Morning Briefing: Futures Up Modestly

In After Hours Trading

IPOs on deck none of note. Secondaries On Deck ATW CIO CSFL FMBI WMB.

In After Hours Trading: CUDA +.08 SHLM +.04 APOL -.05 WDFC -.05.

Lower Guidance: .

Mixed Guidance: CUDA.

Positive Guidance: .

What’s Happening This Morning

U.S. futures: S&P +0.25, Dow Jones -6, NDX +2.75 and Russell 2000 +1.50. Asia mixed and Europe higher.

Copper higher with silver and gold lower. WTI Crude and Brent Oil Futures higher. Natural Gas is higher. $ is higher vs Euro, higher vs. Pound and higher vs. Yen. US 10 year Treasury yield at 2.38% yield, one month change -8 and +27 one year change. Prices as of 7:55 a.m. EDT.

5

Top Sectors Healthcare.

Weak Sectors Utilities and Conglomerates led the way down.

One month winners All.

Three Month Winners Conglomerates, Industrial Goods, Financials, Energy and Materials.

Six Month Winners Conglomerates, Industrial Goods, Financials, Energy and Materials.

One Year Winners Energy, Materials, Industrial Goods and Utilities.

Year To Date All.

Earnings Expected

Earnings due after the close (by avg. trade volume): LMNR SNX.

Due Monday morning (by avg. trade volume descending): SVU MSM.

Rags & Mags: Inside Wall Street

Bloomberg: Dollar pulling back ahead of Trump news conference tomorrow. British Pound continues to fall while the FTSE rises. Yahoo (YHOO) CEO Marissa Mayer will leave the company after Verizon (VZ) sale closes. President Elect Trump appoints his son in law Jared Kushner as a senior White House adviser.

Reported Earnings This Morning

Reported Earnings This Morning (Best to Worst absolute beats/misses [+.02 or greater/-.02 or worse]): none of note.

Missing: .

Lower Guidance: .

Current Morning missing: .

Mixed Guidance: .

Positive Guidance: .

Data Points

Yesterday saw 1073 stocks rise and 1887 fall on the NYSE. NASDAQ saw 1164 rise and 1685 fall.

The SP 500 is back above its 50 day exponential moving average and above its 200 day exponential moving average. The Russell 2000 is above its 50 day moving exponential average and its 200 day exponential moving average.

The 10 day spread moving average of breadth is back to invested as of November 15th. The Madison Market Timing Indicator is now invested since November 18th.

YTD 4066 stocks rose for 2016 and 2259 fell. Updated 12/30/16 close.

Economics

The November JOLTS Job Openings is due out at 10:00 a.m.

Overnight China reported Producer Prices surged 5.5% last year.

Politico

Conference & Analyst Meetings

Meetings, Conference Calls or Announcements of note, PTLA LGFA LGFB AMAG. JP Morgan Healthcare Conference. Needham Annual Growth Conference.

Conference of Note

North American Auto Show in Detroit. The 19th Annual ICR Conference. Precision Genome Engineering Conference.

M & A News

Valeant (VRX) sells assets to L’Oreal for just over $1.3 billion. Also, will sell Dendreon for $819.9 million.

Key Upgrades and Downgrades

Firm	Upgrades	Downgrades
JP Morgan
Goldman Sachs	ETFC XRX VOD	GHL
Morgan Stanley
Deutsche Bank
Citigroup	PCLN	CMA GS EXPE
Merrill Lynch	ALK ILMN
Wachovia/Wells Fargo
Credit Suisse		DISCA
Banc of America
UBS
Key Banc
Sanford Bernstein
Jefferies		WRLD
Nomura
Needham
Raymond James
Societe Generale
Friedman Billings
CLSA
Stifel	WPZ BIDU

Comments »

1. Geopolitical Events. On Monday Federal Reserve Boston President Eric Rosengren will speak at 9:00 a.m. EST. Also on Monday Federal Reserve Atlanta President Dennis Lockhart will speak at 12:40 p.m. EST. On Wednesday President Elect Donald Trump will hold his first press conference in five months. On Thursday Federal Reserve Chairman Janet Yellen will speak at 7:00 p.m. EST. Also, on Thursday Federal Reserve Chicago President Charles Evans will speak at 8:45 a.m. EST, along with Dallas President Robert Kaplan (no time specified) and St. Louis President James Bullard at 1:15 p.m. EST. On Friday Federal Reserve Philadelphia President Patrick Harker will speak at 9:30 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 PPI, Retail Sales and Michigan Sentiment.

3. Earnings Releases. Notable releases include GPN AYI SNX PRGS MSM HAIN TSM DAL JPM WFC.

Monday, January 9:

Japanese markets are closed for trading.

Tuesday, January 10:

No events of note.

Wednesday, January 11:

President Elect Donald Trump holds his first press conference in five months.

The latest short interest data for NYSE and NASDAQ is due out after the close of trading. Data is through settlement of December 30th and trade date of December 27th.

Thursday, January 12:

Federal Reserve Chairman Janet Yellen speaks to educators through a webcast.

Friday, January 13:

December PPI is due out at 8:30 a.m. EST and is expected to come in at 0.3% from 0.4%.

December Retail Sales are due out at 8:30 a.m. EST and are expected to rise to 0.7% from 0.1%.

January Michigan Sentiment is due out at 10:00 a.m. EST and is expected to rise to 98.8 from 98.2.

Comments »

In After Hours Trading

IPOs on deck none of note. Secondaries On Deck JD MC MRTX SUM.

In After Hours Trading: HELE +0.48.

Lower Guidance: .

Mixed Guidance: HELE.

Positive Guidance: .

What’s Happening This Morning

U.S. futures: S&P -2, Dow Jones -20, NDX +0 and Russell 2000 -2.10. Asia mixed and Europe a bit lower.

Copper higher with silver and gold lower. WTI Crude and Brent Oil Futures higher. Natural Gas is lower. $ is lower vs Euro, higher vs. Pound and higher vs. Yen. US 10 year Treasury yield at 2.35% yield, one month change -4 and +18 one year change. Prices as of 7:55 a.m. EDT.

Top Sectors Healthcare, Materials and Energy.

Weak Sectors Conglomerates and Financials.

One month winners All.

Three Month Winners Conglomerates, Industrial Goods, Financials, Energy and Materials.

Six Month Winners Conglomerates, Industrial Goods, Financials, Energy and Materials.

One Year Winners Energy, Materials, Industrial Goods and Utilities.

Year To Date All.

Earnings Expected

Earnings due after the close (by avg. trade volume): none of note.

Due Monday morning (by avg. trade volume descending): AYI CMC GPN.

Rags & Mags: Inside Wall Street

Bloomberg: China is prepared for a trade war with the U.S. if they want it. An APP to track when Trump tweets about one of your stocks.

Reported Earnings This Morning

Reported Earnings This Morning (Best to Worst absolute beats/misses [+.02 or greater/-.02 or worse]): ANGO +.03 AZZ -.17 GBX -.04.

Missing: .

Lower Guidance: .

Current Morning missing: .

Mixed Guidance: .

Positive Guidance: .

Data Points

Yesterday saw 1296 stocks rise and 1640 fall on the NYSE. NASDAQ saw 1177 rise and 1715 fall.

The SP 500 is back above its 50 day exponential moving average and above its 200 day exponential moving average. The Russell 2000 is above its 50 day moving exponential average and its 200 day exponential moving average.

The 10 day spread moving average of breadth is back to invested as of November 15th. The Madison Market Timing Indicator is now invested since November 18th.

YTD 4066 stocks rose for 2016 and 2259 fell. Updated 12/30/16 close.

Economics

December Nonfarm Payroll is due out at 8:30 a.m. EST and is expected to come in at 172,500 from 178,000. The unemployment rate is expected to increase to 4.7% from 4.6%.

November Factory Orders are due out at 10:00 a.m. EST and are expected to fall to -2.2% from 2.7%.

Politico

Fedspeak today. Federal Reserve Chicago President Evans speaks at 11:15 a.m. EST. Followed by Federal Reserve Richmond President Lacker at 1:00 p.m. EST. Last, Federal Reserve Dallas President Kaplan speaks at 3:30 p.m. EST.

Conference & Analyst Meetings

Meetings, Conference Calls or Announcements of note, BIIB GSAT TEVA. Goldman Sachs Global Energy Conference.

Conference of Note

The Consumer Electronic Show (CES) in Las Vegas today.

M & A News

Key Upgrades and Downgrades

Firm	Upgrades	Downgrades
JP Morgan
Goldman Sachs
Morgan Stanley
Deutsche Bank
Citigroup	AVY
Merrill Lynch	TCAP
Wachovia/Wells Fargo
Credit Suisse
Banc of America
UBS
Key Banc
Sanford Bernstein
Jefferies	TFX HWAY
Nomura
Needham		SYK
Raymond James
Societe Generale
Friedman Billings
CLSA
Stifel	GKOS EXPE

Comments »

Below is a morning briefing I put together each day. It helps understand what is moving markets.

Comments »

Sometimes the numbers speak loud and clear to me. This is one of those times.

Wednesday’s advance decline line (a/d line) was the best day since the Trump Rally began. The a/d line was 3,738. The Monday before the election the a/d line was 3,623. In fact, Wednesday’s a/d line was the best since July 8th that came in at 4,259.

The rally stalled after December on the 13th but it has regained momentum the past two days as the year begins. The 10 day moving average of the a/d line has moved back to +522 from a low of -198 on December 22nd.

Everyone is missing the obvious. Massive amounts of money are starting to move from bonds to stocks. There is no way for stocks to move lower currently. Later in Q1 but not now.

From the peak on December 13th to yesterday the S&P 500 fell -1.45%. The pullback lasted 21 days which since the fourth quarter of 2012 has averaged 21 days in duration. This pullback also made it the smallest pullback percentage wise since the fourth quarter of 2012.

Tomorrow looks to be the day those short Dow stocks get their faces ripped off and the Dow blows through 20,000. That is it for now. Sweet dreams if you are long and God help you if you are short. $DIA $SPY

Comments »

One of my favorite Mark Twain’s quotes is about “lies, damned lies and statistics.” What I heard on CNBC got me thinking about this quote.

Marc “I am never correct” Faber is bending statistics again. Why he is even allowed on CNBC boggles my mind. The only other guru with a record worse than Faber is Dennis Gartman. Funny how they are both commodity guys. Enough said about their records back to the lies.

Faber claims the S&P 500 has not corrected since 2009. This is technically correct, but incorrect, but not correct on other equity indexes like the Russell 2000.

First, the S&P 500 on just a price return basis. 2011 saw the S&P 500 drop -0.04 or -0.00% on an absolute basis as the S&P 500 began the year at 1257.64 and ended at 1257.60.  In 2015, the S&P 5oo fell -14.96 points or -0.73%. So where is the up streak statistic coming from?

It comes by adding in dividends since the S&P 500 has yield of 2.01%. Price charts do not reflect dividends.

Meanwhile, the Russell 2000 lost -5.45% in 2011 and -5,71% last year. So much for an eight year win streak. Rather we are one year into a new bull market.

Remember the Russell 2000 lost -16.35% in 2015. Then in 2016 it lost -16.04% from 12/31/15 to the low on 2/11/16. The Russell had multiple -15% drops since 2010. From the June 2015 peak to the February 2016 low the Russell fell -26.40%.

The definition of a bear market is a drop of -20% or more. Hmm…looks like we had a bear market on the Russell 2000 from 2015 into 2016. Even the S&P 500  fell -14.16% from May of 2015 to February 20156.

We will address other points Faber made on Thursday and Friday. $SPY $IWM.

Comments »

We are going to publish our next The Week Ahead the first week of January. Until then, here are a couple thoughts.

Each week I run a spreadsheet that tracks the largest ETFs by various asset classes. They include U.S. stocks, bonds, commodities, currencies, international equities and U.S. sectors.

Of note in my last update natural gas via UNG turned lower for the year. It has had a massive run and I am interesting on a successful test of the 65 day moving average at $8.44 or a move back above $9. Natural gas always runs up on the start of cold weather and then sells off when it hits. However, this year it is staying could especially in the Midwest. My target for next year on UNG is $12.

Second Europre via EFA turned down for the year. It is weak. Will it finally generate a decent return in 2017? Or will the Ghosts of Crisis Past continue to haunt this asset class. India via PIN turned lower for the year. This country is screwed until its Prime Minister stops messing with its currency.

Last for the quarter Japan via EWJ and Australia via EWA turn lower for the quarter. They are still up YTD by 4.20% and 8.49% through last Friday’s close.

Other quick thoughts. The action is sloppy since November 28th. That said, the week of December 5th to 9th was a strong one. The big question is whether we can get another week like that either this or next week? Right now I am in the camp of sideways action between 2250 and 2300. However, I do feel that we are going to get a print at 20,000 on the Dow either this or next week.

 

Comments »

1. Geopolitical Events. On Wednesday Federal Reserve Open Market Committee will announce its latest interest rate decision.

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

3. Earnings Releases. Notable releases include PAY NDSN HAIN JOY PIR SAFM ADBE JBL ORCL SCHL.

Monday, December 12:

• Chinese Retail Sales are due out Monday night at 8:00 p.m. EDT.

• NovaCare (NVCR) holds its investor and analyst day and is a Type 1 Short Squeeze.

Tuesday, December 13:

• The Federal Reserve Open Market Committee (FOMC) begins its two day meeting that will culminate with a decision on Wednesday.

• Terex (TER) holds its investor and analyst day and is a Type 1 Short Squeeze.

• Lending Tree (TREE) holds its investor and analyst day and is a Type 1 Short Squeeze.

Wednesday, December 14:

• November PPI is due out at 8:30 am. EST and is expected to rise to 0.1% from 0%.

• November Retail Sales are due out at 8:30 a.m. EST and are expected to fall to 0.3% from 0.8%.

• November Industrial Production is due out at 9:15 a.m. EST and is expected to fall to -0.2% from 0%.

• The Federal Reserve Open Market Committee (FOMC) concludes its two day meeting at 2:00p.m. EDT and is expected to increase interest rates by 25 basis points. A press conference will follow at 2:30 p.m. EST led by Federal Reserve Chairman Janet Yellen.

Thursday, December 15:

• November CPI is due out at 8:30 a.m. EST and is expected to fall to 0.2% from 0.4%.

• CVS Health (CVS) holds its analyst meeting and is a Type 4 Long Squeeze.

• Eli Lilly (LLY) holds its analyst meeting and is a Type 4 Long Squeeze.

• Zynerba Pharmaceuticals (ZYNE) holds its investor and analyst day and is a Type 1 Short Squeeze.

Friday, December 16:

• November Housing Starts are due out at 8:30 a.m. EST and are expected to fall to 0.2% from 0.4%.

• Centene Corp (CNC) holds its analyst meeting and is a Type 4 Long Squeeze.

Comments »

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.

Comments »

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.

Comments »