Let’s Skip The Monday Chit Chat

Equities start the day higher as we finally, FINALLY print new highs. We have a ton to talk about today so let’s skip the Monday chit chat and talk numbers baby. FactSet had their awesome “earnings update” out on Friday and if you wanna read the whole thing click right here. Ill summarize it briefly for you because I trust you want to spend your evening devouring the whole thing alongside a nice Chianti: EPS doing ok, Revenues are as bad as marrying Ramsay Bolton, earnings guidance is about average (so far 39 companies have issued Q2 2015 EPS guidance, 26 are negative, 67%. 5yr avg rate is 69%). What else? Barrons Big Money poll was out over the weekend, click here for a quick snapshot. What stands out to me? All the neutral answers (especially the “are your clients bullish/bearish/neutral US eqs” question). Once again we sit at fresh all-time highs and LOOK how much “meh” is out there. Is everyone painting their investment house taupe? How about positioning? What if I told you the NET short positioning in SPX futures hit a new monthly high of -46k last week. It did, so me thinks some people are off sides matey (I wanna do a talk like a pirate recap one day). Remember last week when I got despondent about the market, bitterly complained about its lack of effort? I wasn’t bearish, I hope you didn’t take it that way (one guy on Twitter did). I was frustrated that all these things I just mentioned, along with a few other things, weren’t enough, that we needed more. So what’s changed? Why the new highs? I guess all we needed was patience, and as a father you’d think I would’ve learned that lesson by now. Let’s see what happened today first then talk about where we go from here.

After the open the market once again fell from its highs, and this was my reaction. Arrrghhh! Ok, I’m not going to go all pessimistic here, yes things were looking good at the start and traded lower but it’s not like some event happened or a Fed speaker got hawkish. Biotech decided to give up 4%, and when that happens we can’t rally.  That sector has become the de facto “risk on / risk off” indicator so if we’re going to have a sustained move we need them involved. Asia surged last night, as did Europe, so the table was set. The batter was in the box. The cake was ready to be frosted. The puns were ready for inclusion. It just didn’t happen, the entire first half of the day was a slip ‘n slide lower. Materials did well though as Gold rallied $30. $30 you say? Man…the last time gold rallied that much some guy wanted to storm Ft Knox with his butler. FCX / NEM / AA, all big winners. TSLA surged 6% today as people get excited for some home battery. Elon, buddy, if you can find a way to get rid of all these AA and AAA batteries in my life I’ll pledge my soul to you. These things come spilling out of every drawer I have. By lunch we were grinding on the lows, 2,112, down about a quarter of a percent. 

The back half of the day was nothing but downside and we closed on the lows, 2,107, down about half a percent. Patience for new highs? Yep, and we got them, for about 2 trading hours. AAPL earnings are tonight so hopefully that’s a step towards repairing this damage. What other catalysts are out there lurking? Well, we have a FOMC meeting this week (in which nothing major is expected to happen) so there’s always the potential for language shifts. Also, recall that buybacks are notably absent during earnings and GS pointed out that 81% of the S&P is set to exit their quiet period next week so we have that going for us...which is nice. The setup is there, we are on the precipice, we just need one final push! (am I using the wrong phrase there?). Let’s see what tomorrow brings, we need to recover those highs quick or else you’re gonna have to google “engulfing patterns” and technical jargon like that.   

Final Score:   Dow -23bps, S&P500 -41bps, Nasdaq -63bps, Rus2k -117bps.     

News Highlights:

We’ll end tonight with something you, me, everyone has experienced at least once in their lives.   How many times have you wanted to do this?  I gotta be at least 3 bid


Have a good night