Thursday, December 8, 2016
Joined Dec 4, 2012
231 Blog Posts

You Want A Piece Of Me …

trump-screaming

Clearly, President Elect Donald Trump is going to have to learn to use his Twitter account a great deal less than he has in the last week. His tweets last night on China are having some ramifications as I read some just crossing headlines.

China had basically rebutted those tweets and is telling Trump to go f#%@ himself. The Trade Exchange is reporting that China has devalued overnight. The USD/CNY is at 7.48 notes XE.com and it is not a glitch.  It closed yesterday at  6.88.

How the market handles this Tuesday will be of interest. This story could change between now and tomorrow’s open but it is worthy of your attention.

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The Week Ahead After The Italian Referendum

mario draghi

The Week Ahead Post The Italian Referendum

  1. Geopolitical Events. Monday Federal Reserve New York President William Dudley speaks as does Federal Reserve St. Louis President James Bullard.
  2. Economic Releases. Releases of note this week include the weekly chain store sales, oil/gas numbers, mortgage applications, jobless claims and factory orders as well as Michigan Sentiment.
  3. Earnings Releases. Notable releases include GWPH BMO AZO VAL COST BFB AVGO COO TTC MTN.

Monday, December 5

Italy voted “No” on its Referendum. Expect some volatility as a result.

Tuesday, December 6

October Factory Orders are due out at 10:00 a.m. EST and are expected to rise to 2.5% from 0.3%.

Wednesday, December 7

Credit Suisse (CS) holds its investor day and is a Type 4 Long Squeeze.

Thursday, December 8

Edwards Lifesciences (EW) holds its analyst meeting and is a Type 4 Long Squeeze.

Hilton (HLT) holds its investor and analyst day and is a Type 1 Short Squeeze.

Friday, December 9

December Michigan Sentiment is due out at 10:00 a.m. EST and is expected to rise to 94.5 from 93.8.

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The Week Ahead: It’s Job Friday For the Last Time in 2016

ibcfortuneteller

1. Geopolitical Events. On Tuesday Federal Reserve New York President William Dudley will speak in Puerto Rico at 9:15 a.m. EST; Federal Reserve Vice Chairman Stanley Fisher will speak at 7:45 a.m. EST. On Wednesday Federal Reserve Dallas President Rob Kaplan will speak at 8:00 a.m. EST. Cleveland Federal Reserve President Loretta Mester will speak at 12:35 p.m. EST. Also on Wednesday OPEC will hold its annual meeting in Vienna. The latest Federal Reserve Beige Book is out on Wednesday as well. On Thursday Federal Reserve Cleveland President Loretta Mester will speak for a second time at 8:30 a.m. EST.

2. Economic Releases. Releases of note this week include the weekly chain store sales, oil/gas numbers, mortgage applications, jobless claims and consumer confidence, personal income, Chicago PMI, ADP Payroll, construction spending, ISM Manufacturing PMI, nonfarm payroll and the unemployment rate.

3. Earnings Releases. Notable releases include ZTO THO BNS ADSK RY SNPS TD KR BIG FRED.

Monday, November 28:

Cyber Monday follows up Black Friday. So far it seems consumers are spending. Retailing is ranked 5 out of 24 in our sector ranks.

Tuesday, November 29:

Federal Reserve Vice Chairman Stanley Fisher speaks at 7:45 a.m. EST.

Q3 GDP (preliminary) is due out at 8:30 a.m. EST and is expected to remain at 2.9%.

November Consumer Confidence is due out at 10:00 a.m. EST and is expected to rise to 100 from 98.6.

Wednesday, November 30:

October Personal Income is released at 8:30 a.m. EST and is expected to increase to 0.4% from 0.3%.

ADP Payroll Data is due out at 8:15 a.m. EST and is expected to rise to 160,000 from 147,000.

November Chicago PMI is released at 9:45 a.m. EST and is expected to rise to 52.5 from 50.6.

The latest Federal Reserve Beige Book is due out at 2:00 p.m. EST.

Thursday, December 1:

October Construction Spending is due out at 10:00 a.m. EST and is expected to improve to 0.6% from -0.4%.

At the same time, November ISM Manufacturing PMI is due out and is expected to rise to 52.2 from 51.90.

Friday, December 2:

November Nonfarm Payroll is due out at 8:30 a.m. EST and is expected to rise to 171,500 from 161,000. The unemployment rate is expected to stay at 4.90%.

STOCK SPLITS OF NOTE

Cowen Group (COWN) has a reverse split payable on December 2nd with an ex-date of December 5th.The stock will have a reverse 1-4 split.

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The Breakout Above 2200. “To Infinity And Beyond?” Or Is A Pause In Order?

buzz lightyear

The S&P 500 has moved above 2200. This is important. Why? Because I like to think of the S&P 500 in 50 point increments. Other increments are used for other indexes, like 500 points on the Dow Jones Industrial Average.

The prior move up a level was to 2150 and that happened in July. Then it was tested in August. September saw it tested and broken before recovering. October saw another break and close below 2150 at month’s end.

spx23

November saw a break of 2100 for three days. So support had fallen all the way to 2050. The run from the November 4th low has been impressive no doubt and we weighed in with positive commentary on November 8th in the morning that the action on November 7th marked a meaningful low.

Of course several took me to task for this call but once again technical analysis trumps sticking your index finger to the wind. Price always leads the news.

If we look at 2100 like we did with 2150, then we can see that is broke above 2100 in April but failed by month’s end. 2100 was retaken in late May. June saw a move back above 2100 before another selloff and finally in July it busted through to the upside.

So…based on history the easy money is in and we expected some back and forth across 2200. However, given this rally has legs the S&P 500 has about a 25% chance of continuing to 2250. For now we remain with our viewpoint that long is not wrong.

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Friday Night Lights

friday-night-lights

Tomorrow my son has a swim meet so I am doing some weekend work tonight and thought I would share some numbers from my weekly spreadsheet that tracks bonds, stock indexes, commodities, currencies, foreign equity indexes and U.S. Sector indexes.

This quarter coming into the election (October-November) had spared no asset class. Everything was lower mentioned above. Now eight days after President Elect Trump was declared the winner a few things are even clearer.

Bonds continue to struggle whether it be treasuries, corporates or high yield. For the quarter, treasuries are lower by -12.12% on the 20 year. Stay away.

Stocks have come back to life. The only equity index lower is the NASDAQ 100, thanks to FANG stocks (Facebook, Apple/Amazon, Netflix and Google).The best performer for the quarter and year to date is the Russell 2000 up 5.11% for the quarter and 15.82%.

The time to own stocks is upon us. Looks like Merrill Lynch clients who raised cash, thanks to such account busting research from Savita Subramanian, to the highest level since 9/11 are not enjoying the move and surely will be buying the dip.

Commodities continue to trade lower this quarter with the exception of Corn and Soybean. Year to date Silver and Gold remain solid performers up 19.26% and 13.49%. GLD at $115 is getting a bit overdone and a bounce could be in order next week if that level holds. A great play on GLD would be straddle.

Currencies are weak across the board as “King Dollar” is up 6.12% for the quarter.

As a result of the currency moves, all international markets are getting torched. Note Russia is the exception up 0.11% and still up year to date by 28.19%. In one of my option newsletters, I recommended the EEM December $34.50 Call that could work on a bounce back up to $37.

Last in looking at the following sector ETFs are lower for the quarter and are sort from worst to down 0%, IYR PPH XLU XLP XLV XLK RTH. Strength is found in Financial ETFs like KRE and XLF followed the Transportation ETF IYT and Industrials ETF XLI.

 

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The Rest Of The Week Ahead (Wednesday Through Friday)

calendarimage

1. Geopolitical Events. On Wednesday Federal Reserve St. Louis President James Bullard will participate in a monetary policy panel. Minneapolis President Neel Kashkari will speak at 7:30 a.m. EST followed by Philadelphia President Patrick Harker at 5:30 p.m. EST. On Thursday President Obama will attend the APEC Economic Cooperation Summit. Also, on Thursday Federal Reserve New York President William Dudley will speak at 9:50 a.m. EST. Federal Reserve Chicago President Charles Evans will speak at 2:45 p.m. EST. On Friday Federal Reserve St. Louis President James Bullard will speak at 5:00 a.m. EST. Federal Reserve Kansas City President Esther George will speak at 9:30 a.m. EST, as will Dallas President Rob Kaplan at 1:30 p.m. EST.

2. Economic Releases. Releases of note this week include the weekly chain store sales, oil/gas numbers, mortgage applications and PPI, industrial production, CPI, housing starts and leading indicators.

3. Earnings Releases. Notable releases include WMT CRM FL ANF.

Wednesday, November 16:

  • October PPI is released at 8:30 a.m. EST and is expected to increase by 0.3%, the same as in September.

  • October Industrial Production is released at 9:15 a.m. EST and is expected to rise to 0.2% from 0.1%.

  • Principal Financial Group (PFG) holds their investor day and is a Type 1 Short Squeeze.

  • A Schulman Inc. (SHLM) holds their investor day and is a Type 1 Short Squeeze.

Thursday, November 17:

  • October CPI is due out at 8:30 a.m. EST and is expected to rise to 0.4% from 0.3%.

  • October Housing Starts are due out at 8:30 a.m. EST and are expected to rise to 1,160,000 from 1,047,000.

Friday, November 18:

  • October Leading Indicators are due out at 10:00 a.m. EST and are expected to fall to 0.1% from 0.2%.

  • Proctor & Gamble (PG) holds their analyst day and is a Type 4 Long Squeeze.

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Many Missed What Really Happened Yesterday

gekko

Yesterday was the second day in 2016 that the S&P 500 rose more than 2%. The last was on March 1st. Typically, when this happens there is more to go.

Many missed this as they are too focused on the “dumb and dumber” candidates and their positioning in the last day before the election. Just remember the market always knows. You are NEVER smarter than Mr. Market, as Super Mario Gabelli would say.

Markets have struggled as investors try to make sense of the election. Technically, we learned several things yesterday.

1.At the bottom the S&P 500 usually gets a big white candle. We got that.

2.At the bottom the S&P 500 usually gets a green Heikin Ashi candle. We got that.

3.At the bottom the S&P 500 usually crosses a key moving average. Friday we bounced off the 200 day and yesterday we moved above the 150 day. Confirmation will be a move above the 50 day in a couple of days.

4.At the bottom the S&P 500 usually will move back above key retracement levels.

5.At the bottom, you either get a V or W bottom. We got a V bottom.

chart-1

chart-2

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The Week Ahead: It’s All About Tomorrow

trump-screaming

1. Geopolitical Events. On Monday Euro-zone Finance Ministers will meet in Brussels. On Tuesday the U.S. will hold its elections. Federal Reserve Chicago President Charles Evans will participate in a discussion about economic conditions and monetary policy. On Wednesday Federal Reserve Minneapolis Neel Kashkari will speak at an economic outlook event. Federal Reserve St. Louis President James Bullard will speak as will San Francisco President John Williams on Thursday. On Friday Federal Reserve Vice Chairman Stanley Fisher will speak as will San Francisco President John Williams.

2.Economic Activity. Releases of note this week include the weekly chain store sales, oil/gas numbers, mortgage applications and Michigan Sentiment.

3. Earnings Releases. Notable releases include PCLN SYY CVS DHI DISH MYL DIS AZN JCP BAM.

Monday, November 7:

Euro-zone Finance Ministers meet in Brussels.

Chinese State Council Premier Li Keqiang meets with Russian President Vladimir Putin.

Tuesday, November 8:

The U.S. Presidential Election is finally here. There are also races to decide the fate of the Senate and House of Representatives.

Wednesday, November 9:

The latest NYSE and NASDAQ Short Interest Data through October 31st settlement is due out after the close.

Thursday, November 10:

No events of note.

Friday, November 11:

November Michigan Sentiment is due out at 10:00 a.m. EDT and is expected to rise to 87.5 from 87.2.

The U.S. Bond Market is closed for observance of Veteran’s Day.

Federal Reserve Vice Chairman Stanley Fisher speaks about the economy and monetary policy.

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The Week Ahead See Earnings, Earnings & More Earnings

earnings

1. Geopolitical Events. On Monday Federal Reserve New York President William Dudley will speak at 9:00 am EDT as will St. Louis President James Bullard. Chicago President Charles Evans speaks at 1:30 p.m. EDT. Also on Monday IMF Head Christine Lagarde will speak from Pakistan. On Tuesday Federal Reserve Atlanta President Dennis Lockhart will speak, and ECB Head Mario Draghi will speak in Berlin. On Wednesday U.N. Security Council will debate Syria.

2. Economic Releases. Releases of note this week include the weekly chain store sales, oil/gas numbers, mortgage applications and consumer confidence, new home sales, durable goods, Q3 GDP and Michigan Sentiment.

3. Earnings Releases. Notable releases include V KMB T PG CMCSA TXN GOOGL MO MA XOM.

Monday, October 24:

International Monetary Fund (IMF) Head Christine Lagarde speaks from Pakistan at 6:00 a.m. EDT.

Tuesday, October 25:

October Consumer Confidence is due out at 10:00 a.m. EDT and is expected to fall to 100.5 from 104.10.

European Central Bank (ECB) Head Mario Draghi speaks from Berlin at 10:30 a.m. EDT.

The latest short interest from the NYSE and NASDAQ is due out after the close.

Wednesday, October 26:

September New Home Sales are due out at 10:00 a.m. EDT and are expected to fall to 600,000 from 609,000.

The United Nations Security Council meets to discuss Syria.

Thursday, October 27:

September Durable Goods are due out at 8:30 a.m. EDT and are expected to improve to 0.2 % from 0.1%.

Friday, October 28:

Q3 GDP is due out at 8:30 a.m. EDT and is expected to rise to 2.6% from 1.4%.

October Michigan Sentiment is due out at 10:00 a.m. EDT and is expected to rise to 88.1 from 87.9.

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Follow-up On Several Items & Randoms Thoughts :Why A Hillary Presidency Is a Good Not Bad Thing

hrc

Every once in a while I like to look back on what I have written over the past couple of months to see how things are playing out. So here is a quick summary and some new thoughts.

1.On September 30th, I noted that I thought Carter Worth’s comments would mark a low in the price of Deutsche Bank (DB). He was calling for it to go to $0 on the 29th when it closed at $11.48. DB closed at $13.09 and is now at $13.43. I expect it to see $15 in short order. So Carter is indeed worthless. Why do I mention this today? Because he is trash talking the market this afternoon on CNBC. It is a guarantee we go higher from here.

2.On September 27th, I noted that the selling in the overall market, S&P 500 would stop. SPY closed at $215.57. It ran to a high of $216.16 before the recent pullback to $213.12. We are getting  close to the bottom of this down move when I review my various models. More on this early next week. Do not worry the world is not going to end.

3.On September 19th we noted that playing a short squeeze just to play a short squeeze is just a dumb idea. Witness Novavax (NVAX) that fell from $8.34 to $1.29. Rather play short squeezes where the shorts lose money time and again. On October 5th, Alnylam Pharmaceuticals (ALNY) fell from $70.30 to $36.21. Many had played this as a short squeeze without looking to see that the shorts did a good job of making money on this name.

4.On September 9th, we noted not to panic. The market bottomed on September 14th rising 2.36% by September 22nd.

New thoughts:

1.A Hillary Clinton presidency is a good, not a bad thing. Why? If you read her Wikileaks emails, she is much more moderate than the liberals want. If you are a Republican, like I am, who cannot stomach Trump, then this is a welcome relief. If you are a liberal and upset, then are you going to vote for Trump? I do not think so.

You may not like Hillary but she will be fine because her husband was the last Republican President once he went to the center in the mid terms of his first term. Remember Slick Willie passed the biggest tax cut in U.S. history, the exemption on capital gains for selling a house, $250,000 if single and $500,000 if married. President George W. Bush was a Keynesian, just like his father who never believed in Supply Side Economics, and let the deficit balloon so he was not a Republican.

2.The lunar cycle peaks tomorrow and markets could rally next week as we also have a options expiration. October options expiration from 2005 have seen 7 weeks moving higher and 4 weeks moving lower. Losing years were 2005,2007, 2008 and 2014. Clearly, 2007 and 2008 were driven by market meltdowns. So effectively only 2005 and 2014 were losing weeks unrelated to market conditions. The S&P 500 has been lower for the past two weeks so a rebound is not out of the question and is to be expected. More on the pin action over the weekend.

Enjoy the weekend, a Badger victory over Urban Meyer and the Hunter’s Moon!

GG

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