Stocks could hang at record levels but gains may be capped until Congress agrees to a new stimulus package to help the economy and the millions of unemployed Americans.
Stocks were higher in the past week, and the S&P 500 flirted with record levels it set in February.
In the coming week, there are some major retailers reporting earnings, including Walmart, Home Depot and Target, but the season is mostly over and the market is entering a quiet period. There are minutes from the Fed’s last meeting, released Wednesday, and housing data, including starts Tuesday and existing sales Friday.
Investors had been watching efforts by Congress to agree to a new stimulus package, but talks have failed and the Senate has gone on recess. There is a concern that Congress will not be convinced to provide a big enough package when it does get to work again on the next stimulus round because recent economic reports look stronger. July’s retail sales, for example, climbed to a record level and recovered to pre-pandemic levels.
“The juxtaposition of getting more fiscal stimulus and better data has paralyzed us in our tracks … we’ve seen this sideways [market] action,” said Art Hogan, chief market strategist at National Alliance. “It feels like we need more action from Congress, and the concern is the longer we wait, the better the data gets and the less impactful the next round of stimulus will be.”
Some technical analysts say the market may pull back around the high, to allow it to consolidate gains before moving higher into the end of the year. The S&P 500 reached an all-time high of 3,393 on Feb. 19.
Hogan said he expects stocks to tread sideways during the dog days of August, but they could begin to react negatively to the election in September. He also said it is important that progress continue against the spread of Covid-19, as the economy continues to reopen.
Peter Boockvar, chief investment strategist at Bleakley Advisory Group, said the market could have a wakeup call at some point that the stimulus package has not been approved.
“I think it will cross over a line where they care,” he said. “I think the market is in suspended animation of believing there will be a magical deal.” Boockvar said he expects a deal ultimately, but the impact is not likely to be as big as the last round of funding.
“What they’re not grasping is any deal, any extension of unemployment benefits, is going to be smaller than it was, and the rate of change should be the most important thing investors focus on,” he said. “Not the binary outcome of whether there’s a deal or no deal. There’s going to be less air going into the balloon.”
It’s the economy
Still, economists expect to see a strong rebound in the third quarter, and are anticipating about about a 20% jump in third-quarter growth. But they also say that could be threatened if Congress does not help with another stimulus package.
Mark Zandi, chief economist at Moody’s Analytics, described the July retail sales as a perfect V-shaped recovery, but cautioned it would not last unless more aid gets to individuals and cities and states. Democrats have sought a $3 trillion spending package, and Republicans in the Senate offered a $1 trillion package. They could not reach a compromise, including on a $600 weekly payment to individuals on unemployment which expired July 31.
President Donald Trump has tried to fill the gap with executive orders to provide extra benefits to those on unemployment, but the $300 federal payment and $100 from states may take some time to reach individuals, as the processing varies by state. He has also issued an order instructing the Treasury to temporarily defer collection of payroll taxes from individuals making up to $104,000.
“I think in August and September, there will be a lot of Ws, if there’s not more help here,” said Zandi, referring to an economic recovery that retrenches from a V shape before heading higher again. “It’s clearly perplexing. It may take the stock market to say we’re not going to get what we expect, and sell off and light a fire.”
Zandi said it could come to a situation like 2008, where the stock market sold off sharply before Congress would agree to a program that helped financial companies.
“We need a TARP moment to get these guys to help. Maybe if the claims tick higher and the August employment numbers are soft, given the president is focused on the stock market, that might be what it takes to get them back to the table in earnest,” he said, referring to the Troubled Asset Relief Program that helped rescue banks during the financial crisis.
He ultimately expects a package of about $1.5 trillion to be approved in September.
The lack of funding for state and local governments could result in more layoffs, as they struggle with their current 2021 budgets, Zandi said. Already 1.3 million public sector jobs have been lost since February, and there will be more layoffs and more programs and projects cancelled. The impact will hit contractors and other businesses that provide services to local governments.
“The multipliers on state and local government are among the highest of any form of support, so if you don’t provide it, it’s going to ripple through the economy pretty fast,” he said.
Economists expect to see a softening in consumer spending in August with the more than 28 million Americans on unemployment benefits as of mid-July no longer receiving any supplemental pay.
“The real irony is things are shaping up that September is going to be a bad month, and that’s going to show up in all the data in October,” Zandi said. “They are really taking a chance on this election by not acting.”
4 Charts That Will Amaze You
The S&P 500 Index is a few points away from a new all-time high, completing one of the fastest recoveries from a bear market ever. But this will also seal the deal on the shortest bear market ever. Remember, the S&P 500 Index lost 20% from an all-time high in only 16 trading days back in February and March, so it makes sense that this recovery could be one of the fastest ever.
From the lows on March 23, the S&P 500 has now added more than 50%. Many have been calling this a bear market rally for months, while we have been in the camp this is something more. It’s easy to see why this rally is different based on where it stands versus other bear market rallies:
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They say the stock market is the only place where things go on sale, yet everyone runs out of the store screaming. We absolutely saw that back in March and now with stocks near new highs, many have missed this record run. Here we show how stocks have been usually higher a year or two after corrections.
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After a historic drop in March, the S&P 500 has closed higher in April, May, June, and July. This rare event has happened only 11 other times, with stocks gaining the final five months of the year a very impressive 10 times. Only 2018 and the nearly 20% collapse in December saw a loss those final five months.
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As shown in the LPL Chart of the Day, this bear market will go down as the fastest ever, at just over one month. The recovery back to new highs will be five months if we get there by August 23, making this one of the fastest recoveries ever. Not surprisingly, it usually takes longer for bear markets in a recession to recover; only adding to the impressiveness of this rally.
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“It normally takes 30 months for bear markets during a recession to recover their losses, which makes this recovery all the more amazing,” said LPL Financial Chief Market Strateigst Ryan Detrick.. “Then again, there has been nothing normal about this recession, so maybe we shouldn’t be shocked about yet another record going down in 2020.”
When a Few Basis Points Packs a Punch
US Treasury yields have been on the rise this week with the 10-year yield rising 13 basis points (bps) from 0.56% up to 0.69% after getting as high as 0.72% on Thursday. A 13 bps move higher in interest rates may not seem like a whole lot, but with rates already at such low levels, a small move can have a pretty big impact on the prices of longer-term maturities.
(CLICK HERE FOR THE CHART!)
Starting with longer-term US Treasuries, TLT, which measures the performance of maturities greater than 20 years, has declined 3.5% this week. Now, for a growth stock, 3.5% is par for the course, but that kind of move in the Treasury market is no small thing. The latest pullback for TLT also coincides with another failed attempt by the ETF to trade and stay above $170 for more than a day.
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The further out the maturity window you go in the fixed income market, the bigger the impact of the move higher in interest rates. The Republic of Austria issued a 100-year bond in 2017, and its movements exemplify the wild moves that small changes in interest rates (from a low base) can have on prices. Just this week, the Austrian 100-year was down over 5%, which is a painful move no matter what type of asset class you are talking about. This week's move, though, was nothing compared to the stomach-churning swings from earlier this year. When Covid was first hitting the fan, the 100-year rallied 57% in the span of less than two months. That kind of move usually occurs over years rather than days, but in less than a third of that time, all those gains disintegrated in a two-and-a-half week span from early to late March. Easy come, easy go. Ironically enough, despite all the big up and down moves in this bond over the last year, as we type this, the bond's price is the same now as it was on this same day last year.
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Retail Sales Rock to New Highs
At the headline level, July’s Retail Sales report disappointed as the reading missed expectations by nearly a full percentage point. Just as soon as the report was released, we saw a number of stories pounce on the disappointment as a sign that the economy was losing steam. Looked at in more detail, though, the July report wasn’t all that bad. While the headline reading rose less than expected (1.2% vs 2.1%), Ex Autos and Ex Autos and Gas, the results were much better than expected. Not only that, but June’s original readings were all revised higher by around a full percentage point.
Besides the fact that this month’s report was better underneath the surface and June’s reading was revised higher, it was also notable as the seasonally-adjusted annualized rate of sales in July hit a new record high. After the last record high back in January, only five months passed until American consumers were back to their pre-Covid spending ways. For the sake of comparison, back during the Financial Crisis, 40 months passed between the original high in Retail Sales in November 2007 and the next record high in April 2011. 5 months versus 40? Never underestimate the power of the US consumer!
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While the monthly pace of retail sales is back at all-time highs, the characteristics behind the total level of sales have changed markedly in the post COVID world. In our just released B.I.G. Tips report we looked at these changing dynamics to highlight the groups that have been the biggest winners and losers from the shifts.
100 Days of Gains
Today marked 100 trading days since the Nasdaq 100's March 20th COVID Crash closing low. Below is a chart showing the rolling 100-trading day percentage change of the Nasdaq 100 since 1985. The 59.8% gain over the last 100 trading days ranks as the 3rd strongest run on record. The only two stronger 100-day rallies ended in January 1999 and March 2000.
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While the Nasdaq 100 bottomed on Friday, March 20th, the S&P 500 bottomed the following Monday (3/23). This means tomorrow will mark 100 trading days since the S&P 500's COVID Crash closing low. Right now the rolling 100-day percentage change for the S&P 500 sits at +46.7%. But if the S&P manages to trade at current levels tomorrow, the 100-day gain will jump above 50%. It has been 87 years (1933) since we've seen a 100-day gain of more than 50%!
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B.I.G. Tips - New Highs In Sight
Whether you want to look at it from the perspective of closing prices or intraday levels, the S&P 500 is doing what just about everybody thought would be impossible less than five months ago - approaching record highs. Relative to its closing high of 3,386.15, the S&P 500 is just 0.27% lower, while it's within half of a percent from its record intraday high of 3,393.52. Through today, the S&P 500 has gone 120 trading days without a record high, and as shown in the chart below, the current streak is barely even visible when viewed in the perspective of all streaks since 1928. Even if we zoom in on just the last five years, the current streak of 120 trading days only ranks as the fourth-longest streak without a new high.
While the S&P 500's 120-trading day streak without a new high isn't extreme by historical standards, the turnaround off the lows has been extraordinary. In the S&P 500's history, there have been ten prior declines of at least 20% from a record closing high. Of those ten prior periods, the shortest gap between the original record high and the next one was 309 trading days, and the shortest gap between highs that had a pullback of at least 30% was 484 tradings days (or more than four times the current gap of 120 trading days). For all ten streaks without a record high, the median drought was 680 trading days.
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Whenever the S&P 500 does take out its 2/19 high, the question is whether the new high represents a breakout where the S&P 500 keeps rallying into evergreen territory, or does it run out of gas after finally reaching a new milestone? To shed some light on this question, we looked at the S&P 500's performance following each prior streak of similar duration without a new high.
- NOTABLE TICKERS REMOVED DUE TO STOCKS AUTO MOD
Monday 8.17.20 Before Market Open:
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Monday 8.17.20 After Market Close:
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Tuesday 8.18.20 Before Market Open:
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Tuesday 8.18.20 After Market Close:
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Wednesday 8.19.20 Before Market Open:
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Wednesday 8.19.20 After Market Close:
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Thursday 8.20.20 Before Market Open:
(CLICK HERE FOR THURSDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!)
Thursday 8.20.20 After Market Close:
(CLICK HERE FOR THURSDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!)
Friday 8.21.20 Before Market Open:
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Friday 8.21.20 After Market Close:
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Walmart Inc. $132.60
Walmart Inc. (WMT) is confirmed to report earnings at approximately 7:00 AM ET on Tuesday, August 18, 2020. The consensus earnings estimate is $1.20 per share on revenue of $134.28 billion and the Earnings Whisper ® number is $1.29 per share. Investor sentiment going into the company's earnings release has 81% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 5.51% with revenue increasing by 2.99%. Short interest has decreased by 12.5% since the company's last earnings release while the stock has drifted higher by 0.6% from its open following the earnings release to be 9.9% above its 200 day moving average of $120.64. Overall earnings estimates have been revised higher since the company's last earnings release. On Tuesday, August 11, 2020 there was some notable buying of 12,381 contracts of the $135.00 put expiring on Friday, August 21, 2020. Option traders are pricing in a 4.9% move on earnings and the stock has averaged a 2.3% move in recent quarters.
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NVIDIA Corp. $462.56
NVIDIA Corp. (NVDA) is confirmed to report earnings at approximately 4:20 PM ET on Wednesday, August 19, 2020. The consensus earnings estimate is $1.95 per share on revenue of $3.65 billion and the Earnings Whisper ® number is $2.01 per share. Investor sentiment going into the company's earnings release has 84% expecting an earnings beat The company's guidance was for earnings of $1.83 to $2.06 per share. Consensus estimates are for year-over-year earnings growth of 65.25% with revenue increasing by 41.53%. The stock has drifted higher by 31.0% from its open following the earnings release to be 57.7% above its 200 day moving average of $293.24. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, August 14, 2020 there was some notable buying of 3,787 contracts of the $460.00 call expiring on Friday, August 21, 2020. Option traders are pricing in a 7.7% move on earnings and the stock has averaged a 4.0% move in recent quarters.
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Alibaba Group Holding Ltd. $253.97
Alibaba Group Holding Ltd. (BABA) is confirmed to report earnings at approximately 7:10 AM ET on Thursday, August 20, 2020. The consensus earnings estimate is $1.99 per share on revenue of $21.13 billion and the Earnings Whisper ® number is $2.11 per share. Investor sentiment going into the company's earnings release has 83% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 8.74% with revenue increasing by 26.22%. Short interest has increased by 30.1% since the company's last earnings release while the stock has drifted higher by 25.0% from its open following the earnings release to be 20.0% above its 200 day moving average of $211.59. Overall earnings estimates have been revised lower since the company's last earnings release. On Friday, August 7, 2020 there was some notable buying of 12,935 contracts of the $300.00 call expiring on Friday, November 20, 2020. Option traders are pricing in a 6.2% move on earnings and the stock has averaged a 3.1% move in recent quarters.
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JD.com, Inc. $62.06
JD.com, Inc. (JD) is confirmed to report earnings at approximately 5:50 AM ET on Monday, August 17, 2020. The consensus earnings estimate is $0.38 per share on revenue of $26.98 billion and the Earnings Whisper ® number is $0.46 per share. Investor sentiment going into the company's earnings release has 78% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 52.00% with revenue increasing by 23.25%. Short interest has increased by 16.7% since the company's last earnings release while the stock has drifted higher by 24.1% from its open following the earnings release to be 36.9% above its 200 day moving average of $45.34. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, August 14, 2020 there was some notable buying of 12,799 contracts of the $62.00 call expiring on Friday, August 21, 2020. Option traders are pricing in a 8.0% move on earnings and the stock has averaged a 6.4% move in recent quarters.
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Home Depot, Inc. $280.55
Home Depot, Inc. (HD) is confirmed to report earnings at approximately 6:00 AM ET on Tuesday, August 18, 2020. The consensus earnings estimate is $3.71 per share on revenue of $31.67 billion and the Earnings Whisper ® number is $3.75 per share. Investor sentiment going into the company's earnings release has 78% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 17.03% with revenue increasing by 2.69%. Short interest has decreased by 39.8% since the company's last earnings release while the stock has drifted higher by 16.7% from its open following the earnings release to be 22.4% above its 200 day moving average of $229.20. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, August 14, 2020 there was some notable buying of 3,323 contracts of the $300.00 call expiring on Friday, August 28, 2020. Option traders are pricing in a 4.2% move on earnings and the stock has averaged a 2.5% move in recent quarters.
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Lowe's Companies, Inc. $154.34
Lowe's Companies, Inc. (LOW) is confirmed to report earnings at approximately 6:00 AM ET on Wednesday, August 19, 2020. The consensus earnings estimate is $2.93 per share on revenue of $21.29 billion and the Earnings Whisper ® number is $2.97 per share. Investor sentiment going into the company's earnings release has 78% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 36.28% with revenue increasing by 1.42%. Short interest has decreased by 19.2% since the company's last earnings release while the stock has drifted higher by 25.9% from its open following the earnings release to be 31.2% above its 200 day moving average of $117.67. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, August 7, 2020 there was some notable buying of 1,994 contracts of the $170.00 call expiring on Friday, August 21, 2020. Option traders are pricing in a 6.0% move on earnings and the stock has averaged a 5.8% move in recent quarters.
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Target Corp. $136.53
Target Corp. (TGT) is confirmed to report earnings at approximately 6:30 AM ET on Wednesday, August 19, 2020. The consensus earnings estimate is $1.56 per share on revenue of $19.30 billion and the Earnings Whisper ® number is $1.64 per share. Investor sentiment going into the company's earnings release has 75% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 14.29% with revenue increasing by 4.77%. Short interest has decreased by 36.8% since the company's last earnings release while the stock has drifted higher by 10.0% from its open following the earnings release to be 18.0% above its 200 day moving average of $115.73. Overall earnings estimates have been revised higher since the company's last earnings release. On Monday, August 10, 2020 there was some notable buying of 4,479 contracts of the $135.00 call expiring on Friday, September 18, 2020. Option traders are pricing in a 6.3% move on earnings and the stock has averaged a 7.7% move in recent quarters.
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Sea Limited $126.50
Sea Limited (SE) is confirmed to report earnings at approximately 6:30 AM ET on Tuesday, August 18, 2020. The consensus estimate is for a loss of $0.47 per share on revenue of $1.03 billion and the Earnings Whisper ® number is ($0.36) per share. Investor sentiment going into the company's earnings release has 74% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 34.29% with revenue increasing by 136.16%. Short interest has decreased by 8.5% since the company's last earnings release while the stock has drifted higher by 91.7% from its open following the earnings release to be 98.1% above its 200 day moving average of $63.87. Overall earnings estimates have been revised lower since the company's last earnings release. On Tuesday, August 4, 2020 there was some notable buying of 4,000 contracts of the $110.00 put expiring on Friday, January 15, 2021. Option traders are pricing in a 12.9% move on earnings and the stock has averaged a 16.7% move in recent quarters.
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Niu Technologies $20.82
Niu Technologies (NIU) is confirmed to report earnings at approximately 3:00 AM ET on Monday, August 17, 2020. The consensus earnings estimate is $0.07 per share on revenue of $88.07 million and the Earnings Whisper ® number is $0.11 per share. Investor sentiment going into the company's earnings release has 57% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 30.00% with revenue increasing by 13.97%. Short interest has increased by 18.9% since the company's last earnings release while the stock has drifted higher by 129.8% from its open following the earnings release to be 90.3% above its 200 day moving average of $10.94. Overall earnings estimates have been revised higher since the company's last earnings release. The stock has averaged a 3.7% move on earnings in recent quarters.
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BJ's Wholesale Club, Inc. $41.48
BJ's Wholesale Club, Inc. (BJ) is confirmed to report earnings at approximately 6:45 AM ET on Thursday, August 20, 2020. The consensus earnings estimate is $0.57 per share on revenue of $3.64 billion and the Earnings Whisper ® number is $0.60 per share. Investor sentiment going into the company's earnings release has 73% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 46.15% with revenue increasing by 8.79%. Short interest has decreased by 3.2% since the company's last earnings release while the stock has drifted higher by 33.8% from its open following the earnings release to be 46.7% above its 200 day moving average of $28.27. Overall earnings estimates have been revised higher since the company's last earnings release. On Wednesday, August 12, 2020 there was some notable buying of 2,119 contracts of the $50.00 call expiring on Friday, September 18, 2020. Option traders are pricing in a 12.4% move on earnings and the stock has averaged a 10.0% move in recent quarters.
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Stocks could hang at record levels but gains may be capped until Congress agrees to a new stimulus package to help the economy and the millions of unemployed Americans.
Stocks were higher in the past week, and the S&P 500 flirted with record levels it set in February.
In the coming week, there are some major retailers reporting earnings, including Walmart, Home Depot and Target, but the season is mostly over and the market is entering a quiet period. There are minutes from the Fed’s last meeting, released Wednesday, and housing data, including starts Tuesday and existing sales Friday.
Investors had been watching efforts by Congress to agree to a new stimulus package, but talks have failed and the Senate has gone on recess. There is a concern that Congress will not be convinced to provide a big enough package when it does get to work again on the next stimulus round because recent economic reports look stronger. July’s retail sales, for example, climbed to a record level and recovered to pre-pandemic levels.
“The juxtaposition of getting more fiscal stimulus and better data has paralyzed us in our tracks … we’ve seen this sideways [market] action,” said Art Hogan, chief market strategist at National Alliance. “It feels like we need more action from Congress, and the concern is the longer we wait, the better the data gets and the less impactful the next round of stimulus will be.”
Some technical analysts say the market may pull back around the high, to allow it to consolidate gains before moving higher into the end of the year. The S&P 500 reached an all-time high of 3,393 on Feb. 19.
Hogan said he expects stocks to tread sideways during the dog days of August, but they could begin to react negatively to the election in September. He also said it is important that progress continue against the spread of Covid-19, as the economy continues to reopen.
Peter Boockvar, chief investment strategist at Bleakley Advisory Group, said the market could have a wakeup call at some point that the stimulus package has not been approved.
“I think it will cross over a line where they care,” he said. “I think the market is in suspended animation of believing there will be a magical deal.” Boockvar said he expects a deal ultimately, but the impact is not likely to be as big as the last round of funding.
“What they’re not grasping is any deal, any extension of unemployment benefits, is going to be smaller than it was, and the rate of change should be the most important thing investors focus on,” he said. “Not the binary outcome of whether there’s a deal or no deal. There’s going to be less air going into the balloon.”
It’s the economy
Still, economists expect to see a strong rebound in the third quarter, and are anticipating about about a 20% jump in third-quarter growth. But they also say that could be threatened if Congress does not help with another stimulus package.
Mark Zandi, chief economist at Moody’s Analytics, described the July retail sales as a perfect V-shaped recovery, but cautioned it would not last unless more aid gets to individuals and cities and states. Democrats have sought a $3 trillion spending package, and Republicans in the Senate offered a $1 trillion package. They could not reach a compromise, including on a $600 weekly payment to individuals on unemployment which expired July 31.
President Donald Trump has tried to fill the gap with executive orders to provide extra benefits to those on unemployment, but the $300 federal payment and $100 from states may take some time to reach individuals, as the processing varies by state. He has also issued an order instructing the Treasury to temporarily defer collection of payroll taxes from individuals making up to $104,000.
“I think in August and September, there will be a lot of Ws, if there’s not more help here,” said Zandi, referring to an economic recovery that retrenches from a V shape before heading higher again. “It’s clearly perplexing. It may take the stock market to say we’re not going to get what we expect, and sell off and light a fire.”
Zandi said it could come to a situation like 2008, where the stock market sold off sharply before Congress would agree to a program that helped financial companies.
“We need a TARP moment to get these guys to help. Maybe if the claims tick higher and the August employment numbers are soft, given the president is focused on the stock market, that might be what it takes to get them back to the table in earnest,” he said, referring to the Troubled Asset Relief Program that helped rescue banks during the financial crisis.
He ultimately expects a package of about $1.5 trillion to be approved in September.
The lack of funding for state and local governments could result in more layoffs, as they struggle with their current 2021 budgets, Zandi said. Already 1.3 million public sector jobs have been lost since February, and there will be more layoffs and more programs and projects cancelled. The impact will hit contractors and other businesses that provide services to local governments.
“The multipliers on state and local government are among the highest of any form of support, so if you don’t provide it, it’s going to ripple through the economy pretty fast,” he said.
Economists expect to see a softening in consumer spending in August with the more than 28 million Americans on unemployment benefits as of mid-July no longer receiving any supplemental pay.
“The real irony is things are shaping up that September is going to be a bad month, and that’s going to show up in all the data in October,” Zandi said. “They are really taking a chance on this election by not acting.”
4 Charts That Will Amaze You
The S&P 500 Index is a few points away from a new all-time high, completing one of the fastest recoveries from a bear market ever. But this will also seal the deal on the shortest bear market ever. Remember, the S&P 500 Index lost 20% from an all-time high in only 16 trading days back in February and March, so it makes sense that this recovery could be one of the fastest ever.
From the lows on March 23, the S&P 500 has now added more than 50%. Many have been calling this a bear market rally for months, while we have been in the camp this is something more. It’s easy to see why this rally is different based on where it stands versus other bear market rallies:
(CLICK HERE FOR THE CHART!)
They say the stock market is the only place where things go on sale, yet everyone runs out of the store screaming. We absolutely saw that back in March and now with stocks near new highs, many have missed this record run. Here we show how stocks have been usually higher a year or two after corrections.
(CLICK HERE FOR THE CHART!)
After a historic drop in March, the S&P 500 has closed higher in April, May, June, and July. This rare event has happened only 11 other times, with stocks gaining the final five months of the year a very impressive 10 times. Only 2018 and the nearly 20% collapse in December saw a loss those final five months.
(CLICK HERE FOR THE CHART!)
As shown in the LPL Chart of the Day, this bear market will go down as the fastest ever, at just over one month. The recovery back to new highs will be five months if we get there by August 23, making this one of the fastest recoveries ever. Not surprisingly, it usually takes longer for bear markets in a recession to recover; only adding to the impressiveness of this rally.
(CLICK HERE FOR THE CHART!)
“It normally takes 30 months for bear markets during a recession to recover their losses, which makes this recovery all the more amazing,” said LPL Financial Chief Market Strateigst Ryan Detrick.. “Then again, there has been nothing normal about this recession, so maybe we shouldn’t be shocked about yet another record going down in 2020.”
When a Few Basis Points Packs a Punch
US Treasury yields have been on the rise this week with the 10-year yield rising 13 basis points (bps) from 0.56% up to 0.69% after getting as high as 0.72% on Thursday. A 13 bps move higher in interest rates may not seem like a whole lot, but with rates already at such low levels, a small move can have a pretty big impact on the prices of longer-term maturities.
(CLICK HERE FOR THE CHART!)
Starting with longer-term US Treasuries, TLT, which measures the performance of maturities greater than 20 years, has declined 3.5% this week. Now, for a growth stock, 3.5% is par for the course, but that kind of move in the Treasury market is no small thing. The latest pullback for TLT also coincides with another failed attempt by the ETF to trade and stay above $170 for more than a day.
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The further out the maturity window you go in the fixed income market, the bigger the impact of the move higher in interest rates. The Republic of Austria issued a 100-year bond in 2017, and its movements exemplify the wild moves that small changes in interest rates (from a low base) can have on prices. Just this week, the Austrian 100-year was down over 5%, which is a painful move no matter what type of asset class you are talking about. This week's move, though, was nothing compared to the stomach-churning swings from earlier this year. When Covid was first hitting the fan, the 100-year rallied 57% in the span of less than two months. That kind of move usually occurs over years rather than days, but in less than a third of that time, all those gains disintegrated in a two-and-a-half week span from early to late March. Easy come, easy go. Ironically enough, despite all the big up and down moves in this bond over the last year, as we type this, the bond's price is the same now as it was on this same day last year.
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Retail Sales Rock to New Highs
At the headline level, July’s Retail Sales report disappointed as the reading missed expectations by nearly a full percentage point. Just as soon as the report was released, we saw a number of stories pounce on the disappointment as a sign that the economy was losing steam. Looked at in more detail, though, the July report wasn’t all that bad. While the headline reading rose less than expected (1.2% vs 2.1%), Ex Autos and Ex Autos and Gas, the results were much better than expected. Not only that, but June’s original readings were all revised higher by around a full percentage point.
Besides the fact that this month’s report was better underneath the surface and June’s reading was revised higher, it was also notable as the seasonally-adjusted annualized rate of sales in July hit a new record high. After the last record high back in January, only five months passed until American consumers were back to their pre-Covid spending ways. For the sake of comparison, back during the Financial Crisis, 40 months passed between the original high in Retail Sales in November 2007 and the next record high in April 2011. 5 months versus 40? Never underestimate the power of the US consumer!
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While the monthly pace of retail sales is back at all-time highs, the characteristics behind the total level of sales have changed markedly in the post COVID world. In our just released B.I.G. Tips report we looked at these changing dynamics to highlight the groups that have been the biggest winners and losers from the shifts.
100 Days of Gains
Today marked 100 trading days since the Nasdaq 100's March 20th COVID Crash closing low. Below is a chart showing the rolling 100-trading day percentage change of the Nasdaq 100 since 1985. The 59.8% gain over the last 100 trading days ranks as the 3rd strongest run on record. The only two stronger 100-day rallies ended in January 1999 and March 2000.
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While the Nasdaq 100 bottomed on Friday, March 20th, the S&P 500 bottomed the following Monday (3/23). This means tomorrow will mark 100 trading days since the S&P 500's COVID Crash closing low. Right now the rolling 100-day percentage change for the S&P 500 sits at +46.7%. But if the S&P manages to trade at current levels tomorrow, the 100-day gain will jump above 50%. It has been 87 years (1933) since we've seen a 100-day gain of more than 50%!
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B.I.G. Tips - New Highs In Sight
Whether you want to look at it from the perspective of closing prices or intraday levels, the S&P 500 is doing what just about everybody thought would be impossible less than five months ago - approaching record highs. Relative to its closing high of 3,386.15, the S&P 500 is just 0.27% lower, while it's within half of a percent from its record intraday high of 3,393.52. Through today, the S&P 500 has gone 120 trading days without a record high, and as shown in the chart below, the current streak is barely even visible when viewed in the perspective of all streaks since 1928. Even if we zoom in on just the last five years, the current streak of 120 trading days only ranks as the fourth-longest streak without a new high.
While the S&P 500's 120-trading day streak without a new high isn't extreme by historical standards, the turnaround off the lows has been extraordinary. In the S&P 500's history, there have been ten prior declines of at least 20% from a record closing high. Of those ten prior periods, the shortest gap between the original record high and the next one was 309 trading days, and the shortest gap between highs that had a pullback of at least 30% was 484 tradings days (or more than four times the current gap of 120 trading days). For all ten streaks without a record high, the median drought was 680 trading days.
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Whenever the S&P 500 does take out its 2/19 high, the question is whether the new high represents a breakout where the S&P 500 keeps rallying into evergreen territory, or does it run out of gas after finally reaching a new milestone? To shed some light on this question, we looked at the S&P 500's performance following each prior streak of similar duration without a new high.
Rocket Reversals
Over the last few days, we've been seeing a moderate rotation in the market as red-hot growth stocks sell-off and investors shift into other areas of the market that have been lagging. To highlight this, the table below highlights 24 companies in the Russell 3,000 with market caps of more than $1 billion that traded at a 52-week high within the last month but are currently down more than 20% from that high. The vast majority of these stocks are names that investors haven't been able to get enough of in 2020 but now appear to have had their fill.
Topping the list of these reversals is Eastman Kodak (KODK). On 7/29, the stock surged to a 52-week high of $60.00 after being awarded a questionable government contract to domestically produce components for prescription drugs. With the SEC and government agency that originally awarded the contract now looking into stock option awards at the company just before it was announced, the stock has pulled back sharply and is now down over 80% from its high less than two weeks ago.
While KODK is more of a unique example, other names on the list are primarily growth or health care stocks that have benefited from the COVID outbreak. However, now that signs suggest the summer wave in the south has crested, investors appear to be taking some profits. Shares of Vaxart (VXRT) hit a high of $17.49 on July 14th but have since lost nearly half of their value and trade back in the single-digits. Additionally, Bloom Energy (BE), 1Life Healthcare (ONEM), and Bioxcel Therapeutics (BTAI) have all lost more than a third of their value.
In terms of market cap, most of the names listed are on the small side, but Tesla (TSLA) is a notable exception as it is now just over 20% below its 52-week high on 7/13. Other relatively large companies on the list include Moderna (MRNA), Citrix Systems (CTXS), Teladoc (TDOC), and Livongo (LVGO). TDOC and LVGO both hit all-time highs last week but after announcing a mostly stock merger last Wednesday, both have lost nearly a quarter of their value.
While all of the stocks listed below have seen sharp pullbacks in the last several days, a little perspective is in order. Of the 24 names listed, the average YTD change even after the declines has been a gain of 219.7% (median: +94.6%). Only two of the stocks shown (New Relic- NEWR and Sonos- SONO) are down YTD, and half of them have at least doubled and in many cases much more.
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- $WMT
- $NVDA
- $BABA
- $JD
- $HD
- $LOW
- $TGT
- $SE
- $NIU
- $BJ
- $AAP
- $DLPN
- $TJX
- $ADI
- $DE
- $FL
- $KSS
- $DQ
- $PDD
- $GDS
- $ECC
- $BEST
- $CTK
- $EL
- $VIPS
- $SNPS
- $A
- $ROST
- $QIWI
- $LB
- $LX
- $AMCR
- $CMCM
- $LZB
- $OPRA
- $KEYS
- $CREE
- $GAN
- $BZUN
- $JKHY
- $FN
- $MLCO
- $KC
- $FUV
- $SQM
Monday 8.17.20 Before Market Open:
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Monday 8.17.20 After Market Close:
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Tuesday 8.18.20 Before Market Open:
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Tuesday 8.18.20 After Market Close:
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Wednesday 8.19.20 Before Market Open:
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Wednesday 8.19.20 After Market Close:
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Thursday 8.20.20 Before Market Open:
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Thursday 8.20.20 After Market Close:
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Friday 8.21.20 Before Market Open:
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Friday 8.21.20 After Market Close:
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Walmart Inc. $132.60
Walmart Inc. (WMT) is confirmed to report earnings at approximately 7:00 AM ET on Tuesday, August 18, 2020. The consensus earnings estimate is $1.20 per share on revenue of $134.28 billion and the Earnings Whisper ® number is $1.29 per share. Investor sentiment going into the company's earnings release has 81% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 5.51% with revenue increasing by 2.99%. Short interest has decreased by 12.5% since the company's last earnings release while the stock has drifted higher by 0.6% from its open following the earnings release to be 9.9% above its 200 day moving average of $120.64. Overall earnings estimates have been revised higher since the company's last earnings release. On Tuesday, August 11, 2020 there was some notable buying of 12,381 contracts of the $135.00 put expiring on Friday, August 21, 2020. Option traders are pricing in a 4.9% move on earnings and the stock has averaged a 2.3% move in recent quarters.
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NVIDIA Corp. $462.56
NVIDIA Corp. (NVDA) is confirmed to report earnings at approximately 4:20 PM ET on Wednesday, August 19, 2020. The consensus earnings estimate is $1.95 per share on revenue of $3.65 billion and the Earnings Whisper ® number is $2.01 per share. Investor sentiment going into the company's earnings release has 84% expecting an earnings beat The company's guidance was for earnings of $1.83 to $2.06 per share. Consensus estimates are for year-over-year earnings growth of 65.25% with revenue increasing by 41.53%. The stock has drifted higher by 31.0% from its open following the earnings release to be 57.7% above its 200 day moving average of $293.24. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, August 14, 2020 there was some notable buying of 3,787 contracts of the $460.00 call expiring on Friday, August 21, 2020. Option traders are pricing in a 7.7% move on earnings and the stock has averaged a 4.0% move in recent quarters.
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Alibaba Group Holding Ltd. $253.97
Alibaba Group Holding Ltd. (BABA) is confirmed to report earnings at approximately 7:10 AM ET on Thursday, August 20, 2020. The consensus earnings estimate is $1.99 per share on revenue of $21.13 billion and the Earnings Whisper ® number is $2.11 per share. Investor sentiment going into the company's earnings release has 83% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 8.74% with revenue increasing by 26.22%. Short interest has increased by 30.1% since the company's last earnings release while the stock has drifted higher by 25.0% from its open following the earnings release to be 20.0% above its 200 day moving average of $211.59. Overall earnings estimates have been revised lower since the company's last earnings release. On Friday, August 7, 2020 there was some notable buying of 12,935 contracts of the $300.00 call expiring on Friday, November 20, 2020. Option traders are pricing in a 6.2% move on earnings and the stock has averaged a 3.1% move in recent quarters.
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JD.com, Inc. $62.06
JD.com, Inc. (JD) is confirmed to report earnings at approximately 5:50 AM ET on Monday, August 17, 2020. The consensus earnings estimate is $0.38 per share on revenue of $26.98 billion and the Earnings Whisper ® number is $0.46 per share. Investor sentiment going into the company's earnings release has 78% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 52.00% with revenue increasing by 23.25%. Short interest has increased by 16.7% since the company's last earnings release while the stock has drifted higher by 24.1% from its open following the earnings release to be 36.9% above its 200 day moving average of $45.34. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, August 14, 2020 there was some notable buying of 12,799 contracts of the $62.00 call expiring on Friday, August 21, 2020. Option traders are pricing in a 8.0% move on earnings and the stock has averaged a 6.4% move in recent quarters.
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Home Depot, Inc. $280.55
Home Depot, Inc. (HD) is confirmed to report earnings at approximately 6:00 AM ET on Tuesday, August 18, 2020. The consensus earnings estimate is $3.71 per share on revenue of $31.67 billion and the Earnings Whisper ® number is $3.75 per share. Investor sentiment going into the company's earnings release has 78% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 17.03% with revenue increasing by 2.69%. Short interest has decreased by 39.8% since the company's last earnings release while the stock has drifted higher by 16.7% from its open following the earnings release to be 22.4% above its 200 day moving average of $229.20. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, August 14, 2020 there was some notable buying of 3,323 contracts of the $300.00 call expiring on Friday, August 28, 2020. Option traders are pricing in a 4.2% move on earnings and the stock has averaged a 2.5% move in recent quarters.
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Lowe's Companies, Inc. $154.34
Lowe's Companies, Inc. (LOW) is confirmed to report earnings at approximately 6:00 AM ET on Wednesday, August 19, 2020. The consensus earnings estimate is $2.93 per share on revenue of $21.29 billion and the Earnings Whisper ® number is $2.97 per share. Investor sentiment going into the company's earnings release has 78% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 36.28% with revenue increasing by 1.42%. Short interest has decreased by 19.2% since the company's last earnings release while the stock has drifted higher by 25.9% from its open following the earnings release to be 31.2% above its 200 day moving average of $117.67. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, August 7, 2020 there was some notable buying of 1,994 contracts of the $170.00 call expiring on Friday, August 21, 2020. Option traders are pricing in a 6.0% move on earnings and the stock has averaged a 5.8% move in recent quarters.
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Target Corp. $136.53
Target Corp. (TGT) is confirmed to report earnings at approximately 6:30 AM ET on Wednesday, August 19, 2020. The consensus earnings estimate is $1.56 per share on revenue of $19.30 billion and the Earnings Whisper ® number is $1.64 per share. Investor sentiment going into the company's earnings release has 75% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 14.29% with revenue increasing by 4.77%. Short interest has decreased by 36.8% since the company's last earnings release while the stock has drifted higher by 10.0% from its open following the earnings release to be 18.0% above its 200 day moving average of $115.73. Overall earnings estimates have been revised higher since the company's last earnings release. On Monday, August 10, 2020 there was some notable buying of 4,479 contracts of the $135.00 call expiring on Friday, September 18, 2020. Option traders are pricing in a 6.3% move on earnings and the stock has averaged a 7.7% move in recent quarters.
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Sea Limited $126.50
Sea Limited (SE) is confirmed to report earnings at approximately 6:30 AM ET on Tuesday, August 18, 2020. The consensus estimate is for a loss of $0.47 per share on revenue of $1.03 billion and the Earnings Whisper ® number is ($0.36) per share. Investor sentiment going into the company's earnings release has 74% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 34.29% with revenue increasing by 136.16%. Short interest has decreased by 8.5% since the company's last earnings release while the stock has drifted higher by 91.7% from its open following the earnings release to be 98.1% above its 200 day moving average of $63.87. Overall earnings estimates have been revised lower since the company's last earnings release. On Tuesday, August 4, 2020 there was some notable buying of 4,000 contracts of the $110.00 put expiring on Friday, January 15, 2021. Option traders are pricing in a 12.9% move on earnings and the stock has averaged a 16.7% move in recent quarters.
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Niu Technologies $20.82
Niu Technologies (NIU) is confirmed to report earnings at approximately 3:00 AM ET on Monday, August 17, 2020. The consensus earnings estimate is $0.07 per share on revenue of $88.07 million and the Earnings Whisper ® number is $0.11 per share. Investor sentiment going into the company's earnings release has 57% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 30.00% with revenue increasing by 13.97%. Short interest has increased by 18.9% since the company's last earnings release while the stock has drifted higher by 129.8% from its open following the earnings release to be 90.3% above its 200 day moving average of $10.94. Overall earnings estimates have been revised higher since the company's last earnings release. The stock has averaged a 3.7% move on earnings in recent quarters.
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BJ's Wholesale Club, Inc. $41.48
BJ's Wholesale Club, Inc. (BJ) is confirmed to report earnings at approximately 6:45 AM ET on Thursday, August 20, 2020. The consensus earnings estimate is $0.57 per share on revenue of $3.64 billion and the Earnings Whisper ® number is $0.60 per share. Investor sentiment going into the company's earnings release has 73% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 46.15% with revenue increasing by 8.79%. Short interest has decreased by 3.2% since the company's last earnings release while the stock has drifted higher by 33.8% from its open following the earnings release to be 46.7% above its 200 day moving average of $28.27. Overall earnings estimates have been revised higher since the company's last earnings release. On Wednesday, August 12, 2020 there was some notable buying of 2,119 contracts of the $50.00 call expiring on Friday, September 18, 2020. Option traders are pricing in a 12.4% move on earnings and the stock has averaged a 10.0% move in recent quarters.
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Stocks could hang at record levels but gains may be capped until Congress agrees to a new stimulus package to help the economy and the millions of unemployed Americans.
Stocks were higher in the past week, and the S&P 500 flirted with record levels it set in February.
In the coming week, there are some major retailers reporting earnings, including Walmart, Home Depot and Target, but the season is mostly over and the market is entering a quiet period. There are minutes from the Fed’s last meeting, released Wednesday, and housing data, including starts Tuesday and existing sales Friday.
Investors had been watching efforts by Congress to agree to a new stimulus package, but talks have failed and the Senate has gone on recess. There is a concern that Congress will not be convinced to provide a big enough package when it does get to work again on the next stimulus round because recent economic reports look stronger. July’s retail sales, for example, climbed to a record level and recovered to pre-pandemic levels.
“The juxtaposition of getting more fiscal stimulus and better data has paralyzed us in our tracks … we’ve seen this sideways [market] action,” said Art Hogan, chief market strategist at National Alliance. “It feels like we need more action from Congress, and the concern is the longer we wait, the better the data gets and the less impactful the next round of stimulus will be.”
Some technical analysts say the market may pull back around the high, to allow it to consolidate gains before moving higher into the end of the year. The S&P 500 reached an all-time high of 3,393 on Feb. 19.
Hogan said he expects stocks to tread sideways during the dog days of August, but they could begin to react negatively to the election in September. He also said it is important that progress continue against the spread of Covid-19, as the economy continues to reopen.
Peter Boockvar, chief investment strategist at Bleakley Advisory Group, said the market could have a wakeup call at some point that the stimulus package has not been approved.
“I think it will cross over a line where they care,” he said. “I think the market is in suspended animation of believing there will be a magical deal.” Boockvar said he expects a deal ultimately, but the impact is not likely to be as big as the last round of funding.
“What they’re not grasping is any deal, any extension of unemployment benefits, is going to be smaller than it was, and the rate of change should be the most important thing investors focus on,” he said. “Not the binary outcome of whether there’s a deal or no deal. There’s going to be less air going into the balloon.”
It’s the economy
Still, economists expect to see a strong rebound in the third quarter, and are anticipating about about a 20% jump in third-quarter growth. But they also say that could be threatened if Congress does not help with another stimulus package.
Mark Zandi, chief economist at Moody’s Analytics, described the July retail sales as a perfect V-shaped recovery, but cautioned it would not last unless more aid gets to individuals and cities and states. Democrats have sought a $3 trillion spending package, and Republicans in the Senate offered a $1 trillion package. They could not reach a compromise, including on a $600 weekly payment to individuals on unemployment which expired July 31.
President Donald Trump has tried to fill the gap with executive orders to provide extra benefits to those on unemployment, but the $300 federal payment and $100 from states may take some time to reach individuals, as the processing varies by state. He has also issued an order instructing the Treasury to temporarily defer collection of payroll taxes from individuals making up to $104,000.
“I think in August and September, there will be a lot of Ws, if there’s not more help here,” said Zandi, referring to an economic recovery that retrenches from a V shape before heading higher again. “It’s clearly perplexing. It may take the stock market to say we’re not going to get what we expect, and sell off and light a fire.”
Zandi said it could come to a situation like 2008, where the stock market sold off sharply before Congress would agree to a program that helped financial companies.
“We need a TARP moment to get these guys to help. Maybe if the claims tick higher and the August employment numbers are soft, given the president is focused on the stock market, that might be what it takes to get them back to the table in earnest,” he said, referring to the Troubled Asset Relief Program that helped rescue banks during the financial crisis.
He ultimately expects a package of about $1.5 trillion to be approved in September.
The lack of funding for state and local governments could result in more layoffs, as they struggle with their current 2021 budgets, Zandi said. Already 1.3 million public sector jobs have been lost since February, and there will be more layoffs and more programs and projects cancelled. The impact will hit contractors and other businesses that provide services to local governments.
“The multipliers on state and local government are among the highest of any form of support, so if you don’t provide it, it’s going to ripple through the economy pretty fast,” he said.
Economists expect to see a softening in consumer spending in August with the more than 28 million Americans on unemployment benefits as of mid-July no longer receiving any supplemental pay.
“The real irony is things are shaping up that September is going to be a bad month, and that’s going to show up in all the data in October,” Zandi said. “They are really taking a chance on this election by not acting.”
4 Charts That Will Amaze You
The S&P 500 Index is a few points away from a new all-time high, completing one of the fastest recoveries from a bear market ever. But this will also seal the deal on the shortest bear market ever. Remember, the S&P 500 Index lost 20% from an all-time high in only 16 trading days back in February and March, so it makes sense that this recovery could be one of the fastest ever.
From the lows on March 23, the S&P 500 has now added more than 50%. Many have been calling this a bear market rally for months, while we have been in the camp this is something more. It’s easy to see why this rally is different based on where it stands versus other bear market rallies:
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They say the stock market is the only place where things go on sale, yet everyone runs out of the store screaming. We absolutely saw that back in March and now with stocks near new highs, many have missed this record run. Here we show how stocks have been usually higher a year or two after corrections.
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After a historic drop in March, the S&P 500 has closed higher in April, May, June, and July. This rare event has happened only 11 other times, with stocks gaining the final five months of the year a very impressive 10 times. Only 2018 and the nearly 20% collapse in December saw a loss those final five months.
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As shown in the LPL Chart of the Day, this bear market will go down as the fastest ever, at just over one month. The recovery back to new highs will be five months if we get there by August 23, making this one of the fastest recoveries ever. Not surprisingly, it usually takes longer for bear markets in a recession to recover; only adding to the impressiveness of this rally.
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“It normally takes 30 months for bear markets during a recession to recover their losses, which makes this recovery all the more amazing,” said LPL Financial Chief Market Strateigst Ryan Detrick.. “Then again, there has been nothing normal about this recession, so maybe we shouldn’t be shocked about yet another record going down in 2020.”
When a Few Basis Points Packs a Punch
US Treasury yields have been on the rise this week with the 10-year yield rising 13 basis points (bps) from 0.56% up to 0.69% after getting as high as 0.72% on Thursday. A 13 bps move higher in interest rates may not seem like a whole lot, but with rates already at such low levels, a small move can have a pretty big impact on the prices of longer-term maturities.
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Starting with longer-term US Treasuries, TLT, which measures the performance of maturities greater than 20 years, has declined 3.5% this week. Now, for a growth stock, 3.5% is par for the course, but that kind of move in the Treasury market is no small thing. The latest pullback for TLT also coincides with another failed attempt by the ETF to trade and stay above $170 for more than a day.
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The further out the maturity window you go in the fixed income market, the bigger the impact of the move higher in interest rates. The Republic of Austria issued a 100-year bond in 2017, and its movements exemplify the wild moves that small changes in interest rates (from a low base) can have on prices. Just this week, the Austrian 100-year was down over 5%, which is a painful move no matter what type of asset class you are talking about. This week's move, though, was nothing compared to the stomach-churning swings from earlier this year. When Covid was first hitting the fan, the 100-year rallied 57% in the span of less than two months. That kind of move usually occurs over years rather than days, but in less than a third of that time, all those gains disintegrated in a two-and-a-half week span from early to late March. Easy come, easy go. Ironically enough, despite all the big up and down moves in this bond over the last year, as we type this, the bond's price is the same now as it was on this same day last year.
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Retail Sales Rock to New Highs
At the headline level, July’s Retail Sales report disappointed as the reading missed expectations by nearly a full percentage point. Just as soon as the report was released, we saw a number of stories pounce on the disappointment as a sign that the economy was losing steam. Looked at in more detail, though, the July report wasn’t all that bad. While the headline reading rose less than expected (1.2% vs 2.1%), Ex Autos and Ex Autos and Gas, the results were much better than expected. Not only that, but June’s original readings were all revised higher by around a full percentage point.
Besides the fact that this month’s report was better underneath the surface and June’s reading was revised higher, it was also notable as the seasonally-adjusted annualized rate of sales in July hit a new record high. After the last record high back in January, only five months passed until American consumers were back to their pre-Covid spending ways. For the sake of comparison, back during the Financial Crisis, 40 months passed between the original high in Retail Sales in November 2007 and the next record high in April 2011. 5 months versus 40? Never underestimate the power of the US consumer!
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While the monthly pace of retail sales is back at all-time highs, the characteristics behind the total level of sales have changed markedly in the post COVID world. In our just released B.I.G. Tips report we looked at these changing dynamics to highlight the groups that have been the biggest winners and losers from the shifts.
100 Days of Gains
Today marked 100 trading days since the Nasdaq 100's March 20th COVID Crash closing low. Below is a chart showing the rolling 100-trading day percentage change of the Nasdaq 100 since 1985. The 59.8% gain over the last 100 trading days ranks as the 3rd strongest run on record. The only two stronger 100-day rallies ended in January 1999 and March 2000.
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While the Nasdaq 100 bottomed on Friday, March 20th, the S&P 500 bottomed the following Monday (3/23). This means tomorrow will mark 100 trading days since the S&P 500's COVID Crash closing low. Right now the rolling 100-day percentage change for the S&P 500 sits at +46.7%. But if the S&P manages to trade at current levels tomorrow, the 100-day gain will jump above 50%. It has been 87 years (1933) since we've seen a 100-day gain of more than 50%!
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B.I.G. Tips - New Highs In Sight
Whether you want to look at it from the perspective of closing prices or intraday levels, the S&P 500 is doing what just about everybody thought would be impossible less than five months ago - approaching record highs. Relative to its closing high of 3,386.15, the S&P 500 is just 0.27% lower, while it's within half of a percent from its record intraday high of 3,393.52. Through today, the S&P 500 has gone 120 trading days without a record high, and as shown in the chart below, the current streak is barely even visible when viewed in the perspective of all streaks since 1928. Even if we zoom in on just the last five years, the current streak of 120 trading days only ranks as the fourth-longest streak without a new high.
While the S&P 500's 120-trading day streak without a new high isn't extreme by historical standards, the turnaround off the lows has been extraordinary. In the S&P 500's history, there have been ten prior declines of at least 20% from a record closing high. Of those ten prior periods, the shortest gap between the original record high and the next one was 309 trading days, and the shortest gap between highs that had a pullback of at least 30% was 484 tradings days (or more than four times the current gap of 120 trading days). For all ten streaks without a record high, the median drought was 680 trading days.
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Whenever the S&P 500 does take out its 2/19 high, the question is whether the new high represents a breakout where the S&P 500 keeps rallying into evergreen territory, or does it run out of gas after finally reaching a new milestone? To shed some light on this question, we looked at the S&P 500's performance following each prior streak of similar duration without a new high.
Rocket Reversals
Over the last few days, we've been seeing a moderate rotation in the market as red-hot growth stocks sell-off and investors shift into other areas of the market that have been lagging. To highlight this, the table below highlights 24 companies in the Russell 3,000 with market caps of more than $1 billion that traded at a 52-week high within the last month but are currently down more than 20% from that high. The vast majority of these stocks are names that investors haven't been able to get enough of in 2020 but now appear to have had their fill.
Topping the list of these reversals is Eastman Kodak (KODK). On 7/29, the stock surged to a 52-week high of $60.00 after being awarded a questionable government contract to domestically produce components for prescription drugs. With the SEC and government agency that originally awarded the contract now looking into stock option awards at the company just before it was announced, the stock has pulled back sharply and is now down over 80% from its high less than two weeks ago.
While KODK is more of a unique example, other names on the list are primarily growth or health care stocks that have benefited from the COVID outbreak. However, now that signs suggest the summer wave in the south has crested, investors appear to be taking some profits. Shares of Vaxart (VXRT) hit a high of $17.49 on July 14th but have since lost nearly half of their value and trade back in the single-digits. Additionally, Bloom Energy (BE), 1Life Healthcare (ONEM), and Bioxcel Therapeutics (BTAI) have all lost more than a third of their value.
In terms of market cap, most of the names listed are on the small side, but Tesla (TSLA) is a notable exception as it is now just over 20% below its 52-week high on 7/13. Other relatively large companies on the list include Moderna (MRNA), Citrix Systems (CTXS), Teladoc (TDOC), and Livongo (LVGO). TDOC and LVGO both hit all-time highs last week but after announcing a mostly stock merger last Wednesday, both have lost nearly a quarter of their value.
While all of the stocks listed below have seen sharp pullbacks in the last several days, a little perspective is in order. Of the 24 names listed, the average YTD change even after the declines has been a gain of 219.7% (median: +94.6%). Only two of the stocks shown (New Relic- NEWR and Sonos- SONO) are down YTD, and half of them have at least doubled and in many cases much more.
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- $WMT
- $NVDA
- $BABA
- $JD
- $HD
- $LOW
- $TGT
- $SE
- $NIU
- $BJ
- $AAP
- $DLPN
- $TJX
- $ADI
- $DE
- $FL
- $KSS
- $DQ
- $PDD
- $GDS
- $ECC
- $BEST
- $CTK
- $EL
- $VIPS
- $SNPS
- $A
- $ROST
- $QIWI
- $LB
- $LX
- $AMCR
- $CMCM
- $LZB
- $OPRA
- $KEYS
- $CREE
- $GAN
- $BZUN
- $JKHY
- $FN
- $MLCO
- $KC
- $FUV
- $SQM
Monday 8.17.20 Before Market Open:
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Monday 8.17.20 After Market Close:
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Tuesday 8.18.20 Before Market Open:
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Tuesday 8.18.20 After Market Close:
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Wednesday 8.19.20 Before Market Open:
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Wednesday 8.19.20 After Market Close:
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Thursday 8.20.20 Before Market Open:
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Thursday 8.20.20 After Market Close:
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Friday 8.21.20 Before Market Open:
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Friday 8.21.20 After Market Close:
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Walmart Inc. $132.60
Walmart Inc. (WMT) is confirmed to report earnings at approximately 7:00 AM ET on Tuesday, August 18, 2020. The consensus earnings estimate is $1.20 per share on revenue of $134.28 billion and the Earnings Whisper ® number is $1.29 per share. Investor sentiment going into the company's earnings release has 81% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 5.51% with revenue increasing by 2.99%. Short interest has decreased by 12.5% since the company's last earnings release while the stock has drifted higher by 0.6% from its open following the earnings release to be 9.9% above its 200 day moving average of $120.64. Overall earnings estimates have been revised higher since the company's last earnings release. On Tuesday, August 11, 2020 there was some notable buying of 12,381 contracts of the $135.00 put expiring on Friday, August 21, 2020. Option traders are pricing in a 4.9% move on earnings and the stock has averaged a 2.3% move in recent quarters.
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NVIDIA Corp. $462.56
NVIDIA Corp. (NVDA) is confirmed to report earnings at approximately 4:20 PM ET on Wednesday, August 19, 2020. The consensus earnings estimate is $1.95 per share on revenue of $3.65 billion and the Earnings Whisper ® number is $2.01 per share. Investor sentiment going into the company's earnings release has 84% expecting an earnings beat The company's guidance was for earnings of $1.83 to $2.06 per share. Consensus estimates are for year-over-year earnings growth of 65.25% with revenue increasing by 41.53%. The stock has drifted higher by 31.0% from its open following the earnings release to be 57.7% above its 200 day moving average of $293.24. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, August 14, 2020 there was some notable buying of 3,787 contracts of the $460.00 call expiring on Friday, August 21, 2020. Option traders are pricing in a 7.7% move on earnings and the stock has averaged a 4.0% move in recent quarters.
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Alibaba Group Holding Ltd. $253.97
Alibaba Group Holding Ltd. (BABA) is confirmed to report earnings at approximately 7:10 AM ET on Thursday, August 20, 2020. The consensus earnings estimate is $1.99 per share on revenue of $21.13 billion and the Earnings Whisper ® number is $2.11 per share. Investor sentiment going into the company's earnings release has 83% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 8.74% with revenue increasing by 26.22%. Short interest has increased by 30.1% since the company's last earnings release while the stock has drifted higher by 25.0% from its open following the earnings release to be 20.0% above its 200 day moving average of $211.59. Overall earnings estimates have been revised lower since the company's last earnings release. On Friday, August 7, 2020 there was some notable buying of 12,935 contracts of the $300.00 call expiring on Friday, November 20, 2020. Option traders are pricing in a 6.2% move on earnings and the stock has averaged a 3.1% move in recent quarters.
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JD.com, Inc. $62.06
JD.com, Inc. (JD) is confirmed to report earnings at approximately 5:50 AM ET on Monday, August 17, 2020. The consensus earnings estimate is $0.38 per share on revenue of $26.98 billion and the Earnings Whisper ® number is $0.46 per share. Investor sentiment going into the company's earnings release has 78% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 52.00% with revenue increasing by 23.25%. Short interest has increased by 16.7% since the company's last earnings release while the stock has drifted higher by 24.1% from its open following the earnings release to be 36.9% above its 200 day moving average of $45.34. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, August 14, 2020 there was some notable buying of 12,799 contracts of the $62.00 call expiring on Friday, August 21, 2020. Option traders are pricing in a 8.0% move on earnings and the stock has averaged a 6.4% move in recent quarters.
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Home Depot, Inc. $280.55
Home Depot, Inc. (HD) is confirmed to report earnings at approximately 6:00 AM ET on Tuesday, August 18, 2020. The consensus earnings estimate is $3.71 per share on revenue of $31.67 billion and the Earnings Whisper ® number is $3.75 per share. Investor sentiment going into the company's earnings release has 78% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 17.03% with revenue increasing by 2.69%. Short interest has decreased by 39.8% since the company's last earnings release while the stock has drifted higher by 16.7% from its open following the earnings release to be 22.4% above its 200 day moving average of $229.20. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, August 14, 2020 there was some notable buying of 3,323 contracts of the $300.00 call expiring on Friday, August 28, 2020. Option traders are pricing in a 4.2% move on earnings and the stock has averaged a 2.5% move in recent quarters.
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Lowe's Companies, Inc. $154.34
Lowe's Companies, Inc. (LOW) is confirmed to report earnings at approximately 6:00 AM ET on Wednesday, August 19, 2020. The consensus earnings estimate is $2.93 per share on revenue of $21.29 billion and the Earnings Whisper ® number is $2.97 per share. Investor sentiment going into the company's earnings release has 78% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 36.28% with revenue increasing by 1.42%. Short interest has decreased by 19.2% since the company's last earnings release while the stock has drifted higher by 25.9% from its open following the earnings release to be 31.2% above its 200 day moving average of $117.67. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, August 7, 2020 there was some notable buying of 1,994 contracts of the $170.00 call expiring on Friday, August 21, 2020. Option traders are pricing in a 6.0% move on earnings and the stock has averaged a 5.8% move in recent quarters.
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Target Corp. $136.53
Target Corp. (TGT) is confirmed to report earnings at approximately 6:30 AM ET on Wednesday, August 19, 2020. The consensus earnings estimate is $1.56 per share on revenue of $19.30 billion and the Earnings Whisper ® number is $1.64 per share. Investor sentiment going into the company's earnings release has 75% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 14.29% with revenue increasing by 4.77%. Short interest has decreased by 36.8% since the company's last earnings release while the stock has drifted higher by 10.0% from its open following the earnings release to be 18.0% above its 200 day moving average of $115.73. Overall earnings estimates have been revised higher since the company's last earnings release. On Monday, August 10, 2020 there was some notable buying of 4,479 contracts of the $135.00 call expiring on Friday, September 18, 2020. Option traders are pricing in a 6.3% move on earnings and the stock has averaged a 7.7% move in recent quarters.
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Sea Limited $126.50
Sea Limited (SE) is confirmed to report earnings at approximately 6:30 AM ET on Tuesday, August 18, 2020. The consensus estimate is for a loss of $0.47 per share on revenue of $1.03 billion and the Earnings Whisper ® number is ($0.36) per share. Investor sentiment going into the company's earnings release has 74% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 34.29% with revenue increasing by 136.16%. Short interest has decreased by 8.5% since the company's last earnings release while the stock has drifted higher by 91.7% from its open following the earnings release to be 98.1% above its 200 day moving average of $63.87. Overall earnings estimates have been revised lower since the company's last earnings release. On Tuesday, August 4, 2020 there was some notable buying of 4,000 contracts of the $110.00 put expiring on Friday, January 15, 2021. Option traders are pricing in a 12.9% move on earnings and the stock has averaged a 16.7% move in recent quarters.
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Niu Technologies $20.82
Niu Technologies (NIU) is confirmed to report earnings at approximately 3:00 AM ET on Monday, August 17, 2020. The consensus earnings estimate is $0.07 per share on revenue of $88.07 million and the Earnings Whisper ® number is $0.11 per share. Investor sentiment going into the company's earnings release has 57% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 30.00% with revenue increasing by 13.97%. Short interest has increased by 18.9% since the company's last earnings release while the stock has drifted higher by 129.8% from its open following the earnings release to be 90.3% above its 200 day moving average of $10.94. Overall earnings estimates have been revised higher since the company's last earnings release. The stock has averaged a 3.7% move on earnings in recent quarters.
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BJ's Wholesale Club, Inc. $41.48
BJ's Wholesale Club, Inc. (BJ) is confirmed to report earnings at approximately 6:45 AM ET on Thursday, August 20, 2020. The consensus earnings estimate is $0.57 per share on revenue of $3.64 billion and the Earnings Whisper ® number is $0.60 per share. Investor sentiment going into the company's earnings release has 73% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 46.15% with revenue increasing by 8.79%. Short interest has decreased by 3.2% since the company's last earnings release while the stock has drifted higher by 33.8% from its open following the earnings release to be 46.7% above its 200 day moving average of $28.27. Overall earnings estimates have been revised higher since the company's last earnings release. On Wednesday, August 12, 2020 there was some notable buying of 2,119 contracts of the $50.00 call expiring on Friday, September 18, 2020. Option traders are pricing in a 12.4% move on earnings and the stock has averaged a 10.0% move in recent quarters.
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![]() | Sup retards. I know you’re freaking out about your tendies after you completely misunderstood what u/variation-separate said regarding today being, what he thought to be, “the most important trading day of the year.” For an explanation as to what he meant by that, check out his comments on his most recent big 🐻 🌈 star(oil)wars post. That’s not what this is about. submitted by teezar420 to wallstreetbets [link] [comments] This post should bring you gay bears more comfort than the can of paint you huff every night while you watch your wife get rammed by her hairy-assed boyfriend. So buckle up (as in, your helmets) and break out the Jergens, because we’re about to get our jerks in to these gains the next few weeks and months. This Crash Has Been In The Making for a Long Time I know you gaggle of fuckatrons are jacked to the tits in SPY puts and as such, only care about U.S. large cap companies. We all are rather familiar with the success these companies have been benefiting from over the last few years, and the bulls have been jacking their peens to no end over it. Let me peel your eyes off of your RobinHood portfolio and your (at the moment, free) PornHub premium account to look at the performance of global markets for the past decade or so. EFA, 1M Candles EFA is an ETF with exposure to securities in Europe, Australia, and the Far East. Some notable names of their 923 holdings include Nestle, Novartis (pharmaceutical company), and Toyota. What’s important about this ETF is that it excludes U.S. and Canada securities. If you want to know more about about it, since I know you’re too incompetent to find the big fucking search bar at the top of your browser, here you go: https://www.etf.com/EFA#overview. Take a look at the chart, particularly post 2007. It’s essentially been trading sideways ever since, with its most recent peak (marked by the big 🌈 magenta line) being lower than it was in 2007. Speaking of its most recent peak, take a look at the date of that peak at the bottom of the beautiful magenta line. This ETF has been on the decline since January of 2018. Okay, perhaps that’s a coincidence. Maybe Toyota and Nestle haven’t been sucking enough JPOW BRR printer dick to get their share of that unlimited under-the-table QE. EEM, 1M Candles EEM is another ETF that tracks investments of emerging market firms. It’s almost entirely represented by Hong Kong, Taiwan, Korea, India, and China. Most notable of its 1225 holdings include Alibaba, Samsung, and Tencent (info here: https://www.etf.com/EEM#efficiency) Again, we see that it has traded sideways since 2007 and has been on the decline since January of 2018. Let's go bigger. Courtesy of Rodney E. Constable This is the MSCI world index excluding U.S. holdings. This index captures large and mid cap stocks across 22 of 23 developed market countries. It, too, has traded sideways since 2007 and has been on the decline since 2018. I could go on. All this is to say, this is a long time coming. As to the why, the short answer is who the fuck knows? The longer answer is likely multi-factorial, resulting from a failure to adequately rectify the fiscal policy shortfalls that caused the ‘08 recession. Lending to those who shouldn’t be lended to in large amounts and being surprised when the whole shebang goes tits up, then slapping a band-aid on the issue by slashing interest rates and creating stimulus packages (sound familiar?) Let’s not even bother reinstating laws like the Glass-Steagall act that many economists believe would have prevented it all to begin with, let’s just fix it long enough to make it someone else’s problem after the boomers die or retire. The failure to eliminate the underlying causes of the ‘08 crash has had the global economy teetering on the re-entry into a full blown recession for years, but no one gives a fuck here in the states because all we care about are the U.S. large caps. Ya know, ‘murica and all that bud-light-drinkin’ shit. Stonks be goin up, all is gud. Thanks For The History Lesson, but Who Fucking Cares? I’m glad you asked. Speaking of history, the average length of a bear market is 10 months (1). Although, averages can be inflated a lot by outliers, like the 1929 bear market that lasted 61 months (2). The shortest ever bear market was 3 months in 1990, and was mostly due to central banking policy attempting to wrangle inflation like automod wrangles you autists and the invasion of Saddam Hussein into Kuiwait, causing a spike in oil prices (3). We are hardly 6 weeks into this bear market and, needless to say, these are very different circumstances. This is not an issue that can be band-aided through stimulus packages and slashed interest rates. All these years of high-risk lending is going to dick everyone down by these cuts in production caused by the beervirus. I sincerely believe that the Fed and the gov’t in general are just delaying the inevitable (and vegafucking my tendies) under the aforementioned retarded boomer logic. We’re in it for the long haul boys. Diamond hands. Tl;Dr Learn to read, it’s not that long. It’s fuc and it’s been fuc ever since 2008. SPY $220p 5/15 Sources:
Edit: The only part of this post geared towards predicting the future is the final part regarding the average length of bear markets. However, since JPOW and TrumpTheCuck are taking unprecedented action, who knows what could happen. I believe really long dated puts are pretty safe here, because I don't think the question is what direction we're headed, but rather how fast. The general sentiment I'm trying to convey is that based on the performance of other markets, this should not be that fucking surprising. Additionally, who knows what international implications this beervirus crash will lead to. '08 ultimately led to the collapse of Greece's economy (source: https://www.thebalance.com/what-is-the-greece-debt-crisis-3305525). |
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A Helicopter flight from a possible (but mis-located WTC) tribute to what would be the actual location of the WTC which was across the street from the Wintergarden (The Wintergarden is fairly accurately located and rendered in the GTA 4 map. EDIT: This mod was released. You can download it from the link below. This is the gameplay of the latest, unreleased version of the WTC GTA3 mod. The mod has... Learn more here: https://bit.ly/2O5HwLI Do Forex Robots make more money than manual traders? That's exactly what I discuss in this video! We Compare Automate... #Davincipro #BestEAforex #EaForex2020 #Da-Vinci.pro Free sign-up for Davinci: http://bit.ly/Da-vinchi Main site :https://www.davinciproforex.com I have made ... This the new version of auto clicker working as of may 2020, remember DISABLE ANTI VIRUS or the hack won't work, don't complain if it doesn't work and the an...