Author Archive

The Most New Highs

The lede:  Since the inception of the Dow Jones Industrials in 1896, no President saw more new highs the year after the election than President Trump. Interestingly, no one had less 1% changes either:

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Hat tip Ryan Detrick

And It’s Still Not Enough

The lede:   The federal government hauled in record total tax revenues in the month of October, taking in a total of $235,341,000,000 in taxes during the first month of fiscal 2018, according to the Monthly Treasury Statement released today.  The federal government also brought in record individual income tax revenues for the month of October, taking in $127,832,000,000 in individual income taxes.

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Read the entire mind-numbing article here:  www.cnsnews.com

Who Needs a Correction?

Key bit:  It’s been more than a year since the S&P 500 declined as much as 5% from a prior high. That’s quite a long time, now the 5th longest period without a correction in history. With recency bias in hand, investors are starting to forget that corrections are a normal occurrence in markets.

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More:  So will there ever be another correction?

I think it’s a safe bet that there will be, unless the laws of risk and return have been repealed. We just don’t know when, we don’t know why, and we don’t know how deep it will be.

That uncertainty can drive one crazy, but it is that uncertainty which is necessary for the risk premium to exist. For without the prospect of risk in equities there would be no reward. It is not another correction that we should fear, then, but instead the widespread belief that there may never be another one.

Hat tip Charlie Bilello

Reality Hits You Hard, Bro…

Fantasy(1):  “In the event Donald wins, I have no doubt in my mind the market tanks,” Cuban said. “If the polls look like there’s a decent chance that Donald could win, I’ll put a huge hedge on that’s over 100% of my equity positions… that protects me just in case he wins.”  Mark Cuban, Sept. 7, 2016

Fantasy(2):  “So we are very probably looking at a global recession, with no end in sight. I suppose we could get lucky somehow. But on economics, as on everything else, a terrible thing has just happened.”  Paul Krugman(Nobel Prize/Economics) Nov. 9, 2016

Fact:  Looking at all the U.S. elections going back to the creation of the Dow (1896), here is who had the most new highs that first year:

Trump 76 (’16)

Coolidge 60 (’24)

Clinton 51 (’96)

Hoover 44 (’28)

LBJ 37 (’64)

Hat tip Ryan Detrick

Betting on Bristol-Myers Squibb

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Here’s a quick take on BMY.  We believe the stock has returned to a very low risk entry zone.  Following last month’s earnings report BMY took an ugly hit after opening the Oct. 26 session with a damaging downside gap.  Further loses were well contained by a solid support zone that includes the January and August highs as well as powerful breakout gap left behind back on September 7th.  BMY rebounded quickly but was unable to maintain upside momentum.  Last week shares dipped again and are testing the $61.00 to $60.00 this week as well.  We believe the stock is a low risk buy near current levels.  On the downside a close back below $59.00 would be a clear warning sign that a deeper pullback is ahead.  Until then we remain positive on the current set up.

At time of publication we are long BMY in some managed accounts.

 

Netflix Update

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Netflix is beginning the week with a nice bounce.  The stock has been consolidating above a major support zone near the $191.00-$189.00 area for the last four weeks.  NFLX may be on the verge of a fresh rally leg after regaining its footing.  We’ve been positive on shares since early August and are long the stock in some managed accounts.   A close back below $188.00 would indicate a deeper pullback is ahead.  

Strong Earnings

As the current earnings season begins to wind down, Ryan Detrick has some interesting data: 

90% of the S&P 500 Index has reported and year-over-year earnings growth is tracking +8.1% (over +11% excluding insured losses from the financial sector). Once again, coming in above the expectations.

Three key takeaways from earnings season:

1.) SP 500 revenue 1% above estimates

2.) WP500 earnings estimates for the next 4 quarters have risen 0.4% during the season (usually is lowered)

3.) Tech sector beat estimates by 11% – continues to lead

Impressive.

Hat tip LPL Research/Ryan Detrick

It’s Still Very Quiet Out There

 Nearly 96% of this year’s trading days have remained within a 1% range.  The longest such streak in history:

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 Hat tip Charlie Bilello

The Trump Bump

How does it rank?

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Hat tip Ryan Detrick

 

Deep Blue Destroyer

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From strategypage.com:  ATLANTIC OCEAN (Nov. 7, 2017) The Arleigh Burke-class guided-missile destroyer USS Oscar Austin (DDG 79) transits the Atlantic Ocean. Oscar Austin is on a routine deployment supporting U.S. national security interests in Europe, and increasing theater security cooperation and forward naval presence in the U.S. 6th Fleet area of operations. U.S. Navy photo by Mass Communication Specialist 2nd Class Ryan Utah Kledzik

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