BIG Week My Friends, Huge Week
Equities start the day higher as the great S&P 2,500 has been breached! Does 2,500 mean anything to you and your future stock market plans? Nope, but it sure is fun to type that. In between trying to fix a dryer vent (I hate that slinky silver hose thing with a passion) and raking leaves I popped on to $TWTR to see if I could find any hot takes on the stock market. After wading thru 2.5mm tweets on Trump and why the NFC stinks I found this gem from @jlyonfundmgmt. Do me a favor, actually do me two favors, click that link and look at the chart then email a friend and tell them how much you love the Baird evening recap (shameless). You’re back? What you just saw is exactly the kind of thing that makes me excited about the future. An equal weighted index of the top 150 stocks worldwide is on the verge of a breakout. Not only a breakout but a DECADE long breakout. As every student of the market knows, the real move happens after the range dies so if you are optimistic about the state of the world that chart should help you sleep well at night. BIG week my friends, huge week. The Fed meets on Wednesday and all the hipster Fintwit people are expecting them to talk balance sheet reduction. Oooo, fancy term for selling some of this 4 trillion in bonds they are sitting on but I guess we have to take it seriously. “Extraordinary monetary policy” has been with us for years and no one knows what’s going to happen when they reverse course so stay tuned to find out. Wow…a full on stock market breakout in Mid-September after everyone expected some kind of “seasonal weakness” and positioned themselves thus. You know what that’s a recipe for right? THIIISSSSSSSSSSSS
After the open we got a burst of buying out of the gates but it fizzled thru lunch. That chasing I mentioned was definitely in full effect but there wasn’t enough firepower to launch us into orbit. Speaking of orbit, did you see who $NOC bought today? OA. Now you may not know much about OA (I didn’t) but the company name is just AWESOME. Orbital Attack. BOOOM. How in God’s name did I not own a something with that cool of a name? If anyone knows of a company named Artillery Barrage or Subsurface Warfare can you let me know the ticker symbol please? So yea, Northrop Grumman bought Orbital Attack for $9.2B and if they change the name I’ll write a sternly worded letter to Wesley Bush. If these guys aren’t working on a Death Star then I’m going to be disappointed in humanity. Other winners included SSNI, CF, NVDA (someone apparently launched this one into orbit), MU, and HBAN. Losers were UBNT (Citron called it a fraud), MAT (apparently if Toys R Us goes out of business that’s bad for toymakers…who knew), CMG, DISCA, and FOX. Honestly, you’d have thought it would be busier given we were making new highs most of the morning but it wasn’t. It felt dead. I guess that can happen in front of a Fed meeting but it shocked me that it was so quiet. Euphoric thrust higher? Nope. By lunch we were treading water up 0.2% wondering what these people are thinking.
There was a selloff around 2pm ET which was probably some dope firing a big sell program into a quiet market. Will they ever learn? When you do stuff like that it just invites dip buying into the close (this is all such toppy talk isn’t it? Even I can see it). By the time the bell rang we landed on 2,504 up 0.17%. Not bad…but not exactly the gangbusters follow thru I would’ve liked to see. Tailwinds right now are improving sentiment about some kind of tax deal and another round of solid corporate earnings. Headwinds are the Fed and valuations but those take time to play out so let’s not get worked up. Hey…you know what markets like to do all the time? Trend. Guess what? We’re still solidly in an uptrend. Final score: Dow +29bps, S&P500 +15pbs, Nasdaq +10bps, Rus2k +65bps (nice outperform here)
Volume was actually low. Our desk was better to buy. Buying in Energy and Media. Selling in REITs and Tech. Shorting in Tech. News Highlights:
- Succinct Summation of the Day’s Events: New highs but felt pretty wimpy. Still new highs though…
- Time to read the best macro summary on the street. If you can’t see it on your browser make sure you read it at home. Must read stuff. Net, further upside likely lies ahead for US indices into year-end, but there are a number of studies that suggest limited upside and poor short-term risk/reward over the next week or two.
- Are you a history buff like me? Do you know who Stanislav Petrov is? Well you should, because he saved your family’s life: “The siren went off for a second time. Giant blood-red letters appeared on our main screen, saying START. It said that four more missiles had been launched,” he said. From the moment the warheads had taken off, there was only half an hour for the Kremlin to decide on whether to push the red button in retaliation and just 15 minutes for Petrov to determine whether the threat was real and report to his commanders.
- I swear there’s 6 or 7 of each of these names in my children’s school
- Wanna see what a crime against humanity looks like?
- Guess what the best investors of all time aren’t doing? Timing the market: Investors who can stick to a measured market-timing strategy may be rewarded. But the next time you hear a billionaire investor calling the next correction, remember that they most likely didn’t get rich by timing the market.
- How awesome is this NFLX ad?
- Gordon Ramsay taught me how to make scrambled eggs. Now he’s teaching us some next level stuff
- You know what? I’m actually impressed here
- Historically this is the WORST week of the year for the stock market
- In the last Michigan sentiment survey respondents said there was a 65% chance that $1,000 invested in a stock fund will have appreciated in a year’s time. That’s the highest odds since 2002…. Oh man…. (h/t DP)
- Are tech stocks a hedge for career obsolescence? “At what level does technology get so big that it can’t all be held in one S&P grouping? More to the point, when does it get so big that it becomes indistinguishable from the US economy as a whole. Is every industry now a tech industry? Does every job become a tech job? Some would argue that this is already underway”.
We’ll end tonight with a Wisconsin related link! Well, this happened at the BYU-Wisconsin game so that’s close enough right?
Have a good night