Might the First 5 Days of 2018 Be Green?
Equities start the day lower as the Great 2018 surge takes its first pause! Up every single day to start the year, I mean who could possibly hate that? Not me, I hope it’s up every day until December, will make Ripple look like child’s play. So prices keep rising…what about breadth? Well amigos, breadth is there too, this isn’t just FB, AAPL, and GOOGL. Take a look at the cumulative A/D line for NYSE stocks along with the Valueline Geometric avg. Winner winner chicken dinner. Let’s get real here for a second: breadth expanding is not the kind of thing you see at market tops. We are still in the middle of a full blown bull market that is charging into the history books. So what are the big winners to start the year? Bespoke shows us that most of them were gigantic losers in 2017. See all those energy names? What if I told you Crude oil was approaching $62 and we could get a huge tailwind from these names, is that something you’d be interested in? Of course you would because you’re smart and savvy and you ignore all the doomsayers and focus on your goals with relentless precision. It’s a bull market and you ride bull markets because that’s how we create wealth. There’s still plenty to worry about (flattening yield curve, slowing employment growth, Fed hikes, Crypto) but as of right now none of them point to an imminent top. Could I be wrong about that? Sure. Am I always right? Nope (I am right about The Last Jedi being mediocre). Might the first 5 days of 2018 be green? I hope so because @ryandetrick tells us that “when the first 5 days are up >2% Since '50, S&P 500 is higher for the year 15 out of 15 times. Average return is +18.6%.” Hoo boy let’s go people! Get excited!! Plus the Pats are going to lose to the Jaguars in the greatest upset since the Battle of San Jacinto (0.01% of people will get this).
After the open we saw the lows of the session within the first 8 minutes. Up 4 days in a row? I guess trading in the red for a couple hours was a sufficient pullback. I debated making up some “I survived the 2hr, 0.19% dip of January 2018” t-shirts but that joke is getting a bit old. Ok, there’s a few names we need to talk about before we move on so let’s get to it. Jana Partners and CALSTRS sent this letter to $AAPL the other day basically asking the Board of Directors to install better parental controls on iPhones because they are “addicting”. Look…look…Apple might be able to install some kind of ticking clock that shuts a phone down but honestly, can’t parents just take it away if their kids are using it too much? Or, I don’t know I’m just spit balling here, maybe don’t give an iPhone to a 10yr old? Quick, someone call Frito Ley and tell them to install parental controls on Doritos because my daughter eats a bag a week. Sigh. Shifting gears here, GoBroke fell 12.5% after laying off 1 in 5 people and shuttering their drone division while basically saying “selling cameras on sticks is hard”. Then they said the company was for sale and the stock ripped off the lows because, while the people who invented the darn thing and took it public can’t make it happen, maybe someone else can. Sigh. Winners STX, WU, KSS, ALB, NVDA, and ALGN. Losers GPRO, BIIB, ALXN, LB, and ULTA. By lunch we were solidly in the green up 0.13% to 2,746.
We spent the rest of the day grinding higher, again, and closed at 2,747 up 0.17%. 5 days in 2018, 5 days green. Check out these insane stats: The last >2% decline in SPX was in August 2017. The last >3% decline was in October 2016. The last >5% decline was in June of 2016 and it lasted all of two days (h/t @sharkbiotech). Relentless….absolutely relentless. Is it warranted though? Maybe, corporate guidance is at its best levels since 2010 and macro data is rock solid so you can’t say this is happening in a vacuum. Look I’ve been bullish for what…6 years now? Nothing out there screams “Sell” to me…nothing. Final Score: Dow -6bps, S&P500 +17bps, Nasdaq +29bps, Rus2k +11bps.
Volume was average. News Highlights:
- Succinct Summation of the Day’s Events: GPRO news, a crazy letter to AAPL, yield plays led and we closed in the green again. Just bull market things
- Man are we overbought: The S&P 500 Index, MSCI Asia Pacific Index, MSCI World Index, Nikkei 225 Index, and MSCI Emerging Markets Index are all in overbought territory, while the Euro Stoxx 600 Index lingers just shy of such a level.
- Just 2018 things here: “Encrypted messaging startup Telegram plans to launch its own blockchain platform and native cryptocurrency, powering payments on its chat app and beyond. According to multiple sources which have spoken to TechCrunch, the “Telegram Open Network” (TON) will be a new, ‘third generation’ blockchain with superior capabilities, after Bitcoin and, later, Ethereum paved the way.”
- Working on your resume? Need a few tips? This link is all world good
- Great quote by Josh: “In fact, it can be argued that the ability to be bullish on something long-term but wary in the short-term – or skeptical of one’s own ideas in general – is one of the highest planes of enlightenment an investor can attain.”
- Think you’re tough because you do Cross Fit? Try this
- I love irony
- Honestly what is wrong with people
We’re going to end tonight with my favorite new genre of video: Fail + Awesome!
Have a good night