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27 Jan
Daily Market Commentary

Week In Review: Stocks Soar On Trump's 1st Week In Office

Stocks Rally On Trump’s 1st Week In Office

The bulls have been waiting for a catalyst to send the Dow above 20k and it turned out to be Trump’s first week in office. The Dow broke above 20k and the S&P 500 briefly broke above 2,300 over the past few days. The key now is to see if the gains can hold. Elsewhere, the Nasdaq and Nasdaq 100 both hit fresh record highs while the small-cap Russell 2000 is still consolidating its very strong post-election gain. Since Trump won the election the market has been in a very bullish state. The bullish backdrop occurred when a very easy monetary policy (from global central banks) collided with a bullish fiscal policy. Moving forward, until we see any significant selling, this trading window (bullish state), clearly suggests weakness should be bought, not sold. I would be remiss not to note that the major indices are getting extended and a nice light volume pullback would do wonders to restore the health of this market. 

Mon-Wed Action:

Stocks ended a little lower on Monday on Donald Trump’s first official day in office. As promised, President Trump met with Business CEOs and made it clear that he is focused on creating an environment in which businesses can thrive. In the meeting, Trump made it clear that he wants to cut regulations and cut taxes. Stocks rallied on Tuesday after the bulls showed up and defended major support (50 DMA line) in many important areas. The benchmark S&P 500 and Nasdaq Composite closed at fresh record highs while the Dow closed below 20,000. The financials, materials, energy transports and small caps were among key areas that surged off their respective 50 DMA lines. Once that happened, more buyers showed up and stocks just raced higher. Stocks soared on Wednesday fueled by more action from President Trump. On Tuesday, President Trump signed executive orders that will make it easier for TransCanada to build the Keystone XL pipeline. On Wednesday, Trump made it clear that he’s ready to build the Wall on our southern border. The fact that Trump is moving swiftly on his pro-growth policies was enough to send stocks higher and help the Dow top 20,000 for the first time in history.

Thur & Fri Action:

Stocks closed on mixed on Thursday as investors digested the latest round of earnings, economic and political data. Earnings were mixed with some large cap stocks gapping up and some gapping down. Economic data was also mixed. U.S. new home sales fell to 536K, missing estimates for 593K. Weekly jobless claims rose to 259K, missing estimates for 246K. The PMI services index came in at 55.1, higher than the last reading of 53.4. Leading indicators rose 0.5%, beating estimates for 0.4%. Stocks were quiet on Friday as investors digested the latest round of mixed earnings and economic data. The first reading on Q4 2016 GDP came in at 1.9%, missing estimates for 2.2%. Durable goods also missed estimates and came in at -0.4%, compared to the 2.6% forecast. Finally, consumer sentiment came in at 98.5, beating estimates for 98.2.

Market Outlook: Strong Action Continues

The market remains strong as the major indices broke out and hit fresh record highs. The bulls have a very strong fundamental backdrop of monetary and fiscal policy. The ECB extended QE in December and will print another 2.4T to stimulate markets and the global economy. The U.S. Fed only raised rates once in 2016, by a quarter point to 0.50%, which, historically,  is still very low. On the fiscal side, Trump’s pro-growth policies are received well. As always, keep your losses small and never argue with the tape.  Schedule a complimentary appointment today –  if you want Adam to manage your portfolio or talk about your investment needs. Visit: 50Park.com

22 Apr
Daily Market Commentary

Week-In-Review: Stocks Stall Below Major Resistance

11 SPXD- below amjor resisstanceStocks Stall Below Major Resistance As Earnings Season Begins

Stocks opened the week higher but stalled mid-week and closed mixed to lower after sellers showed up in the latter half of the week. Several important areas of the market, that had been leading for months, are now in “pullback mode” as we enter the heart of earnings season. Some of the recent leading areas such as: Defensive stocks, Consumer Staples, Food, Beverage and Utility stocks began pulling back last week after a healthy rally. We are also watching Gold and Gold stocks (another leading area) which stalled on Wednesday and are now pulling back to digest their latest rally. Transports (IYT), Financials (XLF), and a slew of energy stocks remain strong (XLE, XOP, OIH) which continues to bode well for the market. That is the positive sector rotation we are continuing to see beneath the surface. Since earnings season began, the big winners have been financials, a few transportation and commodity stocks. Meanwhile, the big loser has been big tech (GOOG, NFLX, ILMN, V, SBUX, MSFT, just to name a few). Technically, the market is pausing just below record highs which is perfectly normal after a big move. Next week we have another Fed meeting (yippee) and several hundred earnings reports. We want to analyze the health of this pullback to see if it is healthy or the beginning of something worse. Since Feb’s low, the S&P 500 has defended its short term 21 day moving average (just below 2070) almost perfectly. That is the first level of support we are watching. If that level breaks, then watch for the 50 and 200 DMA lines near 2012-2015.
Monday-Wednesday’s Action: Stocks Edge Higher As Crude Hits Fresh 2016 High
Stocks rallied on Monday, led by a huge positive reversal in crude oil, after oil producers decided not to freeze production on Sunday. A slew of energy stocks surged on the news. Earnings news was mixed. Morgan Stanley ($MS) fell after reporting a lousy quarter. Elsewhere, Hasbro (HAS) enjoyed a huge breakaway gap after the company reported numbers. The toy maker enjoyed a healthy quarter largely due to strong sales from Disney’s toys ($DIS). Disney also rallied nicely and jumped to a three month high after being upgraded.
On Tuesday, the market opened higher but sold off shortly after the open as a lot of money piled into commodity stocks as the US dollar fell. Crude oil broke out of its latest base and hit a fresh multi-month high. Silver soared over 4% and also vaulted to a fresh multi-month high. Netflix (NFLX), Illumina (ILMN) and International Business Machines Corp (IBM) all gapped down after reporting earnings. Goldman Sachs (GS) rallied even though they reported a big drop in earnings. Economic data failed to impress. Housing starts fell -8.8% to 1.089M, missing estimates for 1.167M.
Stocks rallied on Wednesday after crude oil broke out and hit a fresh high for 2016. This helped a slew of commodity stocks rally which lifted the broader indices. Earnings data was mixed. Shares of Yahoo (YHOO) and United Healthy (UNH) rallied after reporting numbers but others fell. Economic was relatively light. Existing home sales beat estimates in March, rising +5.1% to a 5.330 million annualized rate. Existing home sales fell -7.3% in February and the year-on-year rate was only +1.5% which is still weak. Gold, and a slew of gold stocks, reversed and closed lower which could be a sign of near term fatigue.
Thursday-Friday’s Action: Earnings Roulette Continues
Stocks fell on Thursday after the European Central Bank (ECB) held their latest meeting and several stronger than expected economic data was released in the U.S. The U.S. dollar rallied hard which put pressure on a slew of commodities and commodity stocks. Stocks were relatively quiet on Friday as investors digested the latest round of earnings data and the Bank of Japan (BOJ) hinted at more easy money. Shares of Alphabet Inc. (GOOG and GOOGL), Visa (V), Microsoft (MSFT), and Starbucks (SBUX) were some of the big cap stocks to fall after reporting earnings. Meanwhile, shares of Norfolk Southern Corp (NSC), Core Laboratories (CLB). and BJ’s Restaurant’s Inc (BJRI) were some of the stocks to rally after reporting earnings.

Market Outlook: Easy Money Back In Play
Stocks are pulling back as the S&P 500 flirts with its short term 10 day moving average. Economic and earnings data remains less than stellar but all that matters now- is easy money from global central banks. As always, keep your losses small and never argue with the tape.

15 Apr
Daily Market Commentary

Week-In-Review: Stocks Sit Below Major Resistance

111 SPX---- higher highStocks Sit Below Major Resistance As Earnings Season Begins

Stocks rallied last week as the bulls sent the major indices above important areas of resistance and within striking distance of fresh record highs. Most of the big financials rallied last week after reporting crummy numbers. This reinforces our point about focusing on the reaction, not the actual numbers. Corporate earnings are expected to fall by nearly -10% in Q1 2016 which will be the worst quarter for earnings since the financials crisis. Economic data also remains less than stellar but the very strong underlying bid in the market, that has existed since the Feb 11th low, remains in clear control. The bullish case is simple: Since Feb 11th, there has been virtually no selling and the strong easy money trade from global central banks remains alive and well (for now). It is also bullish to see the S&P 500 make a higher high last week, meaning it took out Dec’s high which is a short term positive for the market. Right now the major indices have soared since the Feb low and are now trading just below major resistance (record highs). To a lesser extent, we also want to be mindful that most bear market rallies last between 4-10 weeks and we just finished week 9. Gold steel and oil led on the way up. Last week, gold fell and pulled back into its 50 DMA line. There’s a big OPEC meeting on Sunday for oil. If these important areas start falling, this could be a big head fake for the major indices and could drag the market lower. We are entering the heart of earnings season over the next few weeks and want to see how the market reacts. Just to be clear on our stance, the bulls remain in clear control of this market until any meaningful selling emerges. Separately, we have received quite a few “Thank You” emails and calls in recent weeks regarding how we navigated a very difficult environment for you. Especially, when you factor in that Q1 2016 was the worst quarter in history for active managers and nearly all the big fund managers are down- and down big – this year. We are very well positioned for a very strong 2016 and beyond.
Monday-Wednesday’s Action: Stocks Rally As Earnings Season Begins
Stocks opened higher but ended near their lows as seller showed up in the afternoon. Before the open, rumor spread that central banks and governments should begin buying bank stocks to boost the market. Meanwhile, the US dollar fell to a fresh 9-month low which sent gold, silver and several other commodities higher. Tesla (TSLA) recalled 2,700 Model X SUVs after the company told owners not to have anyone sit in the back of the vehicle until it can replace the third-row seat backs, which could fail in an accident. In other news, Goldman Sachs ($GS) will pay $5 billion to settle federal and state probes from before the financial crisis. The Justice Department settled with GS regarding the sale of mortgage-backed securities.
Stocks ended higher on Tuesday, led by a big rally in a slew of energy stocks. Oil prices soared over 4% after news broke that OPEC was closer to freezing production. Gold, silver, oil and steel stocks have soared in recent weeks after pausing to digest the strong rally from the Feb low. Overnight, Italy created a $5.7B fund to buy bank stocks. Italian banks are sitting on €360 billion euros of bad loans. This is part of a new plan from Prime Minister Matteo Renzi to boost their lackluster economy. In other news, the IMF cut its 2017 global growth forecast to 3.5% from 3.6%. In the U.S., more misdirection came from the Fed. Federal Reserve Bank of Philadelphia President Patrick Harker said it may be prudent for Fed officials to wait for more evidence inflation before they raise rates again. Then Fed’s Kaplan Said “Fed Likely to Move in the `Not-Too-Distant Future.” This has been a common occurrence since last month’s Fed meeting.
Stocks rallied nicely on Wednesday helping the Dow Jones Industrial Average and benchmark S&P 500 jump above resistance of their latest range. Before the open, JP Morgan (JPM) reported earnings that beat greatly reduced estimates. Peabody Energy (BTU) filed for bankruptcy protection in the wake of a huge crash in coal prices. Overnight, China said exports beat estimates which bodes well for the global economy. Oil prices were quiet as the US dollar rallied. Saudi oil minister, Ali al-Naimi, said he will not cut production. This came one day after inter-fax said a production freeze would likely occur. In the U.S., retail sales fell -0.3%, missing estimates for a gain of +0.1% which strengthened the case for more easy money from the Fed.
Thursday-Friday’s Action: Financials Lead
Stocks were mostly higher on Thursday after more easy money was thrown at markets from global central banks. Overnight, Singapore surprised the Street when they unexpectedly eased monetary policy and looked to devalue their currency to stimulate growth. They are now back at emergency levels not seen since the 2008 financial crisis. Bank of America (BAC), Wells Fargo (WFC) and BlackRock (BLK) were some of the big companies that reported earnings on Thursday. BAC and BLK rallied while WFC fell. Elsewhere, the IEA lowered their forecast for global oil demand. In the U.S., Energy XXI, filed for bankruptcy which became the biggest casualty (so far) of the crude bear market. Stocks were relatively quiet on Friday as investors digested a strong weekly gain. Overnight, China said its economy grew by +6.7% in the first quarter of 2016, which came in just below China’s goal of 7%. Oil prices slid ahead of Sunday’s OPEC meeting in Doha about a possible output freeze.
Market Outlook: Easy Money Back In Play
Stocks remain very strong as there remains virtually no selling in the market. Economic and earnings data remains less than stellar but all that matters now- is easy money from global central banks. As always, keep your losses small and never argue with the tape. If you want help with the market consider joining: FindLeadingStocks.com.
 

08 Apr
Daily Market Commentary

Week-In-Review: Stocks End Week Lower Ahead of Earnings Season

1 SPX Lower HighsStocks End Week Lower Ahead of Earnings

Stocks ended lower for the first full week of the new quarter and before earnings season begins in earnest. The short term action remains sloppy (to put it nicely) and continues to frustrate both the bulls and the bears. Eventually, clean trends will emerge, but for now, patience is paramount. The intermediate term action remains sideways and the long term trend remains up. Stepping back, the big theme this year has been the unraveling of the strong dollar trade that has prevailed since mid-2014. This year, the Fed has been very vocal about their dovish stance (a.k.a easy money/weak dollar) and that has caused a lot of capital to flow into areas that have fallen due to a stronger dollar over the past 18-24 months. In the short term, the major indices had a very big rally from the Feb 11th low and are now digesting that move ahead of earnings season. Underneath the surface, we are seeing a lot of sector rotation taking place which is healthy in the near term. The big winners this year remain Gold and Silver, Utilities, Food, Defense Stocks and the other beaten down areas over the past 18-24 months. The big losers continue to be the areas that were working for most of 2015 (FANG stocks, biotechs, healthcare etc). Big money continues to move into Gold and Silver stocks as the metals try to bottom after a brutal 5 year bear market. Other beaten down areas which put in a near term low on January 20th are also pausing to consolidate their recent gains. These areas benefit from a weaker dollar: Steel ($SLX), Transportation ($IYT), Materials ($XLB), Energy Stocks ($XOP, $XLE, $OIH), Emerging Markets ($EEM), just to name a few. For obvious reasons, we will be watching the aforementioned areas closer as a “tell” for the market. Oil soared 63% in 5 weeks, then pulled back -17% before bouncing last week off its 50 DMA line. Since the Feb low, the S&P 500 soared +14.48% and is now pulling back to consolidate that strong run. Even with all this noise, the S&P 500 is still moving sideways and just made its 5th lower high since last summer’s all-time high. We now enter earnings season which is the next big catalyst for investors. If sellers show up and this turns out to be a huge bear market rally we will be ready. Most bear market rallies last between 4-10 weeks and we just finished week 8 (something to keep in the back of our mind). We know easy money from central banks has greatly distorted the playing field so we are prepared for any outcome. Without easy money, we would say with near certainty that the market is forming a large top and is heading lower. 
Monday-Wednesday’s Action: Stocks Drift Lower

Stocks fell on Monday as markets paused to digest the very strong rally we have seen over the past 8 weeks. Commodities dragged stocks lower even though the US dollar also fell. Factory orders fell -1.7%, missing consensus for -1.6%. Alaska Air ($ALK) said it plans to acquire Virgin America (VA) in a deal valued at $4 billion. Groupon (GRPN) rallied after the company said Comcast will invest $250 million. Comcast will work with Groupon on potential strategic partnership opportunities. In Europe, unemployment fell to 10.3% in February which was the lowest level since 2011. The IMF said a Greek deal is far off which weighed on investor confidence. Stocks fell on Tuesday as global selling continued across multiple asset classes. India’s Central Bank joined the easy money party and lowered its key interest rate to 6.5%, from 6.75%. Meanwhile, Australia’s Central Bank held rates steady. In the U.S. the PMI Service index rose to 51.3, higher than the prior reading of 49.7 and just above the boom/bust level of 50. The ISM service index came in at 54.5, beating estimates for 54. Overseas stock markets fell after sluggish economic data from Japan and Europe.
Stocks rallied on Wednesday, helped by a big rally in a slew of Biotech (IBB) and Healthcare (XLV) stocks. Transportation stocks lagged for most of the day as they pause to digest the recent rally. The Fed released the minutes of their latest meeting and the minutes reiterated the view that Fed officials are in no rush to raise rates. In other news, oil prices vaulted over 5% after a surprise drop in in U.S. crude supply.
Thursday-Friday’s Action: Stocks Continued To Be Sold
Stocks fell on Thursday as sellers finally showed up. The selling began in Asia and Europe and continued in the U.S. Japan’s stock market continued to fall as the Yen soared. European stock markets were mostly lower even though the European Central Bank (ECB) hinted at even more easy money! President Mario Draghi wrote in the bank’s annual report today that they won’t “surrender” to excessively low price growth. Then, the ECB’s Chief Economist Peter Praet, spoke at a conference in Frankfurt and made it clear that further stimulus would be provided, if needed. Big financials dragged U.S. markets lower as many big banks broke below their respective 50 DMA lines. After Thursday’s close, Janet Yellen, Ben Bernanke, Alan Greenspan, and Paul Volker (current and former heads of the Federal Reserve) spoke at a conference and reiterated the Fed’s easy money stance. Oil prices also soared over 6% which set the stage for a positive gap up on Wall Street. Stocks opened higher but closed near the lows for the day which is a sign of fatigue.

Market Outlook: Easy Money Back In Play

Stocks are still range-bound for the past 10 months. Patience is key until a bigger trend emerges. As always, keep your losses small and never argue with the tape. If you want help with the market consider joining: FindLeadingStocks.com.

01 Apr
Daily Market Commentary

Quarter-In-Review: Stocks End Historic Quarter Higher

11 SPX - 10 DMA line defendedStocks End Historic Quarter

Stocks remain very strong as the bulls continue to defend the short term 10 day-moving-average line for the major indices. The big news last week and last quarter is that easy money from global central banks is here to stay. For now, stocks continue to worship easy money and until that changes, the bulls are fighting to stay in control. Q1 2016 was a historic quarter by any normal measure and a very difficult quarter for most portfolio managers. Stocks experienced their weakest open to a year – ever. Then, had the Dow Jones Industrial Average had the strongest quarterly reversal since 1933! The story began with Gold and silver. Gold and Silver soared last quarter and are one of the strongest asset classes so far this year. Interestingly, Gold and Silver placed a near term low in December, and are trying to bottom after a 5 year brutal bear market (Gold and Silver have been falling since the end of 2011!). Then, on January 20th, a slew of other beaten down areas turned higher and are trying to bottom after multi-year bear markets. These areas include almost all the areas that have not been working over the past 18-36 months: Steel ($SLX), Transportation ($IYT), Materials ($XLB), Energy Stocks ($XOP, $XLE, $OIH), Emerging Markets ($EEM), just to name a few. For obvious reasons, we will be watching the aforementioned areas closer as a “tell” for the market. Then, on Feb 11th, oil and the major indices finally placed a near term low and soared into the end of March! Oil soared 63% in 5 weeks which is a huge move for a major global commodity. The S&P 500 soared 14.48% since the Feb 11th low and is now only -3.4% below a record high! Remember, in normal (non easy money) times, a 10% move for an entire year used to be considered healthy. We just had the S&P 500 soared nearly 15% in 6 weeks! Since the Feb 11th low, the bulls have done their best to defend the short term 10 DMA line for the major indices. We now enter earnings season which is the next big catalyst for investors. On the other hand if this turns out to be a huge bear market rally, we would be remiss not to note that most bear market rallies last between 4-10 weeks and we just finished week 7 (something to keep in the back of our mind). We know easy money has greatly distorted the playing field so, for now, until we see selling show up, the bulls have earned the benefit of the doubt.
Monday-Wednesday’s Action: Yellen Boosts Stocks

Stocks were relatively quiet on Monday as many overseas markets were closed for Easter and string of terror related events occurred. Over the weekend, a bomb exploded in Pakistan which killed 70 people at an Easter celebration. At 2:39pm EST, gunshots were reported in the U.S. Capitol visitors center which caused much of D.C to lock-down. The shooter was immediately apprehended and it appears to be a lone wolf situation. An hour later, NYPD shut down a portion of The Marriott Marquis in Times Square due to a suspicious package. Then around 4pm EST, Miami International Airport shut down Terminal A due to suspicious activity. Thankfully, the latter two were nothing serious. Economic data was mixed. Pending home sales rose by 3.5%, beating estimates for 1.5% in February. The Midwest led the way higher, as sales jumped 11.4%. Sales out West and in the South were also higher. The Dallas Fed Manufacturing’s general activity index jumped 18 points but was still in negative territory. The general activity index came in at -13.6, higher than the prior reading of -31.8. U.S. consumer spending rose slightly in Feb and matched estimates. In M&A news, shares of Starwood (HOT) rallied after the company received a higher $14 Billion Offer From China’s Anbang-Led Group. Stocks opened lower and closed higher on Tuesday after Yellen came out and reiterated her dovish stance.
Before Tuesday’s open, An EgyptAir flight was hijacked and thankfully was resolved quickly with no injuries. The hijacker surrendered and it appears to be an isolated incident related to the man’s ex-wife. Much of D.C. was on lock-down again after Capitol Police were called in to investigate two suspicious packages. Economic data was mostly positive. The Case-Shiller Index rose 5.7% year-over-year which helped the ailing housing market. Lennar (LEN) also rallied after reporting numbers. Meanwhile, Consumer Confidence rose to 96.2, beating estimates for 94. Yellen spoke at noon and largely reiterated her recent stance. Stocks opened higher on Wednesday but lost steam mid-day as some profit-taking showed up before the end of the month and quarter on Thursday. Before Wednesday’s open, ADP, the country’s largest private payrolls company, said private employers added 200,000 new jobs in February, almost matching the forecast for 203,000. The EIA said crude oil inventories grew by 2.3 million barrels to yet another record high of 534.8 million last week.
Thursday-Friday’s Action: Bulls Fight For Control
Stocks were relatively quiet on Thursday which was the last trading day of the month and quarter. This was a historic quarter by any normal measure. The major indices had the worst start ever to a year, then stocks reversed and the Dow had the largest positive reversal since 1933! With all the stock and oil volatility in 2016, gold shined and enjoyed its best quarter in close to 30 years! In other news, the popular rating agency, Standard & Poor’s cut their outlook for China’s credit rating to negative from stable. The rating agency said China’s economic re-balancing will take longer than the firm had previously expected. Friday was a bullish defensive day. Stocks rallied on Friday as the bulls showed up and defended the short term 10 DMA line for the major indices. Before Friday’s open, the government said U.S. employers added 215k (205k est) new jobs and the unemployment rate ticked higher to 5%. The ISM manufacturing index and consumer sentiment also beat estimates. Elsewhere, selling showed up in Japan’s Nikkei and in the oil market. Oil prices fell 4% after Saudi Arabia said they are not willing to freeze output unless Iran freezes. Iran has made it clear that it will not freeze so that put pressure on oil prices. 

Market Outlook: Easy Money Back In Play

The market remains very strong as the bulls continue to defend the short term 10 day moving average line for the major indices. As long as this continues, the market deserves the bullish benefit of the doubt. On the other hand, if this is indeed a bull trap (bear market rally) this is one of the strongest we have seen in ages. As always, keep your losses small and never argue with the tape. If you want help with the market, contact Adam or – Join FindLeadingStocks.com. 

24 Mar
Daily Market Commentary

Stocks Finally Pullback – Will It Last?

11 SPX - two double bottom patterns–

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Stocks Finally Pullback- Will It Last?

Finally, the long awaited pull back arrived on Wall Street as the major indices pulled back and snapped a very strong 5-week win streak. The pullback began when a slew of commodities started falling as the US dollar rallied. Remember, commodity stocks led the way up so they are important to watch because they could lead the way down. Stepping back, markets are very overbought and are way overdue to pullback. In the short term, we want to analyze this pullback to see if it is a healthy or unhealthy pullback. If it is a healthy pullback which would be shallow in both size (small percent decline) and scope (short in duration) we will look to do some more buying. Conversely, if it is an unhealthy pullback, heavy selling across the board, then odds favor lower prices will follow. We have several big catalysts ahead of us: end of month/end of qtr, the jobs report and then earnings season. What concerns us is that the bull market is aging by any normal measure and global markets are trading all over the map. Typically, wide and loose swings are not healthy for an aging bull market. The one major caveat continues to be easy money from the Fed and other central banks. As long as markets continue reacting well to easy money- the playing field remains distorted. Since we are so close to the end of the quarter we don’t think we will see heavy selling ahead of Thursday. We will be prepared for early April because just like last quarter stocks moved sideways after a very strong rally from a double bottom pattern and then collapsed in the near quarter. We’ll see what happens over the next few weeks. We also want to note that most bear market rallies tend to last between 4-10 weeks, we just finished our 6th week. Since easy money is alive and well- we will look to buy if more bullish setups emerge.
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Monday-Wednesday’s Action: Stocks Move Edge Lower Ahead of The Long Weekend

Stocks were relatively quiet on Monday as the market paused to digest the very strong rally we have seen since the Feb 11th low. Apple unveiled a few new (lower priced) products which are aimed at capturing a broader audience. In other news, Starwood ($HOT) accepted a higher offer from Marriott International Inc ($MAR). Existing home sales fell -7.1% to 5.08M, missing estimates for 5.3M. Overnight, the governor of the People’s Bank of China was cautious about corporate debt. China’s central bank warned that the ratio of corporate debt vs gross domestic product had become too high which may become a big problem in the near future.
Before Tuesday’s open, stock futures were slightly lower after two horrific terror attacks occurred in Brussels. Flights in and out of the airport were cancelled for the rest of the day and the city suspended their transit system. U.S. stocks opened lower but buyers showed up and kept losses at a minimum as big money flowed into biotechs and other Nasdaq 100 stocks. Understandably, airline and other travel stocks fell on the news. Economic data was mixed. The Federal Housing Finance Agency (FHFA) House Price Index (HPI) rose +0.5%, missing estimates for a gain +0.6%. The PMI Manufacturing Index rose to 51.4, missing estimates for 52.4. The Richmond Manufacturing Index rose to 22, beating estimates for unchanged.
Stocks fell on Wednesday, dragged lower by falling commodity prices. Crude oil fell over -4% and broke below $40 a barrel. Gold prices tumbled over $30 dragging a slew of commodity stocks lower. The US dollar continued to rally as it bounces back from deeply oversold levels. Remember commodities tend to rally when the greenback falls and fall when the greenback rallies.
Thursday-Friday’s Action: Commodities Pullback
Stocks opened lower on Thursday but closed near their highs as the very strong underlying bid continued to show up. Economic data was mixed. Weekly jobless claims came in at 265k. Meanwhile, February durable goods orders fell -2.8%, slightly better than the Street’s estimate for -3% . Finally, the Markit flash U.S. services PMI was 51.0 in March, beating estimates for +49.8. Stocks were closed on Friday for the holiday but the government reported the latest reading on GDP.

Market Outlook: Time To Pullback?

The market was deeply oversold so keep in mind the strongest rallies in history occur during bear markets (a.k.a bull traps). As always, keep your losses small and never argue with the tape. If you want help with the market, contact Adam or – Join FindLeadingStocks.com.

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13 Nov
Daily Market Commentary

Week-in-Review: Bears Return After A 6-Week Hiatus

Stocks Finally Pullback

It was an ugly week on Wall Street as the bears returned from a short six week hiatus. Stocks fell hard last week, erased the last three weeks worth of gains, fell over 3.5%, and snapped a 6-week win streak. It was the largest weekly decline for stocks since August and the action suggests the bears are getting stronger, once again. Last week we wrote, “The S&P 500 has rallied for six straight weeks and remains very extended to the upside. The major indices opened higher but closed in the lower half of their weekly ranges which is normally a sign of short term fatigue. The market is way overdue to pullback and the key going forward is to analyze the health of that pullback.” At this point, this is not a “healthy” pullback and the only chance the bulls have is to defend the 50 DMA line for the S&P 500, Nasdaq and Dow Jones Industrial Average. If that level is breached, we expect the market to test- and then take out August’s low. To be clear, until the action improves, this is the time for defense, not offence. The big news last week came from retailers. A slew of high profile retail stocks plunged after reporting crummy numbers and slashing guidance. Clearly, this bodes poorly for the Q4 holiday shopping season.

Monday-Wednesday’s Action: Stocks Fall

Stocks fell hard on Monday as global economic woes hurt stocks. China’s said exports fell -6.9% in October, missed estimates and was the fourth consecutive monthly drop. Remember, China is an export based economy so the fact that exports are down clearly illustrates tepid demand from the rest of the world (global economy). In other news, the organization of economic cooperation and development (OECD) cut their forecast for global growth again, reflecting a weak demand. Shares of Priceline Group ($PCLN) gapped down $138, after reporting Q3 results.
Stocks ended mixed on Tuesday after shares of Apple Inc (AAPL) fell over 3%. Credit-Suisse ($CS) published a report that indicated the tech giant has cut its orders for iPhone 6s components by as much as 10%. This dragged a slew of other Apple suppliers lower on the news. ($CRUS, $BRCM, $AVGO, $SWKS, etc). Export prices, excluding agriculture, fell by 0.3% in October after sliding by 0.5% (revised from -0.6%) in the prior reading. Wholesale inventories rose by 0.5% in September after an upwardly revised 0.3% increase (from 0.1%) for August.
Stocks were quiet on Wednesday as the bond market was closed in observance of the Veteran’s Day Holiday. Overnight, economic data from China was mixed. Industrial output grew by +5.6%, the slowest growth since 2008 which missed estimates for +5.8%. It was also slower than last month’s reading of 5.7%.In the U.S., The big news came from Macy’s ($M). The stock gapped down over 15% at one point after reporting Q3 results and lowering earnings and sales guidance. Last month, shares of Wal-Mart ($WMT) plunged after the largest retailer in the world lowered guidance as well. Other retailers are also under-performing as shares of Men’s Wearhouse (MW) plunged nearly 70% since June!

Thursday-Friday’s Action: Sellers Remain In Control

Stocks fell hard on Thursday which was the first day of heavy selling on Wall Street since September. The head of the European Central Bank, Mario Draghi, said he’s prepared to increase QE  (print more money) at their December meeting. A slew of Fed officials spoke and largely reiterated their recent stance that they are reading to raise rates if the data improves. Stocks fell hard on Friday after more retailers reported disconcerting news. Shares of Nordstrom (JWN), Fossil Group ($FOSL) and Party City ($PRTY) all gapped down after reporting crummy numbers and lowering guidance. U.S. retail sales missed estimates which confirmed what these larger retailers have been telling us for months, the consumer is weak.

Market Outlook: Aging Bull Market

This bull market is aging by any normal definition and will celebrate its 7th anniversary in March 2015. The last two major bull markets ended shortly after their 5th anniversary; 1994-2000 & 2002-Oct 2007. The fact that easy money is here to stay (for now) is all that matters. Everything else is noise. Eventually that will change, but for now the bulls remain in control. As always, keep your losses small and never argue with the tape. If you want exact entry and exit points in leading stocks, or access more of Adam’s commentary/thoughts on the market – Join FindLeadingStocks.com.

 

15 Aug
Daily Market Commentary

Week In Review: Stocks Rally Even As Geo-Political Woes Resurface

Stocks Bounce on Wall Street: Resistance Shown Below For Major Averages

After a very short 2.5 week pullback, the bulls showed up and regained control of the market. So far, every pullback for the past two years has been healthy as they have been shallow in both size (shallow % decline) and scope (short in duration). As long as August’s lows hold, odds favor we are heading to new highs in the near future. Conversely, if the market sells off and takes out August’s low, then odds will favor a new leg lower will follow. As we have written for weeks, this appears to be just another shallow pullback within a larger (and very strong) uptrend. The fact that the market closed near its highs on Friday, even after the Ukraine news broke, illustrates how strong the bulls are right now.

Monday-Wednesday’s Action: Buyers Return

Stocks edged higher on Monday as fear eased a bit on the geo-political front. Another ceasefire was agreed upon in Gaza on Sunday and pro-Russian separatists in eastern Ukraine also asked for a pause in fighting. There were conflicting reports coming out of Ukraine, first news broke that a potential humanitarian mission would begin but Kiev quickly denied the report because Russia would be involved in providing the aid, among other international countries.
Stocks drifted lower on Tuesday but closed relatively flat as volume receded (a healthy sign). The big disappointment occurred in Germany, Europe’s largest economy. German investor sentiment (the ZEW report) showed that investor morale fell to its lowest since December 2012. The big drop in sentiment bodes poorly for an already weak European economy and sent a slew of European stock markets lower on the day. The Euro also fell sharply on the news.
Thankfully, the decline was short-lived. Stocks rallied nicely on Wednesday after a slew of mixed economic data was released from all corners of the globe. Japan said Q2 GDP contracted by -6.8%, compared with a forecast for a decline of -7.1%. China said retail sales jumped by a healthy +12.2% in July 2014 vs July 2013. Elsewhere, industrial production rose by 9% in June, matching estimates. In the US, business inventories rose by +0.4% but the bigger news came when U.S. retail sales were unchanged. Retail sales missed estimates and came in at the weakest reading since January. The good news is that stocks rallied nicely on the news because on average the data suggested that global central banks will maintain their accommodative (i.e. easy money) stance.

Thurs & Fri’s Action: Stocks Rally Even As Geo-Political Woes Resurface

Stocks edged higher on Thursday after investors digested the latest round of economic and earnings data. In the US, initial claims rose to +311k which topped estimates for 305k. A separate report showed that export prices, excluding agriculture, rose +0.3% in July after sliding -0.3% in the prior reading. Wal-Mart (WMT) reported numbers that were inline with estimates but lowered guidance for the rest of the year which bodes poorly for the economy. Stocks opened higher on Friday but at 10:43am EST, stocks gave up their gains and quickly turned lower after news spread that Ukraine engaged a Russian convey on its soil. After a lot of public back and forth, the market recovered most of the losses and ended in the upper half of the range for the day- which was a bullish sign.

MARKET OUTLOOK: Time For A Breather

Keep in mind that the bull market is aging (turned 5 in March 2014 and the last two major bull markets ended shortly after their 5th anniversary; 1994-March 2000 & Oct 2002-Oct 2007) but until we see signs of sustained distribution (heavy selling) the market deserves the bullish benefit of the doubt. Furthermore, the S&P 500 has not experienced a 10% correction since 2012 which is longer than most historical comparisons and illustrates how strong this bull market is. As always, keep your losses small and never argue with the tape.

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S&P S00 (SPX):  Will The Market Break Above Resistance?

SPX0

Dow Jones Industrial Average:  Closed Near Resistance

DJIA- Resistance

Nasdaq 100: Closed Near Resistance

QQQ

03 Jul
Daily Market Commentary

Fireworks On Wall Street; Dow Tops 17k, Market Hits New High

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Stocks Surge To Fresh Record Highs

Stocks soared to fresh record highs during the first week of Q3. The market remains exceptionally strong in all three time-frames: short, intermediate and long. In the short term, the major averages are extended and overdue for a nice pullback. As previously mentioned, we trade on what we see happening, not what we think will happen. The latest consolidation only lasted 2 weeks which was just another shallow (and bullish) pullback in size (% decline) and scope (didn’t last long). The best way to interact with markets is to focus on what is happening right now (known) and avoid the temptation to predict the future (which by definition, is unknown). That said, right now we are in a very strong bull market and weakness should be bought until further notice.
MON-WED: Bulls Are In Control
Stocks ended mixed on Monday as the month and quarter came to an end. The S&P 500 has only had one down month since Aug 2013 and has not had a down quarter since QE 3 began at the end of 2012! That speaks volumes to how strong the bulls are right now and until this very strong action ends- the market deserves the bullish benefit of the doubt. Monday’s economic reports were mixed. First the good news, Pending Home Sales jumped to the highest level in four years, rising +6.1%, easily beating the +1.5% consensus. The ISM said its business activity in the Chicago area came in at 62.6 for June, which missed estimates.  On Tuesday, stocks surged to fresh record highs on the first day of the third quarter which helped the Dow Jones Industrial Average and the benchmark S&P 500 edge closer to their next psychologically important levels of 17k and 2k- respectively.The ISM Manufacturing Index slid to 55.3 in June, missing estimates for an increase to 55.8. Elsewhere, construction spending rose +0.1% in May, also missing estimates for a gain of 0.4%. On Wednesday, stocks traded in a very narrow range which is a healthy sign ahead of the always fun monthly jobs report. Before Wednesday’s open, ADP, the country’s largest private payrolls company, said US employers added 281k, beating estimates for 200k. Wednesday was the tigthest trading range of the year for the DJIA.
THURS-FRI: Stocks Surge To New Highs
Before Thursday’s open, the Labor Department said US employers added 288k new jobs last month which easily beat the Street’s estimate for 215k. The market surged higher on the news helping the Dow Jones Industrial Average top 17k for the first time in history. The next level to watch is 2k in the S&P 500. Some interesting notes, going back to 1950, the SPX has never been down in January then up five straight months. At least until this year that is. Going back to 1990, the VIX is up more in July than any other month. The SPX up +37% since this 6 quarter win streak started which is actually the weakest for any 6 quarter win streak since 1950. 1Q 2014 GDP dropped -2.9%, while SPX gained +1.3% for a difference of +4.2%.The biggest difference between GDP and quarterly return is 1Q 1975.  $SPX gained +21.6% and GDP dropped -4.7%. The biggest negative difference between SPX and GDP was 4Q 1987.  SPX dropped -23.2% and GDP gained 6.8% for a difference of 30%. The S&P 500 longest streak above the 200-day in market history crossed 400 trading days last week; now at 402. Since 1928, have been an avg of 3.5 Corrections of >5% per year in SPX. Only 1 in 2013 and 1 thus far in 2014. All this illustrates how strong the bulls are right now. The market was closed on Friday in observance of the July 4 holiday.
MARKET OUTLOOK: Strength Begets Strength
Everyone was expecting the market to pullback but instead- it refuses to fall and has gone straight up. This illustrates how strong the bulls are right now and that weakness should be bought, not just strength. Keep in mind that this bull market is aging (turned 5 in March 2014 and the last two major bull markets ended shortly after their 5th anniversary; 1994-March 2000 & Oct 2002-Oct 2007) but until we see signs of distribution (heavy selling) the market deserves the bullish benefit of the doubt. As always, keep your losses small and never argue with the tape.
Happy 4th!

Dow Tops 17k For The 1st Time In History

INDU

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