Archive for the ‘Market Update’ Category

October Is In The Books

As November gets underway, here’s a look at some interesting data as we say goodbye to the ‘weakest’ month.

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Historic post election markets continue to impress.

Hat tip Charlie Bilello

Amazon

Last Friday Amazon surged over 13% following another blow out earnings report.  This powerful move drove shares to new all time highs.

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As a new week begins AMZN is moving higher still.  Just how strong has Amazon been over the last two years.  This strong:

AMZN   +132%   

XRT(Retail ETF)   -19%

 

 

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Hat tip Charlie Bilello

 

From The Weakest

To the strongest.  Historically the May through October time frame produces the weakest S&P 500 returns.  Not so this year.  What happens after the usually ‘weak’ May/October period ends with solid gains?   Key bit from Ryan Detrick:   So much for “sell in May and go away.” The S&P 500 Index has gained more than 6% during the historically worst six months of the year and could finish higher each of the six months (from May to October) for the first time since 1980. Then again, 2017 has been breaking records left and right, so the strength we’ve seen during this seasonally weak period shouldn’t be too surprising.

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Following the tremendous run we’ve had over the last six months the normally strong November to April period may be even stronger than usual:

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The average gain from November to April is 7%.  But after a better than 5% gain during the usually weak prior six months, the average gain for the the November/April period is 9.2%.

Correction?  Who needs a correction? 

Hat Ryan Detrick of LPL Research. 

 

One Year Ago This Week

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Wonder what she thinks about every day now…

INTC

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One Year Ago…

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Record Breaker

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Today the S&P 500 Index set a new record for the longest streak without a 3% correction.  Volatility has died a violent death.   

Hat tip Charlie Bilello

Crazy Bernie Doesn’t Get It

This is great, key bit:  On Wednesday evening, Cruz and Sanders debated each other on the GOP’s tax plan. Cruz truly slammed the floor with his socialist colleague in the Senate, explaining why his favorite Robin Hood analogy is way, way, way off.

Hat tip Stephen Green

Inside The S&P 500 Index, Considerable Ugliness

There were a number of major breakdowns inside the S&P 500 Index on Tursday.  After reporting their latest quarterly results these four stocks were under heavy selling pressure:

bk

BK fell nearly 3% on over double its average volume.  Just last week the stock reached new 2017 highs.  Today it closed at new October lows.  We expect more downside.  Initial target=$51.60.

 

 

gpc

GPC was the number two loser in the SP 500 today with an 8.5% drop.  Quite a reversal from yesterday’s close at new October highs.  The stock opened today’s session with a massive downside gap that dropped shares well into new October low territory.  GPC filled a huge breakout gap($88.10)and managed a slight bounce in the afternoon.  The stock could stabilize near this area while overhead pressure builds.

 

dov

Dover ended the day with a 4.35% loss on its heaviest volume of the year.  Last week the stock reached new 52 week highs.  Today it finished well below the initial October lows.  There is solid support near today’s low($87.65/July high).  It would be a very impressive hold if this zone limits further downside.

 

 

pm

PM took out major support near the $110.00 area.  This key zone held the April, May, July and September lows.  Downside volume reached its heaviest level of the year.  We expect more downside.  Initial target is the 2016 high($104.00).

At time of publication we are long PM and BK in some managed accounts.

Goldman Sachs Sees a Bear

The lede:  Goldman Sachs has circulated a fascinating but scary research note to clients suggesting that the probability of stocks entering a bear market in the next 24 months currently stands at about 88%, based on the history of previous bear markets.

Well, this bull market is certainly getting long in the tooth.  The S&P 500 Index is currently tracing out its second longest rally in history: 

goldman sachs bear market 1

At some point, something’s gotta ‘give’.  According to Goldman’s ‘GS Bear Market Indicator’, which is now at 67%, something big may ‘give’ within the next two years.  Key bit:  Historically, when the indicator is at 67%, there is an 88% chance of stocks falling into a bear market in two years’ time.

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However, the danger of a new bear in the near term remains quite small(35%):

More:  Bear markets are triggered in three different ways, Oppenheimer et al argue:

  • “Cyclical” bear markets are trigged by rising interest rates and recessions;
  • “Event-driven” bears come from negative economic shocks like war or emerging market crises;
  • “Structural” bears come from financial bubbles.

And when the bear does come… Goldman created this diagram based on an average of historic data. Typical bear markets feature a false “bounce,” in which stocks decline suddenly but then recover, reassuring investors (who then get crushed in the months afterwards) or giving clever investors a second chance to get the heck out of stocks:

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Read the whole thing:  http://www.businessinsider.com

Hat tip BI.com

 

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