.18; -1.13
Put/Call Ratio (CBOE): 0.80; -0.12
Bulls and Bears:
Bulls up again, but bears moved up a bit as some discomfort with the long recovery rally.
Bulls: 49.5 versus 48.6
Bears: 21.5 versus 20.6
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
Bulls: 49.5 versus 48.6
48.6 versus 45.8 versus 45.4 versus 34.8 versus 29.9 versus 39.3 versus 45.4 versus 46.7 versus 38.3 versus 39.6 versus 42.9 versus 42.5 versus 50.5 versus 51.9 versus 56.3 versus 61.8 versus 60.6 versus 59.0 versus 57.7 versus 60.1 versus 59.6 versus 57.7 versus 57.3 versus 54.9 versus 54.5 versus 54.9 versus 55.3 versus 52.4 versus 47.1 versus 47.6 versus 52.0 versus 55.5 versus 52.9 versus 50.0 versus 49.1 versus 46.6 versus 43.1 versus 43.6 versus 48.0 versus 43.6 versus 42.2 versus 49.5 versus 55.5 versus 54.9 versus 48.6 versus 48.1 versus 48.5 versus 41.9 versus 54.4 versus 66.00
Bears: 21.5 versus 20.6
20.6 versus 20.6 versus 21.3 versus 29.4 versus 34.6 versus 21.4 versus 20.4 versus 21.50 versus 20.6 versus 19.8 versus 19.0 versus 19.8 versus 19.8 versus 19.0 versus 18.3 versus 18.5 versus 18.6 versus 18.3 versus 18.1 versus 18.3 versus 18.1 versus 18.3 versus 18.3 versus 18.6 versus 18.8 versus 18.6 versus 18.5 versus 18.5 versus 18.6 versus 18.4 versus 17.6 versus 17.8 versus 17.7 versus 19.2 versus 19.2 versus 19.4 versus 19.4 versus 20.6 versus 20.8 versus 19.6 versus 19.8 versus 18.6 versus 17.5 versus 16.8 versus 15.7 versus 15.5 versus 14.4 versus 14.6 versus 14.4 versus 15.5 versus 12.6 versus 12.8 versus 12.7 versus 13.5 versus 15.2 versus 15.1 versus 15.2 versus 15.1 versus 15.1 versus 15.4 versus 15.4 versus 14.4 versus 14.4 versus 15.1 versus 15.2 versus 15.1 versus 17.0 versus 17.1 versus 19.0 versus 20.2
OTHER MARKETS
Bonds: 2.664% versus 2.654%. A short, 7-week cup with handle has formed, still looking like a bullish setup for bonds to break higher and yields to fall.
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018.
2.654% versus 2.706% versus 2.686% versus 2.672% versus 2.634% versus 2.657% versus 2.695% versus 2.702% versus 2.725% versus 2.684% versus 2.64% versus 2.679% versus 2.710.5 versus
EUR/USD: 1.12922 versus 1.12955. After 3 back to back sharp reversals the euro is really trying to hold 1.125 with a pair of doji.
Historical: 1.12955 versus 1.12616 versus 1.3323 versus 1.12816 versus 1.13218 versus 1.13396 versus 1.13645 versus 1.1396 versus 1.14350 versus 1.14554 versus 1.14478 versus 1.14924 versus 1.14351 versus 1.14285 versus 1.1407 versus 1.13134 versus 1.13830 versus 1.13652 versus 1.13636 versus 1.13919 versus 1.13993 versus 1.14802 versus 1.14734 versus 1.14699 versus 1.15075 versus 1.15532 versus 1.14547 versus 1.14834 versus 1.13980 versus 1.13957 versus 1.13343 versus 1.14450 versus 1.14425 versus 1.1432 versus 1.13588 versus 1.14015 versus 1.13708 versus 1.13828 versus 1.13755 versus 1.13533 versus 1.13049
USD/JPY: 110.469 versus 110.462.
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
110.462 versus 110.945 versus 110.523 versus 110.488 versus 109.754 versus 109.793 versus 109.803 versus 109.777 versus 109.987 versus 109.53 versus 108.85 versus 108.96 versus 109.364 versus 109.180 versus 109.545 versus 109.757 versus 109.58 versus 109.651 versus 109.773 versus 109.133 versus 108.912 versus 108.551 versus 108.340 versus 108.563 versus 108.332 versus 107.959
Oil: 55.98, +1.57. Gapped and rallied to the close, just starting to clear the 5.5 week lateral range.
Gold: 1322.10, +8.20. Gapping and rallying off the 2.5 week lateral move over the 20 day EMA. Looks as if gold could be making that new move higher.
TUESDAY
The week ended with expiration Friday and some apparent reallocation of new money to the financial, industrial, home-centric, and perhaps energy stocks. Other areas did not sell off, just continued to rest or took a breather. If new money wants to come into new areas and drive them higher while staying in the others that are resting, that is perfect. That is the virtuous rotation that keeps the last round of leaders holding gains, resting for a new move once the money is deployed to the new areas.
Still, despite the impressive Dow and RUTX gains Friday, remember the resistance that is very near at hand. New leaders can make their own way as they are not overextended. And once they make the initial move you see if money flows into the earlier leaders that took a break while the new group moved up. Back and forth rotation, pushing higher.
If that action continues, even with the approaching resistance, if there is no selling then the indices can continue to move higher, resistance or not. Nothing yet indicates a rollover, just looming resistance presents the possibility.
With that scenario we will still look for the best upside money making potential heading toward that resistance. Remember, all along we said this fourth leg can still make us money, and with the new names breaking higher we still see the potential. As long as the money pushes into those areas we want to make the plays, following the money.
Have a great weekend!
End part 1
__________
Rally Marches On as Trade Talks Advance, Government Avoids Shutdown
15-Feb-19 16:25 ET
Dow +443.86 at 25883.25, Nasdaq +45.46 at 7472.43, S&P +29.87 at 2775.56
https://www.briefing.com/investor/markets/stock-market-update/2019/2/15/rally-marches-on-as-trade-talks-advance-government-avoids-shutdown.htm
[BRIEFING.COM] The S&P 500 gained 1.1% on Friday, as investors were relieved to hear that U.S.-China trade-talks produced some progress and that Congress passed a funding resolution to avoid another government shutdown. Friday's advance increased the benchmark index's weekly gain to 2.5%.
The Dow Jones Industrial Average (+1.7%), the Nasdaq Composite (+0.6%), and the Russell 2000 (+1.6%) also extended their weekly gains to 3.1%, 2.4%, and 4.2%, respectively.
All 11 S&P 500 sectors finished higher, led by gains in financials (+2.0%), energy (+1.6%), and health care (+1.5%). Conversely, the utilities (+0.3%) and communication services (+0.4%) sectors underperformed but still finished with modest gains.
A week-long round of trade negotiations in Beijing came to a conclusion on Friday, although structural issues -- forced technology transfers, enforcement oversight, and China subsidizing domestic industries -- were unresolved.
Still, investors were pleased to hear that mid-level talks are expected to continue in Washington next week. President Trump expressed optimism, saying talks are going extremely well, while he continued to weigh the possibility of extending the March 1 deadline.
President Trump signed a bipartisan funding resolution, which included funding that was well short of the $5.7 billion requested for border security. As many thought he might, President Trump declared a national emergency, setting up a likely legal battle, to secure adequate funding from other departments to build a border wall.
It was still a positive day for the market, evidenced by the broad-based gains. PepsiCo (PEP 115.91, +3.32, +3.0%) and NVIDIA (NVDA 157.34, +2.81, +1.8%) for instance were undeterred by underwhelming corporate results.
On the other hand, shares of Newell Brands (NWL 17.16, -4.53, -20.9%) and Mattel (MAT 13.82, -3.09, -18.3%) were clobbered on Friday following disappointing guidance, both of which included weak fiscal 2019 guidance.
U.S. Treasuries edged lower, pushing yields slightly higher. The 2-yr yield increased two basis points to 2.52%, and the 10-yr yield increased one basis point to 2.67%. The U.S. Dollar Index decreased 0.1% to 96.90. WTI crude rose 2.0% to $55.56/bbl.
Reviewing Friday's batch of economic data, which included Export and Import Prices for January, the Empire State Manufacturing Survey for February, Industrial Production and Capacity Utilization, and the preliminary University of Michigan Index of Consumer Sentiment for February:
Import prices fell 0.5% in January and are down 1.7% over the last 12 months. Excluding fuel, they are down 0.2% over the last 12 months. Export prices declined 0.6% in January and are down 0.2% over the last 12 months. Excluding agricultural products, export prices are also down 0.2% year-over-year.
The key takeaway is that the Import-Export Price Indexes for January tracked in a way that should keep the Federal Reserve tracking on its patient-minded path.
The Empire Manufacturing Survey for February increased to 8.8 (Briefing.com consensus 7.0) from the prior month's unrevised reading of 3.9.
Industrial production declined 0.6% in January (Briefing.com consensus +0.2%) following a downwardly revised 0.1% increase (from 0.3%) in December. The January downturn was driven by a large drop in motor vehicle assemblies. The capacity utilization rate fell to 78.2% (Briefing.com consensus 78.8%) from an upwardly revised 78.8% (from 78.7%).
The key takeaway from the report is that it will feed into concerns about a slowing U.S. economy. Manufacturing production fell 0.9% due to the downturn in motor vehicle assemblies, but excluding that factor, manufacturing production was still down 0.2% with decreases logged for most other major durable goods industries.
The University of Michigan's preliminary index of consumer sentiment for February increased to 95.5 (Briefing.com consensus 94.0) from the final reading of 91.2 for January, as attitudes improved with the end of the partial government shutdown and the Federal Reserve hitting the pause button on its interest rate hikes.
The key takeaway from the report is the indication that consumers' long-term inflation expectations fell to the lowest level recorded in the past half century, which is a vantage point that is certain to register in the Federal Reserve's willingness to be patient-minded with its policy approach.
Looking ahead, the stock market will be closed Monday for Washington's Birthday, and investors will not receive any economic data.
Russell 2000 +16.4% YTD
Nasdaq Composite +12.6% YTD
Dow Jones Industrial Average +11.0% YTD
S&P 500 +10.7% YTD
Wall Street Finishes Mixed amid Weak Retail Sales Data
14-Feb-19 16:25 ET
Dow -103.88 at 25439.39, Nasdaq +6.58 at 7426.97, S&P -7.30 at 2745.69
https://www.briefing.com/investor/markets/stock-market-update/2019/2/14/wall-street-finishes-mixed-amid-weak-retail-sales-data.htm
[BRIEFING.COM] The S&P 500 declined as much as 0.8% on Thursday, as disappointing retail sales data for December played into the market's concerns about a U.S. economic slowdown. The benchmark index, however, staged a late morning rebound back to its flat line, where it wavered for most of the afternoon. It almost finished flat, but a wave of selling activity in the final 20 minutes of trading left the S&P 500 down 0.3% to end the session.
The Dow Jones Industrial Average (-0.4%), the Nasdaq Composite (+0.1%), and the Russell 2000 (+0.1%) experienced similar price action.
Aside from the retail sales data, which showed a 1.2% decline in retail sales for December (Briefing.com consensus +0.2%) -- the largest monthly decline since Sept. 2009 -- the market navigated its way through a flurry of news headlines.
President Trump was considering a 60-day extension for the March 1 trade deadline, according to Bloomberg, although follow-up reports indicated that both the U.S. and China remained far apart on structural reform demands. In addition, White House press secretary Sarah Sanders said that President Trump is set on signing the spending bill and declaring a national emergency to build a border wall, which caused some minor gyrations in the market.
Some occurrences that helped lift the market from early lows included (1) a belief that the December retail sales numbers were aberrant and will give way to better retail sales data for January, (2) the outperformance of high-growth, mega-cap stocks, (3) Fed Governor Brainard (FOMC voter) saying she thinks the balance sheet normalization effort should come to an end later this year, and (4) the market's resilience to selling efforts squeezing short-sellers and drawing in sidelined participants fearful of missing out on further gains.
The S&P 500 sectors finished the session mixed.
The consumer staples sector (-1.2%) felt the brunt of the negative fallout in Dow component Coca-Cola (KO 45.59, -4.20, -8.4%) after it disappointed with its FY19 earnings guidance. The financial sector (-1.2%) for its part underperformed as a flattening yield curve, and worries about net interest margin compression, weighed on the bank stocks. American Intl. Group (AIG 40.19, -3.99, -9.0%), which fell well short of consensus earnings estimates for the December quarter, was a notable drag on the sector as well.
Conversely, the real estate (+0.5%), health care (+0.2%), communication services (+0.2%), energy (+0.2%), and information technology (+0.1%) sectors finished with gains.
Dow component Cisco Systems (CSCO 48.40, +0.90, +1.9%) provided the information technology sector with added support as it gained ground after beating earnings estimates, guiding Q3 revenue above consensus, raising its quarterly dividend by 6.0%, and approving a $15 billion increase to its stock repurchase program.
U.S. Treasuries saw increased buying interest following the release of the retail sales data, which drove yields lower across the curve. The 2-yr yield declined three basis points to 2.50%, and the 10-yr yield declined five basis points to 2.66%. The U.S. Dollar Index decreased 0.1% to 97.05. WTI crude increased 1.2% to $54.47/bbl.
Reviewing Thursday's economic data, which included Retail Sales for December, the Producer Price Index for January, the weekly Initial and Continuing Claims report, and Business Inventories for November:
Retail sales declined 1.2% (Briefing.com consensus +0.2%) on the heels of a downwardly revised 0.1% increase (from +0.2%) in November. That is the largest monthly decline since September 2009. Excluding autos, retail sales fell 1.8% after a downwardly revised unchanged reading (from +0.2%) for November.
The key takeaway from this disappointing report is that the weakness wasn't isolated to gasoline station sales (-5.1%). It was pretty broad-based across discretionary spending categories like furniture and home furnishings (-1.3%), electronics and appliance stores (-0.1%), clothing and accessories (-0.7%), miscellaneous store retailers (-4.1%), nonstore retailers (-3.9%), and restaurants (-0.7%).
The Producer Price Index for final demand declined 0.1% in January (Briefing.com consensus +0.1%), pulled down by a 0.8% decline in the index for final demand goods. Excluding food and energy, the index for final demand increased 0.3% (Briefing.com consensus +0.2%). On a year-over basis, the index for final demand was up 2.0%, versus 2.5% in December, while the index for final demand, excluding food and energy, was up 2.6%, versus 2.7% in December.
The key takeaway from the report is that it could portend margin pressures for producers if they don't choose to pass along the higher costs to their customers.
Initial claims for the week ending February 9 increased by 4,000 to 239,000 (Briefing.com consensus 225,000). Continuing claims for the week ending February 2 increased by 37,000 to 1.773 million.
The key takeaway from the report is that the four-week moving average of 231,750 for initial claims is the highest since January 27, 2018.
Total business inventories declined 0.1% in November (Briefing.com consensus +0.2%) after increasing an unrevised 0.6% in October. Total business sales fell 0.3% after increasing a downwardly revised 0.1% (from 0.3%) in October.
The key takeaway from the report is that business sales rose at a slower pace than inventories. That distinction, if it persists, will diminish pricing power.
Looking ahead, investors will receive several economic reports on Friday: the preliminary University of Michigan Index of Consumer Sentiment for February, Export and Import Prices for January, the Empire State Manufacturing Survey for February, and Industrial Production and Capacity Utilization for January.
Russell 2000 +14.6% YTD
Nasdaq Composite +11.9% YTD
S&P 500 +9.5% YTD
Dow Jones Industrial Average +9.1% YTD
Rally Continues on Trade Optimism, but Finishes Off Highs
13-Feb-19 16:25 ET
Dow +117.51 at 25543.27, Nasdaq +5.76 at 7420.39, S&P +8.30 at 2752.99
https://www.briefing.com/investor/markets/stock-market-update/2019/2/13/rally-continues-on-trade-optimism-but-finishes-off-highs.htm
[BRIEFING.COM] The S&P 500 increased as much as 0.6% on Wednesday, as continued optimism that U.S.-China trade talks were progressing favorably underpinned another broad-based rally. The benchmark index, however, fell off morning highs and spent a good portion of the day trying to get back to its best levels. It nearly did, but a wave of selling activity in the final 30 minutes knocked it back again. The S&P 500 ended the session up 0.3%.
The Dow Jones Industrial Average (+0.5%), the Nasdaq Composite (+0.1%), and the Russell 2000 (+0.3%) also had similar price action.
Early optimism was buoyed by reports that China President Xi will meet with the U.S. delegation in Beijing to discuss trade issues on Friday. Some of the early buying interest faded, though, after news hit that Senator Marco Rubio (R-FL) plans to file a bill that would make expensing permanent and tax corporate buybacks the same way as dividends.
If that bill ultimately came to pass, it could potentially lead to lower share buyback activity that leads to lower EPS growth. It was an implication that served to take a little steam out of the market.
Nevertheless, nine of the 11 S&P 500 sectors finished higher with energy (+1.3%), industrials (+0.6%), and consumer discretionary (+0.6%) leading the advance. Conversely, the utilities (-0.3%) and the communication services (-0.1%) sectors were the lone groups to finish with a loss.
While gains were largely broad-based, the communication services sector was home to some of the biggest movers in the S&P 500 following some earnings reports.
Activision Blizzard (ATVI 44.57, +2.90) rose 7.0%, recouping a good chunk of its losses from last week despite mixed Q4 results and cautious guidance for FY19. On the downside, TripAdvisor (TRIP 56.94, -3.45) and Dish Network (DISH 28.86, -2.40) fell 5.7% and 7.7%, respectively, after the companies missed earnings expectations.
Separately, Dow component Johnson & Johnson (JNJ 134.45, +0.29, +0.2%) announced plans to acquire robotics company Auris Health for approximately $3.4 billion.
U.S. Treasuries finished on a lower note, pushing yields higher across the curve. The 2-yr yield increased three basis points to 2.53%, and the 10-yr yield increased two basis points to 2.71%. The U.S. Dollar Index rose 0.5% to 97.17. WTI crude increased 1.3% to $53.80/bbl.
Reviewing Wednesday's economic data, which included the Consumer Price Index for January, the Treasury Budget for December, and the weekly MBA Mortgage Applications Index:
Total CPI was unchanged (Briefing.com consensus +0.1%) while core CPI, which excludes food and energy, was up 0.2%, as expected. On a year-over-year basis, total CPI was up 1.6%, which is the smallest increase since June 2017. Core CPI was up 2.2%, which was the same increase as the 12-month periods ending in November and December.
The key takeaway from the report is that core CPI is stable above the Fed's longer-run target. That could give it some leeway to remain patient for the time being, but at the same time, if the stock market keeps rallying and economic data improve, it could be a basis to consider raising rates again.
The Treasury Budget for December showed a deficit of $13.5 billion versus a deficit of $23.2 billion for the same period a year ago. The Treasury Budget data is not seasonally adjusted, so the December deficit cannot be compared to the $204.9 billion deficit for November.
The fiscal year-to-date deficit is $318.9 billion versus a deficit of $224.9 billion for the same period a year ago. The budget deficit over the last 12 months is $873.0 billion.
The weekly MBA Mortgage Applications Index decreased 3.7% following a 2.5% decline in the prior week.
Looking ahead, investors will receive Retail Sales for December, the Producer Price Index for January, the weekly Initial and Continuing Claims report, and Business Inventories for November on Thursday.
Russell 2000 +14.4% YTD
Nasdaq Composite +11.8% YTD
S&P 500 +9.8% YTD
Dow Jones Industrial Average +9.5% YTD
Wall Street Climbs on Trade Hope, Border Security Agreement
12-Feb-19 16:25 ET
Dow +372.65 at 25425.76, Nasdaq +106.71 at 7414.63, S&P +34.93 at 2744.69
https://www.briefing.com/investor/markets/stock-market-update/2019/2/12/wall-street-climbs-on-trade-hope-border-security-agreement.htm
[BRIEFING.COM] The S&P 500 gained 1.3% on Tuesday, as optimism that U.S. lawmakers reached a tentative agreement to prevent another government shutdown helped fuel broad-based buying interest. Investors also remained hopeful for progress on the ongoing U.S-China trade talks.
The Dow Jones Industrial Average gained 1.5%, the Nasdaq Composite gained 1.5%, and the Russell 2000 gained 1.3%.
President Trump expressed some reservations about the agreement, which included funding that was short of the $5.7 billion requested by the White House, but believed that another shutdown was not likely. As for trade, President Trump said there are no plans for a meeting with President Xi at the end of March, but confirmed that the deadline could be extended if real progress is evident.
Tuesday's gains helped the S&P 500 close above its 200-day moving average (2743) for the first time since Dec. 3.
10 of the 11 S&P 500 sectors finished with gains with materials (+2.3%), consumer discretionary (+1.7%), industrials (+1.6%), and financials (+1.6%) leading the advance. Conversely, the real estate (-0.7%) sector was the lone group to finish with a loss.
While gains were largely broad-based, some company-specific news helped Brighthouse Financial (BHF 40.68, +4.98, +14.0%) and Coty (COTY 10.87, +1.21, +12.5%) lead the S&P 500 in gains.
Brighthouse Financial rose after the company more than doubled its total year-over-year revenue. Coty rose after JAB Holding Company sent out a tender offer to acquire up to 150 million additional shares of the beauty company for $11.65/share in cash.
On the other hand, Facebook (FB 165.04, -0.75) was a notable laggard, losing 0.5% after California Governor Gavin Newsom proposed a "digital dividend" that would require technology companies to share profits with consumers in exchange for collecting information, according to Bloomberg.
Molson Coors Brewery (TAP 59.19, -6.17) fell 9.4% after the company's audit committee invalidated the consolidated financial statements for 2016 and 2017. The committee cited material weakness in its prior financial reporting of deferred tax liabilities for its conclusion.
U.S. Treasuries ended the day on a lower note, pushing yields higher across the curve. The 2-yr yield and the 10-yr yield increased two basis points each to 2.50% and 2.68%, respectively. The U.S. Dollar Index pulled back 0.4% to 96.72, recording its first loss of the month. WTI crude rose 1.4% to $53.12/bbl.
Reviewing Tuesday's economic data, which included the NFIB Small Business Optimism Index for January and the JOLTS - Job Openings report for December:
The NFIB Small Business Optimism Index for January decreased to 101.2 from the prior reading of 104.4 in December.
The December Job Openings and Labor Turnover Survey showed that job openings increased to 7.335 million from a revised 7.166 million (from 6.888 million) in November.
Looking ahead, investors will receive the Consumer Price Index for January, the weekly MBA Mortgage Applications Index, and the Treasury Budget for December on Wednesday.
Russell 2000 +14.1% YTD
Nasdaq Composite +11.8% YTD
S&P 500 +9.5% YTD
Dow Jones Industrial Average +9.0% YTD
Wall Street Mixed in Lackluster Session
11-Feb-19 16:20 ET
Dow -53.22 at 25053.11, Nasdaq +9.71 at 7307.92, S&P +1.92 at 2709.76
https://www.briefing.com/investor/markets/stock-market-update/2019/2/11/wall-street-mixed-in-lackluster-session.htm
[BRIEFING.COM] The S&P 500 increased 0.1% on Monday in a lackluster session. The major averages wavered around their flat lines throughout the day with investors preferring to wait and see for progress on U.S.-China trade talks.
The Nasdaq Composite gained 0.1%, and the Dow Jones Industrial Average lost 0.2%. The Russell 2000, meanwhile, outperformed with a gain of 0.8%.
Stocks began the day modestly higher amid optimism surrounding U.S.-China trade talks, which resumed in Beijing on Monday. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will partake in the the week-long round of negotiations Thursday and Friday.
The S&P 500 industrials (+0.6%) and energy (+0.5%) sectors outperformed the broader market. Conversely, the communication services (-0.6%), health care (-0.1%), and utilities (-0.1%) sectors were the lone groups to finish with losses.
Relative strength from the transport stocks underpinned the outperformance of the industrial sector. The Dow Jones Transportation Average increased 1.3%, led by gains from Norfolk Southern (NSC 176.95, +5.49, +3.2%) and Avis Budget (CAR 27.58, +1.90, +7.4%).
Norfolk Southern rose after it announced a strategic financial plan to target a full year operating ratio of 60% by 2021. Avis Budget rose after Goldman Sachs "double" upgraded the stock to 'Buy' from 'Sell' and increased its target price to $35 from $30, citing improved attractiveness in its valuation and seeing its positioning as favorable versus industry peers.
On the other hand, Loews Corp (L 44.56, -2.91, -6.1%) was one of the worst-performers in the S&P 500 after the company reported a Q4 loss of $0.53 per share. Its disappointment was construed as company-specific, as the S&P 500 financial sector gained 0.3%.
Separately, there was some speculation about an M&A deal within the health care space. NuVasive (NUVA 56.12, +6.57) climbed 13.3% amid reports that the company is in talks to be acquired by Smith & Nephew (SNN 38.44, -1.75, -4.4%) for over $3 billion.
U.S. Treasuries finished the day on a lower note, pushing yields higher across the curve. The 2-yr yield increased two basis points to 2.48%, and the 10-yr yield increased three basis points to 2.66%. The U.S. Dollar Index rose 0.4% to 97.05, setting a new high for 2019. WTI crude lost 0.7% to $52.39/bbl.
Investors did not receive any economic data on Monday.
Looking ahead, investors will receive the NFIB Small Business Optimism Index for January and the JOLTS - Job Openings report for December on Tuesday.
Russell 2000 +12.6% YTD
Nasdaq Composite +10.1% YTD
S&P 500 +8.1% YTD
Dow Jones Industrial Average +7.4% YTD
InvestmentHouse - Trade Dominates Headlines (Weekend Newsletter)
https://news.investmenthouse.com/2019/02/the-daily-part-1-of-3-2-9-19.html
- Trading trade: Trade dominates the headlines for a second session, with more negatives early but then a White House release designed to calm the markets.
- Stocks start weaker with the negative trade news, rallies back with some bids in the afternoon on better trade news.
- Indices still at an inflection point at key levels. DJ30, SOX test from above, the rest are still below.
- Solid leaders remain solid, e.g. software, chips. Others trying to set up, old leaders trying to reestablish, a few in FAANG are not.
- Testing the third leg off the lows. Anyone for a fourth?
Trade news received the most attention to end the week, and this time the trade news was not upside conducive. At least through the Friday open. Thursday Larry Kudlow uttered his 'sizeable distance to go' warning regarding US/China trade negotiations, and Friday morning we learned that Trump and Xi did NOT have a scheduled meeting -- a real market issue given the President said he would personally have to meet with Xi to work through the stickier portions. Then on top of that, reports warned that Trump would issue an order banning Chinese telecom equipment in the US. From trade optimism back to gloom in a week.
Futures were again lower for another start to a session. Wednesday was lower and stocks suffered modest losses. Thursday was a fairly sharp day lower. Friday was the third. And perhaps the charm. Stocks rebounded off midmorning and midday lows and rallied back upside to the close. That actually turned some indices positive.
Trigger? Trade yet again. After realizing the trade comments from Kudlow, Trump and who knows who else rattled the market, the White House announced that Mnuchin and Lighthizer are heading to China on February 14-15. Alone. No Kudlow, no Ross, no Navarro. That is viewed as being deal positive as those wanting deep structural changes are staying home. I doubt the administration is going to capitulate and accept just the purchase of more US goods, but indeed a few pundits were concluding that Friday.
Bids return midday, push the indices up off the lows to close.
SP500
In any event, the market liked the better news and recovered in the afternoon. That showed very good low to high intraday action, a bullish indication as buyers moved in on the low and drove the indices back up.
That action had DJ30 tapping just below the 200 day SMA and rebounding to a doji with tail, holding the 200 day. A very nice 1-2-3 pullback to test the break over the 200 day SMA early last week. SOX is testing a break over the 200 day as well, though not as orderly; it gapped below the 200 day Friday, then recovered to hold it at the close.
Indeed, all the indices rose off a lower open Friday, though not all are in the same position as DJ30. SP500 and NASDAQ are below the 200 day SMA, and of course RUTX and SP400 finished off the lows though down from midweek.
For a pullback, this action is very mild. Heavy duty sellers have not appeared as the action is more akin to buyers pulling back in after a good third leg surge and the indices at, near, or through key resistance levels. Without sellers it is just a lack of bids, and stocks tend to settle back in an orderly fashion to test near support. Then you see if the bids return and drive them back upside.
What do money flows have to say about bids?
While some bids returned intraday Friday to snatch stocks off the lows, volume tailed off showing it was no big new buying binge. Just a recovery off a test of near support.
Money flows show investors not that interested in stocks. Since the January 2 lows of the selling, bond funds have received $36B in new money. Total equities lost $10B, while US equities dropped $26B; that means $16B went to stocks elsewhere.
Is this again a case of the average investor turning negative at the wrong time? What a rally off the low and money was being yanked out of the market even as it started back upside. Longer term, however, if money continues leaving the market it won't be able to climb. Obviously not the case in January into early February.
FOMC: The Fed also made the news Thursday and Friday, musing that perhaps QE could be used along with rate manipulation in a nonemergency sense. In other words, the Fed is considering using QE as a choice of a tool to use just as it uses interest rates. Why not? The Fed has so grown its role in our economy, yea verily dictating our wealth, that it makes perverse sense it should expand its 'tool's to do so. If it 'runs out of ammunition' with one, it can switch to another much like a spendthrift consumer maxes out one credit card, takes it out of the wallet, then proceeds to max out a new credit card.
THE MARKET
CHARTS
Again, little damage to the index charts. Indeed, the action is more constructive than damaging as the stock indices post very orderly 1-2-3 pullbacks after a solid -- eventually -- third leg higher off that December selloff low. The action is the same, but the orientation differs: DJ30 and SOX test from a position of strength over resistance, while SP500, NASDAQ et al never made it past the 200 day SMA. I would note that NONE of the indices outside of SOX made it past the October/December trading range, and that still looms as the next big resistance. Even so, as you can see, many of the patterns are similar, setting up potentially bullish moves but also just below key resistance. As stated last weekend, that makes this, as others noted in the following sessions, an important inflection point.
DJ30: Broke over the 200 day SMA, put some distance on it, then slid back to test Wednesday to Friday. That keeps DJ30 over the 25K level, over the 200 day SMA and showing a doji there Friday. Still ahead: the top of the Oct/Dec range from roughly 26K to 26,250.
SOX: Retained its newfound upside leadership role with a gap over the 200 day SMA Wednesday. It gapped up then gapped back down Thursday, gapping lower again Friday but recovering to hold the 200 day. That small island reversal action is not great, but most stocks in the sector continue to sport more bullish patterns. Its next resistance is 1375 to 1415, but SOX has to show it can hold the break higher after gapping lower on the heels of the upside gap.
SP500: Tested the 200 day SMA from below, faded to close at the 10 day EMA. 2800 is also resistance, but this is key for SP500 as so many are watching from here to 2800 with many predicting the same failure right now.
NASDAQ: Similar to SP500, tested the 200 day SMA from below though never made it there. NASDAQ's OCT/DEC range is closer at hand than the other indices, so a double layer of ice to break through. Closed out the week just as SP500, holding the 10 day EMA after gapping below it Friday and recovering. Trying to set up an inverted head and shoulders pattern from November to present, and this action would be working on the right shoulder. Makes this resistance point very interesting. If NASDAQ can finish out the pattern and break it, that is a strong upside indication.
SP400: Nice 1-2-3 fade to the 10 day EMA after a week-plus rise. Similar to NASDAQ in possibly working on the right shoulder to an inverted head and shoulders pattern out of November.
RUTX: Also a nice test of the third let, showing a doji Friday at the 10 day EMA, tapping it on the low.
LEADERSHIP
Semiconductors fading some, setting up decently, e.g. MCHP, XLNX, VSH, ON, TER, MPWR. Still a serious leadership group.
Software: Looked as if it would finish out the week with a four session test for the group but Friday saw many breaking back upside out of short consolidations. TEAM, HUBS, NOW, ADBE, COUP -- even after substantial 4+ week runs they are finding bids. FTNT is setting up well -- may need a few more days, but if it breaks higher before we have it on, be ready.
Food: Still rather solid overall. CMG held its big gap higher on earnings. PEP, KO solid setups with KO heading toward earnings. WING is set up pretty nicely in a 4+ cup with handle. Gotta' eat.
FAANG: FB, AAPL, NFLX remain solid enough. GOOG struggling after dropping below the 200 day SMA Thursday. AMZN gapped lower Friday as Bezos challenged the Enquirer's tactics in what he calls extortion. Likely when this subsides AMZN will be a buy.
POT: Definitely going through some consolidation as volatility is high for CRON, not as much CGC but it is not just snoozing.
Biotech: Some interesting movement and setups. IMGN is very interesting as is INSY. Bigger names not so hot, e.g. BIIB, AMGN. Pharma is recovering, e.g. LLY, MRK. MRK setting up a nice pattern.
For many others we are waiting to let them set up better after earnings, e.g. BA, LRCX, INTC.
Financial: Struggled to end the week as they dropped from tight lateral consolidations, e.g. C. JPM. BAC testing the upper gap point from mid-January on earnings. Perhaps this is just a shakeout move. Will be watching.
MARKET STATS
DJ30
Stats: -63.20 points (-0.25%) to close at 25106.33
Nasdaq
Stats: +9.85 points (+0.14%) to close at 7298.20
Volume: 2.1B (-8.7%)
Up Volume: 1.1B (+407.97M)
Down Volume: 978.91M (-591.09M)
A/D and Hi/Lo: Decliners led 1.04 to 1
Previous Session: Decliners led 2.07 to 1
New Highs: 47 (+13)
New Lows: 43 (+8)
S&P
Stats: +1.83 points (+0.07%) to close at 2707.88
NYSE Volume: 830.898M (-11.92%)
Up Volume: 370.567M (+111.975M)
Down Volume: 447.039M (-229.703M)
A/D and Hi/Lo: Decliners led 1.08 to 1
Previous Session: Decliners led 2.2 to 1
New Highs: 63 (+3)
New Lows: 19 (-5)
SENTIMENT
VIX: 15.72; -0.65
VXN: 20.04; -0.88
VXO: 16.30; -0.49
Put/Call Ratio (CBOE): 1.04; +0.05
Bulls and Bears:
Bulls continue to recover, bears hold steady, both after really large moves during the late 2018 selling.
Bulls: 48.6 versus 45.8
Bears: 20.6 versus 20.6
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
Bulls: 48.6 versus 45.8
45.8 versus 45.4 versus 34.8 versus 29.9 versus 39.3 versus 45.4 versus 46.7 versus 38.3 versus 39.6 versus 42.9 versus 42.5 versus 50.5 versus 51.9 versus 56.3 versus 61.8 versus 60.6 versus 59.0 versus 57.7 versus 60.1 versus 59.6 versus 57.7 versus 57.3 versus 54.9 versus 54.5 versus 54.9 versus 55.3 versus 52.4 versus 47.1 versus 47.6 versus 52.0 versus 55.5 versus 52.9 versus 50.0 versus 49.1 versus 46.6 versus 43.1 versus 43.6 versus 48.0 versus 43.6 versus 42.2 versus 49.5 versus 55.5 versus 54.9 versus 48.6 versus 48.1 versus 48.5 versus 41.9 versus 54.4 versus 66.00
Bears: 20.6 versus 20.6
20.6 versus 21.3 versus 29.4 versus 34.6 versus 21.4 versus 20.4 versus 21.50 versus 20.6 versus 19.8 versus 19.0 versus 19.8 versus 19.8 versus 19.0 versus 18.3 versus 18.5 versus 18.6 versus 18.3 versus 18.1 versus 18.3 versus 18.1 versus 18.3 versus 18.3 versus 18.6 versus 18.8 versus 18.6 versus 18.5 versus 18.5 versus 18.6 versus 18.4 versus 17.6 versus 17.8 versus 17.7 versus 19.2 versus 19.2 versus 19.4 versus 19.4 versus 20.6 versus 20.8 versus 19.6 versus 19.8 versus 18.6 versus 17.5 versus 16.8 versus 15.7 versus 15.5 versus 14.4 versus 14.6 versus 14.4 versus 15.5 versus 12.6 versus 12.8 versus 12.7 versus 13.5 versus 15.2 versus 15.1 versus 15.2 versus 15.1 versus 15.1 versus 15.4 versus 15.4 versus 14.4 versus 14.4 versus 15.1 versus 15.2 versus 15.1 versus 17.0 versus 17.1 versus 19.0 versus 20.2
OTHER MARKETS
Bonds: 2.634% versus 2.657%. Bonds continue to rally, Friday TLT moved past the late January high. Still below the early January spike but working.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.657% versus 2.695% versus 2.702% versus 2.725% versus 2.684% versus 2.64% versus 2.679% versus 2.710.5 versus 2.738% versus 2.748% versus 2.734% versus 2.741% versus 2.75% versus 2.788% versus 2.752% versus 2.727% versus 2.718% versus 2.706% versus 2.699% versus 2.733% versus 2.712% versus 2.731% versus 2.694% versus 2.668% versus 2.552% versus 2.643% versus 2.686% versus 2.716% versus 2.774% versus 2.811% versus 2.736% versus 2.788% versus 2.803%. versus 2.762% versus 2.821% versus 2.855% versus 2.895% versus 2.913% versus 2.908% versus 2.884% versus 2.863% versus 2.854% versus 2.892% versus 2.915% versus 2.979% versus 2.993% versus 3.032% versus 3.061% versus 3.058%
EUR/USD: 1.13218 versus 1.13396. The euro is back down to the low at 1.13000. There is a lot of support there so we will see if the euro rebounds.
Historical: 1.13396 versus 1.13645 versus 1.1396 versus 1.14350 versus 1.14554 versus 1.14478 versus 1.14924 versus 1.14351 versus 1.14285 versus 1.1407 versus 1.13134 versus 1.13830 versus 1.13652 versus 1.13636 versus 1.13919 versus 1.13993 versus 1.14802 versus 1.14734 versus 1.14699 versus 1.15075 versus 1.15532 versus 1.14547 versus 1.14834 versus 1.13980 versus 1.13957 versus 1.13343 versus 1.14450 versus 1.14425 versus 1.1432 versus 1.13588 versus 1.14015 versus 1.13708 versus 1.13828 versus 1.13755 versus 1.13533 versus 1.13049
USD/JPY: 109.754 versus 109.793. Still working laterally below the 50 day EMA MA in a tight range. Overall negative pattern but it refuses to give in thus far.
Historical: Last below 109 in June 2018: 109.793 versus 109.803 versus 109.777 versus 109.987 versus 109.53 versus 108.85 versus 108.96 versus 109.364 versus 109.180 versus 109.545 versus 109.757 versus 109.58 versus 109.651 versus 109.773 versus 109.133 versus 108.912 versus 108.551 versus 108.340 versus 108.563 versus 108.332 versus 107.959 versus 108.802 versus 108.705 versus 108.517 versus 107.173 versus 107.515 versus 109.687 versus 110.273 versus 110.845 versus 111.190 versus 110.337 versus 111.223 versus 111.21 versus 112.521 versus 112.477 versus 112.653 versus 113.382
Oil: 52.72, +0.08. Holding at support but not able thus far to hold a move above it.
Gold: 1318.50, +4.30. Nice test back to the 20 day EMA, breaking higher again Friday.
MONDAY
Earnings still to come but the market is at that point where earnings are not as big an overall impact; the gist of the season is well-quantified and of course investors are looking farther down the road.
Trade elevated its importance again late in the week, attributed with the weakness. Okay, sure. The markets were set to pullback, however, and trade was a good trigger for that pullback.
As noted, it was not heavy selling, just a normal pullback to near support by the indices and by most leadership stocks. Not all as some FAANG really struggled, e.g. AMZN, GOOG.
The action is certainly calm, but other selling in recent times started calm as well. With the indices at resistance after a third leg off the selling, it is not safe to assume anything.
Still many good-looking leaders and this fade is offering some good setups. More stocks and groups are trying to set up, always a good indication. We have several new plays ready to go, we are keeping current positions that are showing good action. We banked a lot of solid gain the past couple of weeks as the indices and stocks approached resistance. After this test, if they resume the move higher of course we will participate and watch for a fourth leg up off the December selling. May seem on borrowed time given the yearlong 2018 top, but we play what the market sets up when those setups move, taking what the market gives.
Have a great weekend!
S&P 500 Stages Rebound, Ekes out Gains
08-Feb-19 16:25 ET
Dow -63.20 at 25106.33, Nasdaq +9.85 at 7298.21, S&P +1.83 at 2707.84
https://www.briefing.com/investor/markets/stock-market-update/2019/2/8/s-and-p-500-stages-rebound-ekes-out-gains.htm
[BRIEFING.COM] The S&P 500 declined as much as 0.9% on Friday as follow-through selling and an effort to de-risk sent the broader market lower. However, steady buying interest throughout the afternoon, and a last-minute swarm of buyers, lifted the S&P 500 to a gain of 0.1%.
The Nasdaq Composite and Russell 2000 also gained 0.1% apiece. The Dow Jones Industrial Average, however, lost 0.3%.
Most sectors were down in the early going amid a continuation from Thursday's narrative, which emphasized concerns about growth, trade matters, and disappointing earnings guidance. There was also a prevailing sense that the market was due for some consolidation, considering the extent of its rally and no news catalyst to support a continued advance.
The S&P 500 utilities sector (+0.5%) was a consistent leader throughout the day. Comeback performances from the consumer staples (+0.5%), information technology (+0.5%), and communication services (+0.4%) sectors helped underpin the rebound effort. Conversely, the cyclical energy (-0.7%), financial (-0.6%), and consumer discretionary (-0.5%) sectors underperformed.
Some buying interest may have been generated by a Reuters report, which quoted San Francisco Fed President Mary Daly as saying the central bank is debating whether quantitative easing should be reserved for emergencies or used more readily.
Amazon (AMZN 1588.22, -26.15) was a bit of a story stock, losing 1.6% amid news that CEO Jeff Bezos accused National Enquirer's publisher of blackmail. Its underperformance was a huge drag on the consumer discretionary space, which featured some notable post-earnings movers.
In earnings news, toy maker Mattel (MAT 15.23, +2.87) surged 23.2% after it beat top and bottom-line estimates and provided a positive financial outlook for 2019. Goodyear Tire (GT 18.69, -1.86), however, fell 9.1%% after the company missed top and bottom-line estimates.
U.S. Treasuries edged higher, pushing yields lower across the curve. The 2-yr yield decreased one basis point to 2.46%, and the 10-yr yield decreased two basis points to 2.63%. The U.S. Dollar Index gained 0.1% to 96.63. WTI crude increased 0.1% to $52.76/bbl.
Investors did not receive any notable economic data on Friday and will not receive any reports on Monday, either.
Russell 2000 +11.7% YTD
Nasdaq Composite +10.0% YTD
S&P 500 +8.0% YTD
Dow Jones Industrial Average +7.6% YTD
Stocks Pull Back amid Growth, Trade Concerns
07-Feb-19 16:25 ET
Dow -220.77 at 25169.53, Nasdaq -86.93 at 7288.36, S&P -25.56 at 2706.01
https://www.briefing.com/investor/markets/stock-market-update/2019/2/7/stocks-pull-back-amid-growth-trade-concerns.htm
[BRIEFING.COM] The S&P 500 lost 0.9% on Thursday, as recurring concerns about a slowdown in global growth and the prospects of a U.S.-China trade deal weighed on investor sentiment. In addition, an underlying sense that the market was due for a pullback also fueled broad-based profit taking.
The Dow Jones Industrial Average lost 0.9%, the Nasdaq Composite lost 1.2%, and the Russell 2000 lost 0.8%.
The S&P 500 energy (-2.1%), information technology (-1.4%), and materials (-1.4%) sectors led Thursday's retreat. Conversely, the defensive-oriented, and higher-yielding, utilities (+1.3%) and real estate (+0.8%) sectors were the lone groups to finish with gains.
Growth concerns resurfaced following a batch of disappointing updates from overseas: (1) the Bank of England left its key rate unchanged at 0.75% and lowered its 2019 GDP growth outlook to 1.2% from 1.7%, (2) the EU Commission cut its 2019 euro area GDP growth forecast to 1.3% from 1.9%, (3) Germany reported a 0.4% month-over- month decline in industrial production in December and (4) the Reserve Bank of India surprisingly cut its key lending rate 25 basis points to 6.25%.
These developments contributed to a lower start for the stock market, which extended losses following some negative trade-related headlines.
Specifically, NEC Director Larry Kudlow told Fox Business Thursday morning that there is still "a pretty sizable distance to go in U.S. trade talks." A White House official then told CNBC that a meeting between President Trump and China's President Xi was "highly unlikely" to happen prior to the March 1 trade deadline. President Trump later confirmed that a meeting is not likely before the deadline.
Some buying interest in late afternoon trading, however, helped the S&P 500 close off its session low (-1.6%).
In earnings news, Twitter (TWTR 30.80, -3.36, -9.8%), Fiat Chrysler (FCAU 15.23, -2.12, -12.2%), and Tapestry (TPR 33.48, -5.83, -14.8%) all posted steep losses after the companies disappointed investors with their results. On the other hand, Chipotle Mexican Grill (CMG 585.78, +59.72) jumped 11.4% after it impressed investors with a strong report and reassuring outlook.
Separately, the S&P 500 financial sector (-0.9%) saw a big M&A deal on Thursday -- the largest since the financial crisis.
BB&T (BBT 50.46, +1.93, +4.0%) and SunTrust Banks (STI 64.72, +5.98, +10.2%) announced an all-stock merger of equals valued at approximately $66 billion, which would make it the sixth largest U.S. retail bank if approved. The agreement, however, was not enough to lift the financial space, which was pressured by a drop in U.S. Treasury yields and weakness in the money-center bank stocks.
U.S. Treasury yields, which move inversely to prices, declined amid the economic growth concerns. The 2-yr yield decreased six basis points to 2.47%, and the 10-yr yield decreased five basis points to 2.65%. The U.S. Dollar Index increased 0.2% to 96.54. WTI crude lost 2.4% to $52.70/bbl.
Reviewing Thursday's economic data, which included the weekly Initial and Continuing Claims report and the Consumer Credit report for December:
Initial claims for the week ending February 2 decreased by 19,000 to 234,000 (Briefing.com consensus 220,000). Continuing claims for the week ending January 26 decreased by 42,000 to 1.736 million.
The key takeaway is that the labor market is still looking pretty good, as initial claims remain low, yet outside headlines are stirring concerns that might not remain the prevailing trend.
Total outstanding consumer credit increased by $16.5 billion in December after increasing an upwardly revised $22.4 billion (from $22.1 billion) in November.
The key takeaway from the report is that it shows the extension of consumer credit is rooted in nonrevolving debt (e.g. car loans and student loans) while revolving credit (e.g. credit cards), which can be a support for discretionary spending, is not expanding in a robust manner.
Investors will not receive any notable economic data on Friday.
Russell 2000 +11.7% YTD
Nasdaq Composite +9.8% YTD
S&P 500 +8.0% YTD
Dow Jones Industrial Average +7.9% YTD
Wall Street Posts Modest Losses in Lackluster Trading Session
06-Feb-19 16:20 ET
Dow -21.22 at 25390.30, Nasdaq -26.80 at 7375.29, S&P -6.09 at 2731.57
https://www.briefing.com/investor/markets/stock-market-update/2019/2/6/wall-street-posts-modest-losses-in-lackluster-trading-session.htm
[BRIEFING.COM] The S&P 500 lost 0.2% on Wednesday in a lackluster trading session. The benchmark index traded with modest losses nearly the entire day with price action dictated by the underperformance of the entertainment software stocks, the outperformance of the semiconductor stocks, and an underlying sense that the market was due for a breather.
The Dow Jones Industrial Average lost 0.1%, the Nasdaq Composite lost 0.4%, and the Russell 2000 lost 0.2%. For the second day in a row, the S&P 500 stalled just in front of its 200-day moving average (2742), topping out at 2738.08.
The S&P 500 communication services (-1.5%), real estate (-0.8%), energy (-0.8%), and materials (-0.7%) sectors underperformed the broader market.
Entertainment software stocks dragged on the communication services sector following earnings reports from Electronic Arts (EA 80.21, -12.31, -13.3%) and Take-Two Interactive (TTWO 92.53, -14.76, -13.8%). The two companies disappointed investors with quarterly guidance that was lower than expected, which reportedly fueled competition concerns.
Dow component Walt Disney (DIS 111.41, -1.25) for its part lost 1.1% despite beating earnings expectations.
Conversely, the health care (+0.4%), information technology (+0.2%), and consumer staples (+0.1%) sectors were the lone groups to finish with gains.
The heavily-weighted tech sector derived its relative strength from the outperformance of chip stocks. The Philadelphia Semiconductor Index rose 2.6%.
Certainly, it wasn't the downside guidance for the March quarter from Microchip (MCHP 89.31, +6.07, +7.3%) and Skyworks Solutions (SWKS 84.69, +8.73, +11.5%) that pleased investors. Instead, it was Microchip's contention that the March quarter should be a "bottom" for revenues that presumably fueled broad-based buying interest.
Separately, Snap (SNAP 8.59, +1.55) was a story stock, surging 22.0% after the company provided a better-than-feared indication of its daily active users in its quarterly report. Specifically, the number of daily active users was sequentially flat at 186 million in the fourth quarter. Snap added that it doesn't expect to see a sequential decline in the first quarter.
U.S. Treasuries ended the day near their unchanged marks. The 2-yr yield decreased one basis point to 2.53%, and the 10-yr yield remained unchanged at 2.70%. The U.S. Dollar Index increased 0.3% to 96.38. WTI crude rose 0.4% to $53.99/bbl.
Reviewing Wednesday's economic data, which included the November Trade Balance report and the weekly MBA Mortgage Applications Index:
The trade deficit narrowed to $49.3 billion in November (Briefing.com consensus -$55.5) from a revised $55.7 billion (from -$55.5 billion) in November.
The trade deficit narrowed, because imports fell more than exports, yet the key takeaway from the report is that both exports and imports were down in November from the prior month, which fits with a slower growth narrative.
The weekly MBA Mortgage Applications Index decreased 2.5% following a 3.0% decline in the prior week.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report and the Consumer Credit report for December on Thursday
Russell 2000 +12.6% YTD
Nasdaq Composite 11.2% YTD
S&P 500 +9.0% YTD
Dow Jones Industrial Average +8.8% YTD
Wall Street Extends Gains, Led by Mega-Cap Stocks
04-Feb-19 16:25 ET
Dow +175.48 at 25239.37, Nasdaq +83.67 at 7233.20, S&P +18.34 at 2724.83
https://www.briefing.com/investor/markets/stock-market-update/2019/2/4/wall-street-extends-gains-led-by-megacap-stocks.htm
[BRIEFING.COM] The S&P 500 gained 0.7% on Monday with shares of mega-cap companies leading the advance. The Dow Jones Industrial Average gained 0.7%, the Nasdaq Composite gained 1.2%, and the Russell 2000 gained 1.0%.
A mega-cap rally characterized the day's trading action for most of the session with buying interest concentrated among a handful of names ahead of Alphabet's (GOOG 1132.80, +22.05, +2.0%) earnings report after the close. A last minute swarm of broad-based buyers, though, pushed most sectors to finish near their best levels of the day.
The S&P 500 information technology (+1.6%), industrials (+1.3%), and communication services (+1.0%) sectors outperformed the broader market.
Shares of widely-held companies like Apple (AAPL 171.25, +4.73, +2.8%), Microsoft (MSFT 105.74, +2.96, +2.9%), Facebook (FB 169.25, +3.54, +2.1%), and Netflix (NFLX 351.34, +11.49, +3.4%) all rose more than 2.0%.
Defense stocks increased, too, underpinning the strength in the industrials sector. The iShares Dow Jones US Aerospace & Defense ETF (ITA 198.86, +4.06) gained 2.1%.
Some story stocks from Monday included Clorox (CLX 158.38, +8.52, +5.7%) and Sysco (SYY 66.64, +3.07, +4.8%), both of which beat earnings estimates. Also, Ultimate Software (ULTI 332.54, +54.71) surged 19.7% after the company received a cash buyout offer led by private equity firm Hellman & Friedman for $11 billion, or $331.50/share.
The health care (-0.3%) and materials (-0.2%) sectors underperformed the broader market and were the only sectors ending Monday with a loss.
U.S. Treasuries also finished the day with losses, pushing yields higher across the curve. The 2-yr yield and 10-yr yield increased three basis points each to 2.53% and 2.72%, respectively. The U.S. Dollar Index gained 0.3% to 95.84. WTI crude lost 1.2% to $54.61/bbl.
Reviewing Monday's lone economic report, the Factory Orders report for November:
Factory orders declined 0.6% in November (Briefing.com consensus +0.3%) on the heels of a 2.1% decline in October. Excluding transportation, orders were down 1.3% in November following a 0.2% increase in October.
The key takeaway from the report is that it showed a drop in business investment in November, evidenced by the 0.6% decline in new orders for nondefense capital goods excluding aircraft. That raises the potential for a further decline in December since the November softness preceded the big market sell-off in December and the start of the partial government shutdown in January that were drags on business confidence.
Looking ahead, investors will receive the ISM Non-Manufacturing Index for January on Tuesday.
Russell 2000 +12.5% YTD
Nasdaq Composite 10.7% YTD
S&P 500 +8.7% YTD
Dow Jones Industrial Average +8.2% YTD
InvestmentHouse - AMZN Guidance Drags on NASDAQ (Weekend Newsletter)
https://news.investmenthouse.com/2019/02/the-daily-part-1-of-3-2-2-19.html
- A mix of data to end the week closes the market mixed but nicely higher for the week.
- AMZN guidance drags on NASDAQ.
- Jobs report stronger than expected, revisions placate worries of too much strength.
- Trade talks end with an agreement for Trump/Xi meeting.
- Well entrenched leaders enjoy a strong week while other areas are trying to form up and join leadership as did the chips.
Friday produced a ton of data about the economy, but it was all somewhat anticlimactic. Good jobs data pushed stocks higher from weaker futures, helping offset AMZN's earnings guidance and the lack of a trade deal after the US/China meeting. On balance the market handled all the news decently, closing mostly higher though NASDAQ was weighed down by AMZN.
SP500 2.43, 0.09%
NASDAQ -17.87, -0.25%
DJ30 64.22, 0.26%
SP400 0.33%
RUTX 0.18%
SOX 1.20%
NASDAQ 100 -0.45%
VOLUME: NYSE -36%, NASDAQ -18%.
ADVANCE/DECLINE: NYSE +1.3:1, NASDAQ +1.4:1.
The week was so much more than Friday, however. Other earnings from big names kept the upside working. AAPL and BA led the move with their earnings and gap rallies Wednesday. FB led higher Thursday with a big upside gap. Lots of earnings on the week, lots of beats, lots of top line misses attesting to the economic slowing that resulted just as the FOMC's Powell issued his October proclamation against the economy and by extension the markets. What is new about that? Nothing at all. The Fed always acts too late, it always reacts to the prior cycle, not the current one. I think that is called fighting the last war.
Ah, the Fed. It was a huge contributor to the market as well. Already indicating it had flipped its view from the October announcement it was hiking a set number of times regardless, the FOMC meeting simply confirmed that. But confirmation is very important -- putting it in writing means more. Stocks were up Wednesday before the FOMC (AAPL, BA), but the FOMC statement and Powell's conference comments jumped stocks further upside.
Friday saw jobs, AMZN and other earnings, and ISM January. Jobs beat expectations and was solid though December was written 90K lower (222k vs 312k); that revision actually helped as investors decided that was not too strong to impact the Fed.
Let's face it: the Fed basically told everyone it was a non-factor for at least a quarter, some say 6 months. It is data dependent, but after recognizing it was wrong in its economic assessment, it is not going to jump back to hikes anytime soon as that would expose it for what it is -- clueless, no better at timing economic cycle turns than most investors are at telling when the market is topping or bottoming. Thus, good economic data is likely read by the market as good for the market.
Stocks jumped higher on the jobs report and managed to rally into the first half hour and indeed midday. Then they tailed off in the afternoon session. Just a weak effort for most stocks though the chips put in a decent performance.
That left DJ30 at the 200 day SMA, NASDAQ and SP500 moving toward that next resistance with the small and midcaps doing the same. SOX is similar to DJ30 as the chips are bumping up against the 200 day SMA as well.
THE ECONOMY
Jobs Report
Jobs: 304K vs 160K exp vs 222K Dec (from 312K)
Unemployment: 4.0% vs 3.9%. That is to be expected.
Wages: 0.1% vs 0.3% exp. 3.2% year/year, not bad
Participation: 63.2%. Nice
Average week: 34.5 vs 34.4 exp vs 34.5 prior. Did not drop during shutdown.
Govt says limited shutdown impact as Federal workers will get back pay. Makes sense.
Leisure: +74K
Construction: +53K
Healthcare: +42K
Retail: +21k
Mining: +7K
Manufacturing: +13K
Professional/Business: +30K
The Fed and Jobs
It just so happened that FOMC voting member Bullard appeared on CNBC and was able to give the Fed's (at least from his perspective) take on the jobs report. For background, remember that Bullard is from Chicago with the Chicago economic theory of markets that is more akin to the Austrian model that actually reflect historical data. He was against the rate hikes as he saw the Fed hiking into the slowdown. He was correct, though he never wants rate hikes either, even when the Fed could have gotten away with it.
Bullard said he was pleased with the current interest rate level and that the Fed was now at a point where there were no rate hikes 'penciled in,' that the Fed had no presumption one way or the other regarding rates.
Bullard noted the rest of the world (EU, Japan) had negative rates and growth and economic issues while the US was 'normalized' at 2.25% to 2.5% with ongoing growth. According to Bullard, that acted as a buffer of sorts, allowing the Fed to back off and leave the economy to itself.
What Bullard DID NOT say, something that is SCREAMING at us while many in the US push for socialism, indeed in some cases communism, is that the REASON the US has growth and can leave rates alone with some acceptable inflation is because the US once again adopted pro-growth strategies and policies in 2017.
Ten years of pathetic economic performance after big government growth, big government taxes, massive big government regulation that saw the first 10 year period without a year where growth averaged 3% or better. The first such decade since the Great Depression.
All of that was transformed into world-leading growth with just a FEW policy changes. That is the difference between the US and the rest of the world. This is another real-time, live textbook example of what capitalism accomplishes versus the socialism of the EU, Japan, and Venezuela, or the totalitarianism of Saudi Arabia, Russia and . . . China.
Everyone is obsessing over the slowdown in the world economies outside the US, yet fail to make the connection that the reason the US is doing well when others are not is that our system is different. It works. People are talking socialism when the policies in the last two years have reduced unemployment overall and in minority groups to historic and indeed all-time lows.
What about China? I know everyone thinks China is so strong. It is not. Its economy is dangerously weak. No doubt China could be an economic monster if it was free enterprise system. As it is, however, it chooses communism and a crappy economy that has to steal to 'advance.' That is why China will not make the structural changes the administration seeks: if it does so it loses its only method of technological gain: theft. If your economy provides no incentive to innovate, there is little innovation. The numbers of the past 10 years show China rolling back its move to open up its economy. That is the hardline communists trying to live the 'good old days' of strongarm governance. That is not compatible, however, with a burgeoning economy.
Gorbachev saw this as leader of the USSR. He tried to make economic changes and cut deals with the US. Reagan had surged the US economy with his growth policies and the US was crushing the USSR in military development. Gorbachev saw the USSR could not compete, tried to make deals, Reagan saw the USSR was dealing from a position of weakness and turned the deals down. The USSR ultimately collapsed without a shot fired.
We have that chance with China. The Fed is now on board. If we don't get bogged down in the absurd bifurcation in the US, we could live to see the last big communist government fail. We just have to be smart enough to realize what is happening and take advantage of it -- for the betterment of the entire world. I remember communism. Everyone should read about the hundreds of millions who have died under these regimes. Pushing the Chinese communist party to oblivion is a noble cause.
Yet, you have people here in the US pushing socialism, indeed labeling communist ideas as socialist (as if that makes them better!). It all sounds great: free stuff for everyone. But it is never free. When you have over 50% of people not paying any income tax as it is, you cannot given away free healthcare and college as well, at least not quality. It turns into what socialist and communist nations provide: low grade services.
Thus you see spectacles such as senator Warren chiding Howard Shultz. Shultz was born dirt poor. His father suffered a serious accident when Shultz was a boy and his family lost everything it had. Shultz just did what you do, that is keep working hard and smart. He recognized the opportunity with Starbucks when he saw it, and after years of trying was able to convince the original owners it could be big. Even then they sold out to him because they didn't see it, could not dream that big. Shultz had nothing but intelligence, a strong work ethic, the dream and the drive to do it. MOST IMPORTANTLY, he could use the system we have in the US, a system that would allow him the opportunity to be great. He did it. With his success he made many, many millionaires. His company provides some of the best healthcare there is for its workers, many of whom are simply hourly employees.
For those accomplishments, Warren calls him a freeloader. The liar about being of Native American heritage calls a great entrepreneur, creator, jobs maker, worker benefits provider, and classic American success story a freeloader. That is the state of our politics. I cannot say I agree with Shultz on all his social and political positions, but he has definitely earned the right to espouse them, dare I say more so than Warren.
But, I digress.
THE MARKET
CHARTS
SOX led the Friday move, moving close to the 200 day MA, ready to join the Dow that made the move Wednesday. Chips are still leading nicely higher. Again, 1300 is next resistance, and just 13 points away.
DJ30: Gapped upside and rallied to the 200 day SMA Wednesday, held that position through Friday. Oh, that is 25,000, the next resistance, right in the middle of the October/December trading range. Dow 25,000 hats were out starting Wednesday, a questionable practice. Still, a good move higher with next resistance at 26K, though 25K is not a done deal.
SP500: Excellent break higher starting Wednesday, bouncing up off the 50 day MA second test. Doji Friday, 45 points off the 200 day SMA. 2750 to 2800 is next serious resistance.
NASDAQ: FAANG helped break NASDAQ higher from the second 50 day MA test. Rallied Wednesday and Friday, hitting some resistance at 7265, pausing Friday. Of course, the move higher was gratis AAPL, GOOG, AMZN and strong software stocks. Friday the modest loss was due to AMZN gapping lower after earnings results, but the rest of the stocks performed quite decently to keep the losses quite minimal. Next serious resistance at the top of the October/December range from 7485 to 7575 along with the 200 day SMA at 7453.
SP400, RUTX: As with the other indices, the midcaps and small caps started higher again Wednesday from a weeklong lateral move. Nice new breaks higher, moving up near the center of their October/December trading range. Trying to play catch up to the large cap indices, doing a decent job.
LEADERSHIP
FAANG: AAPL, FB gapped sharply higher on earnings, gapping into next resistance but holding the move. GOOG, AMZN gapped upside to the 200 day SMA just following along. Of course Friday AMZN gapped back down on its earnings guidance. NFLX moved over the 200 day SMA and is holding on to close out the week.
Software: Nice solid week. ZS exploded higher Thursday. NOW gapped upside on results. COUP continued flying higher after a strong Thursday move. CRM started a new break higher Wednesday into Friday. FIVN moved well for us the past week, breaking higher out of its triangle. SPLK moving to higher rally highs. A good group. Still.
Semiconductors: AVGO hit a higher recovery high midweek, tested back to the 10 day EMA. UCTT posted another strong week. MU lagged but Friday started higher again. AMD gapped upside Wednesday and continued. RMBS posted a strong week, CY gapped to the 200 day SMA Friday. The group remains very good.
China: These stocks have come back around. BABA at the 200 day SMA with a solid move. JD moving up off the 50 day EMA in its recovery. SINA set up well. HTHT interesting as is BZUN. Anticipating a recovery?
Financial: Mostly working laterally all week, e.g. C, JPM, GS. Regional banks are improving, e.g. TCBI, STTdec. V broke higher Friday after its earnings report.
Apparel: DECK gapped to a new high, clearing a 3 month range on earnings. LULU still looks nice in a test of the rally off the December low.
MARKET STATS
DJ30
Stats: +64.22 points (+0.26%) to close at 25063.89
Nasdaq
Stats: -17.87 points (-0.25%) to close at 7263.87
Volume: 2.4B (-18.09%)
Up Volume: 1.52B (-290M)
Down Volume: 850.49M (-249.51M)
A/D and Hi/Lo: Advancers led 1.37 to 1
Previous Session: Advancers led 1.79 to 1
New Highs: 57 (-18)
New Lows: 17 (-10)
S&P
Stats: +2.43 points (+0.09%) to close at 2706.53
NYSE Volume: 881.197M (-36.32%)
Up Volume: 468.586M (-414.319M)
Down Volume: 389.316M (-103.256M)
A/D and Hi/Lo: Advancers led 1.33 to 1
Previous Session: Advancers led 2.16 to 1
New Highs: 99 (-33)
New Lows: 10 (+3)
SENTIMENT
VIX: 16.14; -0.43
VXN: 19.80; -0.44
VXO: 16.67; -0.43
Put/Call Ratio (CBOE): 1.13; +0.29
Bulls and Bears:
Bulls rebounded farther but the move has slowed after that crash into the thirties during the December selloff. Bears are fading but bulls and bears crossed and did their 'thing' in terms of a contrary signal.
Bulls: 45.8 versus 45.4
Bears: 20.6 versus 21.3
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
Bulls: 45.8 versus 45.4
45.4 versus 34.8 versus 29.9 versus 39.3 versus 45.4 versus 46.7 versus 38.3 versus 39.6 versus 42.9 versus 42.5 versus 50.5 versus 51.9 versus 56.3 versus 61.8 versus 60.6 versus 59.0 versus 57.7 versus 60.1 versus 59.6 versus 57.7 versus 57.3 versus 54.9 versus 54.5 versus 54.9 versus 55.3 versus 52.4 versus 47.1 versus 47.6 versus 52.0 versus 55.5 versus 52.9 versus 50.0 versus 49.1 versus 46.6 versus 43.1 versus 43.6 versus 48.0 versus 43.6 versus 42.2 versus 49.5 versus 55.5 versus 54.9 versus 48.6 versus 48.1 versus 48.5 versus 41.9 versus 54.4 versus 66.00
Bears: 20.6 versus 21.3
21.3 versus 29.4 versus 34.6 versus 21.4 versus 20.4 versus 21.50 versus 20.6 versus 19.8 versus 19.0 versus 19.8 versus 19.8 versus 19.0 versus 18.3 versus 18.5 versus 18.6 versus 18.3 versus 18.1 versus 18.3 versus 18.1 versus 18.3 versus 18.3 versus 18.6 versus 18.8 versus 18.6 versus 18.5 versus 18.5 versus 18.6 versus 18.4 versus 17.6 versus 17.8 versus 17.7 versus 19.2 versus 19.2 versus 19.4 versus 19.4 versus 20.6 versus 20.8 versus 19.6 versus 19.8 versus 18.6 versus 17.5 versus 16.8 versus 15.7 versus 15.5 versus 14.4 versus 14.6 versus 14.4 versus 15.5 versus 12.6 versus 12.8 versus 12.7 versus 13.5 versus 15.2 versus 15.1 versus 15.2 versus 15.1 versus 15.1 versus 15.4 versus 15.4 versus 14.4 versus 14.4 versus 15.1 versus 15.2 versus 15.1 versus 17.0 versus 17.1 versus 19.0 versus 20.2
OTHER MARKETS
Bonds: 2.684% versus 2.64%. Bonds surged Thursday but Friday dropped back to the 10 day EMA, giving up the Thursday surge.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.64% versus 2.679% versus 2.710.5 versus 2.738% versus 2.748% versus 2.734% versus 2.741% versus 2.75% versus 2.788% versus 2.752% versus 2.727% versus 2.718% versus 2.706% versus 2.699% versus 2.733% versus 2.712% versus 2.731% versus 2.694% versus 2.668% versus 2.552% versus 2.643% versus 2.686% versus 2.716% versus 2.774% versus 2.811% versus 2.736% versus 2.788% versus 2.803%. versus 2.762% versus 2.821% versus 2.855% versus 2.895% versus 2.913% versus 2.908% versus 2.884% versus 2.863% versus 2.854% versus 2.892% versus 2.915% versus 2.979% versus 2.993% versus 3.032% versus 3.061% versus 3.058%
EUR/USD: 1.14554 versus 1.14478. Still bumping at the 200 day SMA.
Historical: 1.14478 versus 1.14924 versus 1.14351 versus 1.14285 versus 1.1407 versus 1.13134 versus 1.13830 versus 1.13652 versus 1.13636 versus 1.13919 versus 1.13993 versus 1.14802 versus 1.14734 versus 1.14699 versus 1.15075 versus 1.15532 versus 1.14547 versus 1.14834 versus 1.13980 versus 1.13957 versus 1.13343 versus 1.14450 versus 1.14425 versus 1.1432 versus 1.13588 versus 1.14015 versus 1.13708 versus 1.13828 versus 1.13755 versus 1.13533 versus 1.13049
USD/JPY: 109.530 versus 108.85. Dollar jumped Friday though it was a tough week, recovering what it lost Wednesday.
Historical: Last below 109 in June 2018: 108.85 versus 108.96 versus 109.364 versus 109.180 versus 109.545 versus 109.757 versus 109.58 versus 109.651 versus 109.773 versus 109.133 versus 108.912 versus 108.551 versus 108.340 versus 108.563 versus 108.332 versus 107.959 versus 108.802 versus 108.705 versus 108.517 versus 107.173 versus 107.515 versus 109.687 versus 110.273 versus 110.845 versus 111.190 versus 110.337 versus 111.223 versus 111.21 versus 112.521 versus 112.477 versus 112.653 versus 113.382
Oil: 55.26, +1.47. Bounced off the 50 day MA and hit a higher recovery high Friday.
Gold: 1322.10, -3.10. Off a bit Friday, but a strong move on the week into Thursday. Quite the break higher.
MONDAY
This week more earnings while the economic data slows a bit. The market could use a bit slower news feed.
Good breaks higher that stuck for the indices and of course many stocks making up the indices. The key will be if new blood joins the upside. Semiconductors have come back into leadership after a long absence, a huge addition upside. China stocks are stirring with some breaking higher, others looking to do the same. Financials are still recovering, trying to make the next move.
We have positions on many of the current leaders in software, FAANG, etc. Indeed, we are looking at AAPL for a new position this week. Still, the other areas need to set up more and make moves, and we do like some of these groups. If they can make the moves that would provide the market a lot more support for the move higher.
Recall way, way back when we talked about the sentiment indicators being leading indicators, and the initial leaders moving, and while they did their thing, over time other stocks would build bases and set up? That is occurring, e.g. the semiconductors, and others are setting up. Thus far it is a slow process but it is working for the upside.
Have a great weekend!
S&P 500 Extends Rally amid Better-than-Feared Earnings
31-Jan-19 16:25 ET
Dow -15.19 at 24999.67, Nasdaq -15.19 at 7167.40, S&P +23.05 at 2704.06
https://www.briefing.com/investor/markets/stock-market-update/2019/1/31/s-and-p-500-extends-rally-amid-betterthanfeared-earnings.htm
[BRIEFING.COM] The S&P 500 gained 0.9% on Thursday, as another batch of better-than-feared earnings added to the optimism surrounding U.S.-China trade relations and a dovish-minded Federal Reserve. The Nasdaq Composite gained 1.4%, and the Russell 2000 gained 0.8%.
The Dow Jones Industrial Average, however, lost 0.1% due in large part to negative price action in Microsoft (MSFT 104.43, -1.95, -1.8%), Visa (V 135.01, -2.59, -1.9%), and DowDuPont (DWDP 53.81, -5.47, -9.2%) following their earnings reports.
The S&P 500 communication services sector was easily the best-performing group on Thursday, rising 3.7% on the strength of Facebook (FB 166.69, +16.27, +10.8%) and Charter Communications (CHTR 331.05, +41.14, +14.2%). The utilities (+2.1%) and consumer staples (+1.8%) sectors also outperformed the broader market.
Facebook delivered fourth quarter results that were both better than expected and better than feared in light of the negative publicity surrounding Facebook's shortcomings in protecting users' data privacy. Charter Communications for its part reported year-over-year revenue growth that was above expectations.
General Electric (GE 10.16, +1.06) was another story stock, climbing 11.7%, after the company beat revenue expectations and pleased investors with a $4.9 billion free cash flow figure and a lower-than-expected $1.5 billion settlement with the Department of Justice.
On the other hand, the underperformance from the heavily-weighted information technology (-0.1%) and financial (-0.3%) sectors weighed on the broader market. Also, the lightly-weighted materials sector (-1.5%) was the worst-performing group.
Financial stocks, in particular, fell in part for the same reason the broader market rallied: an expectation that the Fed will not be raising interest rates soon and that it is discussing an earlier end than expected to its balance sheet normalization effort.
The Treasury market seems to be pricing in a softer economic outlook, which has been reflected in the sharp drop in yields following Wednesday's FOMC decision and Fed Chair Powell's press conference.
After both the 2-yr yield and the 10-yr yield decreased four basis points Wednesday, the 2-yr yield fell seven basis points to 2.46% today while the 10-yr yield fell six basis points to 2.64%. The U.S. Dollar Index increased 0.2% to 95.57.
Separately, WTI crude lost 1.0% to $53.77/bbl, although it finished the month up 18.4%.
Reviewing Thursday's economic data, which included New Home Sales for November, the fourth quarter Employment Cost Index, the Chicago PMI for January, and the weekly Initial and Continuing Claims report:
New home sales, which are counted when a contract is signed, jumped 16.9% month-over-month in November to a seasonally adjusted annual rate of 657,000 (Briefing.com consensus 555,000).
The key takeaway from the report is that the surge in new home sales, which are counted when a contract is signed, coincided with a noticeable drop in both median and average selling prices.
The Employment Cost Index showed compensation costs for civilian workers increased 0.7% (Briefing.com consensus +0.8%), seasonally adjusted, in the fourth quarter, down from 0.8% in the third quarter. Wages and salaries, which comprise about 70% of compensation costs, increased 0.6%, while benefit costs jumped 0.7%.
The key takeaway from the report is that it showed an acceleration in the growth of wages and salaries for civilian workers, which increased 3.1% for the 12 months ending in December 2018, versus 2.5% for the 12-month period ending in December 2017.
The MNI Chicago Business Barometer, also known as the Chicago PMI, dropped to 56.7 in January (Briefing.com consensus 58.0) from a downwardly revised 63.8 (from 65.4) in December. The dividing line between expansion and contraction is 50.0, so the January reading is to be interpreted as a deceleration in growth and not an actual decline in growth.
The key takeaway from the report was the indication that the New Orders Index fell to a two-year low of 53.2 and that manufacturers' inability to absorb cost pressures was a reason customers were deterred from placing orders in January.
Initial claims for the week ending January 26 increased by 53,000 to 253,000 (Briefing.com consensus 220,000). Continuing claims for the week ending January 19 increased by 69,000 to 1.782 million.
The headline increase is notable, yet the key takeaway is that the large increase in initial claims is apt to be dismissed at this juncture as some typical volatility in a series that saw initial claims hit their lowest level last week in nearly 50 years.
Looking ahead, investors will receive a big batch of economic data on Friday: the Employment Situation Report for January, the ISM Manufacturing Index for January, the final reading of the University of Michigan Index of Consumer Sentiment for January, Construction Spending for November, and Wholesale Inventories for November.
Russell 2000 +11.2% YTD
Nasdaq Composite +9.7% YTD
S&P 500 +7.9% YTD
Dow Jones Industrial Average +7.2% YTD
Stocks Close Mixed ahead of Apple's Earnings Report
29-Jan-19 16:25 ET
Dow +51.74 at 24579.96, Nasdaq -57.39 at 7027.80, S&P -3.85 at 2639.96
https://www.briefing.com/investor/markets/stock-market-update/2019/1/29/stocks-close-mixed-ahead-of-apples-earnings-report.htm
[BRIEFING.COM] Wall Street closed on a mixed note on Tuesday, with the S&P 500 losing 0.2%, ahead of a big batch of earnings reports. The market has heard its share of guidance cuts during the Q4 earnings season so far, which presumably led investors to employ some caution in front of Apple's (AAPL 154.68, -1.62, -1.0%) report after Tuesday's close.
The blue-chip Dow Jones Industrial Average gained 0.2%, the tech-sensitive Nasdaq Composite lost 0.8%, and the small-cap Russell 2000 lost 0.1%.
The S&P 500 communication services (-1.1%), information technology (-1.0%), and consumer discretionary (-0.8%) sectors underperformed the broader market. Conversely, the industrials (+1.4%), materials (+1.1%), and real estate (+0.8%) sectors outperformed.
Buying interest was largely absent within the market's most heavily-weighted tech sector in front of Apple's earnings report. Investors were perhaps fearful that there could be some cautious-minded guidance, with a nod to weakness in China, that could drive a spillover effect to Apple suppliers and the broader tech sector.
Dow component 3M (MMM 196.95, +3.75, +1.9%) for its part lowered its fiscal 2019 guidance, in part due to slowing segments in China. The stock outperformed, though, helped by an earnings beat and by the view that its guidance cut was better than feared.
Fellow Dow components Pfizer (PFE 40.77, +1.24, +3.1%) and Verizon (VZ 53.28, -1.79, -3.3%) also reported better-than-expected profit estimates and issued underwhelming guidance. Pfizer guided fiscal 2019 earnings and revenue below consensus, and Verizon issued mixed guidance for fiscal 2019.
In other earnings news, Xerox (XRX 27.07, +2.77, +11.4%), Corning (GLW 33.72, +3.36, +11.1%), and Whirlpool (WHR 136.49, +12.03, +9.7%) all climbed after impressing investors with their corporate results.
U.S. Treasuries edged higher, pushing yields lower across the curve. The 2-yr yield decreased one basis point to 2.57%, and the 10-yr yield decreased three basis points to 2.71%. The U.S. Dollar Index gained 0.1% to 95.82. WTI crude rose 2.4% to $53.22/bbl.
Overseas, the UK Parliament backed an amendment to renegotiate a Brexit deal, according to Bloomberg. The outcome produced little effect on U.S. markets, but the voting was seen as a victory for UK Prime Minister Theresa May. The offset to the news is that the EU has said the Brexit deal is not renegotiable, particularly with respect to the Irish backstop worked out previously in the Withdrawal Agreement.
Reviewing Tuesday's economic data, which included the Conference Board's Consumer Confidence Index for January and the S&P Case-Shiller Home Price Index for November:
The Conference Board's Consumer Confidence Index dropped to 120.2 in January (Briefing.com consensus 126.1) from a downwardly revised 126.6 (from 128.1) in December.
The key takeaway from the report is that it showed the outlook among consumers was dampened by the volatility in financial markets and the government shutdown, which threatens to register in consumer spending data that would be a drag on first quarter GDP.
The S&P Case-Shiller Home Price Index for November increased 4.7% (Briefing.com consensus 4.9%), down from an unrevised increase of 5.0% in October.
Looking ahead, investors will receive the FOMC Rate Decision for January, Pending Home Sales for December, the ADP Employment Change for January, and the weekly MBA Mortgage Applications Index on Wednesday.
Russell 2000 +9.1% YTD
Nasdaq Composite +5.9% YTD
Dow Jones Industrial Average +5.4% YTD
S&P 500 +5.3% YTD
Stocks Fall on Caterpillar, NVIDIA Warnings but Close Near Highs
28-Jan-19 16:25 ET
Dow -208.98 at 24528.22, Nasdaq -79.18 at 7085.19, S&P -20.91 at 2643.81
https://www.briefing.com/investor/markets/stock-market-update/2019/1/28/stocks-fall-on-caterpillar-nvidia-warnings-but-close-near-highs.htm
[BRIEFING.COM] The S&P 500 declined as much as 1.5% on Monday, as warnings from Caterpillar (CAT 124.37, -12.49, -9.1%) and NVIDIA (NVDA 138.01, -22.14, -13.8%) catalyzed early selling efforts. The benchmark index, however, ended the day down 0.8% and finished near its best levels of the session.
The Dow Jones Industrial Average lost 0.8%, the Nasdaq Composite lost 1.1%, and the Russell 2000 lost 0.6%.
The S&P 500 information technology (-1.4%), communication services (-1.2%), and health care (-1.1%) sectors underperformed the broader market. Conversely, the real estate (+1.0%) and consumer staples (+0.5%) sectors were the lone groups to finish in the green.
Stocks opened sharply lower, as disappointments from Dow component Caterpillar and chipmaker NVIDIA provided an excuse for profit-taking. The S&P 500 was up 13.3% from its Dec. 24 low heading into the session.
Specifically, Caterpillar came up well short of Q4 earnings estimates and issued fiscal 2019 earnings guidance below expectations. NVIDIA lowered its fiscal Q4 revenue guidance below consensus, citing weaker-than-expected sales in segments like gaming and datacenter.
Caterpillar was a huge drag on the industrial sector (-1.0%) while NVIDIA's warning cooled down the red-hot Philadelphia Semiconductor Index (-2.1%).
While buyers were largely absent during the morning trade, they returned in the afternoon session and helped the major indices pare their losses in what has become a familiar buy-the-dip trade.
Airline stocks outperformed, bolstered in part by lower oil prices ($51.98/bbl, -$1.64, -3.1%). American Airlines (AAL 36.57, +1.59) led the S&P 500 in gains, rising 4.6%.
Strikingly, U.S. Treasuries did not stray too far from their unchanged marks throughout the day despite the slide in equities. The lack of a flight-to-safety bid was indicative of a stock market succumbing to profit taking rather than panic selling. The 2-yr yield decreased two basis points to 2.58%, and the 10-yr yield decreased one basis point to 2.74%. The U.S. Dollar Index lost 0.1% to 95.75.
Investors did not receive any economic data on Monday. This week, however, is shaping up to be a busy week of big happenings that will include a swarm of earnings reports, U.S-China trade talks, another vote on the Brexit plan in the UK Parliament, an FOMC meeting and press conference, and the January employment report.
Looking ahead, investors will receive the Conference Board's Consumer Confidence Index for January and the S&P Case-Shiller Home Price Index for November on Tuesday.
Russell 2000 +9.3% YTD
Nasdaq Composite +6.8% YTD
S&P 500 +5.5% YTD
Dow Jones Industrial Average +5.2% YTD
InvestmentHouse - Drama, Drama, Drama (Weekend Newsletter)
https://news.investmenthouse.com/2019/01/the-daily-part-1-of-3-1-26-19.html
- Trade on again, shutdown is shutdown, NYSE indices break higher from the test.
- SOX continues higher, taking the lead in the third leg.
- Stocks rise in the face of less than great news, lead by an important, often market-leading group.
- A new bounce for the third leg on Friday, but of course in a recovery there is little margin for error.
Fridays, Walls, balls, shutdowns that really are not, re-openings, and of course, markets.
Drama, drama, drama. Futures were higher Friday as some of the drama remained, some lifted. Trade news was upbeat as the meeting between Chinese and US trade people that never existed but was cancelled Tuesday was said to be back on. A preliminary protocol-type meeting for the end of January meeting -- but are we not at the end of January now? Ah, such is the state of what is considered news today.
The shutdown over the border wall -- among other things -- still continued as of Friday morning. Who would blink first? The reporting of carnage continued, though the metrics show that even with a government shutdown, government spending was down by just 7% per day. Even with the shutdown still ongoing, stocks were ready to try a rally.
Late day, word came that a deal was struck, a 3-week reopening of the government, no money for a border wall. It is hoped the respite will allow the sides to agree. Hmmm. Both sides are entrenched, at least the ones calling the shots. Several GOP senators pleaded to reopen the government -- had to get their spending fixes I suppose -- and that put pressure on the GOP. Many democrats were doing the same. Their voices were loud enough for a truce, but of course both sides have spent the ensuing 24 hours claiming victory. A 3-week window of funding is victory for anyone? Questionable.
GOP pundits claim the President broke a promise. No wall, no b*lls appeared to be the response from the GOP-ish side. Democratic leaders claim the President blinked. The White House shot back, stating if no deal is reached with border funding, then get ready for some kind of executive action on the wall.
Hardly reported early Friday was the White House drafting a 'national emergency proclamation' including $7B for wall construction. It would appear that if there is no deal with wall funding, something reiterated by top democrats this weekend, there will be some form of executive action. Oh THAT will be well-received.
Stocks respond: huh? What?
Stocks did not seem to mind. INTC missed on revenues, WDC missed earnings and revenues, but stocks moved higher nonetheless. Trade was 'back on' and the markets figure the shutdown gets resolved.
For a second Friday the stock indices rallied. While the prior week saw a bold new move into a third upside leg off the December low, the past week started a short week with a relative sharp decline that set the tone of the week. Was the prior Friday break through resistance a one-day shot that would result in a rebound-ending rollover, or was it just a test ahead of more gains on a third upside leg?
After two sessions' test the growth indices tried a move. NASDAQ edged higher but it was SOX that really moved. Riding earnings from XLNX and LRCX, SOX shot higher. The NYSE indices did not. Their action, as noted at the time, however, was constructive.
Friday SOX shot higher again, NASDAQ gapped upside, and this time the NYSE indices followed.
SP500 22.43, 0.85%
NASDAQ 91.40, 1.29%
DJ30 183.96, 0.75%
SP400 1.07%
RUTX 1.26%
SOX 2.17%
NASDAQ 100 1.27%
VOLUME: NYSE +9%, NASDAQ +1%.
ADVANCE/DECLINE: NYSE +3.3:1, NASDAQ +2.6:1
THE CHARTS
After 2 to 3 days down following the prior Friday upside gap, downside that did not look very upside positive after Tuesday, stocks resumed the third bounce. There were clearly leaders, e.g. SOX, while others more or less followed along. SOX is on the run upside while the others are up, but of course face more upside resistance challenges as they resume the climb higher. Nonetheless, the indices are doing exactly what they need to do and they have some leadership from semiconductors, financials coming back, and of course, software.
SOX clearly led upside, surging Thursday to a new recovery high and Friday as well.
NASDAQ was pulled along by SOX' performance, moving Friday to a new closing high on the recovery -- by a slim margin.
DJ30 moved to a new recovery high as well, just eclipsing the prior recovery high a week prior. DJ30 did fall well off the Friday intraday day high to close, taking some of the luster off the move to near the 200 day SMA at 25,000, the next resistance point to take on and overcome.
SP500 gapped and rallied off the 3-day test, moving intraday past the prior week's closing and recovery high. SP500 faded to close just below that prior high. Volume was up but still below average. The move was upside positive but not definitive, a good rebound off a test of the attempt at a new leg. Now it just needs banks to continue and lead the way higher.
SP400 gapped and rallied, closing just over the rebound's recovery high hit the prior Friday. A solid upside break off a classic test of a break through resistance.
RUTX also gapped and rallied, closing just over the prior week's high. As with SP400, a very solid, classic test then break higher.
LEADERSHIP
FAANG: After a weak start, FAANG stocks held support and stated higher Thursday, adding gains Friday. FB still looks as if it wants to end its relatively long downtrend. AAPL actually looks quite similar to FB as it comes off lows. AMZN bounced off the 50 day MA and gapped upside Friday with a decent but uninspired move. NFLX moved up through the 200 day SMA. GOOG gapped up off the 50 day EMA similar to AMZN.
Software: Still a solid group. COUP surged to the initial target. SPLK continued to a higher rally high. DATA surged almost 6% Friday. NOW bounced nicely though is not yet a breakout. EA spent the week working laterally. NTNX, ZS look good but have not made the breaks yet.
Financial: After a week of lateral consolidation, Friday the bank stocks rallied again -- C, BAC. JPM, WFC, not so great. GS started upside, but a light move thus far.
Semiconductors: Another strong move despite INTC, TXN and their weak outlooks. XLNX surged again. LRCX to the 200 day SMA. UCTT surged 11% for us. MU +6.5%, RMBS a good move. Some very solid advances still underway.
Pot: CGC gapped out of a lateral consolidation, rallying 9.66% on huge volume. CRON a strong upside week to a new high.
Drugs: Tough week for the large pharma stocks such as PFE, MRK. LLY held the 50 day EMA with a decent test. Biotechs still look decent: ARRY, EXEL, but nothing overly impressive thus far.
Energy: The big service stocks are trying to make the break higher, e.g. HAL, SLB.
Metals: Gold performs decently, e.g. SA, GG. Industrial metals are so-so, e.g. CENX, AKS, RS.
Machinery/Manufacturing: Some definite improvement though hard to call them leaders just yet. CAT is rallying toward the 200 day SMA in a four month base. CMI is bouncing off a 200 day SMA test following earnings that shot it through that level. TEX, MMM, EMR are off the lows but not much more.
MARKET STATS
DJ30
Stats: +183.96 points (+0.75%) to close at 24737.20
Nasdaq
Stats: +91.40 points (+1.29%) to close at 7164.86
Volume: 2.44B (+0.83%)
Up Volume: 1.91B (+360M)
Down Volume: 521.8M (-329.33M)
A/D and Hi/Lo: Advancers led 2.57 to 1
Previous Session: Advancers led 1.64 to 1
New Highs: 41 (+12)
New Lows: 21 (-11)
S&P
Stats: +22.43 points (+0.85%) to close at 2664.76
NYSE Volume: 860.856M (+9.39%)
Up Volume: 667.665M (+164.109M)
Down Volume: 188.992M (-85.876M)
A/D and Hi/Lo: Advancers led 3.3 to 1
Previous Session: Advancers led 2.08 to 1
New Highs: 50 (+19)
New Lows: 5 (-17)
SENTIMENT
VIX: 17.42; -1.47
VXN: 21.78; -1.71
VXO: 18.25; -1.13
Put/Call Ratio (CBOE): 0.75; -0.23
Bulls and Bears:
Bulls continued a bounce back in the forties with bears dropping back near 20. Then the market sold back this week. Still, the crossover occurred and that is a bullish indication. The market has made a move up, is testing, and then the question is if it can continue from there.
Bulls: 45.4 versus 42.1 versus 34.8
Bears: 21.3 versus 25.2 versus 29.4
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
Bulls: 45.4 versus 42.1
34.8 versus 29.9 versus 39.3 versus 45.4 versus 46.7 versus 38.3 versus 39.6 versus 42.9 versus 42.5 versus 50.5 versus 51.9 versus 56.3 versus 61.8 versus 60.6 versus 59.0 versus 57.7 versus 60.1 versus 59.6 versus 57.7 versus 57.3 versus 54.9 versus 54.5 versus 54.9 versus 55.3 versus 52.4 versus 47.1 versus 47.6 versus 52.0 versus 55.5 versus 52.9 versus 50.0 versus 49.1 versus 46.6 versus 43.1 versus 43.6 versus 48.0 versus 43.6 versus 42.2 versus 49.5 versus 55.5 versus 54.9 versus 48.6 versus 48.1 versus 48.5 versus 41.9 versus 54.4 versus 66.00
Bears: 21.3 versus 25.2
29.4 versus 34.6 versus 21.4 versus 20.4 versus 21.50 versus 20.6 versus 19.8 versus 19.0 versus 19.8 versus 19.8 versus 19.0 versus 18.3 versus 18.5 versus 18.6 versus 18.3 versus 18.1 versus 18.3 versus 18.1 versus 18.3 versus 18.3 versus 18.6 versus 18.8 versus 18.6 versus 18.5 versus 18.5 versus 18.6 versus 18.4 versus 17.6 versus 17.8 versus 17.7 versus 19.2 versus 19.2 versus 19.4 versus 19.4 versus 20.6 versus 20.8 versus 19.6 versus 19.8 versus 18.6 versus 17.5 versus 16.8 versus 15.7 versus 15.5 versus 14.4 versus 14.6 versus 14.4 versus 15.5 versus 12.6 versus 12.8 versus 12.7 versus 13.5 versus 15.2 versus 15.1 versus 15.2 versus 15.1 versus 15.1 versus 15.4 versus 15.4 versus 14.4 versus 14.4 versus 15.1 versus 15.2 versus 15.1 versus 17.0 versus 17.1 versus 19.0 versus 20.2
OTHER MARKETS
Bonds: 2.748% versus 2.734%. Bonds mostly higher on the week though Friday were off. Bouncing off the 2.5 week slide off the early January high.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.734% versus 2.741% versus 2.75% versus 2.788% versus 2.752% versus 2.727% versus 2.718% versus 2.706% versus 2.699% versus 2.733% versus 2.712% versus 2.731% versus 2.694% versus 2.668% versus 2.552% versus 2.643% versus 2.686% versus 2.716% versus 2.774% versus 2.811% versus 2.736% versus 2.788% versus 2.803%. versus 2.762% versus 2.821% versus 2.855% versus 2.895% versus 2.913% versus 2.908% versus 2.884% versus 2.863% versus 2.854% versus 2.892% versus 2.915% versus 2.979% versus 2.993% versus 3.032% versus 3.061% versus 3.058%
EUR/USD: 1.1407 versus 1.13134. After bombing lower Thursday on the ECB white flag, a surge upside Friday to take back the losses.
Historical: 1.13134 versus 1.13830 versus 1.13652 versus 1.13636 versus 1.13919 versus 1.13993 versus 1.14802 versus 1.14734 versus 1.14699 versus 1.15075 versus 1.15532 versus 1.14547 versus 1.14834 versus 1.13980 versus 1.13957 versus 1.13343 versus 1.14450 versus 1.14425 versus 1.1432 versus 1.13588 versus 1.14015 versus 1.13708 versus 1.13828 versus 1.13755 versus 1.13533 versus 1.13049
USD/JPY: 109.545 versus 109.757. A slow, slow creep upside, but nothing more as USD/JPY remains inside the December selloff.
Historical: Last below 109 in June 2018: 109.757 versus 109.58 versus 109.651 versus 109.773 versus 109.133 versus 108.912 versus 108.551 versus 108.340 versus 108.563 versus 108.332 versus 107.959 versus 108.802 versus 108.705 versus 108.517 versus 107.173 versus 107.515 versus 109.687 versus 110.273 versus 110.845 versus 111.190 versus 110.337 versus 111.223 versus 111.21 versus 112.521 versus 112.477 versus 112.653 versus 113.382
Oil: 53.69, +0.56. Hanging on over the 50 day EMA and 52.50 support in a weeklong lateral move. Trying to make a break higher from a 9 week inverted head and shoulders that formed after a 2 month selloff.
Gold: 1298.10, +18.30. After falling to the 20 day EMA early week, XGLD surged Friday to the upper trendline of the large triangle.
MONDAY
The third leg is underway for sure with SOX, indeed NASDAQ. The other indices are moving up off the test with a very important group, semiconductors, taking the clear point. A very important group for the overall market and thus a good upside signal.
NASDAQ is following -- thanks in large part to its semiconductor components -- while FAANG tries to reset and lead again and software continues its overall solid moves.
The real key for this week is whether the NYSE indices follow. SP400 and RUTX, really growth indices with NASDAQ and SOX, made very good moves Friday. SP500 and DJ30 were not bad, but they need more. Always more, more, more, but that is the nature of the fight when coming out of a sharp selloff.
There are still leaders that can push the third leg higher. NVDA is ready to break upside. AAPL could throw in upside. AMZN and GOOG are still in position to really help, but they have to make some serious moves in their four month bases. Software is solid and not all have broken higher yet, e.g. NOW, NTNX; CRM has consolidated and is at a make or break point. Financials are also there, machinery/manufacturing as well.
Good, but have to perform. Thus far the upside continues to win out on the recovery in spite of the trade, shutdown, world economic, and some earnings have been feast or famine. That shows a resilience in the move and we will thus continue to let positions run and pick up new positions as they show themselves.
Have a great weekend!
Stocks Rise on Government Shutdown Deal
25-Jan-19 16:30 ET
Dow +183.96 at 24737.20, Nasdaq +91.40 at 7164.37, S&P +22.43 at 2664.72
https://www.briefing.com/investor/markets/stock-market-update/2019/1/25/stocks-rise-on-government-shutdown-deal.htm
[BRIEFING.COM] The S&P 500 gained 0.9% on Friday as positive-sounding headlines, which included the temporary reopening of the government, helped lift investor sentiment. Friday's gains helped pare the benchmark index's weekly losses to 0.2%.
The Dow Jones Industrial Average (+0.8%) and the Nasdaq Composite (+1.3%) squeezed out weekly gains of 0.1% apiece, and the Russell 2000 (+1.3%) returned to its unchanged mark.
Nine of the 11 S&P 500 sectors closed the day in positive territory with the cyclical materials (+1.9%), information technology (+1.5%), and industrial (+1.3%) groups setting the pace. Conversely, the utilities (-1.3%) and consumer staples (-0.2%) sectors were the lone groups to finish in the red.
Stocks jumped at the open on initial speculation that a deal to reopen the government was imminent; hope the Federal Reserve may be getting close to the end of its balance sheet normalization effort; and a contention from Treasury Secretary Mnuchin that the U.S. is making progress with China trade talks.
Notably, news hit in the afternoon session that an agreement had been struck to provide funding, minus border security funding, to re-open the government through February 15. Negotiations over border security funding will take place in the interim, and a failure to reach a compromise on that front could result in another shutdown or a declaration of a national emergency in order to secure funding.
The market's response to the news was relatively muted, partially because it had already priced in some type of an agreement, and partially because it realizes it is only a temporary solution.
The Philadelphia Semiconductor Index was a notable area of strength on Friday, rising 2.2% after its best session in nearly 10 years the day before. A disappointing earnings report from Intel (INTC 47.04, -2.72, -5.5%) did not dampen buying interest in the group, but it did hurt the stock.
In other earnings news, Western Digital (WDC 43.16, +3.02) rose 7.5% with an upbeat outlook for the second half of 2019 offsetting weaker-than-expected quarterly earnings and guidance. In addition, Starbucks (SBUX 67.09, +2.35, +3.6%) impressed investors with its fiscal first quarter report and full-year outlook.
U.S. Treasuries ended the day on a lower note, pushing the 2-yr yield and the 10-yr yield up four basis points each to 2.60% and 2.75%, respectively. The U.S. Dollar Index fell 0.9% to 95.75, pulled back by a rebound in the euro. WTI crude rose 0.9% to $53.62/bbl.
Investors did not receive any notable economic data on Friday and will not receive any economic data on Monday.
Russell 2000 +10.0% YTD
Nasdaq Composite +8.0% YTD
S&P 500 +6.3% YTD
Dow Jones Industrial Average +6.0% YTD
Wall Street Mixed as Growth Concerns Limit Gains
24-Jan-19 16:25 ET
Dow -22.38 at 24553.24, Nasdaq +47.69 at 7072.97, S&P +3.63 at 2642.29
https://www.briefing.com/investor/markets/stock-market-update/2019/1/24/wall-street-mixed-as-growth-concerns-limit-gains.htm
[BRIEFING.COM] The S&P 500 eked out a gain of 0.1% on Thursday as it wavered between small gains and losses throughout the day. Another round of better-than-expected corporate earnings coupled with ongoing global growth concerns contributed to a mixed session on Wall Street.
The Dow Jones Industrial Average lost 0.1%, the Nasdaq Composite gained 0.7%, and the Russell 2000 gained 0.7%.
Some discouraging commentary from Commerce Secretary Wilbur Ross and European Central Bank President Mario Draghi helped temper buying interest.
Specifically, Mr. Ross said the U.S. and China are still "miles and miles" from reaching a trade deal, and Mr. Draghi acknowledged that significant stimulus is still needed for the eurozone. These comments stirred concerns about the pace of future economic growth, which in turn stirred concerns about the pace of future earnings growth.
Nevertheless, the cyclical information technology (+0.9%), energy (+0.6%), and industrial (+0.6%) sectors managed to outperform the broader market. Conversely, the consumer staples (-1.3%), health care (-0.9%), and material (-0.6%) sectors were the lone groups to finish in the red.
The Philadelphia Semiconductor Index was a notable pocket of strength on Thursday, rising 5.7% on the back of some strong earnings reports. The outperformance in chip stocks underpinned the strength in the heavily-weighted tech sector and the tech-heavy Nasdaq.
Heavyweight component Texas Instruments (TXN 102.09, +6.60) rose 6.9%, while Lam Research (LRCX 161.20, +21.87, +15.7%), Xilinx (106.06, +16.51, +18.4%), and Teradyne (TER 36.04, +4.11, +12.9%) each surged well over 10% following their earnings reports.
In addition, better-than-feared earnings and guidance from the transport stocks, particularly the airlines, helped lift the Dow Jones Transportation Average (+1.1%) and the industrial sector.
American Airlines (AAL 33.66, +2.01, +6.4%), Southwest Air (LUV 54.21, +3.19, +6.3%), JetBlue (JBLU 18.12, +0.88, +5.1%), and Union Pacific (UNP 160.34, +6.01, +3.9%) all beat earnings and revenue estimates.
On the other hand, McCormick (MKC 124.35, -14.65) was a bit of a story stock, dropping 10.5% after it missed Q4 top and bottom-line estimates and guided fiscal 2019 earnings and revenue below consensus. Its poor performance was a huge drag on the consumer staples sector (-1.3%). Another story stock was PG&E (PCG 13.95, +5.96, +74.6%), which surged late in the day on a report that a California investigation cleared the company from issues surrounding the 2017 Tubbs wildfire.
U.S. Treasuries ended on a higher note, pushing yields lower across the curve. The 2-yr yield decreased three basis points to 2.56%, and the 10-yr yield decreased four basis points to 2.71%. The U.S. Dollar Index rose 0.4% to 96.53, benefiting at the expense of the euro, which fell on the back of Mr. Draghi's cautious-minded remarks. WTI crude rose 1.0% to $53.15/bbl.
Reviewing Thursday's economic data, which included the weekly Initial and Continuing Claims report and the Conference Board's Leading Economic Index for December:
Weekly initial claims decreased by 13,000 to 199,000 (Briefing.com consensus 217,000) for the week ending January 19. That is the lowest level of initial claims since November 15, 1969. Continuing claims for the week ending January 12 dropped by 24,000 to 1.713 million.
The key takeaway from the report is that the low level of initial claims is reflective of a tight labor market.
The Conference Board's Leading Economic Indicators Index decreased 0.1% in December (Briefing.com consensus -0.1%) after increasing 0.2% in November. The Leading Indicators report for December included estimates for manufacturers' new orders for consumer goods and materials for November and December and Building Permits for December due to the ongoing partial government shutdown. The Conference Board will not release its annual benchmark revision of indicators until underlying data become available once the government reopens.
The key takeaway from the report is that the Conference Board sees a path to GDP growth slowing to 2.0% by the end of 2019.
Investors will not receive any notable economic data on Friday.
Russell 2000 +8.6% YTD
Nasdaq Composite +6.6% YTD
S&P 500 +5.4% YTD
Dow Jones Industrial Average +5.3% YTD
Wall Street Mixed in Uneven Session
23-Jan-19 16:25 ET
Dow +171.14 at 24575.62, Nasdaq +5.41 at 7025.28, S&P +5.80 at 2638.66
https://www.briefing.com/investor/markets/stock-market-update/2019/1/23/wall-street-mixed-in-uneven-session.htm
[BRIEFING.COM] The S&P 500 gained 0.2% on Wednesday in what was an uneven day of trading. The benchmark index was up as much as 0.8% shortly after the start of trading, lost as much as 0.8% by midday, and teetered around its flat line for most of the afternoon.
The Dow Jones Industrial Average (+0.7%) and the Nasdaq Composite (+0.1%) also experienced similar price action. The Russell 2000 (-0.2%) did, too, but finished in negative territory.
Most S&P 500 sectors finished higher with consumer staples (+1.2%) and utilities (+1.1%) outperforming. Conversely, the energy (-1.0%) and material (-0.7%) sectors underperformed the broader market and were the lone sectors ending with a loss.
Stocks had rallied at the open on some earnings beats and reassuring guidance from Dow components IBM (IBM 132.89, +10.37, +8.5%), Procter & Gamble (PG 94.84, +4.40, +4.9%), and United Technologies (UTX 117.04, +5.98, +5.4%).
With stocks recouping a good chunk of Tuesday's losses, there was some hope that the prior day's weakness was nothing more than a one-day pullback for an overbought market.
Market participants, however, would sell into strength, which resulted in a steady decline throughout the morning that left the S&P 500 below its 50-day moving average (2619). A dearth of buying interest, though, turned into a wave of buying interest soon after the S&P 500 violated its 50-day moving average.
The 50-day moving average has proven to be an important technical support level the past two sessions, where an inflow of buyers has helped prevent selling efforts from getting too out of hand.
Sure enough, the S&P 500 ascended to its flat line in afternoon action despite the lingering concerns surrounding a U.S-China trade deal, global growth prospects, and a tense government shutdown.
In other corporate news, Comcast (CMCSA 36.89, +1.92) rose 5.5% after it beat beat top and bottom-line estimates and increased its dividend by 10% to $0.84 per share on an annualized basis for 2019.
U.S. Treasuries ended on a lower note, although the bulk of the session saw a steady climb off opening lows. The 2-yr yield increased two basis points to 2.59%, and the 10-yr yield increased three basis points to 2.76%. The U.S. Dollar Index lost 0.2% to 96.12. WTI crude lost 0.8% to $52.63/bbl.
Reviewing Wednesday's economic data, which included the FHFA Housing Price Index for November and the weekly MBA Mortgage Applications Index:
The FHFA Housing Price Index for November increased 0.4% (Briefing.com consensus 0.3%), unchanged from October's upwardly revised increase (from 0.3%).
The weekly MBA Mortgage Applications Index decreased 2.7% from the prior increase of 13.5% last week.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report and the Conference Board's Leading Economic Index for December on Thursday.
Russell 2000 +7.8% YTD
Nasdaq Composite +5.9% YTD
Dow Jones Industrial Average +5.4% YTD
S&P 500 +5.3% YTD
Stocks Pull Back as Narrative Shifts Back towards Growth Concerns
22-Jan-19 16:20 ET
Dow -301.87 at 24404.48, Nasdaq -136.87 at 7019.87, S&P -37.81 at 2632.86
https://www.briefing.com/investor/markets/stock-market-update/2019/1/22/stocks-pull-back-as-narrative-shifts-back-towards-growth-concerns.htm
[BRIEFING.COM] The S&P 500 lost 1.4% on Tuesday, pulling back from short-term overbought conditions, with the narrative shifting back towards growth concerns. The Dow Jones Industrial Average lost 1.2%, the Nasdaq Composite lost 1.9%, and the Russell 2000 lost 1.7%.
10 of the 11 S&P 500 sectors finished lower with energy (-2.2%), industrials (-2.1%), and communication services (-2.0%) underperforming the broader market. Conversely, the utilities sector (+0.2%) was the only group to finish with gains.
The benchmark index came into the session up 13.6% since its Dec. 24 low and was arguably due for a pullback. Strikingly, the market's rally up to this point had brushed past many of the issues that were highlighted in Tuesday's headlines, which were nothing new to the market.
Some of those headlines included (1) a slowing Chinese economy, evidenced by China's 2018 6.6% GDP growth being its lowest pace since 1990; (2) the IMF cutting its 2019 and 2020 global growth forecasts by 0.1 each to 3.5% and 3.6%, respectively; and (3) a slowing U.S. housing market, evidenced by existing home sales sinking 6.4% in December to a seasonally adjusted annual rate of 4.99 million (Briefing.com consensus 5.25 million).
The stock market's seeming vulnerability to those headlines fostered a sense that the rally from deeply oversold conditions has run its course, such that the stock market will now be more attuned to stories highlighting weak growth or sticking points in trade negotiations with China.
Tuesday's selling efforts sent the S&P 500 below its 50-day moving average (2623). However, the benchmark index would close above that important technical support level after NEC Director Larry Kudlow, in a CNBC interview late in the day, refuted earlier reports that a preparatory US-China trade meeting had been cancelled. Mr. Kudlow stated simply that the earlier reports were not true.
Separately, some weaker-than-expected corporate guidance also provided an excuse to take some profits off the table.
Dow component Johnson & Johnson (JNJ 128.92, -1.77, -1.5%) fell after it guided full-year 2019 sales below Wall Street's estimates. In addition, Stanley Black & Decker (SWK 115.69, -21.19) dropped 15.5% after it guided fiscal year 2019 earnings below consensus estimates.
Stanley Black & Decker's outsized loss, and a large downturn in shares of Arconic (ARNC 17.09, -3.25, -16.0%) after the company said its Board is no longer considering a sale of the company, contributed to the industrial sector's (-2.1%) underperformance.
Travelers (TRV 122.36, -1.65, -1.3%) was another Dow component that released its earnings report. The company missed earnings estimates and reported in-line revenue.
U.S. Treasuries saw increased buying interest, sending yields lower across the curve. The 2-yr yield decreased four basis points to 2.57%, and the 10-yr yield decreased five basis points to 2.73%. The U.S. Dollar Index was flat at 96.34. WTI crude fell 3.5% to $52.16/bbl.
Reviewing Tuesday's economic data, which featured Existing Home Sales for December as the only report:
Existing home sales decreased 6.4% month-over-month in December to a seasonally adjusted annual rate of 4.99 million (Briefing.com consensus 5.25 million) from an upwardly revised 5.33 million (from 5.32 million) in November. Total sales were 10.3% lower than the same period a year ago.
The key takeaway from the report is that it reflects a softening housing market, evidenced by the deceleration in the median selling price growth rate and sales declines across all regions despite a decline in the average commitment rate for a 30-year, conventional, fixed rate mortgage (4.64%) versus November (4.87%).
Looking ahead, investors will receive the weekly MBA Mortgage Applications Index and the FHFA Housing Price Index for November on Wednesday.
Russell 2000 +8.1% YTD
Nasdaq Composite +5.8% YTD
S&P 500 +5.0% YTD
Dow Jones Industrial Average +4.6% YTD
Stocks Pull Back as Narrative Shifts Back towards Growth Concerns
22-Jan-19 16:20 ET
Dow -301.87 at 24404.48, Nasdaq -136.87 at 7019.87, S&P -37.81 at 2632.86
https://www.briefing.com/investor/markets/stock-market-update/2019/1/22/stocks-pull-back-as-narrative-shifts-back-towards-growth-concerns.htm
[BRIEFING.COM] The S&P 500 lost 1.4% on Tuesday, pulling back from short-term overbought conditions, with the narrative shifting back towards growth concerns. The Dow Jones Industrial Average lost 1.2%, the Nasdaq Composite lost 1.9%, and the Russell 2000 lost 1.7%.
10 of the 11 S&P 500 sectors finished lower with energy (-2.2%), industrials (-2.1%), and communication services (-2.0%) underperforming the broader market. Conversely, the utilities sector (+0.2%) was the only group to finish with gains.
The benchmark index came into the session up 13.6% since its Dec. 24 low and was arguably due for a pullback. Strikingly, the market's rally up to this point had brushed past many of the issues that were highlighted in Tuesday's headlines, which were nothing new to the market.
Some of those headlines included (1) a slowing Chinese economy, evidenced by China's 2018 6.6% GDP growth being its lowest pace since 1990; (2) the IMF cutting its 2019 and 2020 global growth forecasts by 0.1 each to 3.5% and 3.6%, respectively; and (3) a slowing U.S. housing market, evidenced by existing home sales sinking 6.4% in December to a seasonally adjusted annual rate of 4.99 million (Briefing.com consensus 5.25 million).
The stock market's seeming vulnerability to those headlines fostered a sense that the rally from deeply oversold conditions has run its course, such that the stock market will now be more attuned to stories highlighting weak growth or sticking points in trade negotiations with China.
Tuesday's selling efforts sent the S&P 500 below its 50-day moving average (2623). However, the benchmark index would close above that important technical support level after NEC Director Larry Kudlow, in a CNBC interview late in the day, refuted earlier reports that a preparatory US-China trade meeting had been cancelled. Mr. Kudlow stated simply that the earlier reports were not true.
Separately, some weaker-than-expected corporate guidance also provided an excuse to take some profits off the table.
Dow component Johnson & Johnson (JNJ 128.92, -1.77, -1.5%) fell after it guided full-year 2019 sales below Wall Street's estimates. In addition, Stanley Black & Decker (SWK 115.69, -21.19) dropped 15.5% after it guided fiscal year 2019 earnings below consensus estimates.
Stanley Black & Decker's outsized loss, and a large downturn in shares of Arconic (ARNC 17.09, -3.25, -16.0%) after the company said its Board is no longer considering a sale of the company, contributed to the industrial sector's (-2.1%) underperformance.
Travelers (TRV 122.36, -1.65, -1.3%) was another Dow component that released its earnings report. The company missed earnings estimates and reported in-line revenue.
U.S. Treasuries saw increased buying interest, sending yields lower across the curve. The 2-yr yield decreased four basis points to 2.57%, and the 10-yr yield decreased five basis points to 2.73%. The U.S. Dollar Index was flat at 96.34. WTI crude fell 3.5% to $52.16/bbl.
Reviewing Tuesday's economic data, which featured Existing Home Sales for December as the only report:
Existing home sales decreased 6.4% month-over-month in December to a seasonally adjusted annual rate of 4.99 million (Briefing.com consensus 5.25 million) from an upwardly revised 5.33 million (from 5.32 million) in November. Total sales were 10.3% lower than the same period a year ago.
The key takeaway from the report is that it reflects a softening housing market, evidenced by the deceleration in the median selling price growth rate and sales declines across all regions despite a decline in the average commitment rate for a 30-year, conventional, fixed rate mortgage (4.64%) versus November (4.87%).
Looking ahead, investors will receive the weekly MBA Mortgage Applications Index and the FHFA Housing Price Index for November on Wednesday.
Russell 2000 +8.1% YTD
Nasdaq Composite +5.8% YTD
S&P 500 +5.0% YTD
Dow Jones Industrial Average +4.6% YTD
InvestmentHouse - No Time for the US to Back Off (Weekend Newsletter)
https://news.investmenthouse.com/2019/01/the-daily-part-1-of-3-1-19-19.html
- Indices move through next resistance as the third leg expands.
- Trade, Fed trump signs of slowing, some so-so earnings and some warnings.
- China injects massive liquidity, offers US $1T in purchases of goods. No time for the US to back off.
- Fed on the US' side or not?
- More leaders setting up to support the move higher.
- Many are claiming bear market is over, but don't forget that big top is still in place.
After an upside but somewhat disappointing Thursday, at least in terms of NASDAQ and the other indices still bumping the bottom of the October/December trading range, Friday was nothing but net. Renewed trade hope, Fed softening afterglow, and lingering positive bank earnings offset expiration, company layoffs, and weak consumer sentiment.
Stocks started higher and really never looked back. All indices cut well into the trading range, moving through the near resistance, putting distance on the resistance. That is key in turning resistance into support on a subsequent test -- and indices and stocks almost always test.
SP500 34.75, 1.32%
NASDAQ 72.77, 1.03%
DJ30 336.25, 1.38%
SP400 1.40%
RUTX 1.04%
SOX 2.30%
NASDAQ 100 0.98%
VOLUME: NYSE +10%, NASDAQ +15%. NYSE volume moved over average for the first time in a while, just squeezing past. NASDAQ trade was up but still below average. Not exactly explosive volume on expiration.
ADVANCE/DECLINE: NYSE 2.9:1, NASDAQ 2.3:1.
Trade: China is offering purchases of $1T in US goods as a trade deal enhancer. China is at a point it has to deal. 1T yuan in liquidity injected into its financial markets last week in a desperate effort to get its economy going again. Rates for shipping commodities into China plunging, indicating China is not importing nearly the same quantities. Tariffs crushing its economy.
Now the key is what Trump does. This is very reminiscent of the Reagan/Gorbachev nuclear negotiations. Gorbachev knew his economy was imploding as the USSR could not keep up with the economic engine Reagan restarted and used to fund the US military. So, Gorbachev offered everything the US had said it wanted to that point. At that juncture, Reagan's belief was confirmed -- the US was winning the economically and thus militarily. He turned down Gorbachev's offer. Why give up the benefits of a winning hand? We all know the outcome.
Back to Trump's next step. The market rallied late Thursday on a story Mnuchin had or was wanting to offer lifting tariffs as a good faith offering to aid in completing negotiations. Applying Reagan's, and I believe what is Trump's, way of thinking, however, that is the LAST thing the US should do. It would be viewed as weakness on our part by the Chinese. Likely it was Mnuchin, a former GS banker and globalist, acting on his own, applying his globalist views to the negotiation. No, we need to hold resolute, demand that China meet all our conditions, and let time work in our favor. China will only feel more pressure as its economy continues falling. 1T yuan injected in one week. An offer to buy $1T in US goods. That is, as the President would say, huge. Recognize it, understand it, use it. And yes, win.
The Fed, of course, has to be part of the game, and on the US' side at that. The US needs a strong economy to win the trade war and cement the US' position in the future. It is good the Fed is now more 'data dependent'; that helps.
But Powell has to wake up and realize he is not playing for the globe, he is playing for the US. Despite the popular meme many globalists like to parrot, the US is not dependent upon the rest of the world for prosperity. The rest of the world is dependent upon the US' prosperity. If we take care of what we need to do, i.e. play our game, the US and thus the rest of the world, is better off. The Fed appears to be better, but I am not sure it really understands its role in this negotiation.
I thus posit the question I have often put out: why do we have a Fed? If it can stymie the policy of our elected government, how is that constitutional? It is a construct of control that the Constitution does not allow for. It was created to benefit those in positions of power and it has worked to maintain their power ever since. Remember, the very wealthy are not as concerned about their total amount of wealth as they are in maintaining their relative amount of wealth and thus power. With that power comes their wealth. Contemplate that premise and its ramifications and then ask yourself my question again.
THE MARKET
CHARTS
The indices spent the week moving through more resistance, taking out the 50 day MA's, the Fibonacci retracements, and Friday moved through the barrier at the bottom of the trading ranges (though NASDAQ was already there). A very important move obviously. It speaks for itself.
Of course, when the indices are in such a big hole after December's selloff, moving back up results in taking on resistance after resistance. More is to come, and don't forget, this could just be a third upside leg in a relief move after the breakdown from the massive yearlong 2018 topping pattern.
Thus, we are enjoying the upside for sure with good positions already letting us bank gain and more to come. But, there is a long, long way to new highs and the top is disrupted at this point. Many are now convinced that the bear market of December is over and that a new or continuing bull market is in place.
Certainly there are good patterns that developed over the time of the rally, just as I said could be the case several weeks back. Those have set up the upside move and more are set up and breaking higher as well. Very encouraging as rallies MUST have leadership to succeed. They are getting it as well as others coming up from downtrends and reversing their action. To survive a rally needs that.
Again, however, this rally does not mean the top is obviated. We play the moves the market presents. You also keep in mind the top and watch for actions that start to cut against the upside move continuing, e.g. TEAM announcing great earnings doubling expectations, gapping higher but then reversing. That is just one case, but if it happens again and again, that is a warning sign. Thus far, it has been limited and the market is into its third leg.
NASDAQ: NASDAQ gapped upside to a doji, tapping the 100% retracement of the selloff from the first recovery peak of the December selloff. A bit of resistance there, but after moving through 7000, 7400 to 7450 is more likely a recovery level.
SP500: Gapped and rallied, putting more distance on the 50 day MA and breaking up through the bottom of the October/December trading range. Rising volume, moving back above average, but quite light for an expiration session. 2700 is next resistance on up to 2750ish.
DJ30: Finally broke up into the October/December range, clearing the 50 day MA and 61% Fibonacci retracement as well. Next resistance is 25,000 where the 200 day SMA resides as well as a series of price points from October including a series of gaps. Important level.
SOX: SOX broke through the 50 day MA a week back, spent last week testing that move, then Friday a big gap and run higher. Cleared the prior January peak, solid move. As goes SOX . . . typically so goes the rest of the market.
SP400: The midcaps are in recovery mode, clearing all resistance Thursday then gapping and rallying farther Friday. Closed at 1817, next resistance at the 78% Fibonacci retracement and the upper gap point from early December at 1825-1830.
RUTX: Early week RUTX moved through the 50 day MA and 61% Fibonacci retracement. Friday it moved through the bottom of the October/December trading range. Already close to the 78% Fibonacci retracement at 1490 (closed at 1482).
LEADERSHIP
FAANG: Lackluster Friday after an overall solid week that saw these stocks break higher early on. GOOG gapped to a doji below the 200 day SMA, AMZN gapped to the 200 day SMA and faded to basically flat. NFLX gapped higher early week, sold to near the 200 day SMA Friday after earnings; a good place to test and hold. FB gapped upside, faded to a doji on threats of a big fine. AAPL was up on the week though flat Friday.
Software: TEAM gapped higher on earnings, reversed to close with a loss at the 20 day EMA. CRM enjoyed a good week and was up 1.8% Friday. SPLK similar. COUP had a big week for us. FFIV struggling, ADBE trying to get back in the game, NOW still looks interesting.
Financial: Excellent week despite MS struggling on the day of earnings. GS, BAC, JPM, WFC -- good results.
Semiconductors: Some good moves as chips try to come back to life. LRCX gapped and rallied from an inverted head and shoulders at the end of a pullback. SIMO gapped and rallied nicely. UCTT moved but no volume. AMD, AMAT, MU, RMBS, SMTC look very interesting.
Pot: CRON surged Friday off a 10 day EMA test. CGC enjoyed a solid week. TLRY lagged.
Metals: Still improving in some areas. FCX up nicely late week, breaking up off the 50 day MA. CENX ditto.
Machinery: Really got going. CMI posted 2 big sessions to end the week. TEX moved up through resistance after a long downtrend. CAT approaching the 200 day SMA in its recovery.
Drugs: LLY surged Thursday but gapped lower Friday. Big biotech still decent, others are very mixed.
Energy: Service companies are not bad, e.g. SLB, HAL.
MARKET STATS
DJ30
Stats: +336.25 points (+1.38%) to close at 24706.35
Nasdaq
Stats: +72.76 points (+1.03%) to close at 7157.23
Volume: 2.45B (+15.02%)
Up Volume: 1.75B (+230M)
Down Volume: 669.77M (+175.78M)
A/D and Hi/Lo: Advancers led 2.26 to 1
Previous Session: Advancers led 1.68 to 1
New Highs: 33 (+3)
New Lows: 23 (-3)
S&P
Stats: +34.75 points (+1.32%) to close at 2670.71
NYSE Volume: 1.006B (+10.33%)
Up Volume: 845.091M (+185.834M)
Down Volume: 157.891M (-88.536M)
A/D and Hi/Lo: Advancers led 2.87 to 1
Previous Session: Advancers led 2.44 to 1
New Highs: 31 (+12)
New Lows: 12 (+1)
SENTIMENT
VIX: 17.80; -0.26
VXN: 21.89; -1.45
VXO: 17.76; +0.11
Put/Call Ratio (CBOE): 0.84; +0.04
Bulls and Bears:
After a quick crossover, a quick trist, bulls rebounded, bears fell a bit, and there is some separation. Still, the deed is done; they crossed over, typically a very good indication sentiment was extreme to the negative and sets up a move higher. We are seeing a move and now the indices are near the next key levels of resistance.
Bulls: 34.8 versus 29.9
Bears: 29.4 versus 34.6
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
Bulls: 34.8 versus 29.9
29.9 versus 39.3 versus 45.4 versus 46.7 versus 38.3 versus 39.6 versus 42.9 versus 42.5 versus 50.5 versus 51.9 versus 56.3 versus 61.8 versus 60.6 versus 59.0 versus 57.7 versus 60.1 versus 59.6 versus 57.7 versus 57.3 versus 54.9 versus 54.5 versus 54.9 versus 55.3 versus 52.4 versus 47.1 versus 47.6 versus 52.0 versus 55.5 versus 52.9 versus 50.0 versus 49.1 versus 46.6 versus 43.1 versus 43.6 versus 48.0 versus 43.6 versus 42.2 versus 49.5 versus 55.5 versus 54.9 versus 48.6 versus 48.1 versus 48.5 versus 41.9 versus 54.4 versus 66.00
Bears: 29.4 versus 34.6
34.6 versus 21.4 versus 20.4 versus 21.50 versus 20.6 versus 19.8 versus 19.0 versus 19.8 versus 19.8 versus 19.0 versus 18.3 versus 18.5 versus 18.6 versus 18.3 versus 18.1 versus 18.3 versus 18.1 versus 18.3 versus 18.3 versus 18.6 versus 18.8 versus 18.6 versus 18.5 versus 18.5 versus 18.6 versus 18.4 versus 17.6 versus 17.8 versus 17.7 versus 19.2 versus 19.2 versus 19.4 versus 19.4 versus 20.6 versus 20.8 versus 19.6 versus 19.8 versus 18.6 versus 17.5 versus 16.8 versus 15.7 versus 15.5 versus 14.4 versus 14.6 versus 14.4 versus 15.5 versus 12.6 versus 12.8 versus 12.7 versus 13.5 versus 15.2 versus 15.1 versus 15.2 versus 15.1 versus 15.1 versus 15.4 versus 15.4 versus 14.4 versus 14.4 versus 15.1 versus 15.2 versus 15.1 versus 17.0 versus 17.1 versus 19.0 versus 20.2
OTHER MARKETS
Bonds: 2.788% versus 2.752%. Bonds continue fading the past two weeks after surging to that recovery high over the late summer peak.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.752% versus 2.727% versus 2.718% versus 2.706% versus 2.699% versus 2.733% versus 2.712% versus 2.731% versus 2.694% versus 2.668% versus 2.552% versus 2.643% versus 2.686% versus 2.716% versus 2.774% versus 2.811% versus 2.736% versus 2.788% versus 2.803%. versus 2.762% versus 2.821% versus 2.855% versus 2.895% versus 2.913% versus 2.908% versus 2.884% versus 2.863% versus 2.854% versus 2.892% versus 2.915% versus 2.979% versus 2.993% versus 3.032% versus 3.061% versus 3.058%
EUR/USD: 1.13636 versus 1.13919. Euro continues a 2 week fade after hitting the 200 day SMA. Still heading lower.
Historical: 1.13919 versus 1.13993 versus 1.14802 versus 1.14734 versus 1.14699 versus 1.15075 versus 1.15532 versus 1.14547 versus 1.14834 versus 1.13980 versus 1.13957 versus 1.13343 versus 1.14450 versus 1.14425 versus 1.1432 versus 1.13588 versus 1.14015 versus 1.13708 versus 1.13828 versus 1.13755 versus 1.13533 versus 1.13049
USD/JPY: 109.773 versus 109.133. Dollar continues its recovery, showing improbable strength.
Historical: Last below 109 in June 2018: 109.133 versus 108.912 versus 108.551 versus 108.340 versus 108.563 versus 108.332 versus 107.959 versus 108.802 versus 108.705 versus 108.517 versus 107.173 versus 107.515 versus 109.687 versus 110.273 versus 110.845 versus 111.190 versus 110.337 versus 111.223 versus 111.21 versus 112.521 versus 112.477 versus 112.653 versus 113.382
Oil: 54.04, +1.68. After a weeklong lateral move, oil breaks higher through the 52.50 and 50 day MA resistance. Nice inverted head and shoulders setup paying off upside.
Gold: 1282.60, -9.70. After consolidating just below the upper trendline in the triangle, gold broke lower Friday to the 20 day EMA.
TUESDAY
Market closed Monday for MLK day. Expiration was a big upside move. Perhaps some giveback early Tuesday, but not expecting the move to roll over without some kind of negative news on trade or the Fed this weekend.
If there is some weakness, we plan on using that to pick up some more upside positions. We purchased some Friday while some plays could not make up their mind. We will look at them this week along with some new plays that are set up quite well.
Right now it is that kind of market. The big top is still there, but the rally sparked a third leg this past week. As long as good plays continue setting up and break higher while providing good entries, we will use those to enter.
Have a great weekend!
Stocks Climb on Trade Hope, Waning Growth Concerns
18-Jan-19 16:25 ET
Dow +336.25 at 24706.35, Nasdaq +72.26 at 7156.74, S&P +34.75 at 2670.67
https://www.briefing.com/investor/markets/stock-market-update/2019/1/18/stocks-climb-on-trade-hope-waning-growth-concerns.htm
[BRIEFING.COM] The S&P 500 gained 1.3% on Friday, boosted by trade talk optimism and waning concerns about the U.S. economic outlook. Friday's gains extended the benchmark index's weekly gain to 2.9%.
The Dow Jones Industrial Average (+1.4%), the Nasdaq Composite (+1.0%), and the Russell 2000 (+1.0%) also extended their weekly gains to 3.0%, 2.7%, and 2.4%, respectively.
Within the S&P 500, all 11 sectors finished higher with the cyclical energy (+1.9%), industrials (+1.9%), financials (+1.7%), and materials (+1.6%) groups leading the broader market higher.
Friday's presumed catalyst was a Bloomberg News report highlighting China's willingness to eliminate the U.S. trade imbalance.
According to the report, China made an offer during trade negotiations earlier this month to boost the amount of U.S. imports, such that the trade balance with the U.S. would be $0 by 2024. It's not the news itself that sparked an extended rally, but the tenor of recent trade headlines that have fed hope for a meaningful trade deal.
It is evident that the market is beginning to price in the positive effects of a trade deal, which, if struck, should bode well for global growth and corporate earnings prospects.
In addition, strength in manufacturing output, which drove a 0.3% increase in industrial production in December (Briefing.com consensus 0.2%), and the capacity utilization rate rising to 78.7% (Briefing.com consensus 78.5%), helped temper some of the pressing economic growth concerns that were so prominent at the end of 2018.
The easing concerns over economic growth were subsequently made apparent across capital markets.
The S&P 500 cyclical sectors outperformed; U.S. Treasury prices finished lower, driving yields higher; the dollar extended gains; and oil prices ($53.84/bbl, +$1.85, +3.6%) increased, as did copper prices ($2.72/lb, +0.04, +1.5%).
The yield on the 2-yr Treasury note rose five basis points to 2.61%, and the yield on the 10-yr Treasury note rose four basis points to 2.78%. The U.S. Dollar Index increased 0.3% to 96.37.
In earnings news, Dow component American Express (AXP 100.48, +0.99, +1.0%) rose after it released a better-than-expected earnings report. Netflix (NFLX 339.10, -14.09, -4.0%) for its part fell after a Q4 revenue miss and guiding Q1 top and bottom lines below consensus.
In other corporate news, Tesla (TSLA 302.26, -45.05) was a story stock after it dropped 13.0% following plans to reduce its full-time staff by approximately 7%. The company hopes that a reduction can help produce its Model 3 at a more affordable price point for the masses.
Reviewing Friday's economic data, which included Industrial Production and Capacity Utilization for December and the preliminary reading of the University of Michigan Index of Consumer Sentiment for January:
Industrial production increased 0.3% in December (Briefing.com consensus 0.2%) on top of a downwardly revised 0.4% increase (from 0.6%) in November. The capacity utilization rate rose to 78.7% (Briefing.com consensus 78.5%) from an upwardly revised 78.6% (from 78.5%).
The key takeaway from the report is that the there was notable strength in manufacturing output (hard data), which saw its largest gain since February 2018 and helped allay some of the concerns surrounding the softening ISM Manufacturing Index (and soft survey data) for December.
The preliminary University of Michigan Index of Consumer Sentiment for January slumped to 90.7 (Briefing.com consensus 96.0) from 98.3 in December, marking the lowest level since President Trump was elected.
The key takeaway from the report is that the consumer's attitude about the economic outlook for the year ahead was categorized as the worst since mid-2014, calling into question the consumer's propensity to spend freely on discretionary items.
Looking ahead, investors will receive Existing Home Sales for December on Monday.
Russell 2000 +9.9% YTD
Nasdaq Composite +7.9% YTD
S&P 500 +6.5% YTD
Dow Jones Industrial Average +5.9% YTD
Rally Continues on Strong Bank Earnings
16-Jan-19 16:20 ET
Dow +141.57 at 24207.16, Nasdaq +10.86 at 7034.71, S&P +5.80 at 2616.06
https://www.briefing.com/investor/markets/stock-market-update/2019/1/16/rally-continues-on-strong-bank-earnings.htm
[BRIEFING.COM] The S&P 500 gained 0.2% on Wednesday, as strong earnings from Bank of America (BAC 28.45, +1.90, +7.2%) and Goldman Sachs (GS 197.08, +17.17, +9.5%) helped keep the rally going. The benchmark index was up as much as 0.6%, but succumbed to selling pressure into the close.
The Dow Jones Industrial Average gained 0.6%, the Nasdaq Composite gained 0.2%, and the Russell 2000 gained 0.7%.
The S&P 500 financial sector carried the load on Wednesday with a sizable gain of 2.2%. Conversely, the consumer staples (-0.5%) and communication services (-0.4%) sectors underperformed the broader market.
Bank of America and Goldman Sachs climbed 7.2% and 9.5%, respectively, after both exceeded Wall Street's expectations for revenue and earnings in the fourth quarter.
Their outperformance helped underpin the strength in the financial sector, which is now up 6.6% in January. The overwhelmingly positive response to their earnings news was rooted in the idea that the results demonstrated the December negativity surrounding the stocks -- and the sector -- was overdone.
United Continental (UAL 86.36, +5.16, +6.4%) also reported better-than-expected top and bottom lines. Its strong report, and a reassuring outlook, helped lift the Dow Jones Transportation Average (+0.5%) and airline stocks as a whole.
The market has had its fair share of earnings warnings during this rally and Wednesday was no exception. Still, the stock market seemed unaffected by a fourth quarter earnings warning from Ford Motor (F 8.29, -0.55, -6.2%) and retailer Nordstrom (JWN 45.01, -2.25, -4.8%) saying its full-year earnings are expected to be at the low end of its previous outlook due to weaker-than-expected holiday sales.
The warnings may have tempered some buying interest, but it was the upbeat earnings reports that swayed investors, keeping the broader market afloat all session.
The positive reaction to earnings had the S&P 500 flirting with its 50-day moving average (2628.59) for the first time since early December -- that is, until a Wall Street Journal report indicated that the U.S. Department of Justice is pursuing criminal charges against Huawei for IP theft. The news preceded the late selling action into the close.
Separately, there was some merger news of note on Wednesday. Fiserv (FISV 72.57, -2.47, -3.3%) announced a $22 billion, or $22.74 per share, all-stock offer to acquire First Data (FDC 21.24, +3.70, +21.1%).
U.S. Treasuries ended on Wednesday on a lower note, pushing the 2-yr yield and 10-yr yield up two basis points each to 2.54% and 2.73%, respectively. The U.S. Dollar Index was flat at 96.08. WTI crude reversed course to finish higher by 0.8% at $52.33/bbl.
Overseas, UK Prime Minister Theresa May survived a no-confidence vote a day after her Brexit plan was soundly defeated. Her ability to survive the no-confidence vote was widely expected and, like Tuesday, the outcome was a non-factor for U.S. markets.
Reviewing this Wednesday's economic data, which included the NAHB Housing Market Index, Import and Export Prices for December, the Fed's Beige Book for January, and the weekly MBA Mortgage Applications Index:
The NAHB Housing Market Index for January came in at 58 (Briefing.com consensus 56), up from 56 in December.
Import prices declined 1.0% month-over-month and were down 0.6% year-over-year. Excluding fuel, they were unchanged in December and up just 0.5% year-over-year. Export prices declined 0.6% and were up 1.1% year-over-year. Excluding agricultural products, they were down 1.1% in December and up 1.0% year-over-year.
The key takeaway from the report is that it didn't ring any inflation alarm bells that would compel the Fed to be less patient with its monetary policy approach.
The Federal Reserve's January Beige Book noted that eight out of twelve districts reported modest to moderate growth, but contacts had become less optimistic about their expectations due to increased volatility in financial markets, rising short-term rates, falling energy prices, and trade/political uncertainty.
The weekly MBA Mortgage Applications Index rose 13.5% versus last week's increase of 23.5%.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report and the Philadelphia Fed Index for January on Thursday.
Russell 2000 +7.9% YTD
Nasdaq Composite +6.0% YTD
S&P 500 +4.4% YTD
Dow Jones Industrial Average +3.8% YTD
High-Growth Stocks Help Wall Street Rally Past Disappointing Earnings
15-Jan-19 16:25 ET
Dow +155.75 at 24065.59, Nasdaq +117.92 at 7023.85, S&P +27.69 at 2610.26
https://www.briefing.com/investor/markets/stock-market-update/2019/1/15/highgrowth-stocks-help-wall-street-rally-past-disappointing-earnings-.htm
[BRIEFING.COM] The S&P 500 gained 1.1% on Tuesday, as a shift to high-growth stocks helped the market rally past several earnings disappointments. The ability of the market to rally on bad news fed into a belief that the bad news was priced in already during the December rout, which in turn fueled hope that bargain-hunting efforts will keep the 2019 rally try going.
The Dow Jones Industrial Average gained 0.7%, the Nasdaq Composite gained 1.7%, and the Russell 2000 gained 0.9%.
The S&P 500 health care (+1.7%), communication services (+1.7%), and information technology (+1.5%) sectors led the advance. Conversely, the industrials (-0.3%) and material (-0.7%) sectors underperformed.
Stocks jumped out of the gate despite early weakness from the heavily-weighted financial sector (+0.8%).
Weaker-than-expected (but not weak) earnings reports from JPMorgan Chase (JPM 101.68, +0.74, +0.7%) and Wells Fargo (WFC 47.67, -0.75, -1.6%) provided an early justification to sell the banks. JPMorgan missed both top and bottom line estimates, but net income increased 67%, earnings per share increased 85%, and net revenue growth increased 4%. Wells Fargo for its part missed top line estimates but beat earnings estimates.
On a related note, Delta Air Lines (DAL 47.83, +0.08, +0.2%) overcame a Q1 earnings warning.
Dow component UnitedHealth (UNH 256.87, +8.81, +3.6%) outperformed after it beat earnings estimates and helped drive the leadership of the health care sector.
The preference for high-growth tech stocks kept the broader market afloat despite the earnings disappointments. The outperformance of the growth stocks on Tuesday could be rationalized in part as an effort to invest in companies with stronger growth prospects amid a slowing growth environment.
Netflix (NFLX 354.64, +21.70, +6.5%), for instance, remained in growth mode with reports indicating it will raise its U.S. subscription prices to finance its original content and heavy debt load.
Notably, JPMorgan and the financial sector eventually turned it around in late morning trading. A pivot from negative territory into positive territory helped lift the S&P 500 to session highs (+1.2%) and above the closely-watched 2600 level, which approximates the low end of the 2018 trading range.
The broader market succumbed to some knee-jerk selling shortly after 2:00 p.m. ET when it was learned the British Parliament voted against PM Theresa May's Brexit deal, as expected. The outcome of the vote is a huge blow to Ms. May's leadership but it didn't matter for long for the U.S. market, as stocks would close near session highs.
The bond market was quiet despite the gains in the stock market. The 2-yr yield and 10-yr yield were unchanged at 2.52% and 2.71%. The U.S. Dollar Index rose 0.3% to 95.92. WTI crude rose 2.6% to $51.92/bbl.
Reviewing Tuesday's economic data, which included the Producer Price Index for December and the Empire State Manufacturing Survey for January:
The Producer Price Index for final demand declined 0.2% (Briefing.com consensus -0.1%) while the index for final demand, less food and energy, declined 0.1% (Briefing.com consensus +0.2%). The monthly changes left the index for final demand up 2.5% year-over-year, unchanged from November, and the index for final demand, less food and energy, up 2.7%, also unchanged from November.
The key takeaway from this report is that producer price inflation is moderating, which will suggest in the market's mind that consumer price inflation is going to as well.
The Empire State Manufacturing Survey General Business Conditions Index fell to 3.9 in January (Briefing.com consensus 12.2) from 11.5 in December, led by a deceleration in new orders, inventories, and the number of employees. The six-month outlook also dropped, falling to 17.8 from 30.6.
The key takeaway from the report is that it fits the view that there is a slowdown in manufacturing activity, which has piqued concerns about a broader slowdown in economic activity unfolding in 2019.
Looking ahead, investors will receive several economic reports on Wednesday: the NAHB Housing Market Index for January, the weekly MBA Mortgage Applications Index, Import and Export Prices for December, the Fed's Beige Book for January, and Net Long-Term TIC Flow for November.
Russell 2000 +7.2% YTD
Nasdaq Composite +5.9% YTD
S&P 500 +4.1% YTD
Dow Jones Industrial Average +3.2% YTD
Stocks Slide as China Stirs Global Growth Concerns
14-Jan-19 16:25 ET
Dow -86.11 at 23909.84, Nasdaq -65.56 at 6905.93, S&P -13.65 at 2582.57
https://www.briefing.com/investor/markets/stock-market-update/2019/1/14/stocks-slide-as-china-stirs-global-growth-concerns.htm
[BRIEFING.COM] The S&P 500 lost 0.5% on Monday, pulling back from a three-week winning streak. The benchmark index never traded in positive territory but it did cut its intraday losses in half. The Dow Jones Industrial Average (-0.4%) also finished off its low. The Nasdaq Composite (-0.9%) and the Russell 2000 (-1.0%) did, too, yet they did not fare as well overall.
The S&P 500 utilities (-2.3%), health care (-1.2%), and information technology (-0.9%) sectors weighed on the broader market. Conversely, the financials (+0.7%) sector helped offset losses and it was the only sector to finish in positive territory.
The broader market opened on a lower note, as disappointing trade data out of China stirred ongoing concerns over global economic growth. Specifically, China's exports unexpectedly declined 4.4% year-over-year in December and its imports declined 7.6%.
In addition, the amount of attention surrounding the partial U.S. government shutdown, which is currently the longest in U.S. history with no clear end in sight, also weighed on investor sentiment.
The S&P 500 managed to bounce off its early lows as Citigroup (C 58.93, +2.24, +4.0%) overcame early weakness that was initially attributed to some disappointment over a fourth quarter revenue shortfall that overshadowed better than expected earnings results driven in part by expense savings and a lower tax rate.
Citigroup was down more than 1.0% in pre-market hours but quickly reversed course shortly after the start of the trading session. Its quick turnaround, which several pundits attributed to a discounted valuation, helped lift other bank stocks and the financial space.
There was no coming back for PG&E (PCG 8.38, -9.21), however, after the company disclosed intentions to file for Chapter 11 bankruptcy protection amid possible liability for the California wildfires. The stock consequently plunged 52.4% and was a huge drag on the underperforming utilities sector.
U.S. Treasuries finished mixed with the 2-yr yield decreasing three basis points to 2.52% and the 10-yr yield adding one basis point to 2.71% in a curve-steepening trade. The U.S. Dollar Index lost 0.1% to 95.59. WTI crude lost 2.1% to $50.58/bbl.
Investors did not receive any economic data on Monday.
Looking ahead, investors will receive a couple of economic reports on Tuesday: the December Producer Price Index and the Empire State Manufacturing Survey. Also, the UK Parliament is expected to hold a widely-watched (and potentially market-moving) vote on the UK Brexit plan around 2:00 p.m. ET.
Russell 2000 +6.3% YTD
Nasdaq Composite +4.1% YTD
S&P 500 +3.0% YTD
Dow Jones Industrial Average +2.5% YTD
InvestmentHouse - Rally Leaders Set to Break Higher (Weekend Newsletter)
https://news.investmenthouse.com/2019/01/the-daily-part-1-of-3-1-12-19.html
MARKET SUMMARY
- Better views of trade situation and Fed overcome other substantial concerns.
- Indices up to resistance, ABCD patterns, but rally leaders are set to break higher again.
- SOX breaks through resistance late week. Leader or lone wolf?
- Coming to the moment of truth for the market inflection point with earnings possibly the catalyst.
Another week higher slowed at the end as the indices bump at resistance. Still . . . the resistance did not immediately repulse the upside move. Instead, the indices are sliding laterally just below, resting after a solid second leg higher. Or, in the case of SOX, moving right on up through resistance. Not a bad reaction at all.
SP500 -0.38, -0.01%
NASDAQ -14.59, -0.21%
DJ30 -5.97, -0.02%
SP400 0.13%
RUTX 0.14%
SOX 0.97%
NASDAQ 100 -0.30%
VOLUME: NYSE -11%, NASDAQ -6%. Not bad price/volume action on a flattish day; no heavy selling as volume backed off below average even farther.
ADVANCE/DECLINE: NYSE 1.3:1, NASDAQ 1.2:1.
Indeed, many of the rally's early leaders are testing while others follow their early lead. AMZN, TEAM, NOW, CRM -- solid moves higher, now testing laterally, setting up the next move.
While the resistance confronting the second leg of the rally is still there and is serious, the action thus far suggests these leaders can break higher and -- lead -- once again. We will definitely be looking at new positions on them as the make the next break higher. Nothing like concentrating on winners; that really leverages your gains when they are in a run.
Trade 'progress' (read not walking away from each other in anger), the Fed remaining and reiterating pseudo-dovishness, a series of upgrades were sufficient to overcome:
1. Earnings warnings from some key companies (e.g. AAPL, M, AAL)
2. Continuing weakness in US, EU, and China economics (no matter what US jobs were)
3. Government shutdown hitting a record and Fitch or one of the other less than unimportant credit agencies threatening to downgrade US credit (though I still view the shutdown as an overall positive)
4. Retail holiday sales missing all over the board
5. Brexit vote next week hitting another major snag
Nope, no negatives here. The bottom in stocks is surely in, everything will no doubt be resolved perfectly, and new index highs are the only logical outcome. It can happen.
It can also be that the sell algos kick back in and the ABCD patterns in the indices send stocks back down -- they are at resistance after all.
Prudent to be ready for either despite all of the excuse making for the October through December selloff that capped a yearlong top formation. You hear it hourly now, e.g. it was trade, it was Powell, it was China's economy -- yes, it was all of those but I would argue those were triggers to the top that was built the prior 9 months. I have been through enough of these to know that this kind of apologist rationalization for a selloff is based in a lot of hope and a lot of talking the book by large funds. They truly want the market to proceed higher so more money will come back in, more money they can use to make more fees.
Money flow. Yes, it is coming back. This past week $6.2B into stocks, not bad after those back to back weeks of record outflows. Bond funds gained $7.2B -- not everyone is enamored with moving back into equities. Gold gained $1.1B. Bullish sentiment rebounded as noted Thursday, and with it money came back. Rapid moves both directions though money coming in is always good for the upside -- cannot get the latter without the former. It can also, however, indicate sentiment is too scattered as money flip-flops back and forth.
In any event, this is a classic inflection point, the old lick log as southern lawyers like to say. There will be a break higher continuing the rebound for a third leg or this is it for the relief move. Again, it is prudent to not get enamored with the upside or the downside, play the moves that are there, take gain after good rallies, be ready when the move reaches potential stall areas (as now), and be ready to act with current positions if the move waffles further and act with the plays in waiting if the move breaks higher again or rolls over.
THE MARKET
CHARTS
As noted, each index outside SOX has a potential ABCD downside pattern set up. That is the potential negative. On the other side of the ledger, the initial leaders in this move, e.g. AMZN, TEAM, are setting up for a new move higher and look quite good. If the move breaks upside again, we will be all over them as they make the moves.
SP500: SP500 is still just below the 50 day MA, the bottom of the October/December trading range, and the 78% Fibonacci retracement of the December selloff. Those are all CLASSIC levels for the ABCD pattern to consummate. We will see.
DJ30: Carbon of SP500, just below the same trio of resistance though the 61% Fibonacci retracement versus the 78%.
NASDAQ: Very similar pattern here with NASDAQ actually bumping the 50 day MA and the bottom of the trading range, also at the 78% Fibonacci retracement of the selloff from mid-December. It has going for it some big names and not so big names setting up for it again, e.g. AMZN in the former category, TEAM, NOW in the latter.
SP400, RUTX: Both are smaller versions of SP500/DJ30, but are actually bumping the 50 day MA, 61% Fibonacci retracement of the selloff, and bottom of the October/December range. They also have ABCD downside patterns just as the large cap indices.
SOX: Unlike the other indices, SOX is moving through resistance, breaking through the 50 day MA Thursday and continuing higher Friday as part of a move just over a week old. SOX broke below the yearlong top in December, recovered, sold back through to start January. Now it has rallied back through the bottom of the range and is over the 50 day EMA. Trying to repudiate the top. SOX has lagged the overall market a long time, SOX is an important leading indicator. If it continues to perform well, the rest of the indices could shake off the ABCD patterns and continue their relief move. Whether they can turn it into something more will show up with better and better patterns.
LEADERSHP
Seeing more stocks perform with the market's second leg higher in the bounce. Initial leaders are resting while newer areas such as semiconductors take the lead. Earnings start this week; some may be extended with the last move, others such as AMZN are setting up with a rest.
Semiconductors: Like the setup of AMD, AMAT, SIMO, MU. Others such as ON, QRVO, INTC have moved up already to some resistance.
FAANG: AMZN is in a 1-2-3 test of the 2 week move to near the 200 day SMA. FB is also working laterally after clearing the 50 day MA for the first time in 6 months. NFLX surged up to and through the 200 day SMA. GOOG is also in a very nice test of its last move, showing a doji at the 50 day MA. These look good, ready to bounce again or give it a shot. AAPL made it to the 10 day EMA again, sixth test since it started the downtrend early November. Likely time for it to bounce a bit higher in relief.
Software: Some early leaders setting up well in this group as well, e.g. TEAM, NOW, COUP, DATA. TTWO not bad. Others need some work, e.g. ADBE, FFIV. Still a solid group.
Retail: Many were hammered Thursday on the disappointing holiday sales. Not much recovery from M, KSS Friday. ROST not bad, ULTA recovering from the late December low. HD, LOW set up well.
Drugs: Big pharma still not that inspiring outside LLY. MRK, PFE not in that league right now. Big biotech taking a breather (AMGN) while other biotech continues to improve setups, e.g. IMGN.
Transports: AAL warned Thursday but it did not do a lot of damage to the airline group. Trucking continues to try to complete new bases, e.g. ODFL, SAIA. Rails are on a 3 week move -- after sharp selloffs.
Financial: Still mostly testing after good moves into the past week. After a week of rest they are in decent positions for a new break higher, e.g. GS, JPM, WFC.
Metals: Some more improvement as they try to break trends e.g. FCX, holding over the 50 day EMA after moving up through it Wednesday. CENX is also showing similar solid action. HMY in gold is in a pretty decent 2 week lateral move.
MARKET STATS
DJ30
Stats: -5.97 points (-0.02%) to close at 23995.95
Nasdaq
Stats: -14.59 points (-0.21%) to close at 6971.48
Volume: 2.06B (-5.94%)
Up Volume: 1.15B (-160M)
Down Volume: 886.71M (+35.63M)
A/D and Hi/Lo: Advancers led 1.18 to 1
Previous Session: Advancers led 1.19 to 1
New Highs: 26 (+8)
New Lows: 13 (-1)
S&P
Stats: -0.38 points (-0.01%) to close at 2596.26
NYSE Volume: 799.32M (-10.57%)
Up Volume: 450.828M (-51.118M)
Down Volume: 318.664M (-62.242M)
A/D and Hi/Lo: Advancers led 1.31 to 1
Previous Session: Advancers led 1.57 to 1
New Highs: 16 (+5)
New Lows: 5 (-2)
SENTIMENT
VIX: 18.19; -1.31
VXN: 24.78; -1.13
VXO: 19.45; -1.69
Put/Call Ratio (CBOE): 1.08; -0.05
Bulls and Bears:
After a quick crossover, a quick trist, bulls rebounded, bears fell a bit, and there is some separation. Still, the deed is done; they crossed over, typically a very good indication sentiment was extreme to the negative and sets up a move higher. We are seeing a move and now the indices are near the next key levels of resistance.
Bulls: 34.8 versus 29.9
Bears: 29.4 versus 34.6
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
Bulls: 34.8 versus 29.9
29.9 versus 39.3 versus 45.4 versus 46.7 versus 38.3 versus 39.6 versus 42.9 versus 42.5 versus 50.5 versus 51.9 versus 56.3 versus 61.8 versus 60.6 versus 59.0 versus 57.7 versus 60.1 versus 59.6 versus 57.7 versus 57.3 versus 54.9 versus 54.5 versus 54.9 versus 55.3 versus 52.4 versus 47.1 versus 47.6 versus 52.0 versus 55.5 versus 52.9 versus 50.0 versus 49.1 versus 46.6 versus 43.1 versus 43.6 versus 48.0 versus 43.6 versus 42.2 versus 49.5 versus 55.5 versus 54.9 versus 48.6 versus 48.1 versus 48.5 versus 41.9 versus 54.4 versus 66.00
Bears: 29.4 versus 34.6
34.6 versus 21.4 versus 20.4 versus 21.50 versus 20.6 versus 19.8 versus 19.0 versus 19.8 versus 19.8 versus 19.0 versus 18.3 versus 18.5 versus 18.6 versus 18.3 versus 18.1 versus 18.3 versus 18.1 versus 18.3 versus 18.3 versus 18.6 versus 18.8 versus 18.6 versus 18.5 versus 18.5 versus 18.6 versus 18.4 versus 17.6 versus 17.8 versus 17.7 versus 19.2 versus 19.2 versus 19.4 versus 19.4 versus 20.6 versus 20.8 versus 19.6 versus 19.8 versus 18.6 versus 17.5 versus 16.8 versus 15.7 versus 15.5 versus 14.4 versus 14.6 versus 14.4 versus 15.5 versus 12.6 versus 12.8 versus 12.7 versus 13.5 versus 15.2 versus 15.1 versus 15.2 versus 15.1 versus 15.1 versus 15.4 versus 15.4 versus 14.4 versus 14.4 versus 15.1 versus 15.2 versus 15.1 versus 17.0 versus 17.1 versus 19.0 versus 20.2
OTHER MARKETS
Bonds: 2.699% versus 2.733%. Bonds tested into Thursday, with TLT landing on the 20 day EMA. Friday a doji just over that level, perhaps showing bonds are ready to rebound.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.733% versus 2.712% versus 2.731% versus 2.694% versus 2.668% versus 2.552% versus 2.643% versus 2.686% versus 2.716% versus 2.774% versus 2.811% versus 2.736% versus 2.788% versus 2.803%. versus 2.762% versus 2.821% versus 2.855% versus 2.895% versus 2.913% versus 2.908% versus 2.884% versus 2.863% versus 2.854% versus 2.892% versus 2.915% versus 2.979% versus 2.993% versus 3.032% versus 3.061% versus 3.058% versus 3.059% versus 3.048% versus 3.065% versus 3.074% versus 3.056% versus 3.065% versus 3.116%
EUR/USD: 1.14699 versus 1.15075. Big break higher Wednesday to just over the 200 day SMA, then a pause, then a fall Friday back down to the 10 day EMA. First breakout attempt in question.
Historical: 1.15075 versus 1.15532 versus 1.14547 versus 1.14834 versus 1.13980 versus 1.13957 versus 1.13343 versus 1.14450 versus 1.14425 versus 1.1432 versus 1.13588 versus 1.14015 versus 1.13708 versus 1.13828 versus 1.13755 versus 1.13533 versus 1.13049
USD/JPY: 108.563 versus 108.332. Still bouncing up and down in a small range below the 10 day EMA, trending lower below that MA since breaking the range downside in mid-December.
Historical: Last below 109 in June 2018: 108.332 versus 107.959 versus 108.802 versus 108.705 versus 108.517 versus 107.173 versus 107.515 versus 109.687 versus 110.273 versus 110.845 versus 111.190 versus 110.337 versus 111.223 versus 111.21 versus 112.521 versus 112.477 versus 112.653 versus 113.382
Oil: 51.59, -1.00. Rallied up to the 50 day MA into Thursday, tried higher Friday but stalled and faded to a modest loss. First try higher and the question is whether it keeps trying or is done. Might be done, though MACD did put in a higher low at the December lower price low.
Gold: 1289.50, +2.10. Six sessions in a lateral rest over the 10 day EMA after the rally from early December.
MONDAY
Another week and a second leg up for the stock indices. Powell spoke a second time as well and managed to avoid upsetting the move he helped fuel the prior Friday with his 'I'm listening' comfort words. The market focused on the better news, ignored the worse news.
It now won't have much more room to do that with earnings approaching. Combine that with the runs in the indices setting up ABCD patterns at resistance. Pretty serious decision point/inflection point/lick log ahead.
C gets things going Monday, JPM and WFC Tuesday, and NFLX helps get NASDAQ earnings going on Thursday. Stocks have enjoyed a decent move higher into results, by some accounts the best in 5 or so months. Sometimes a run into earnings take out all the fuel in the tank. In this kind of selloff and recovery they can add more fuel.
Q4 earnings are an enigma. S&P earnings forecasts predominantly fall in a range from 11% to 16% growth. Pretty hefty, particularly in light of last week's sneak peak with warnings from AAPL, AAL, M on top of earlier warnings from FDX, CAG, STZ, and MU. There is definitely room for upset. But, as BBBY showed, there is also room for upside surprise delivering upside stock moves.
Still, there are signals some are not doing that well other than the out and out warnings. Anyone receiving the emails from Hewlett Packard asking if you want a PC delivered the next day? Pushing hard to start the new year and generate some sales.
There are several issues merging next week and the following weeks. Obviously. A move to resistance has good setups downside as well as upside. We have some current plays and will add more. As for current positions we have let them work, taking gain on the way up. If they continue to work, obviously let them. If that happens, then the market is continuing upside and we will enter more positions on AMZN, TEAM and some other stocks as well.
Have a great weekend!
Stocks Close Mixed Ahead of Earnings Season
11-Jan-19 16:25 ET
Dow -5.97 at 23995.95, Nasdaq -14.59 at 6971.49, S&P -0.38 at 2596.22
https://www.briefing.com/investor/markets/stock-market-update/2019/1/11/stocks-close-mixed-ahead-of-earnings-season.htm
[BRIEFING.COM] The S&P 500 (-0.01%) finished just a hair below its flat line on Friday. The benchmark index never traded in positive territory but did close at its session high. It also finished the week with a gain of 2.5%.
The Dow Jones Industrial Average (unch), the Nasdaq Composite (-0.2%), and the Russell 2000 (+0.1%) closed mixed, finishing with weekly gains of 2.4%, 3.5%, and 4.8%, respectively.
The S&P 500 sectors also finished mixed with energy (-0.6%), utilities (-0.4%), and materials (-0.4%) weighing on the broader market. Conversely, the consumer staples (+0.3%) and health care (+0.3%) sectors finished atop the standings.
The benchmark index came into the session up 10.4% from its Christmas Eve low, suggesting to many that the broader market had gotten overbought on a short-term basis and was due for a pullback. The S&P 500 was down 0.7% in the early going with weakness presumably being a function of profit-taking as opposed to any news-driven catalyst.
In addition, given the number of earnings warnings already announced this week, and with earnings season set to kick off next week, some took this as another reason to take some profits. Nevertheless, some buying interest throughout the session slowly recouped the broader market's losses.
General Motors (GM 37.18, +2.45) for its part jumped 7.1% after it increased its adjusted fiscal 2018 and 2019 earnings above consensus. Its strength, however, was not enough to lift the consumer discretionary space (unch).
The lack of a distinctly positive reaction in the market to GM's upbeat earnings news, in light of the market overcoming prior earnings warnings this week, was reflective of a tired market preferring to take a breather.
U.S. Treasuries closed out the week on a higher note, pushing the 2-yr yield down two basis points to 2.55% and the 10-yr yield down three basis points to 2.70% in the wake of a market-friendly consumer inflation report. The U.S. Dollar Index gained 0.1% to 95.67. WTI crude, meanwhile, snapped its nine-day winning streak, losing 1.9% to $51.68/bbl.
Reviewing the Consumer Price Index for December, which was the only economic report released on Friday:
The Consumer Price Index (CPI) for December was right in-line with the Briefing.com consensus estimates that called for a 0.1% month-over-month decline in total CPI and a 0.2% increase in core CPI, which excludes food and energy.
The key takeaway from the report is that it supports the Fed's born-again belief that it can be patient with its policy approach given that the core inflation trend is stable around the longer-run target at a time when data here and abroad is revealing some softening in economic activity.
Investors will not receive any notable economic data on Monday.
Russell 2000 +7.3% YTD
Nasdaq Composite +5.1% YTD
S&P 500 +3.6% YTD
Dow Jones Industrial Average +2.9% YTD
Stocks Brush Past Retail Weakness, Powell Comments
10-Jan-19 16:25 ET
Dow +122.80 at 24001.92, Nasdaq +28.99 at 6986.08, S&P +11.68 at 2596.60
https://www.briefing.com/investor/markets/stock-market-update/2019/1/10/stocks-brush-past-retail-weakness-powell-comments.htm
[BRIEFING.COM] The S&P 500 gained 0.5% on Thursday, extending its winning streak to five straight sessions. The Dow Jones Industrial Average gained 0.5%, the Nasdaq Composite gained 0.4%, and the Russell 2000 gained 0.5%.
10 of the 11 S&P 500 sectors finished higher with real estate (+1.6%), utilities (+1.4%), and industrials (+1.4%) leading the advance. Conversely, the consumer discretionary sector (-0.2%) underperformed.
It wasn't easy, as investors wrestled with some earnings warnings and some comments from Fed Chair Jerome Powell, but the story of the day once again involved buying the intraday dips and the market remaining resilient to selling efforts.
The S&P 500 lost as much as 0.9% shortly after the start of trading amid a prevailing sense that the broader market may have gotten overbought on a short-term basis. Entering the session, the benchmark index was up 10% from its Christmas eve low.
In addition, earnings warnings from department store Macy's (M 26.11, -5.61, -17.7%) and airline operator American Airlines (AAL 32.04, -1.38, -4.1%) helped catalyze the opening selling activity, as they provided ample excuses to take some money off the table. Macy's also acted as an influential drag on the SPDR S&P Retail ETF (XRT 43.60, -0.71, -1.6%).
Despite these warnings, stocks staged a morning rebound effort into positive territory. This resilience to selling efforts presumably drew in sidelined participants fearful about missing out on further gains and pushed out weak-handed short sellers expecting a downturn.
The second dip brought the S&P 500 from a gain of 0.3% to a loss of 0.5% in afternoon trading. The dip occurred during Fed Chair Powell's participation in a Q&A session at the Economic Club of Washington and following a tweet from President Trump to say he is canceling his trip to the Davos World Economic Forum on account of matters related to the partial government shutdown.
Headlines would suggest the dip was attributed to Mr. Powell's observation that the Fed's balance sheet will be substantially smaller than it is now, but larger than before. However, the market managed to regroup, cognizant that Mr. Powell wasn't suggesting anything the market didn't already know.
The balance sheet will eventually be "substantially smaller," because it got bloated on the other side of the 2008 financial crisis. Since the economy and financial system are no longer in the dire straits of that perilous time, it only makes sense that the balance sheet would one day be substantially smaller. Moreover, it was only last week that Mr. Powell conceded that the Fed "wouldn't hesitate to make a change" to its balance sheet normalization plan if it was necessary.
True to recent form, the S&P 500 climbed back into positive territory and closed near its session high, which was just below the 2600 level.
Reviewing the weekly Initial and Continuing Claims report, which was the only economic data to be released on Thursday:
Initial claims decreased by 17,000 to 216,000 (Briefing.com consensus 225,000) for the week ending January 5. Continuing claims for the week ending December 29 decreased by 28,000 to 1.722 million.
The key takeaway from the report is that it fits neatly with the market's latest awareness that the labor market has held up fine despite the burgeoning concerns about the economy slowing.
Looking ahead, investors will receive the Consumer Price Index for December and the Treasury Budget for December on Friday.
Russell 2000 +7.2% YTD
Nasdaq Composite +5.3% YTD
S&P 500 +3.6% YTD
Dow Jones Industrial Average +2.9% YTD
Stocks Gain, but Close Off Best Levels
09-Jan-19 16:25 ET
Dow +91.67 at 23879.12, Nasdaq +60.08 at 6957.09, S&P +10.55 at 2584.92
https://www.briefing.com/investor/markets/stock-market-update/2019/1/9/stocks-gain-but-close-off-best-levels.htm
[BRIEFING.COM] The S&P 500 gained 0.4% on Wednesday, helped by softening trade tensions, easing anxieties over U.S. monetary policy, and rebounding oil prices ($52.20/bbl, +$2.54, +5.1%). The Dow Jones Industrial Average gained 0.4%, the Nasdaq Composite gained 0.9%, and the Russell 2000 gained 0.9%.
During the recent stock market rally, the market has shown a propensity not only to buy beaten-down stocks, but also to buy on intraday dips. Wednesday was no exception.
The S&P 500 briefly fell into negative territory (-0.2%) in the early going, but ultimately rebounded before running into some resistance as it approached the 2600 level shortly after the release of the FOMC minutes from the December policy meeting.
Regarding the minutes, they revealed a view that the path of U.S. monetary policy is "less clear" than before, and a contention that the Fed can "afford to be patient" about future rate hikes.
In light of more recent remarks from other Fed officials discussing a more patient-minded approach, namely Fed Chair Powell, the view communicated in the minutes wasn't altogether surprising. Roughly an hour after their release, the S&P 500 was trading at a level close to where it was trading when the minutes were released at 2:00 p.m. ET.
Stock prices wavered a bit late in the day, however, after some discouraging news out of Capitol Hill. President Trump tweeted his dissatisfaction over a meeting with Congressional Democrats, calling it a "total waste of time." The S&P 500 ended off its best levels of the day, but still managed to end on an uptick in the closing minutes of trading.
Within the S&P 500, the energy (+1.5%) and information technology (+1.2%) sectors led the broader market higher. Conversely, the defensive-oriented consumer staples (-1.0%), utilities (-0.7%), and real estate (-0.4%) sectors underperformed.
The Philadelphia Semiconductor Index (+2.5%) was a notable outperformer on Wednesday, despite Apple (AAPL 153.31, +2.56, +1.7%) supplier Skyworks Solutions (SWKS 67.69, +2.50, +3.8%) lowering its fiscal first quarter guidance.
Some catalysts that underpinned the group's performance included (1) the positive price action in Skyworks despite the bad news, which was interpreted as a sign that the bad news was already priced in, (2) Bernstein upgrading Micron (MU 35.44, +1.70, +5.0%) to 'Outperform' from 'Market Perform', and (3) optimism over the trade discussions with China.
The U.S. Treasury yield curve steepened a bit on Thursday, undoing the prior session's flattening. The 2-yr yield decreased four basis points to 2.55%, and the 10-yr yield added one basis point to 2.73%. The U.S. Dollar Index fell 0.8% to 95.13.
Separately, the weekly MBA Mortgage Applications Index spiked 23.5% from the prior 8.5% decrease last week.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report on Thursday.
Russell 2000 +6.7% YTD
Nasdaq Composite +4.9% YTD
S&P 500 +3.1% YTD
Dow Jones Industrial Average +2.4% YTD
Stocks Climb amid Improved Sentiment, Trade Optimism
08-Jan-19 16:20 ET
Dow +256.10 at 23787.45, Nasdaq +73.53 at 6897.01, S&P +24.72 at 2574.37
https://www.briefing.com/investor/markets/stock-market-update/2019/1/8/stocks-climb-amid-improved-sentiment-trade-optimism.htm
[BRIEFING.COM] The S&P 500 rose 1.0% on Tuesday, notching its third straight day of gains and its fifth in the last six sessions. The benchmark index did succumb to some early selling pressure, though, surrendering an early 1.2% gain. However, the wave of improved investor sentiment -- and a buy-the-dip mentality -- that has supported the stock market rally thus far in the new year lifted stocks from early lows.
The Dow Jones Industrial Average gained 1.1%, the Nasdaq Composite gained 1.1%, and the Russell 2000 gained 1.5%.
In addition, upbeat reports surrounding U.S.-China trade discussions helped keep the positive sentiment and buying interest intact. A scheduled two-day meeting in Beijing is now slated to extend into a third day of discussions on Wednesday.
Buying interest was largely broad-based with 10 of the 11 S&P 500 sectors finishing with gains. The real estate (+1.8%), communication services (+1.6%), industrials (+1.4%), and utilities (+1.3%) groups outperformed the broader market.
Industrial heavyweights Union Pacific (UNP 150.75, +12.10) and Boeing (BA 340.53, +12.42) carried the trade-sensitive group with respective gains of 8.7% and 3.8%.
Union Pacific's outsized gain, however, was driven more by the popular news that the company appointed industry veteran Jim Vena as its COO. Boeing for its part reported an impressive 238 commercial airplanes deliveries last quarter. Boeing's fourth quarter deliveries helped the company set a new yearly record of 806 deliveries in 2018.
The S&P 500 financial sector (unch) and the Philadelphia Semiconductor Index (-0.5%) were two notable underperformers on Tuesday.
A flattening yield curve and a profit warning from Samsung Electronics about memory chip demand acted as headwinds for the respective groups. The financial sector, however, managed to claw its way back to its flat line after being down as much as 1.1% intraday.
The 2-yr Treasury note yield rose seven basis points to 2.59%, and the 10-yr Treasury note yield rose three basis points to 2.72%. The U.S. Dollar Index increased by 0.3% to 95.92.
Reviewing Tuesday's economic data, which included the NFIB Small Business Optimism Index for December, the JOLTS - Job Openings and Labor Turnover Survey for November, and Consumer Credit for November:
The NFIB Small Business Optimism Index for December decreased to 104.4 from the prior reading of 104.8 in November
The November Job Openings and Labor Turnover Survey showed that job openings decreased to 6.888 million from a revised 7.131 million (from 7.079 million) in October
Total outstanding consumer credit increased by $22.2 billion in November after increasing a downwardly revised $24.9 billion (from $25.4 billion) in October.
The key takeaway from the report is that the healthy expansion in consumer credit is a good portent for consumer spending activity when matched with good feelings about job security and income growth.
Looking ahead, investors will receive the FOMC Minutes from December and the weekly MBA Mortgage Applications Index on Wednesday.
Russell 2000 +5.8% YTD
Nasdaq Composite +3.9% YTD
S&P 500 +2.7% YTD
Dow Jones Industrial Average +2.0% YTD
Stocks Still in Rally Mode
07-Jan-19 16:20 ET
Dow +98.19 at 23531.35, Nasdaq +84.61 at 6823.48, S&P +17.75 at 2549.65
https://www.briefing.com/investor/markets/stock-market-update/2019/1/7/stocks-still-in-rally-mode.htm
[BRIEFING.COM] The S&P 500 gained 0.7% on Monday, securing its fourth day of gains in the last five sessions. The Dow Jones Industrial Average gained 0.4%, the Nasdaq Composite gained 1.3%, and the Russell 2000 outperformed with a gain of 1.8%.
The major averages opened the session to some tepid buying interest. The S&P 500 briefly dipped into negative territory (-0.3%), but the pullback didn't gain any traction as the benchmark index steadily climbed to session highs (+1.4%) by early afternoon.
This resiliency to selling efforts following huge gains last Friday created some fear of missing out on further gains that helped drive up prices.
Stocks, however, began to lose steam at around 1:45 p.m. ET, shortly after President Trump tweeted that he will address the nation over border security Tuesday evening.
Nevertheless, selling didn't gain much traction, as nine of the 11 S&P 500 sectors finished the session with gains. The consumer discretionary (+2.4%) and energy (+1.3%) sectors outperformed, while the consumer staples (-0.3%) and utilities (-0.7%) groups dragged on the broader market.
Retail was a consistent group that outperformed and helped lift the consumer discretionary sector. The SPDR S&P Retail ETF (XRT 43.56, +1.31) rose 3.1%.
Notable movers included PG&E (PCG 18.95, -5.45) plunging 22.3% amid a possible bankruptcy filing and Loxo Oncology (LOXO 232.65, +92.78) soaring 66.3% after an offer to be acquired by Eli Lilly (LLY 115.28, +0.62, +0.5%) at a 68% premium over its Friday closing price. PG&E was an influential drag on the utilities sector.
U.S. Treasuries started the session in positive territory, but spent the bulk of the day in a retreat that coincided with a rally in the stock market. The 2-yr yield rose four basis points to 2.52%, and the 10-yr yield added two basis points to 2.68%. The U.S. Dollar Index fell 0.5% to 95.70, reaching its lowest close since mid-October.
Separately, the U.S. and China kicked off a two-day round of trade talks in Beijing on Monday.
Reviewing Monday's lone economic report, the ISM Non-Manufacturing Index for December:
The ISM Non-Manufacturing Index slipped to 57.6% in December (Briefing.com consensus 58.8%) from 60.7% in November. The dividing line between expansion and contraction is 50.0%, so the December reading reflects a deceleration in non-manufacturing business activity in the final month of 2018.
The key takeaway from the report is that it follows form with the ISM Manufacturing Index in showing a slowdown in activity in December. That is in keeping with the market's perception of economic matters and threatens to bleed into a slowdown in earnings growth.
According to ISM, the past relationship between the overall economy and the non-manufacturing index corresponds to a 3.2% increase in real GDP on an annualized basis.
Looking ahead, investors will receive the NFIB Small Business Optimism Index for December, the JOLTS - Job Openings and Labor Turnover report for November, and Consumer Credit for November on Tuesday.
Russell 2000 +4.2% YTD
Nasdaq Composite +2.8% YTD
S&P 500 +1.7% YTD
Dow Jones Industrial Average +0.9% YTD