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A significant selloff Friday had bears continuing to enjoy December and calls for the bulls for the Federal Reserve to save them.  It’s been a very long time since bears have had the upper hand for such an extended period.  Volatility continues to be very high and the charts continue to say “remain in safety”.  The Russell 2000 – the laggard of 2018 – broke a yearly low set in February and the S&P 500 broke October lows to create a “lower low”.

Karyn Cavanaugh, senior market strategist with Voya Investment Management, said that disappointing economic data out of China was the biggest driver of Friday’s losses. “The Chinese data was a dirt sandwich, not because it showed deceleration in the Chinese economy, but because it’s showing that all the stimulus they’ve done can’t turn it around.”  She argued that the losses snowballed throughout the day because “people are worried that we will reach technical indicators” that could trigger a bout of algorithmic selling.

“Indeed, investors are right to be worried about global growth as China economy continues to sputter,” said Stephen Innes, head of Asia-Pacific trading at Oanda, in a note to clients. “The data lend support to the market’s view that things will get worse in China before they get better, this despite investment rising.”

Go …. utilities (again)?

On the economic front, Chinese export growth slowed dramatically month over month (+5.4% in November vs +15.6% in October) which led to a big selloff early Monday.  Industrial output and retail sales in China, announced late in the week also were weaker, leading to Friday’s selling.  U.S. retail sales rose a better than expected 0.2%, even as October sales growth was revised up to 1.1%.

For the week the S&P 500 fell 1.2% while the NASDAQ dropped 0.8%.  The S&P 500 is now down 2.8% for the year while the NASDAQ clings to a 0.1% gain.

Here is the 5 day weekly “intraday” chart of the S&P 500 … via Jill Mislinski. (please note that there is an error in her chart Monday as the S&P 500 was up 0.2%)

If you are interested in what the top things people were looking for on Google in 2018 here is the data.  Interesting that the World Cup was #1…. even in the U.S. in a year the country didn’t qualify to play in it!

The week ahead…

The main focus will be on the Fed’s commentary on the future on Wednesday. Investors will be looking for changes in the forward guidance and potential signals that the U.S. central bank could be slowing down the pace of rate hikes in 2019.  If the Fed doesn’t deliver, it sure could be an interesting Wednesday afternoon.

Index charts:

Short term: A new “lower low” in the S&P 500 Friday as October’s intraday low was pierced.  The NASDAQ was “stronger” as it did not break to a new low, but obviously looks a train wreck.

It feels like we’ve been typing the Russell 2000 has been underperforming in nearly every recap this year – and that continues as it’s the first major index to break yearly lows.

The NYSE McClellan Oscillator is in the red, concurrent with bad index charts.  Enough said.  With that noted, any heavy selling early in the week, combined with a “dovish” Fed Wednesday could lead to an oversold rally near term!

Long term: Both these charts are showing breakdowns of channels that are sustained.

Charts of interest / Big Movers:

Monday, Axovent Sciences (AXON) plunged 28% after the drugmaker announced a trial of a treatment for REM sleep behavior disorder wasn’t successful.  The rest of the week wasn’t too grand either.

Wednesday, Under Armour (UA) slumped 8.9% after disappointing analysts at an investor day with guidance for coming years.

Thursday, Monster Beverage (MNST) slumped 7% following UBS’s initiation of coverage of the company with a sell rating.

Friday, Costco (COST) plunged 8.6% Friday after a Thursday evening earnings release showed the retailer missed revenue expectations for the fiscal first quarter.  Those stock fell below its 200 day moving average for the first time in over a year.

Johnson & Johnson (JNJ) – the type of stock investors usually flee into during times of turmoil – sunk 10%, Friday after a Reuters report alleged the company knew for decades that its baby talcum powder was sometimes contaminated with the carcinogen asbestos. Johnson & Johnson said the report was “one-sided, false and inflammatory.”

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

Original article: Weekly Market Recap Dec 16, 2018.

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Bears are certainly showing the type of strength we haven’t seen in a long time.   A week ago at this time futures were surging on news of a “truce” for 90 days between China and the U.S. in their trade spat.  But the charts were still not saying lovely things despite a major rally the week prior.   And by Tuesday, darkness had descended back on the indexes, with another gut punch Friday.    A lot of emphasis was put on a long term Treasury yield dropping below a shorter term Treasury.

On Monday, the yield on five year government debt slid below the yield on three year debt, a phenomenon which has preceded previous recessions, and a sign that investors are more confident about current than future economic growth as the Federal Reserve raises rates.

The “two year” vs the “ten year” Treasury yield a lot of people like to watch and that hit its narrowest spread in 11 years.

There is no rush to be involved heavily in this market until this volatility sorts itself.    The obvious near term “upside drivers” now would be (a) a real trade peace between U.S. and China and (b) the market’s favorite thing – an easier Fed; in this case that would entail signals to the market that the rate hikes forecast for 2019 are no longer in the cards.   The latter is ALREADY being floated out to the investing community as the Fed has become a lackey for the market the past 20 years.

It’s always helpful to watch what major sectors are “strong” – in this case the type of sectors that institutional money flees into – utilities and consumer staples are holding up.

Meanwhile “growthy” areas like tech and industrials are sagging.

This whole move down was started by a spike in yields such as the 10 year – even with a big retreat this past week, the market did not respond positively.

This week was almost the exact opposite of the week prior with ~5% moves in the indexes either way week to week!  Now that’s some good ole volatility.  This week it was downward with the S&P 500 sinking 4.6% and the NASDAQ 4.9%.

On the economic front, ISM Services still came in a very healthy 60.7.  Readings over 60 aren’t too common; anything over 50 signals expansion.  Of course the market is a forward looking indicator.

As to the November employment data, the Labor Department estimated a gain of 155,000 vs expectations closer to 190,000.  The unemployment rate held steady at 3.7%, as expected. Average hourly earnings grew 6 cents per hour from October, or 0.2%, just shy of expectations, and grew by 3.1% year-over-year, their highest rate since 2009.

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

The week ahead…

Fun fact – there have been 57 1% moves in the S&P 500 in 2018 vs the very strange year of 2017 where the snoozer market only offered up 8 such days!  In terms of 2% moves, there were 0 in 2017, while there have been 16 in 2018.

The last Fed meeting comes the week after this (Dec 18-19) and one would expect more “leaks” about how 2019 is going to be more dovish than people expect.

Other than waiting for the leaks, watching the “flattening” yield curve will preoccupy the minds of many.

Index charts:

Short term: The S&P 500 spent exactly 1 session over our trend line (and the 200 day moving average) before getting crushed.  NASDAQ didn’t even try to go above the 200 day.  Looking at recent lows now becomes important – if those break, it would not be a positive.

The Russell 2000 still looks putrid.  It is now facing lows of February!

The NYSE McClellan Oscillator spent much of last week in the black actually – but for now this is not an indicator we are going to focus on a ton as the charts are saying negative things for now.

Long term: The NASDAQ is the chart that interests me as it has such a well defined channel.  Last week we said “So it appears 7500 is a good number to watch as a rally up and through that level would signal the index getting back in a channel it has been in for years!”

That didn’t happen – in fact the index got within a few points of 7500 – then was soundly rejected.  This is why charts are fun to evaluate.

Charts of interest / Big Movers:

Another rough week in brick & mortar retail:

Thursday, Children’s Place (PLCE) plunged 13%, hitting 13-month lows, after the retailer cut its earnings and margin outlook for the full year.

Friday Big Lots (BIG) traded down 23.1%, after a wider-than-expected third-quarter loss.

Also Friday, Ulta Beauty (ULTA) slumped more than 13%, after a Thursday evening earnings release that predicted weaker holiday sales that analysts hoped.

Altria announced it would take a 45% ownership stake in the cannabis firm Cronos Group (CRON).

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

Original article: Weekly Market Recap Dec 09, 2018.

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Looks like the Thanksgiving week rally missed it’s usual target by a week!  Optimism of a trade war halt with China carried markets up through the week and as of Sunday evening futures were surging once more as a 90 day stay of execution on the next round of tariffs was agreed to.   Giant rallies Monday and Wednesday – with a huge surge mid day intraday Wednesday – helped rocket the indexes to spectacular gains.

Federal Reserve Chairman Jerome Powell spoke Wednesday and his comments on interest rates were considered quite dovish.  This led to the largest gain in the S&P 500 since March 26th! While it has not been so pronounced the last year or two – over the past decade whenever the market dare sell off – the Federal Reserve always has come to the rescue with words or actions!

“Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy — that is, neither speeding up nor slowing down growth,” said Powell during a speech at the Economic Club of New York.   The comments were viewed by investors as a retreat from his stance in early October when he had said that the central bank “may go past neutral, but we’re a long way from neutral at this point, probably.”

Jamie Cox, managing partner for Harris Financial Group, said Powell did exactly what he needed to do. “He calmed the nerves of investors worried about policy overshoot and retained all the flexibility [he] had before he started talking,” he said.

“As is typical with this market, the Fed chair gave an inch and the market took a yard,” wrote Mike O’Rourke, chief market strategist at JonesTrading.

Trading in fed funds futures imply an 83% chance of a hike in December, but just one more hike in 2019. The Fed’s dot plot implies three interest rate hikes in 2019.

More Federal Reserve as the minutes of the prior meeting were released:

The Fed minutes from the central bank’s November meeting showed that almost every member of the Federal Open Market Committee felt comfortable with raising interest rates “fairly soon” as long as job market and inflation data were in line with expectations, bolstering expectations of another rate hike in December.  However, they did note that “monetary policy was not on a preset course,” reiterating the need to be flexible about monetary policy in 2019.

This ended up being the best week since December 2011 for the S&P 500 (+4.9%) and NASDAQ (+5.6%).

The only major economic reports of note came Thursday  as the Commerce Department reported that consumer spending in October rose by 0.6%, while income rose by 0.5%

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

The week ahead…

Markets will be closed Wednesday in observance of the passing of President Bush.   Powell will be back on Capital Hill cheerleading the markets upward…. err, discussing economic policy.  Key economic data throughout the week with the two ISM reports and employment data Friday.

As for the indexes, we have a surge coming Monday and then we will see what happens.  Often the most violent moves up are within downtrends.  So we’ll know in the next few weeks if *THAT* was the bottom, or if this is just one of the massive oversold rallies.   Bears have been unable to stop bulls for years so if it’s the latter it will be a change in character for sure.  Lots of technical damage still needs to be repaired.  Also note WHERE the rallying is happening – in more defensive nature sectors:

“We’ve seen a shift in leadership from the high-growth stocks to the more high-quality value stocks,” Michael Arone, chief investment strategist at State Street Global Advisors. “In 70% of the trading days in November, value stocks beat growth stocks,” he said, adding that this is indicative of investors’ newfound preference for company’s with low earnings volatility.

Index charts:

Short term: The S&P 500 rallies exactly to our trend line!  The rally in futures Monday signal we’ll see a jump above that level shortly.  The NASDAQ even with a huge 5% move still looks like a weak chart.   We’ll talk more about that index in the 5 year chart.

The Russell 2000 still looks putrid.

The NYSE McClellan Oscillator is positive but again it’s a bit more difficult to trust it when charts are weak.

Long term: The NASDAQ is the chart that interests me as it has such a well defined channel.  So it appears 7500 is a good number to watch as a rally up and through that level would signal the index getting back in a channel it has been in for years!

Charts of interest / Big Movers:

Wednesday, Tiffany & Co (TIF) sunk 12% after the firm announced same-store sales that fell short of Wall Street expectations.

Amazon rallied strongly both Monday and Wednesday (Monday due to Cyber Monday!) – Fun fact –  the firm announced that Cyber Monday was its biggest single-day of sales in the company’s history. According to Rakuten Intelligence data, Amazon has secured 24% of total online holiday sales!

Wayfair (W) surged 15% Wednesday after the online furniture and home goods retailer reported a 58% increase in direct retail sales over the peak five-day holiday shopping weekend.

Not such a great story over at Chicos FAS (CHS) as it tumbled 35% after the women’s apparel and accessories retailer reported a fiscal third-quarter profit that missed expectations as well as a steep decline in sales.

Thursday, Abercrombie & Fitch (ANF) surged 21% after the clothing company beat earnings and sales estimates by wide margins.

Friday, Workday (WDAY) rallied 13% following a third-quarter earnings report that beat Wall Street expectations.

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

Original article: Weekly Market Recap Dec 02, 2018.

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For whatever reason over the years Thanksgiving week tends to be market positive, especially the days bracketing Thursday.  While we did see a nice rally Wednesday, the selling Monday and Tuesday did not make for a nice week for the bulls.   In fact, this was the worst Thanksgiving week since 2011.  For those with shorter term time frames there is no reason not to have a lot of cash raised here as there has been a lot of technical damage, and it’s going to take time to fix it.  And now we are starting to see some worrying technical signs for the long term as well.  On the news front, nothing new – worries about trade with China, global growth slowing etc were offered as the main culprits.

Oil again had a rough week with Friday’s rout (worst day since 2015) capping off the week.  This is now 7 down weeks in a row, and on pace for the worst month in a decade.

Crude oil’s bear market worsened Friday, as investors wrestled with growing output from the U.S., President Donald Trump’s entreaties to key producers to keep prices lower, and generally rising inventories, despite a recent cold snap in many oil-consuming regions.

About that Bitcoin….

For the week the S&P 500 fell 3.8% while the NASDAQ plummeted 4.4%.

In economic news, durable goods fell by 4.4% in October, the largest decline in 15 months, and below expectations for a 3.4% decline.  The report also showed orders for “core” capital orders falling slightly, further signaling a slowing in business investment.

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

The week ahead…

Whatever the news flow, the technicals are saying be wary on every time frame.   If you are a retail fiend, in store traffic apparently was down year over year 1.7% Thursday/Black Friday but online sales up mid 20% range.

There is a G20 meeting, along with some Fed speakers – maybe they will begin the dovish talk that markets love so much, regarding 2019 (a December 2018 rate hike is baked in).

Index charts:

Short term: Nothing good near term.  The NASDAQ broke October 2018 lows – new lower lows are not positive.  Of course some of the most violent rallies happen within downtrends so that can happen at any time.  But right now it’s a time to be cautious.

The Russell 2000 – at least it didn’t make a new low…so there’s that.

While the NYSE McClellan Oscillator was positive there for a bit, it was not confirmed in the actual charts of the indexes so we said we’d take it with a grain of salt.  So now we are back in the red.

Long term: Both of these indexes are now below key long term support levels – we’ve been saying for a few weeks now it would be interesting to see what happened in the NASDAQ fell out of it’s channel — I think a weekly 4.4% drop would count as “interesting”.

Charts of interest / Big Movers:

Monday, Spectrum Brands (SPB) fell 19% after reporting fiscal fourth-quarter earnings and sales that missed their targets, combined with a downbeat 2019 outlook.

Tuesday, Target (TGT) plunged 10.5%, after the discount retailer reported fiscal third-quarter earnings and same-store sales that missed expectations.

Kohl’s (KSS) likewise fell over 9% Tuesday, even after the firm beat Wall Street estimates for earnings and profit and raised its full-year 2018 guidance.

Wednesday, Foot Locker (FL) surged nearly 15%, following a Tuesday-evening earnings release that showed the company beating Wall Street estimates for third-quarter profits.

Apple (AAPL) was weak all week as whispers of order reductions among the supply base continue. With the “market leader” below the 200 day moving average – another feather is in the cap for bears.

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

Original article: Weekly Market Recap Nov 25, 2018.

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A rough Monday sunk chances for a positive week on the indexes as the choppy action continues.   As we mentioned in last week’s recap while some technical indicators improved, solid markets show lower volatility than what we are currently seeing.  This week will be interesting because there is usually a positive bias Thanksgiving week as many professional traders are off for the week!  Not much news worthy this week – some fears around oil, Brexit, China trade, etc etc – mostly technical conditions continue to be weak.

Macro headwinds, including trade tensions, rising interest rates, a stronger dollar, and slowing growth abroad have also helped to trigger a pivot towards negative sentiment in the market. “This is where peak earnings growth comes in,” Essaye said, arguing that the stock market has been supported this year by two pillars: strong economic growth and strong earnings growth.  “The market knows that earnings growth has peaked, and so earnings growth can’t be a reason any longer to ignore the macro picture,” he said.

Oil had a very rough Monday (the 11th straight session down) and –  for now – followed that with just a small dead cat bounce.

Worth pointing out that the 10 year bond yield did fall back below (for the 2nd time) it’s “breakout level”.

Look at these market favorites – stocks like Facebook (FB) and Google (GOOG) are not even able to rally above their 20 day moving averages.  That is a very weak sign.

Interesting to see the bullish “outside reversal” day (when the intraday price both goes higher and lower than the prior day’s high and low – and then closes above the prior day high) in the Chinese market is still holding.

For the week the S&P 500 fell 1.6% while the NASDAQ sunk 2.2%

In economic news, retail sales rose by 0.8% for October, above the expectation of 0.6%.

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

The week ahead…

Markets will be closed Thursday for the holiday while financial media will breathlessly report from retailer parking lots on how the economy is doing based on how many cars they see.  (while of course many people are shopping in their PJs on their phone or computer).   Most years Thanksgiving week tends to trend up so we’ll see how things turn out in the midst of this selloff.

Index charts:

Short term: The NASDAQ continues to be weaker than the S&P 500 but neither are in a great position right now.  After breaking over this trend line we have drawn on the chart last week, the S&P 500 fell right back below it – in fact Friday’s intraday high was exactly at this line!  The NASDAQ is just not in good shape – much like the market darlings we noted above, the 20 day moving average is serving as resistance.

The Russell 2000 – not much to add we haven’t already said – it’s in bad shape.

As we said last week it is a bit difficult to trust the NYSE McClellan Oscillator being positive when the indexes are in weak technical standing.  So while it remained in the black all week – which is usually a good short term sign – we have to see better conditions in the general market to trust this.

Long term: The S&P 500 is still holding onto support but the NASDAQ is beginning to create a sustained period of time below this very well defined channel it has been in years.  If that sustains it is bearish.

Charts of interest / Big Movers:

Monday, Abiomed (ABMD) tumbled 17%, after the results of an FDA study into one of the firm’s heart-pump products disappointed investors.

A large drop for Goldman Sachs (GS) Monday as U.S. prosecutors allege that Goldman bankers were involved in a bribery and kickback scheme led by a Malaysian financier to land Goldman $6 billion in deals to underwrite bonds for the fund, known as 1Malaysia Development Berhad.

All sorts of volatility in Pacific Gas and Electric (PCG) as the electric utility company continues to deal with the fallout of wildfires throughout California. The company has told California regulators one of its transmission lines suffered an outage at about the time a deadly wildfire still raging in Northern California started last week.  Thursday there were fears the company doesn’t have enough insurance to cover the losses from California’s wildfire.  Then Friday, California State Public Utilities Commission President Michael Picker said in an interview with Bloomberg that the state would be very reluctant to allow these firms to go bankrupt.

Advance Auto Parts (AAP) surged 11% Tuesday after the firm beat third-quarter estimates and raised its full-year 2018 guidance.

Quite a run by Walmart (WMT) but Thursday the company announced it missed revenue expectations for the third quarter—blamed on currency headwinds—adding to fears that the U.S. consumer isn’t as healthy as data have suggested.

Housing stocks have had a difficult past half year which we’ve highlighted quite a few times – Thursday KB Home (KBH) sank 15% after the company issued disappointing guidance for its fourth quarter results. In a business update call Chairman and CEO Jeffrey Metzger blamed weakness on rising interest rates and “steady home price appreciation over the past several years.”

Friday, Nvidia (NVDA) fell sharply after reporting disappointing quarterly results late Thursday.  The company missed revenue expectations for the third quarter and a issued forward guidance that was well below expectations.

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

Original article: Weekly Market Recap Nov 18, 2018.

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This past week was saw another positive move up by bulls – especially in the Dow and S&P 500; the NASDAQ was not quite as enthusiastic.   Wednesday’s rally was on the legs of an election that was seen as market friendly or at least not as bad as it could have been.   Essentially – paying people a lot of money to get nothing done the next 2 years – woo hoo!

The market is interpreting Wedneday’s result as insuring that “no big things will get done,” in Washington between now and 2020, Craig Birk, chief investment officer at Personal Capital told MarketWatch. “The market appreciates the relative certainty of the slow legislative agenda.” he said.

“As President Trump plans his 2020 reelection campaign, a gridlocked Congress is unlikely to deliver any notable wins to help expand his agenda. Therefore, Trump will likely focus on his broad executive powers to affect trade and national security,” wrote Dec Mullarkey, managing director, investment strategy, Sun Life Investment Management, in a research note.

We are still seeing quite a bout of volatility – usually rallies that will last will settle into some sort of “calm” so we are not there yet.   In fact the move to the upside got so extreme mid week that the NYSE McClellan Oscillator actually went to overbought levels for the first time since spring (more on that below).

Nothing of note from the Federal Reserve Thursday – exactly as expected:

In a statement that was largely intact from its September meeting, the Fed said, “The Committee expects further gradual increases in the target range for the federal funds rate.” It also said the risks to the economic outlook “appear roughly balanced” and noted that inflation remains near its 2% target.

The absence of any major changes to its commentary suggests that the central bank plans to raise interest rates in December and plans three hikes next year, in line with market expectations.

Massive drop in oil the past few weeks!  Some contrasting thoughts on the implication of this selling can be found here.

U.S. crude oil prices settled in bear-market territory on Thursday, defined as a drop of at least 20% from a recent peak, and that decline may invite questions about the health of demand and the vitality of economies around the globe. Along with other key commodities, oil has often been used as a gauge of world wide vitality.

Willie Delwiche, investment strategist at R.W. Baird, said in an interview with MarketWatch that the oil’s bear market could be spooking investors. “Oil being down could be a sign that the global economy is in a tough spot,” he said.

For the week the S&P 500 gained 2.1% while the NASDAQ added 0.7%.

In economic news, the ISM services index slipped to 60.3 in October, down from 61.6 in September, but beating the 58.6 average estimate.  Still a very strong reading – anything over 50 marks expansion.

We don’t normally mention this one but Friday the producer-price index for October rose 0.6%, versus the consensus estimate of 0.2%. Excluding volatile food and energy prices, producer prices increased by 0.5%.  That’s a very “hot” number and one the Fed would be interested in.

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

This is a great infographic from Statista about those representatives we just elected.  The number of committee hearings about you know…actual policy… has fallen off a cliff vs 25 years ago.

Over time the legislative process has been breaking down, with less legislation getting into committees. According to Pro Publica, the count of committee hearings dealing directly with legislation has dropped significantly between the 101st Congress, governing between 1989-1990, and the 114th Congress, governing between 2015-2016. The number of Senate committee hearings dealing with legislation has fallen by about 85 percent over this period… the 114th Congress conducted about 72 percent fewer committee hearings dealing with legislation than the 101st Congress did.

The week ahead…

Earnings season is coming to an end and we are in a bit of an impactful economic news drought here aside from retail sales hitting Thursday.  Technical traders should be watching how these recent rally acts – can markets go sideways for a while before a new leg up.  Or was that rally the oversold bounce and can bears – for the first time in eons – impart their will over a sustained period of time.

Index charts:

Short term: The S&P 500 obviously had the better week – both indexes crossed over their 200 day moving averages but only the S&P 500 held it by end of week.  So the question of the week of course is “is this the beginning of the rally or was THAT the oversold bounce?”  These next few weeks will be very interesting as a bullish take can be we have an “inverse head and shoulders” forming (if the market can go sideways for a bit) while a bearish take would require another bout of selling – and then creating a new low below the one seen at end of October.  No one knows today but those are some of the things to watch!

This Russell 2000 continues to act poorly – this long trend line connecting lows of August 2017 and February 2018 served as resistance this week – the index rallied to it and was rejected.  The 200 day moving average is about to get crossed by the 50 day moving average which is seen as a negative in technical terms as well.  This chart reflects the smaller and mid sized public companies in the country – which are far less multi national – so it’s interesting to observe how much weaker it has been this past year.  Especially if you believe markets forecast the future ….

The NYSE McClellan Oscillator is in the black – not only that it hit its first overBOUGHT level since Spring Wednesday.  It’s difficult to quite trust this with the technical damage done on the charts but usually it does signal a positive sign when it’s positive.

Long term: The S&P 500 looks to be in decent shape here but the NASDAQ continues to trail at the bottom end of this long term channel so it’s the one to keep an eye on the next month.  Any reversal back down that sustains would mark a big change in character.

Charts of interest / Big Movers:

CVS (CVS) rose 5.7% Tuesday after the drugstore and health care company announced 6.7% same-store-sales growth for the third-quarter.

E.l.f. Beauty (ELF) rallied 19.2% Tuesday, after its Monday-evening earnings report showed the cosmetics company producing third-quarter projections for revenue and profits that were better than expected. The firm also raised its full-year guidance for 2018.  Now we eagerly await results from Hobbit Beauty….

Generic drug maker Mylan (MYL) rose 16.1%, after the pharmaceutical company announced Monday evening that its profits more than doubled in the third quarter from the year previous.

Michael Kors (KORS) tumbled 14.6%, after the fashion luxury group missed revenue expectations in a Wednesday morning earnings release.

Office Depot (ODP) popped 24% after the company announced revenue and sales figures Wednesday morning that beat analysts’ third-quarter estimates. The office-goods retailer also raised its full year guidance for 2018.

Wynn Resorts (WYNN) sank 13% Thursday after an earnings call late Wednesday during which CEO Matthew Maddox said he anticipates a “soft” market in the fourth quarter for its Macau business line.  Been a rough 6 months for this stock!

TripAdvisor (TRIP) surged 15% Thursday after it released better-than-expected earnings.

Yelp (YELP) tumbled 26.6% Friday, after the companymissed Wall Street sales targets and lowered fourth-quarter guidance, in a Thursday evening release.

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

Original article: Weekly Market Recap Nov 11, 2018.

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Words rarely spoken the past few years:  “The market was due for a bounce back after some intense selling.”  Modest selloffs Monday and Friday bookmarked 1%+ rallies Tue-Thu on the S&P 500.  It’s not so much the rally during a selloff to examine as the action after the rally.   So we should have a good amount of information at this time next week – bears have been so used to rallies just continuing straight up the past half decade plus so we’ll see if there is a change in nature.  Aside from fixing some technical damage bulls would want to see a significant drop in volatility.

October once again struck as one of the trickiest months on the calendar for markets:  The S&P 500 shed 6.9% for its biggest monthly decline since September 2011, while the NASDAQ dropped 9.2% in October for the biggest fall since November 2008.

(Far) across the pond, we mentioned the bullish “outside reversal” day a few weeks ago in the Chinese market – despite the selling in U.S. markets this reversal held up and the Chinese market looks like it has put in a short term bottom at least!

For the week the S&P 500 gained 2.4% while the NASDAQ added 2.7%.

In economic news, Monday the government announced consumer spending rose 0.4% in September, matching forecasts. Incomes rose a smaller 0.2%, the smallest rise in 13 months.

Thursday, ISM Manufacturing fell to a six month low of 57.7 vs economists’ expectations of 58.7.  Still a very strong number.

Friday, the government reported job gains of 250,000 in October, beating economists’ expectations for payrolls to rise by 202,000. The unemployment rate remained flat at 3.7%, while the report showed year-over-year wage gains rising to 3.1%, slightly above the consensus estimate of 3%.

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

The week ahead…

Earnings season is slowing down but still some heavy hitters coming in.  For technical traders, let’s see the nature of the bounce in duration and strength!  Mid term elections hit Tuesday and China – U.S. trade talk speculation continues.   The Federal Reserve meets this week and is widely expected to raise rates at next month’s meeting.

Index charts:

Short term: Similar stories on both the S&P 500 and NASDAQ although the S&P 500 is in a tad better shape as it’s back near a trend line that connects the major lows of 2018.  However both remain below the 200 day moving average, although not far off.

This Russell 2000 is still far off from the 200 day moving average and soon enough we have the danger of the 50 day moving average crossing below the 200 day which is seen as a negative.  This has been the worst performing of the indexes of the past half year, if not longer.

The NYSE McClellan Oscillator turned positive for the first time in 2 months.  Let’s see if it sustains – if so that would be a positive.  A bit too early to jump on that bandwagon considering the state of the indexes but we should know better in a week how to judge this.

Long term: This past week’s rally in both the S&P 500 and NASDAQ helped push them to/near some support trend lines.  Again – next few weeks will be interesting – if markets reverse back down that will mean a clear break of very long term support lines and mark a stark change in character.  If indexes rally, we’ll be back to business as “usual”.

Charts of interest / Big Movers:

Monday, Red Hat (RHT) jumped 45% after IBM said it would acquire the open-source software company for $190 a share in a cash deal.

Tuesday, General Electric (GE) sunk 8.8% after it slashed its dividend and reported disappointing third-quarter results but announced a restructuring of its power business.  The rest of the week didn’t go too well either!

Blast from the past Akamai Technologies (AKAM) surged 17% Tuesday after the firm beat third-quarter estimates and raised its fourth-quarter guidance and full-year outlook in an earnings release Monday evening.

Under Armour (UAA) jumped 25% after the company announced third-quarter earnings and revenue that beat analysts’ estimates.

Wednesday, General Motors (GM) jumped 9.1% after third-quarter earnings and revenue came in above expectations.

Thursday, Wynn Resorts (WYNN) soared 12% following an SEC filing that indicated that the firm will take out a $500 million loan that will be used in part to buy back stock.

Friday, Apple (AAPL) sunk 6.6% after the tech giant posted results that were better than expected but disappointed on its outlook. It also said it would no longer disclose unit sales of its products for investors, as it has for more than a decade.

Starbucks (SBUX) rallied 9.7% Friday after the firm posted same-store sales growth of 4%.

GoPro (GPRO) shares tumbled the most in almost 10 months Friday, after giving an outlook for sales in the holiday period that missed analysts’ estimates.

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

Original article: Weekly Market Recap Nov 4, 2018.

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Market action continues to be weak and real damage has been done technically.  Selling Wednesday and Friday was particularly harsh, with an oversold rally in between.  But the “buy every dip and make bears cry” mindset seems to have disappeared for the moment.

“We’ve had this massive shift in sentiment in recent months from ‘the market can do no wrong,’ to ‘the market can do no right,’” said Amanda Agati, co-chief investment strategist at PNC Financial Services Group.

The triple overhang of trade uncertainty, Fed rate increases, and slowing global growth are “causing investors to jump on any bad news, or even just mediocre news, to punish stocks,” Lance James, senior portfolio manager at RBC Global Asset Management, told MarketWatch.

While some of the most dramatic rallies can happen within the context of a correction, those with a short to intermediate term view still would be wise to view the near term with caution. And for the first time in a long time there is some cautionary tales out there even on the long term charts.

(Far) across the pond, please note the Chinese market did not hit a new low and the “outside reversal” day to the upside we noted last week is still holding sway.  That said if things get ugly from here, that could fall away quickly.

For the week the S&P 500 fell 3.9% while the NASDAQ fell 3.8%.  The S&P 500 is now down for the year while the NASDAQ is still up 3.8%.

Sales of newly constructed homes swooned to the lowest since December 2016.  The charts of the housings stocks have been telling us about this slowdown well in advance!

The Fed’s Beige Book showed that wages and prices are rising in the central bank’s 12 districts but not faster than a “modest to moderate” pace and that the economy expanded at a “modest to moderate” pace.  Still, the Fed’s account of the business atmosphere helped to reinforce the view for skittish investors that trade clashes are a genuine, creeping threat to the economy.

The Commerce Department reported that the U.S. economy grew 3.5% in the third quarter, beating forecaster estimates of 3.4%.

The European Central Bank on Thursday reaffirmed its plan to end the asset-buying program at the heart of its quantitative-easing strategy in December provided data show inflation remains on track to eventually meet its target. The ECB left interest rates unchanged and repeated that they will remain at present levels “at least through the summer of 2019.”

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

The week ahead…

Earnings season continues but all eyes will be focused on the health of the market in general.  ISM Manufacturing and the monthly employment data will be released Thursday and Friday respectively.

Index charts:

Short term: We expanded our short term charts out to over a year to give some context.  For the S&P 500, a trend line connecting lows of early 2018 has been broken and to even begin talk of a healthy market would entail that level being recovered along with a move back above the 200 day moving average.   Not too different on the NASDAQ.  One note for the longer term – there is a “gap” in the NASDAQ chart down there near 6000 – at some point…some day… that should get filled.  Doesn’t mean in this correction.

This Russell 2000 is just in rough shape and not too far from 2018 lows.

The NYSE McClellan Oscillator continues to tell us to be cautious as it has for 2 months now.  Last positive reading was in August!

Long term: Finally some fireworks in the long term charts as some support levels were broken this week.

Charts of interest / Big Movers:

Monday, American Railcar Industries (ARII) soared 51% after the company announced said it would be acquired by a fund managed by investment firm ITE Managment LP. Under the terms of the deal, valued at $1.75 billion, ITE will pay $70 for each share of the company.

Tuesday, Caterpillar (CAT) fell 7.6% after the industrial giant reported profits and revenue ahead of analysts expectations but offered guidance that was below consensus.

McDonald’s (MCD) rose 6.3% after announcing third-quarter results.  When “boring safety stocks” stocks like McDonald’s begin to lead the market it’s not a great thing.

Wednesday, Texas Instruments (TXN) fell 8.2%% after the chip company released third-quarter results late Tuesday.

AT&T (T) shed 8.1% Wednesday, after the telecommunications and media giant reported third-quarter earnings that missed expectations but sales that beat.

Thursday, Tesla (TSLA) soared 9.1%, after the electric-car maker produced the largest quarterly profit in the company’s history.

Ford (F) rose 9.9% Thursday – its best day in 9 years – after reporting better-than-expected earnings after Wednesday’s close.

Twitter (TWTR) soared 15.5%, after the company posted earnings and revenue beats for the third quarter, though a 9% decline in monthly active users was a sharper drop than analysts expected.

Advanced Micro Devices (AMD)  sunk 15.5% Thursday after the firm reported revenue and an outlook that missed expectations Wednesday, after the close.

Amazon (AMZN) closed below its 200 day moving average Friday for the first time since early 2016 after it posted a record profit but sales disappointed.   Guidance for next quarter was also not to the market’s liking.

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

Original article: Weekly Market Recap Oct 28, 2018.

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This was a second week of consolidation with generally good action in the Russell 2000 and NASDAQ.  The S&P 500 and DJIA suffered a bit more as TRADE WARS!!!(tm) fear affect companies in those indexes more than the companies in the former 2 indexes. Quite a few “gap ups” and “gap downs” this week as news overnight weighed on indexes.  A sample of this week’s fun:

After Beijing’s retaliation against U.S. planned tariffs on $50 billion worth of Chinese imports, Trump asked U.S. Trade Representative Robert Lighthizer late Monday to identify $200 billion more in Chinese products that could be subject to tariffs of 10%. The U.S. president also threatened to find $200 billion more worth of goods if China tried to retaliate against those additional tariffs.

“We’re still analyzing how much the trade policies, if they go through, would impact valuations and fundamentals. If tariffs continue to rise, that is a negative, and it could derail some of the confidence. However, so many issues like this either don’t end up happening, or they don’t happen in the worst-case scenario. A lot of what we’ve seen is just rhetoric, and if you try and trade off things like that, you’ll likely be wrong,” said Lance Humphrey, executive director of global multi-assets at USAA.

Seems like the Chinese market is taking these threats more seriously then U.S. markets.

For the week the S&P 500 closed down 0.9% while the NASDAQ retreated 0.3%.

Economic data was not market moving.

Worth showing the divergence of small caps which mostly are domestically focused (Russell 2000) vs the Dow Jones Industrial Average which is full of companies who sell internationally – here is a 1 month chart. (click to enlarge).  R2K up 3.5% vs DJIA -0.9%, in just 30 days!

Oil jumped Friday after members of the OPEC and other major producers struck a deal that would result in an effective rise in production of around 600,000 barrels a day, a figure that comes as a relief to bullish traders who feared a more aggressive increase.

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

The student loan bubble continues unabated…  a future crisis unfolding slowly but surely.

This chart only includes federal loans to students. Private loans increase the debt burden. The Federal Reserve Bank of New York regularly tracks household debt and credit. In their most recent update, they calculate student loan debt to be nearing $1.41 trillion.

Great infographic from Visual Capitalist on the major bull markets – the current one is about to be the longest in duration.  Here is a summary but the full infographic on the website is worth the click thru.

The week ahead…

As we said last week, trade wars stuff could be the main headline as economic data is light and we are in the gap between earnings seasons.

Index charts:

Short term: The S&P 500 held its breakout level at just over 2740 – watch that number next week.   The NASDAQ remains quite strong.

The Russell 2000 remains impressive.

The NYSE McClellan Oscillator has now been negative all week.  That’s a caution flag for short term traders.

Long term: Still very positive for the “buy and never sell” crowd.

Charts of interest / Big Movers:

Monday, Valeant Pharma (VRX) sunk 12.3% after the Food and Drug Administration failed to approve a lotion product intended to treat plaque psoriasis.   The stock had been on quite a run after a disaster 2017.

Rent-A-Center (RCII) jumped 22% Monday after it agreed to be taken private by Vintage Capital, a private and public equity firm, in a deal valued at about $1.365 billion.

Tuesday, Foundation Medicine (FMI) surged nearly 29% after Swiss health care group Roche Holding announced a $2.4 billion deal to buy the remaining shares of the genomic profiling group that it doesn’t already own.

Wednesday, Oracle (ORCL) fell 7.5% after an earnings beat was followed up by weak guidance.

Starbucks (SBUX) slumped 9.1% after saying it will close more coffee shops in an increasingly crowded U.S. market.

Friday, Red Hat (RHT) fell more than 14% a day after the software company gave a softer-than-anticipated quarterly outlook.

It is worth noting Etsy (ETSY) which we highlighted last week – this is called “holding a breakout”!

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

Original article: Weekly Market Recap Jun 24, 2018.

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After two weeks of rallies, the S&P 500 mostly consolidated this week – except for Friday the action was very reminiscent of 2017 with almost no volatility at all intraday and modest gains or sideways action.  Friday was the wrench in the mix, with a gap down to open the day but buyers came in during the afternoon and in the end the markets had a week to digest prior gains.  Friday’s action was due to TRADE WARS(tm)!

President Donald Trump approved tariffs on about $50 billion of Chinese goods, marking the latest escalation in the trade spat between the two countries. Beijing has said it intends to assess tariffs on a corresponding amount of U.S. goods, while Trump said the U.S. would pursue more tariffs if China retaliates. Subsequently, Trump said there was no trade war with China.

The Federal Reserve did what it had telegraphed what it would do:

The Federal Reserve voted to raise its benchmark federal funds rate by a quarter percentage point to a range of 1.75% to 2%. Eight of 15 Fed officials now expect at least four rate hikes will be needed this year, up from seven at the March meeting.

The Fed’s dot plot, a projection by the members of the central bank’s expectations for rates in the future, shows the policy-setting Federal Open Market Committee penciling in two additional rate increases in 2018 for a total of four increases in the year. That is up from expectations from three in the March Fed rate estimates.

More interesting this week was the European Central Bank which Thursday left interest rates unchanged and laid out plans to taper its program of monthly bond purchases later this year. The central bank is aiming to bring them to a halt by the end of 2018.   There was no “taper tantrum” by markets, as we saw in the Bernanke era.

“The ECB did a pretty good job telegraphing what it’s planning to do. [ECB President Mario] Draghi is following Ben Bernanke’s playbook, with a zero-interest-rate policy, bond buying, and then eventually shrinking the central bank’s balance sheet. When we did all that, our market continued to move higher, which gives investors confidence that the blueprint they’re following is the correct one,” said Phil Orlando, chief equity market strategist at Federated Investors.

For the week the S&P 500 closed up fractionally while the NASDAQ added yet another 1.3%!

On the economic front the consumer price index popped 0.2% in May; some funny headlines out there about that being the “hottest in 6 years!” – it’s an annualized rate of 2.4%… woo hoo.

The increase in the cost of living last month was spearheaded by the rising cost of gasoline, medical care and shelter — rent and home prices.  The cost of medical care has accelerated again after a slowdown toward the end of 2017. Ditto for rents and home prices.

Meanwhile the producer price index did surge 0.5% in May on the back of the big jump in oil.  Core producer prices that exclude food, energy and trade rose a much smaller 0.1% last month.

Retail sales jumped 0.8%, double expectations.

“U.S. households are back to their free spending ways, with the strength of May’s retail sales figures implying that second-quarter real consumption growth (and GDP growth for that matter) will now be more than 4% annualized. With the benefit of the tax cuts, strong employment growth and a slow acceleration in hourly wage growth, consumption growth should remain strong going into the second half of this year,” said Paul Ashworth, chief U.S. economist at Capital Economics.

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

Speaking of oil, the chart has a bit of a “bear flag” look to it which should make consumers happy if it fulfills.  Turn the chart upside down and looking at the most recent period you’d love to see that chart action if you were a bull – i.e. a breakout, consolidation with a minor pullback, then a push forward Friday.  Of course we are not looking at the chart upside down so it might bode well for bears – we shall see.

The week ahead…

No major economic news – trade war concerns certainly could pop up again.

Index charts:

Short term: The S&P 500 was quiet while the NASDAQ continued to churn up.

The Russell 2000 was steady as a rock in a consolidation phase after a huge run.

The NYSE McClellan Oscillator went slightly negative late in the week but not enough to raise eyebrows yet.

Long term: Still very positive for the “buy and never sell” crowd.

Charts of interest / Big Movers:

Monday, Sempra Energy (SE) jumped nearly 16% after activist investors Elliott Management and Bluescape Resources revealed a “value creation” strategy for the company.

Tuesday, Lands’ End (LE) soared 27% after the retailer said its first-quarter sales got a 12% boost from sales of uniforms to Delta Air Lines.

In this week’s biotech lottery, Galmed Therapeutics (GLMD) surged 151% Wednesday after successful trial results of its drug to treat nonalcoholic steatohepatitis.  You can say that again.

Thursday, Tailored Brands (TLRD) tanked 22% after the retailer late Wednesday reported comparable sales below analyst forecasts.

Also Thursday, Etsy (ETSY) jumped 26% after the company raised its 2018 revenue growth guidance range to 32% to 34% from the range provided last month of 22% to 24%.   Etsy said the increased guidance comes as it plans to increase the transaction fee it charges when a seller makes a sale. The fee was previously 3.5%, but will increase to 5.0% on July 16.

Go Twitter (TWTR) go!

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

Original article: Weekly Market Recap Jun 17, 2018.

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