But there could be trouble ahead for the S&P 500, according to Stock Trader's Almanac editor Jeff Hirsch, who provides our call of the day. He is basing his warning on a chart pattern -- not everybody's thing, but Hirsch says this one is " arcane yet uncannily accurate."
"Our old esoteric chart pattern friend, the Three Peaks and a Domed House Top pattern (3PDH), is potentially in play again," he writes in an Almanac Trader blog post (http://jeffhirsch.tumblr.com/post/159766934548/three-peaks-and-a- domed-house-top-in-play-again).
The majority of market advances have ended after they etch a chart structure that looks like a 3PDH, says Hirsch, in explaining this formation that was developed by revered technician George Lindsay.
So it's bearish that the S&P has sketched out this complex pattern, though Hirsch graciously adds that he does not expect a plunge of 20% or more.
Here is the textbook look for the 3PDH:
And below is Hirsch's take on how the S&P is following the script. He says the stock index's March 1 peak might be Point 23 in the pattern -- the tippity top of the domed (doomed?) house.
Futures for the Dow , S&P 500 and Nasdaq-100 are flat to slightly higher. The Dow , S&P and Nasdaq Composite are all on track for their first weekly gain this month, as the Naz revels in its latest record close (http:// www.marketwatch.com/story/dow-set-to-claw-its-way-back-from-triple-digit-loss-as-oil-prices-rebound-2017-04-20).
European stocks (http://www.marketwatch.com/story/french-stocks-slide-after-paris-attack-fuels-election-uncertainty- 2017-04-21) have pared earlier losses. The early selling came as analysts said last night's attack could lead to more votes for populist candidate Marine Le Pen in France's tight presidential race. See the Market Snapshot (http:// www.marketwatch.com/story/us-stocks-set-for-small-opening-gains-as-french-election-fears-linger-2017-04-21) column for the latest action.
Traders yesterday were viewed as betting that centrist presidential candidate Emmanuel Macron will do well in France's first round of voting on Sunday, then win the top job in Round 2 on May 7.
Given the race is tight, the violence could lead to Round 2 being "a face-off between Marine Le Pen on the right and [ Jean-Luc] Melenchon on the left," says CMC Markets UK's Michael Hewson, referring to two euroskeptic candidates. That is "unlikely to be well received by the markets," he says.
See:Euro traders are dangerously complacent about the French election (http://www.marketwatch.com/story/heres-a-sign- euro-traders-are-dangerously-complacent-about-the-french-election-2017-04-20)
The buzz
A spokesman for AG Jeff Sessions has had to clarify his stance (http://www.marketwatch.com/story/jeff-sessions- belittles-hawaii-rips-judge-who-blocked-travel-ban-2017-04-20) on the Aloha State after an outcry: "Hawaii is, in fact, an island in the Pacific -- a beautiful one where the Attorney General's granddaughter was born. The point, however, is that there is a problem when a flawed opinion by a single judge can block the president's lawful exercise of authority."
In other Justice Department news, officials are considering filing criminal charges (http://www.marketwatch.com/story/ wikileaks-founder-julian-assange-may-face-criminal-charges-from-us-reports-2017-04-20) against WikiLeaks founder Julian Assange.
Have you been hoping for an ETF that lets you bet on the ETF industry? There is now such a thing (http:// www.marketwatch.com/story/feeling-bullish-on-the-etf-industry-theres-an-etf-for-that-2017-04-20) -- the ETF Industry Exposure & Financial Services ETF (TETF) .
The quote
"A significant share price drop could have been expected if a player had been seriously injured or even killed as a result of the attack." -- German prosecutors say the Borussia Dortmund bus bomber was a trader who had bet against the publicly traded soccer team's stock (BVB.XE) .
See:Borussia Dortmund bus bomb was no terrorist -- just a greedy investor (http://www.marketwatch.com/story/borussia- dortmund-bus-bomb-was-no-terrorist-just-a-greedy-investor-investigators-say-2017-04-21)
The economy
Right as the market is opening, the Minneapolis Fed's Neel Kashkari is set to talk about the state of the economy (https://www.hamline.edu/community-economic-development-symposium/agenda/). Once trading is underway, we're due to get Markit's latest readings on manufacturing and services activity, as well as a report on existing-home sales.
Fed No. 2 Stanley Fischer is due to appear on CNBC around 11 a.m. Eastern.
Check out:
The stat
4 minutes before his death warrant was due to expire -- That is when convicted murder Ledell Lee was pronounced dead last night due to lethal injection, according to a Washington Post report (https://www.washingtonpost.com/national/the- latest-appeals-court-delays-execution-at-least-an-hour/2017/04/20/efe31a14-2626-11e7-928e-3624539060e8_story.html?utm_ term=.59b9ace88d78) citing an Arkansas Department of Correction spokesman.
This was the first of eight executions (http://www.marketwatch.com/story/arkansas-carries-out-first-of-eight-planned- executions-2017-04-21) that Arkansas officials had planned to carry out this month, before the expiration of the state's lethal injection drugs. The plan has run into many legal hurdles, with judges halting half of the scheduled executions.
Mystery trader called "50 Cent" can't stop buying VIX calls, has lost $89 million (http://uk.businessinsider.com/ mystery-trader-50-cent-cant-stop-betting-on-a-stock-market-shock-2017-4?r=US&IR=T).
19-year-old McDonald's dipping sauces just sold for about $15K (http://www.standard.co.uk/news/world/19yearold- mulaninspired-mcdonalds-dipping-sauces-sell-for-11500-on-ebay-a3520011.html).
Call it a kiddie pool. There's now a dark pool aimed at young traders (https://www.bloomberg.com/news/articles/2017- 04-20/dark-pool-for-college-kids-startup-bets-on-an-unusual-market).
Need to Know starts early and is updated until the opening bell, butto get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.
High-Yield Bond A-D Line By Tom McClellan | April 28, 2017
Junk bonds are the canaries in the stock market’s coal mine.
If you want to know ahead of time that trouble is coming for the stock market, then one of the best places to look is the high-yield (or junk) bond market. The movements of prices among these bonds correlates much more closely to the stock market than to T-Bonds. More importantly, when liquidity gets tight, the junk bonds are the first to be sold by traders wanting to lessen their portfolio risk.
We can see the importance of this message in this week’s chart, which features A-D data from FINRA TRACE. For those who like the full spelling of acronyms, that means “Financial INdustry Regulatory Authority Trade Reporting and Compliance Engine”. FINRA tracks the price changes on a total of 7876 individual bonds, and breaks down the Advance-Decline statistics into categories of Investment Grade, High Yield, and Convertible bonds. The chart above features the A-D data for the High Yield bonds.
This A-D Line arguably does a better job than the composite NYSE A-D Line at doing what we want an A-D Line to do, which is to show us divergences at important times. That is the whole reason behind ever looking at breadth data of any type. We want it to give us an answer which is different from what prices are saying, but only at the right moments.
A lot of analysts mistakenly assert that if one is interested in the stock market, then one should only look at A-D data from the stock market. And to take that point further, they assert that one should filter out all of the contaminants such as preferred stocks, rights, warrants, bond closed end funds, and other detritus which together are making the stock market less pure. I debunked that point in a March 24, 2017 article.
Just recently, the overall NYSE A-D Line moved to a new all-time high, saying that liquidity is plentiful and it should lift the overall stock market. The same message comes from this High Yield Bond A-D Line, which has also pushed ahead to a new all-time high. The message is that liquidity is so plentiful that even junk bonds can go higher. And history shows that such plentiful liquidity is also beneficial for the overall stock market.
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