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Great news for bulls: The stock market just did something it hasn’t done in 60 years

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Posted by Jeffrey Saut - Chief Investment Strategist Raymond James

on Wednesday, 01 August 2018 07:31

MW-GN520 Shuttl 20180731160121 MGJeffrey Saut, chief investment strategist at Raymond James, a widely followed strategist and an unwavering market bull, made two very critical observations Tuesday that are likely to reverberate for stocks going forward. 

One, the stock market just made a positive move that has not happened since 1958, the same year that NASA was born and President Dwight Eisenhower, a Republican, was in the White House. Two, Democrats are likely to fail in their effort to retake the Senate and may even fall short in the House this fall.

After a fairly rocky month, stocks closed out July with solid gains, extending the S&P 500’s SPX, +0.28% winning streak to four months. Historically, when the market gains in April, May, June and July of midterm election years, the market has finished higher in that year, according to Saut.

“The history of midterm election years is that stocks become dicey in August, but tend to rally as we approach the midterm elections,” said Saut, in a note. “Also worth a mention is that going back decades shows that when the stock market is up in April, May, June and July in midterm election years, in the two years that has happened (1954 and 1958), after an August Angst moment, stocks have finished the year stronger.”

The S&P 500 was up 0.3% in April, 2.2% in May, 0.5% in June and 3.6% in July. The large-cap index jumped 45% in 1954 and rallied 38% in 1958. So far this year, the benchmark has risen 5.3%.

Even without the added boost from politics, stocks almost always gain in years when the market finished higher between April and July, according to Paul Hickey, an analyst at Bespoke Investment Group. 

Still, investors probably should not get too complacent given unresolved issues with President Donald Trump’s trade war. Investors will also have to navigate heightened turbulence in the next few weeks given August’s reputation as among the weakest months of the year, prompting Saut to warn that the market’s internal energy will likely turn neutral this week.

But perhaps the most interesting nugget in Saut’s report is that he doesn’t expect the Democrats to retake the Senate, and even their ability to recapture the House is uncertain.



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Stocks & Equities

3-Day Blowout In "Value/Growth" Is Biggest Since Lehman Bankruptcy: "A 4.3 Sigma Event"

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Posted by Charlie McElligott via ZeroHedge

on Tuesday, 31 July 2018 07:19

relval1

 

Click for larger image

The collective three-day move in U.S. “Value / Growth” has been the largest since October 2008--a 4.3 standard deviation event relative to the returns of the past 10 year period--while conversely “1Y Price Momentum” sees its largest three-day drawdown since the Nov ’16 election post-trade.

Enormous underperformance of popular longs relative to shorts speaks to “net-down” behavior at the very least across Equities-funds, although seeing pockets of outright short squeeze speaks to a fair-bit of “de-grossing” as well—ESPECIALLY across the quant market-neutral universe.

The question now becomes whether Value continue to outperform Growth if the tape turns to an outright ‘risk off’ one over the next few weeks of seasonal weakness, prior to commence of heavy (Tech-led) buyback.

....continue reading this entire article HERE

 



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Stocks & Equities

The FAANG-nary In The Coal Mine

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Posted by Adam Taggart - Peak Prosperity

on Monday, 30 July 2018 07:24

canary.jpgTwo weeks ago, I issued a report to Peak Prosperity's premium subscribers, warning of an immiment downwards re-pricing of the FAANG stocks. I even made a rare recommendation for taking an active short position against them (one now up 18%).

That report proved quite timely. Over the past 10 days:

  • Netflix (NFLX) is down 10% after issuing disappointing subscriber growth and Q3 guidance
  • Facebook (FB) is down 20% after  delivering lower user and revenue numbers than the Street was expecting
  • Amazon (AMZN) is flat despite posting blowout Q2 EPS yesterday, offset by a revenue miss
  • Google/Alphabet (GOOGL) only managed a meager 3% rise after reporting earnings & revenue beats that were tempered by rising costs and a record $5 billion EU anti-trust fine

This sudden weakness among key FAANG members is extremely significant. Much more so than most investors realize.

Confidence In The FAANGs Ran Supreme (Until Now)

Over the past few years, investor capital has been increasingly concentrating into the FAANGs while the rest of the market has been deteriorating: 

ETF With FAANG Equities Within Top 15 Holdings

2018: 605
2017: 501
2016: 430
2015: 332
2014: 277
2013; 230
2012: 175
2011: 101
2010: 62
2009: 14
2008: 9

Source: Lawrence McDonald

As portfolios have become more and more FAANG-dominated, more and more investors have come to see those five stocks as "unstoppable". They have unnaturally performed as both "risk-on" and "risk-off" havens for years -- delivering consistent share price growth when markets move higher, while holding steady when they don't.

As a result of this piling-in by investors, the five FAANG stocks collectively now have a whopping market capitalization of $4 trillion.

They comprise nearly half of the NASDAQ index's market cap.

The FAANGs are the largest five companies in the S&P 500. And they were responsible for ALL of that index's growth over the first six months of this year (without them, the S&P 500 would have had a negative return in H1 2018):



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Stocks & Equities

Cashin – “The Shorts Began To Panic”

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Posted by KingWorldNews

on Friday, 27 July 2018 06:46

Screenshot 2018-07-27 06.50.21With stocks surging and the US dollar rebounding, one of the legends in the business said, “The shorts began to panic.”

A Short Panic
Here is a portion of today’s note from legend Art Cashin:  The stock market painted a beautiful picture yesterday but that wasn’t truly evident until the final thirty minutes in trading.

Apparent Tariff Truce Spooks The Shorts – Stocks began the Wednesday session in a rather shaky fashion. 

The Dow weighed heaviest in the early trading and that was due to two specific components.

....continue reading HERE

 

also from King World News"

Celente Just Issued A Major Trend Alert For Gold & The Stock Market



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Stocks & Equities

Nasdaq slumps as Facebook suffers biggest one-day drop ever

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Posted by Robert Zurrer

on Thursday, 26 July 2018 09:10

MW-GF698 thumbs 20180319080121 ZH

                         Investors are giving a thumbs down to Facebook’s quarterly report.

U.S. stocks mostly fell on Thursday, with technology stocks leading the Nasdaq sharply lower as Facebook shares plummeted in their biggest one-day drop ever following disappointing quarterly results.

Facebook, due to its size and weight in the market, cast a negative light on the session, which was otherwise largely strong. Seven of the 11 primary industry groups rose on the day, which put the Dow into positive territory and limited declines in the S&P 500.

What are the main benchmarks doing?

The Dow Jones Industrial Average DJIA, +0.61%rose 157 points, or 0.6%, to 25,570. The blue-chip average doesn’t count Facebook among its 30 components.

The S&P 500 SPX, -0.13%fell 8 points, or 0.3%, to 2,837. Tech stocks were by far the biggest decliners of the day, off 2%. The Nasdaq Composite Index COMP, -0.81%sank 97 points to 7,836, a decline of 1.2% from a record close.

What’s driving markets?

Facebook FB, -19.34%dropped 19% a day after the company late Wednesday revealed lower-than-expected quarterly revenue, slowing user growth and weak guidance. At its current level, the stock was on track for its biggest one-day drop in its history. 

Other social media stocks fell, withTwitter IncTWTR, -3.03% down 4.3% and Snap Inc.SNAP, -2.20% losing 4.4%. The Global X Social Media ETF SOCL, -3.50% was off 4%.

The social-media giant has been among the tech giants powering the stock market’s gainsthis year. Other so-called FAANG stocks—which refers to the quintet of large-capitalization technology and internet stocks, a group that many analysts frequently warn is overvalued— also trended lower, with Netflix IncNFLX, -0.21% down 1.4% and Google-parent Alphabet IncGOOG, -0.33%GOOGL, -0.27%down 0.7%.

Outside of Facebook-related gloom, the second-quarter earnings season continued to roll on, with a number of major companies reporting better-than-expected results, providing an underpinning of support to markets.

In addition, investors cheered Wednesday’s upbeat meeting between Trump and the European Commission’s president. The two leaders reached a trade agreement that has been called short on specifics, but still significant.

  

Why small and mid-caps could be the answer to trade-related jitters
 

Separately, European Central Bank left interest rates unchanged and affirmed its plan to end its monthly bond-buying program in December, as had been expected. In addition, ECB President Mario Draghi said that uncertainty around the inflation outlook was receding. 

What are strategists saying?

“I’m not surprised to see a decline like this in Facebook, especially since even with this drop its still up year-over-year. As a growth investor looking for sustainable competitive advantages, I’m identifying cracks in Facebook’s business model. It’s new users are going to come from emerging markets, for the most part, which generate a lower revenue per user. That means the revenue growth will slow over time, and that margins will compress,” said Brian Milligan, portfolio manager of the Ave Maria Growth Fund.

“Beyond the FAANGs, things look pretty good right now, not withstanding the trade rhetoric, which seems to change every hour. There’s good growth, but trade obviously creates uncertainty, and that’s the risk. How much uncertainty is out there and how much are investors willing to bear?”

Which other stocks are in focus?

Comcast CorpCMCSA, +3.55% reported adjusted second-quarter earnings that came in ahead of forecasts, but lower-than-expected revenue. Shares rose 3.2%.

Advanced Micro Devices IncAMD, +9.78% climbed 6.4% after the chip maker reported revenue that grew more than expected.

Celgene CorpCELG, +0.86% dipped 0.1% after it reported positive resultsfrom a phase 3 cancer trial after-hours the previous day.

MasterCard IncMA, -3.62%fell 3.8% after reporting its results.

ConocoPhillips COP, -0.69% posted adjusted second-quarter earnings that beat expectations. Shares lost 0.9%.

Raytheon CoRTN, -3.39% slid 5% after the defense company reported second-quarter earnings and revenue that beat expectations.

Dunkin’ Brands Group IncDNKN, +0.03% reported adjusted second-quarter earnings that beat analyst forecasts, but it lowered its outlook. Shares were flat.

Under Armour Inc.UA, +2.33% popped 1.9% after it posted stronger-than-expected second-quarter revenue.

PayPal Holdings Inc. PYPL, -4.20% gave a third-quarter outlook that missed expectations. Shares fell 3%.

Hershey CoHSY, +5.34% jumped 5.6% after it reported adjusted second-quarter earnings that beat expectations.

Supervalu IncSVU, +64.16% surged 65% after United Natural Foods IncUNFI, -13.78% said it would buy the company for about $2.9 billion. Shares of United lost 14%.

Which economic reports are in focus?

Initial jobless claims climbed more than expected in the latest week, though they remain near a multidecade low

Durable-goods orders rose 1% in June, the first increase in three months. Economists surveyed by MarketWatch had forecast a 3.8% gain in orders for durable goods.

The U.S. trade deficit in goods widened to $68.3 billion in June, up 5.5% or $3.6 billion, according to the Commerce Department’s advanced estimate released Thursday.

Check out:MarketWatch’s Economic Calendar

What are other markets doing?

European stocksSXXP, +0.63%traded higher after the U.S.-EU trade truce, while Asian markets finished mixed.

Gold futures GCQ8, -0.42%and oil futures CLU8, +0.13%were lower, as the ICE U.S. Dollar Index DXY, +0.47%also lost ground.



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